Van Trump Report

 

Many farmers subscribe to the (Kevin) Van Trump Report. Last week, Kevin and I were in Peoria, Illinois, speaking. Here’s a free summary of Kevin’s thoughts on the farm economy.

First, Kevin came from a small Missouri farming community. He worked as an NFL football assistant coach. He’s a big (large) man with a huge personality! He’s fun and mostly optimistic about agriculture. Then he started working at the Chicago Board of Trade buying and selling commodities.

He was successful. Why? One, he is easy to see and notice (large frame, booming voice). Two, his colleagues said he had an unfair advantage. Since he came from a farming community, he knew how farmers thought and had many farming friends. However, he also knew many capital investors (NFL owners, coaches, doctors, lawyers, bankers, etc.). He knew how to trade both sides.

The following is what Kevin Van Trump thinks, good or bad.

On tariffs, there are tons of unknowns, but he thinks something needs to be done. Too many markets (especially the European Union) are closed to American products. He expects some uncertainty and short-term pain, but long-term, he is bullish. He believes that the USA, Canada, and Mexico need to unify to slow down China, Russia, and North Korea.

On energy production, he thinks higher output will greatly lower farm expenses. Fuel, transportation, and fertilizer are all tied to energy costs. He believes the USA is in a better financial position than many other countries, benefiting the most. The USA has untapped energy resources that could lower national debt ($36 trillion) through taxes and help reduce inflation. He expects a weaker U.S. dollar, increasing future grain exports. As a side note, he predicts continued increases in U.S. crop yields, lowering overall prices, but with a weaker dollar, exports should rise. To stay profitable in agriculture, farmers must continue lowering production costs.

On tax cuts, will they be renewed? Van Trump thinks yes, but perhaps not much lower than today. Interesting point—do you know why lowering the tax rate increases tax revenue? The lowest tax rate is in Ireland, and its economy is booming. Why? Lower tax rates attract corporations, increasing tax receipts despite the lower percentage. That comes from my college international business class. Additionally, fuel costs impact everything (fertilizer, food, transportation), so lowering fuel prices directly reduces inflation.

On immigration, Van Trump sees both sides and recognizes propaganda from both. The USA cannot afford to pay for housing immigrants. However, agriculture (field workers, dairy workers, slaughterhouses, manufacturing, carpentry) heavily relies on immigrant labor. One solution is requiring VISAs for legal immigration, ensuring productive immigrants are employed under stricter supervision.

Van Trump also commented on government department heads: Lee Zeldon (EPA Secretary), RFK Jr. (Health and Human Services), and Brooke Rollins (Secretary of Agriculture). He thinks all three are competent. Reducing pesticides in agriculture is a slow process. While all people want healthier food, poorer populations prioritize affordability. He expects wealthier individuals to pay premiums for healthier options, while others will choose the cheapest alternative. Watch the Midwest—California and New York are highly populated, but the Midwest will ultimately determine the pace of change.

On ethanol, the USA has huge ethanol stocks. With increased energy production, expect lower crude oil prices, which will pressure corn prices downward.

On crop insurance, there’s talk of eliminating it, but Van Trump doesn’t see that happening. Farms are getting larger, and he expects this trend to continue. With new technology (AI, drones, big data), only larger farms can afford advancements, meaning small farms will continue shrinking. The way for small farms to survive is diversification into alternative and specialty markets.

He anticipates farmers leveraging technology for higher yields and lower production costs, ultimately leading to lower crop prices.

Next week, I’ll finish Van Trump’s comments and add Economist Emily French’s insights.