Kyle sits down with Luis Ribera, Professor and Extension Economist at Texas A&M, specializing in risk analysis, production economics, biofuels, and international trade this week. They discuss the implications for agriculture abroad as well as the effects on the labor market.
We know, the immigration system is messy! It’s complicated and confusing, especially for those looking to gain a visa or hire foreign workers. Farmer Law PC’s Immigration Guy, Kyle Farmer, knows all of the tricks of the trade. The firm specializes in innovative immigration solutions, some of which you’ll get to hear about on this podcast. Tune in for commentary on immigration-related news and industry insights, and The Immigration Guy’s thoughts on much more!
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**The information provided on this podcast does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only. Listeners of this podcast should contact their attorney to obtain advice with respect to any particular legal matter. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained within the description do not create an attorney-client relationship between the listener and Kyle Farmer. **
Produced & Edited By: Drew Tattam
Kyle sits down with Luis Ribera, Professor and Extension Economist at Texas A&M, specializing in risk analysis, production economics, biofuels, and international trade this week. They discuss the implications for agriculture abroad as well as the effects on the labor market.
We know, the immigration system is messy! It’s complicated and confusing, especially for those looking to gain a visa or hire foreign workers. Farmer Law PC’s Immigration Guy, Kyle Farmer, knows all of the tricks of the trade. The firm specializes in innovative immigration solutions, some of which you’ll get to hear about on this podcast. Tune in for commentary on immigration-related news and industry insights, and The Immigration Guy’s thoughts on much more!
If you're interested in talking with one of our Business Relationship Developers about solving your business labor needs, click the link and fill out your contact information. We will get back to you shortly!
Sign up for our free webinars using the links below:
Send an email to media@farmerlawpc.com if you'd like to be featured in an episode, if you have a question Kyle can answer, or if you'd like to purchase an advertisement on the podcast.
Follow Kyle Farmer on LinkedIn, here.
Subscribe to our monthly Immigration Insider Newsletter, here.
**The information provided on this podcast does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only. Listeners of this podcast should contact their attorney to obtain advice with respect to any particular legal matter. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation. Use of, and access to, this podcast or any of the links or resources contained within the description do not create an attorney-client relationship between the listener and Kyle Farmer. **
Produced & Edited By: Drew Tattam
Last week on the Immigration Guy, we did a comparison of a, a basket of goods, uh, between the, uh, Brazil, and then we compare it to the same basket of goods for Lucian, Texas. So, the basket of goods will have, uh, white rice pin to bean, uh, beef, uh, whole chicken in here in Lucian, Texas. We have a cheaper cost of food that in Brazil by about 20%. So, what are some of the implications that you see for USMCA for our livestock? You know, for our beef there is supply of labor south of us that we is gonna help us, uh, labor to be. Uh, to reduce the cost of labor. Hey, all, this is the Immigration Guy with Kyle Farmer.
I think from that same standpoint, it is, uh, how do you put the, how do you put the pressure on, uh, the innovators, cause the farmers aren't necessarily always the innovators, they're kind of the recipients of the innovation. So how do you put the pressure on those companies to innovate if you do constantly try to compete dollar per dollar wage rate wise?
Well, again, you know, it's just, uh, capitalisms and free market. You know, it's, it's kind of like, show me the money. Yeah. You know, uh, these companies, they're, they're innovating. They're a lot of the reason why they're innovating is because they're, they're, uh, core necessities are met, spending so little on food that that's a big plus already.
So, this big data, drone technology, um, Digital cloning thing, you know, I believe that's, that's, that's gonna be big in the next few years. Uh, and, and, and it's already there. Now we have to show how producers can make money with that technology. One thing is just to have, you know, great pictures of your field with, with, uh, heat sensor and, and, and color and all that.
But we have to show our producers how can they make money so they can invest. You know, and, and I think the technology is coming along now. The single party is showing them how producers can be more efficient and make more money and reduces their, reducing their costs or reducing their losses, uh, so they can be more efficient.
I think that's coming up and, and, and the universities, uh, you know, um, uh, Uh, put pressure on universities as well on the research and the extension components that we need to be working with industry as well. Uh, so we can provide that information, uh, to, uh, I think that that is exactly the way that you get ahead of it.
It is part of that issue. You know, you can. Let's say that I am an agricultural robotics company and I'm investing hundreds of millions of dollars in reducing labor costs. But right now, labor costs aren't necessarily the biggest issue. Maybe in 10 or 15 years, labor costs will become the biggest issue.
But I can't float a hundred 10 million for that long. I can't wait that long to make that much money. So, from their standpoint, it makes sense why they don't, because, uh, if I innovate, if I increase, if I increase productivity, well it doesn't really matter because the cost that increase productivity still exceeds the benefit of it.
Um, but like you're saying, they could partner with universities and put pressure on universities because you guys. Y'all, y'all seen, you know, 10, 15 years down the road when that does become an issue. Um, and we could. Helping our universities work with and put pressure on your universities developing that now so it doesn't become an issue in the future.
I think that's a great point. No, that, that's right. And, and, and, and, and we can be the, uh, the, um, unbiased evaluators of those technology, you know, you know, cause we're, uh, there's always gonna be some, uh, some issues with Monsanto or, or Pioneer or whoever, you know, they come up with Obeyer, they come up with new technology and tell the producer, Hey, this is the.
Uh, thing that you can do. I think producers will like some unbiased evaluator of that technology. And, uh, uh, and that's what universities, uh, has been doing, you know, for, for years and years. And when you look at, at, uh, uh, also throwing up numbers from 1950 to 2014 for every dollar invested in, in, uh, uh, land grant, uh, uh, research and extension in agriculture, the society.
Uh, get $36 back, so it's one to 36, you know, all this innovation that we've seen and, and here in Texas, you know, with cotton production, with the modules and all that, that was developed at Texas A&M. Oh, so yes. You know, so it basically revolutionized changed the way that you produce and store cotton, you know, so things like that, you know, that was a measurement on from 1950 to 2014 where every dollar invested in our programs.
You know, the society got $36 back. So that's a really good bet. Yeah. There's a challenge for us to keep it. Because other countries are, are also doing pretty good. When you look again, Brazil, you know, they're, they're, uh, increasing in production from, uh, they call it the Brazilian Miracle. From 76 to 2017, they increase production by 340% in grains.
You know, in the, in the, in the Midwest area, the Matoso, uh, area, 340% increase in productivity. They're the largest, uh, soybean producer and largest explorer of soybean, you know? And, and, and, uh, a few years back, they were not. Uh, so they're keep innovating as well. There's, they're, we, you know, when with technology, other countries are also take, uh, uh, they're also innovating and, and trying to compete with us.
You know, we have to keep it up and, and, um, um, don't just, uh, be content with what we have is we need to be looking on what's next, right? Yeah. I, I think that that's where our university's coming to play big time. So, um, with, with the USMCA, what are some of the potential benefits of it or cost of it with our, with our livestock producers, was, was there anything in there that is helpful for 'em in terms of the, um, level of production?
You know, are they gonna be able to produce more for it? Are there some concerns with That'll cut the, cut the amount that we're exporting to 'em? Cause I know like for Mexico in particular, they're big port producers and so I, I just kinda. What, what's your take on that? Well, I think, I think there's tremendous opportunities and, uh, when you look at, uh, countries, especially in Mexico, that, that they're increasing their, they're, they're growing quite a bit and they, they're changing their diets and, and, and a lot of their diet is very Americanized.
Uh, they, uh, they changed from a grain base to more of protein-based diet, and that's what happened when you have economic growth. So that market is, is still growing and, uh, and, uh, and that's, you know, good for our poultry, uh, pork and, and beef producers and more protein-based diet. That means, you know, more value added that we can do in-house instead of just sending their corn, our corn or soybeans.
We can do value added to our animals here and then. Finished product and they're able to afford it. Uh, one of the graphs that I usually show is just increasing population that we're gonna see in, uh, uh, 2050, that we are supposed to reach about 10 billion with about 7.2-7.5 billion. But one graph that I think is more important, that is when you look at the world GDP, how it's projected to grow, and it's projected to almost triple, uh, by 2050.
So that means that the world in general is gonna have, is gonna growth and is gonna have more money, especially those emerging countries like China, India, Brazil, Russia. Uh, so they're gonna have more money to buy, uh, uh, more things. And one of the things that we see with economic growth is that change, as I mentioned, from grain-based to more protein-based diet.
And that is huge. That's what I mentioned that we need to be opening new markets and trying to increase our share in foreign markets than try to, uh, shut them down. Because on the next, in the next few years, that's gonna be huge. If it's 35% now, it might be a lot more, uh, later on. That makes then, so we're, you're, I mean, not even just the ones that we traditionally export to, but maybe even getting our foot in the door with some other countries that are kinda more developing now. Uh, but over the course or so to protein-based diet diet. Right. So, so again, you know, that is very positive in, in, uh, uh, but we have to be able to compete. And there's, uh, other countries, I I mentioned Brazil, also Mexico, their, their, uh, uh, uh, beef productions have increased quite a bit because what they have done is taken advantage of NAFTA now, USMCA, instead of sending their, their steers or their, you know, 500-pound calf to, to be finished in the U.S.
Now they finish it in the, in Mexico with our grain. There's a lot of uh, uh, feed lots along the US-Mexico border on the Mexican side. So, they get cheap corn from us, and they finish them in, in Mexico, and then they're able to export either to us or to other parts of the world. That's part of, part of the synergy that we see with these trade agreements as well, and we will, we have to be able to, to compete as well.
Yes, they do have, uh, cheaper labor. But remember that also they have to deal with other issues, uh, crime with the, uh, uh, um, um, what do you call it, drug cartels. And, uh, not as good roles as we have. And, and all those things, corruption and, and other things that they have to deal with, and they have to make it, make it work as well.
Uh, that's the only thing that we saw with Brazil is that, uh, uh, the roads are really, really bad. Uh, but even with bad roads, uh, they're still able to compete. Just one example of how bad it is, uh, there is, is with, uh, with, I don't know if I mentioned to you, but, uh, uh, uh, we were behind a, it was, it was soybean harvesting time in Brazil, and we were behind a, a, a big 18-wheeler, you know, full of soybean.
The road was so bad every time that they hit a a, a, a a hole, uh, uh, in the, uh, in the, uh, in the asphalt, uh, soybean will fall down. And, uh, and they tell us that they have quantified that, and it's about three to 5% of the production is lots on the road because of bad roads. So that's a huge advantage that we have is we have that, uh, you know, people complain about our roads, but from an infrastructure standpoint, comparatively they're significantly better than those in other countries.
And so that, that helps our production. And that would be a huge expense, you know, if, uh, Brazil or Mexico or any, any country that doesn't have that sort of infrastructure already in place saying, oh no, we need to. Improve that infrastructure. Uh, that's a huge expense that they would have. Whereas, you know, our, our trade off might be lowering the labor rates by innovation.
Right. And, and the other advantage that we have is the Mississippi River, you know, which is the cheapest way of transporting goods is, is through water. Uh, you know, so that is huge too. And we're looking at the, at the transportation matrix in Brazil, uh, the, the bulk of the production is through trucks, which is the most expensive one.
Then you get railroad and then you got water. Here, most of our soybeans, it goes through water. In fact, remember correctly, it's about 65% of our soybeans goes through water and then, uh, more through, uh, a railroad and then a little bit through, through, uh, trucks in Brazil is the opposite. So even though their cost of production maybe, uh, uh, their, their, uh, soil is a little bit more productive.
They can double crop, which that's what, that's a part of the Brazilian miracle when they plant soybean. And soon after that corn, uh, making them more profitable. But they have to deal with those issues as well. And they're trying to, uh, address those. Uh, uh, as we speak, you know, they were just, just finished a road that it was joining the mid, the, the Midwest to the north part of Brazil.
That that road was in construction for 25 years. You know, they finally finish it. Uh, but you know, when you look back, you know, the, the ones that it was already finished, it's in that shape. So those are the things that you have to deal with in, in, in, in, uh, and, and compete and, and, and, and make sure that.
Keep that, uh, that, um, edge, that advantage so you can, uh, uh, keep opening markets and producing. Sure. Sure. Yeah, that definitely makes sense. So, what about the, the trade deal with, uh, Japan, you know, where, where was our trade deal versus what is it like now with them? Well, just remember that, uh, that, uh, um, when, um, uh, this administration got into office, they pulled out of the TPP, the transpacific partner.
And, uh, uh, one of the main reasons that we wanted that, that, uh, trade agreement, it's, uh, because of Japan. Japan, Japan is a, is a huge market for us. Uh, and we have, we run a, a huge trade surplus with them. So, uh, uh, just. Uh, to 2019 numbers, you know, of our experts in Japan, we export about almost, uh, 12 billion, uh, to Japan, you know, mainly, uh, grains, uh, livestock horticultural products, oil products.
Now if, because we pull out of, uh, the TPP, we thought that they were, that was gonna be it. But they continue, they signed that agreement without us. Now when you look at Japan, it's, it is our main market for our beef products. It's a big, big market. And uh, and uh, when you look at where Japan gets their, their, um, their beef, it's uh, almost 50 50, maybe a little bit more from Australia than from us.
Of the a hundred percent, about 95% comes either from the US or Australia. Now, Australia, New Zealand, they were going to, uh, in Canada, Mexico, they were, they're still part of the t p and the, uh, uh, export tariffs or the import tariffs in Japan to Japan, into Japan, uh, for beef is about 35%. Now, with that agreement, the, uh, the tariffs were gonna go down by about to about 9% in the next five to 10 years.
So, we were going to be in a really, really disadvantage with, uh, with, uh, with, uh, mainly with Australia, our main competitors, but at the same time we, Canada and Mexico as well. If they decided to rock up their beef production, okay, so, so, uh, this agreement with Japan is, is very, very important because it basically put us back into what we were going to have with TPP with Japan.
And it was a, it was signed, it's, it's a, it's a, it's a mini trade agreement. It's a small trade agreement, but it's, it is worth about on 7 billion worth of our agricultural products. And it was going to help us be on the same, uh, playing level field with our big competitor, which is again, Australia for the, and specifically for the beef industry, you know, so that was, uh, it is a big deal.
And the other good thing about Japan is that it, it's a trusted partner. Uh, uh, you and Mexico and Canada also are trusted partner. We have history with them. When we look at the Chinese trade agreement, uh, you know, it's, it is, it's better to have it than not have. But you know, you, you know, you never know what China is going to do.
Um, uh, but with Japan, we know they're gonna do and they're there. We have long history with them. They, uh, take, uh, a lot of, um, They, they put a lot of weight on the trusted partner. Cause I mentioned to them, I went there, I went to Tokyo last, uh, last spring, uh, because of this issue on beef. I wanted to learn more about, uh, what do they think about TPP and, and, uh, about Brazil.
If, if, if they're gonna get a larger share. But what, what, what they told me is that, uh, we see. The US and Australia's trusted partners. Same thing with, uh, with, uh, Canada. Same thing with New Zealand, but, uh, Brazil, they don't trust that the quality is there or that, uh, they're going to do what they're supposed to do.
You know, so, so, and there's some issues with, uh, with Brazil, with the, uh, with the JB uh, the packing plant that they have and the jobs or, you know, so, uh, that played a major role for them. But, uh, but they trust the US uh, uh, products. They like our beef. Which is, uh, uh, grain-based Australia mainly is, is is grass, grass-fed.
Uh, so there's a price premium for our products and they like the quality, and they trust us, uh, that we're gonna send what we're supposed to send. So, they say, you know, I don't see that much, but if Australia start cracking other production, uh, those are, that, that, that's a country we need to. Uh, watching, not, not necessarily Brazil.
That doesn't mean that it's not gonna change again, you know, when you come supply cheaper products, you know, with good quality, uh, your consumers are gonna gonna make a decision there, you know? Yeah. Yeah. And that's, that's very interesting. I remember back in 2018, um, I was in, I went to College Station and I was talking to a bunch of the agricultural, um, Economist there, you know, like Dr. Anderson was one in particular, and we'll, we'll be talking to him pretty soon, and I remember whenever I was talking to him, he, he was telling me that one of the big concerns with a, even a temporary disruption in supply is that it ki... It hurts credibility. And so, if, let's say for example, with, uh, uh, I mean we're, we're talking Japan.
We can, we can skip to the China trade deal and like China, we export well. They got hit with African swine fever. So, their, their need for those kind of went down. But back then, one of the concerns that he had, this was before they were really getting hit with African swine fever, was well, now they're gonna start going to Brazil for their corn and their soybeans so that they can feed their own.
Uh, pork. Mm-hmm. And one of the big issues with that is it's not easy to get that back. Right. Once they go elsewhere, they're not just gonna be like, oh, nevermind, it's cheap now so we can go back. Because they, uh, they have to have that consistency that they can rely on to avoid putting themselves in a bad situation long.
That is correct. Yeah. And so, I, so that's a, that's pretty interesting. Well, that, that's the issue. When you lose a market, it's really hard, hard to get it back. Right. And that's where we need to avoid, uh, uh, uh, you know, at all costs. Uh, we need to expand and not to, uh, close those doors. Yeah. Yeah. And so, well, yeah, let's, let's talk about the, the China trade deal.
So, With the China trade deal, this one was particularly interesting to me because China, the biggest consuming country in the world. Our biggest, the one that we exported the most to, uh, I believe we exported most of our corn and soybeans there too. I could be wrong about that, but, uh, the tariffs were originally put on pork.
They gradually went up and it kinda just, really hurt the amount that we exported to 'em, uh, and our agricultural, at least from a pork standpoint. We in 2000, I think it was two 14, we went from exporting like 19-ish billion to 24 billion to them. And so, we started producing a lot more pork cause there was a lot more demand.
Mm-hmm. Demanded demand until 18 and then they put on the tariff demand stopped. So, our supplies killed the cost of pork. And I could be wrong on any of this and if I'm, you can tell me. Uh, but so then we had. It, it hurt our pork farmers from that standpoint because the price of their pork went way down, and now we have this huge supply, even stored supply.
And so, our exporting has gone way up because now they've committed to, you know, something insane, like 40 billion a year, which is just. You know, we saw what happened with a 5 billion increase and now I'm thinking about an additional 16 on top of what the highest we had was them. So, from opportunity standpoint, it's out in insane increase in production. But something that you bring up is how much can we trust it? Right. And that, that's the thing, you know, I mean, uh, their deal was, and, and, and the other thing that is very important to point out is only a two-year deal. Uh, you know, so how many years? Two. Oh, it's only a two-year deal.
Okay. Right. You know, they say that they're gonna rack up their imports by about 12.5 billion in 2020. And by 19.5 billion in 2021 off of 2017 baseline, which depending on how you count, if you include wood, uh, wood products and, and ethanol, it's about 24 billion if you take off, uh, out that it's about 19, almost 20 billion, you know?
Uh, so, so again, you know, it, it depends on where… Uh, you know, it's 12.5 billion increase in, in, in, in, uh, in, uh, imports from the U.S. That's, that's big. Uh, and, and like as you mentioned, you know, are you gonna, what's gonna happen after the, uh, these two years pass by? You know, are they gonna, uh, keep. Consuming or keep, uh, importing the amounts before the phase, before the agreement, or is it gonna continually, you really don't know.
So, it, but let me back that a little bit. It's better than we, we had over the last couple of years at least. We, at least we have something signed. You know, are we gonna send 12.5 billion? Probably not. But what happened if we sent 10? What happened if we said five more, or, or, or eight more? You know, it's better.
And then, Then the outlook same, same time last year, you know, but, uh, we need to try to, uh, um, uh, make sure, try to, um, hold them to, uh, for them to, to uh, keep the agreement in, in, in, uh, in, uh, uh, comply by it. But, but again, you know, the outlook is, is more positive. And again, and also this administration, President Trump said that this is just initial phase one agreement.
You know, there's gonna be some other one I think coming. Uh, so hopefully the, the, uh, the phase two or there's gonna be more, um, uh, uh, multi-year, just not two years, you know, but, but right now I think it's, it is an opportunity. Uh, are we gonna be able to, or are they gonna demand that much from us? I really don't know.
But, but it's definitely, um, more positive now that it was a, a year. So, yeah. So yeah, that definitely makes sense. And so, you, you bring up something that's kind of interesting to me, uh, kinda interesting. It's very, very interesting. So, let's say hypothetically that China does honor their commitments with the phase one trade deal, and they actually do.
Buy as much agricultural products as we're anticipating. And our, our pork farmers, um, they, they, we represent a lot of construction companies. So, our construction companies will bring up H-2A visa workers to build the livestock confinement, which the swine herds grown. And, uh, so anyways, so let's say that these pork producers.
Grow their production to meet that demand because the price is accommodating for it. But then five or 10 years down the road, China backs back down because their own domestic swine population, their herd has grown back up cuz it's been decimated. Um, does that cause a big supply issue where we have way too much?
Well, again, you know, it's, it's, um, it could, uh, but you, I, I don't know if I mentioned this before, but, but the, uh, the, uh, the prices of commodities are set by supply and demand. Okay? Not by, by how much it costs to produce. So, if China is buying a lot more pork from us is buying less pork from somewhere else like Brazil, then that that sends Brazil sign that either they reduce production, they find other markets.
Now, uh, will China, uh, start to racking up their own production of pork after this, uh, issue that they have with swan fever? You know, so, uh, those are the questions that we, that we, that, that are up in here. Uh, the question that we need to answer is that, given the, the, the price of pork right now and what is forecasted to be, can we supply that amount of pour, uh, you know, so if so there's gonna be a balance, you know, on, on the supply and the demand side.
Now, let's say that, not 10 years from now, but let's say after the two-year agreement, uh, expired, let's say 2022, what is China going to do? Well again, you know, if, if, if they're going to be demanding, they don't wanna buy as much as they've been used to, let's say pork, for example. Uh, they're gonna have to find it somewhere else.
Is it available? You know, we saw that happening in, in, in, with soybeans, uh, so much that we started exporting soybeans to Argentina and Brazil. Never heard of that. Yeah. Why? Why? Because China decided, because the centralized economy decided we're not gonna buy soybean from the U.S. Not necessarily cause of the tariff, but it was more like a decision by their government not to do it.
And because it social is and, and, and centralized, that's what they did. So, they're starting to buy a lot more soybean from Brazil at a price premium. So, what did Brazil do is say, hey, we send, send, send, uh, soybeans to you as much as we can. More than what? Than we used to. And, and even more than in all in, in reducing our, uh, stock for domestic consumption.
And we can get it cheaper from the US because, you know, the Chicago prices were very low compared to Brazilian prices and Argentina prices too. So again, you know, you cannot magically, um, uh, come up with, with a bunch of soybeans if you have a, you know, a, an increase because it wasn't, wasn't an increased demand, it was just a redirection of the demand.
Instead of buying it half from the US and from Brazil and or the South cone, uh, south America, uh, they directed more into the Brazil, Argentina side, you know, less from the us. So, when you look at numbers, we started sending a lot more soybeans. European Union and Japan, where Brazil used to send quite a bit to the European Union.
You know, so it basically rebalance things. And another thing that you have to, uh, uh, take into consideration is that the trading company, the grain trading companies, the big ones, the ABCDs, they have all the ABMs, the Bangi Car Hill, and they have all offices all over the world. They're big players in Brazil.
So again, you know when there's a higher demand from China, from Brazil, the, the same ABCDs that are here in the U.S., they're sending grants from Brazil and they're sending. Uh, grain from the US to Brazil, just to, to make up the difference. So, it's a, it is, it is a world, it's a globalized rate, uh, issue. So, it's, it's, it's not as simple as saying we're gonna increase our, our, our production and uh, and uh, uh, unless there's a huge increase in consumption, then somebody else will have to reduce.
Right. That makes sense. Yeah, no, that definitely makes sense. Yeah, that absolutely makes sense. Uh, I mean, yeah, it, it seems like it perfectly correlates with what happened, uh, with the soybeans, you know, that, so the, the big question there is that can we compete with the prices set by the market? If we can, then we're in good shape.
Yeah. Yeah. So that definitely makes sense. Uh, something else that you just brought up is the, you know, the, the market being a global market, and right now we're dealing with this Covid-19 crisis, and, but we're not the only one. Everyone in the, you know, is, um, uh, what, what are some of the implications that you could see?
You know, it doesn't necessarily mean it's gonna happen, but what are some of the. What, what are some of the potential implications for this Covid-19 crisis on, uh, the prices of agricultural products? Well, one thing for sure that we've already seen it, there's a lot more volatility and a lot more, more, more uncertainty in the markets.
You know, you see big swing on a, you know, hourly basis now or daily basis. Uh, we've seen it on, on a, on a mid-prices. We've seen it in great prices as well. Uh, the question that I have is that when, when are we gonna be over this hump? Uh, cause I don't think we are at the peak of, uh, in the U.S. Um, so. When, when are we gonna be over this?
And, uh, how's the economy going to be? Cause even though food is a necessity, what you consume is a choice depending on your budget. You know, are we gonna see, um, more of our reversal and trying to go a little bit more into the, uh, grain-based diet because it's cheaper than the protein-based diet? Uh, I, I will expect that to happen to, to some degree.
But how big is that gonna be and how, how long is it gonna take for the world economy to recover from, from this? Those are, those are big questions, uh, that I, I, I don't know the answer. I just know. That is gonna impact, um, not only agricultural production, but production all over the world. And again, you know, when you looked at the, um, unemployment, um, uh, claims that raised by over 3000%, um, it, you know, that is huge.
There's a lot of people without, without, uh, source of income. Uh, they're depending on the government, on employment and, and also the, the, this part of the cares, um, uh, bill that already was signed by president, but they're gonna get some. But again, you know, it's a one-time payment and eventually they need to go back to work.
When are the, uh, when is, where are we gonna go back to full production again? And I don't know, because I don't know where, where are we in the curve? Uh, I believe that we're still in the, in the increasing, we're increasing an increasing rate. We haven't reached the, uh, the, the, um, the point of inflection yet.
I don't believe. So. If you, if, if we know that or we can forecast that, then I think we can, we can have a better idea of how long it's gonna take to, to recover. We don't know what, I dunno. Yeah, no, I, I think that that makes sense. And for anyone that's listening, uh, we're recording this on, uh, Monday, March 30th, 2020.
So that's where we're, uh, and you know, the, the information we're getting every day is changing and I, I think you're right. I think there's no way to know right now, especially with how, you know, cause it, it's hard to gauge our curve and you know, what the actual. Uh, implications of this are gonna be long term in the duration.
Cause I think a big part of that is our testing. You know, we've really. Improved our testing. We've tested more people than anyone in the world by a long shot we've tested, right? As of yesterday, it was almost 900,000 people. Uh, and so we're gonna continue to see our cases increase, but that makes logical sense because we're testing a lot more.
Um, I think at that, at the same time, the more you test, if you're testing people that aren't just the ones that are seriously. Uh, which we are now, you're gonna see the, uh, mortality rate of the virus go down. Cause, and a lot of the other countries where their testing isn't as robust, uh, you're seeing high mortality rates, but you're also probably not getting all of the people that aren't, uh, suffering badly from the virus.
And so, their mortality rate is actually a reflection of their testing. And so, I think that you're gonna see that kind of in the next few weeks with ours. You, our, our number of cases are gonna go way up. The number of deaths are also gonna go up, but, um, I, I would suspect that the mortality rate stays relatively low just cause we're testing also people that aren't critically ill.
Yeah. But I would agree with that, with that take. And, and then we also don't know how the, uh, the heat wave is gonna, how the virus is gonna react to, uh, warm and weather. We know that it, it doesn't spread as quickly. But, you know, uh, how long is that? How long is that gonna take? I mean, for here in Texas it's probably gonna help us cause we're still, we're, we're having, uh, warm and weather.
But, uh, the Northeast and the Chicago area, New York, you know, that there, or Washington State, you know, those are, uh, they still have a few more months we call weather there. Right. Yeah. And that's a great point because, and that also kind of opens up another one of the. Complexities of forecasting. The implications of Covid-19 is, you know, even if we start opening up markets like hours here in Texas, which it, you know, as it gets hotter in the, it's harder for the virus to spread.
Uh, but you know, the, the Midwest is gonna remain. Kinda colder for, and you know, maybe even through May. And you got, uh, yeah. The, the Northeast and it pretty much anywhere other than here in the south and southwest. It's, uh, if you open up just those regions, I, it's hard to tell what the long-term implications of the virus are gonna be on our economy and our production and the cost of all of our agricultural commodities.
Mm-hmm. So that's, yeah. That is, um, very interesting. Well, uh, Dr. Rivera, we really do appreciate your time that you've taken with us. Uh, and I didn't know if there was anything else that you wanted to say, uh, before we signed off of this, but we certainly appreciate you taking the time and sharing your knowledge with us.
You, you know so much about the trade deals, it is really interest. I guess one thing, you know, kind my big takeaway, and you could correct from an agricultural standpoint.
We we're not sure long term if it was worth the sacrifice, but the sacrifice was made and now the outlook is really good cause we've, we've renegotiated these and, uh, the, the renegotiations have been really good for agriculture. Now, if it was worth sacrifices to be told, but, we'll, I guess we do have a positive outlook from an agricultural standpoint.
Uh, I, I would agree with that and, and, um, uh, definitely better on last year and, and, and hopefully this, uh, uh, they, they pan out to be, to be, um, uh, positive. Uh, I, I don't doubt that that, uh, um, that it, that it was hard for, for producers in general. Uh, uh, come from a, from a farming background. My parents are still farming back in Bolivia.
They had to go through that as well. Uh, but again, you know, I mean, uh, I think the, the, the, the more trade agreements that we have, the better, uh, cause we were able to compete, were very efficient and, and what you want is just, uh, rules of the game. You know, even the rules of the games. And then, uh, producers can decide to participate or not.
Uh, so I get asked, you know, should we have a trade agreement with Argentina, with the European Union? Of course, you sit down and, and negotiated the, the rules of the games and then compete. You know, we have, uh, again, you know, most of our market, more of our populations outside the US. So, uh, we won those, those, uh, those consumers.
Yeah. Yeah. And, and I think that that makes a lot of sense because you don't want, you know, you, you don't want your producers relying on, um, these have been the rules of the game, despite the fact that there's no enforce agreement in place. Right. And then the rules of the game just all a sudden change.
Cause the ones that are, you know, eating the cost of that and suffering the consequences are the producer. So yeah, the more trade deals, the. Right. And, and one last thing, uh, also is that the other thing is that we have a tremendous bargaining power because, uh, almost 25% of the world's money is in this country.
Wow. So we have, we have 320, 350 million people in this country that spends little on food. that accounts are about 24, almost 25% of the world's money. So this is a huge market that other countries will like to get in. They would like to come into our market because we have tremendous purchasing power, and we have a lot of people here that will spend very little in necessity.
So, they want to come in here. So, when you do a trade, uh, negotiation, you are, remember you have a tremendous bargaining power. So, they will wanna come in. That's the time for us to also send the stuff that we export. Yeah. Yeah. And yeah, I think that definitely makes a lot of sense. And it's a, it's very good.
Um, yeah, but we, we certainly appreciate your time. Uh, Dr. Rivera, thank you for being with us. Thank y'all for listening to the Immigration Guide Podcast. We really appreciate it. You can find us on our website. Go to www.farmerlawpc.com. You can find me on LinkedIn and Twitter. Just search at Kyle Farmer, FLPC.
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