Against a backdrop of a global pandemic, disrupted exports, trade fights and influx of federal aid, Delaware farmers continued to plant their crops. Now, like farmers across the nation, they are reaping the fruits of their labor.
“There were a few hiccups with supply disruption, but if you’re a grain farmer right now, there’s a lot to smile about,” Delaware Farm Bureau President Richard Wilkins told the Delaware Business Times. “Once the soy and corn harvests were done, the price really began to rally.”
The last two years for Delaware farmers have been fraught with heightened trade tensions between China, the United States’ best customer for its top crop, soybean. Like many across the country, farmers struggled to see a profit after commodity prices were set so low.
The average U.S. price received for soybeans was $8.28 per bushel in May 2020, and by early June, it’s now hovering around $15.63 per bushel. Corn averaged around $3.50 per bushel last summer, and now it’s slowly ticking back up to $7.03 per bushel.
Even with the COVID-19 pandemic disrupting the supply chain and extreme weather events destroying 850,000 acres of crops in the Midwest, agricultural exports recovered quickly. In 2020, the U.S. exported $146 billion in agricultural exports, the second highest year on record with the U.S. Department of Agriculture.
Delaware farmers harvested 176,000 acres of corn last year and 148,000 acres of soybeans. Combined, the production of those two crops is valued at $184.5 million, according to the USDA.
Despite some uncertainty with China in the past two years, it was one of the major buyers of Delaware’s and the rest of the nation’s crops. China’s swine herd was hit by African swine fever, so demand was high for pork, while other grains are huge in terms of feeding livestock as well as grain-based dishes.
While China renewed its interest in American exports after trade tensions were heightened in 2018, Mexico continues to remain a stable partner. After the North American Free Trade Agreement (NAFTA) was renegotiated, the U.S. Soybean Export Council focused more on establishing stronger ties to Mexico, and that continues to hold today.
As of the most recent data available on May 27, the U.S. has exported 35 million metric tons to China and 3.85 million metric tons to Mexico, setting a new record for the marketing year.
“This marketing year has been fantastic to both countries,” United Soybean Export Council Vice President for Market Intelligence Mac Marshall said in an email. “[Exports to Mexico] are slightly ahead of the pace at this point in the season, but I should note that this season we had a lot of early season sales which helped jumpstart our export pace.”
With record crop volume and high demand, the USDA forecast that agricultural exports will remain strong, even performing $7 million higher than last year. But Delaware State University professor Akash Dania, who studies international exports and economics, warns that farmers need to be a little more cautious when planning for the future.
“You have to keep in mind this value is based on what crop is on hand. These markets can be very cyclical, and it’s very much based on our competition and how they react,” Dania said. “One thing that would give me pause is the value of the dollar. When you think about Brazil, it’s possible to buy more because their currency has weaker value.”
Brazil, a country that produces 34% of the world’s soybean, was a popular trade partner with China amid the trade war. Last year, Brazil’s exports were valued at $20.9 billion.
With a new president in the White House, Dania pointed out this may be a time to open more trade agreements with countries, including potentially softening tensions with India.
“India is the second-populated country, and President Biden has voiced support for a more global approach when it comes to fair trades. My hope is that Biden will establish a more stable bilateral trade agreement with them. When you have more stability in these relationships, farmers can start to think where they will be five, 10, 15 years ahead,” he said.
But in the end, all agricultural trade and domestic sale depends on one thing not even President Biden can control: the weather.
“The Delaware grain market is shaping up to be a good year, but you have to keep in mind we could have a hurricane that could wipe it out,” Wilkins said. “I used to joke that we’re about four days from a drought because Delaware soil is so sandy. A few days with 90-degree temperature without rain, that moisture can leave pretty quickly.”
