In Press: AAEC’s Hudson warns of more uncertainty amid Russia’s invasion
By: Norman Martin
Darren Hudson, an internationally-recognized professor with Texas Tech's Department of Agricultural & Applied Economics, was featured this month in an interview with Radio Oklahoma Ag Network's Farm Director KC Sheperd. Here's part of the takeaway.
With all eyes on Russia and Ukraine, many consumers and producers are left wondering about long-term effects. One thing is clear: The impact of the war isn't going away anytime soon. Ukraine is a significant exporter of wheat, corn, vegetable oil, barley and fertilizer. Currently, it is planting season in that part of the world, so supply disruptions are substantial.
“The dynamics taking place are shocking markets,” said Darren Hudson, Texas Tech's Larry Combest Endowed Chair for Agricultural Competitiveness and Director of the International Center for Agricultural Competitiveness. “Traders react to anything that looks like it might change expectations, supply, cost of production – anything. So, all these things are layered together.”
Hudson stressed that it doesn't help matters that the nation is already in the midst of a substantial inflation run. Meanwhile, markets have to play out and ration available supplies worldwide. Couple that with weather and drought concerns worldwide, and there's a lot of uncertainty.
Hudson says his advice for producers would be to start thinking about their financial risk. “Not just price risk, but maintaining cash reserves and doing things that minimize risk out into the future,” he said. “You've got to have something to fall back on.”
Looking at the marketing side will also be necessary. “I hope producers start looking at the marketing side of things more seriously than they probably have been,” he said.
As for the lasting effects of the Ukraine invasion, Hudson said the United States is already facing high cost and labor shortages, and that the reality of thinking that producers can produce everything here in the United States is somewhat of a pipe dream. That doesn't mean the nation can't realign supply chains in areas that have a less political risk.
“U.S. agriculture is slightly buffered from this event because we have a greater diversity of where we send products,” Hudson said. “While we aren't dependent on Russia as the primary consumer, we are dependent on China. We may need to re-think about being overly dependent on one country, or a set of countries that are probably not strategically aligned with the United States."
Hudson's research interests include agricultural policy and trade, economic development, marketing and consumer demand, and behavioral economics. He participates in the Food and Agricultural Policy Research Institute consortium producing annual baseline projections for cotton for the group, and is a past-President of the Southern Agricultural Economics Association.
CONTACT: Phillip Johnson, chairman and director of the Thornton Agricultural Finance Institute, Department of Agricultural and Applied Economics, Texas Tech University at (806) 834-0474 or firstname.lastname@example.org
0316NM22 / Editor's Note: For the full-text version of Hudson's interview with the Radio Oklahoma Ag Network, please click here