Bridge and Hope

What’s Happened…

Bridge payments of twelve billion dollars announced by the Trump administration in early December will help many financially, providing the resources to plant 2026 crops. Payments are to be distributed by the end of February. While needed and necessary, bridge payments do little to solve a bigger problem, which is oversupply and, therefore, low prices.  

Multiple years of both domestic and foreign overproduction are the real reasons behind lower prices. It has little to do with trade or tariffs. Farmers have better tillage practices and genetics, creating continuously improving crop results. This is most noticed in South America where land usage and yield have increased to the point that, between the two Americas, the world currently has a steady supply of quality grains and oilseeds. Weather conditions in recent years have been beneficial to the world’s crops where record after record has been broken, both in yield and total production. 

Why this is Important…

So why are bridge payments and other ad hoc support programs important? It might depend on your point of view. For many, the need to financially support producers is a matter of national security. Widespread financial failures in agriculture could lead to civil unrest. Most Americans are not involved in agriculture and, therefore, really don’t have a vested interest other than they want food that is available and affordable. They believe the government is responsible for these priorities. A few billion dollars in a budget of trillions is a small expense to keep farmers afloat and grocery stores stocked. 

A slightly different view suggests that America, were it to become dependent on imports of foreign agriculture, would lose its stature as a superpower. Here too, the argument holds to support U.S. farmers in times of financial needs. Most Americans do not want to rely on other countries as their primary food source. 

What can you do about it?

Most farmers really don’t feel good about government support programs, yet they also recognize that in lean times, they are critical and necessary to stay in business. There is no room for guilt. A farmer’s job is to produce the best product possible. If it takes financial aid to help during challenging cash flow times, then so be it. Accept financial support and look for better times ahead. What else can you do? Agriculture is the world’s most important industry. In times of need, it is only expected that financial support is a paramount priority that benefits everyone.

Find out what works for you… 

Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation and less emotionally–charged responses to market moves, which are always dynamic.   

About the Author: With the wisdom of over 36 years at Total Farm Marketing and following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of Brokerage Solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the markets and marketing tools, an excellent listener, and communicates with intent and clarity to ensure clients are comfortable with their decisions. 

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Bryan Doherty