Trade Winds Bearing Down on Farm Country

Last week the U.S. announced another $200 billion in tariffs on Chinese imports. It was a clear signal to China that our government is not backing down and that this trade war is far from over. The question at the top of farmers’ and ranchers’ minds now is whether our livelihoods will be the first casualties.

This trade war didn’t begin on the farm, but China has been quick to target U.S. agriculture. American farmers value the trade relationships we have built in this market, but we don’t take lightly having the bullseye of retaliation aimed right at our farm gates. Commodity and livestock prices are already taking a beating during what has become the worst farm economy since the Great Depression. Our crops were already in the ground and on the vine before the first round of tariffs were announced. That leaves us with our hands tied as harvest begins. We could not have forecast this kind of blow to the market, and many are facing lost income as they struggle to hold on. Many farmers and ranchers will be forced to accept rock-bottom prices—far below the cost of production—just to repay operating loans and pay other bills. U.S. agriculture needs relief and open markets for our products—and with every turn of the combine, we are running out of time.

For many Americans, this trade war is just a high stakes business deal that seems far off for now. To farmers and ranchers, however, retaliation is already hitting home.

For many Americans, this trade war is just a high stakes business deal that seems far off for now. To farmers and ranchers, however, retaliation is already hitting home. Livestock and dairy farmers are suffering lost income with milk and dairy product prices down more than 10 percent in one month and lean hog and live cattle futures down 8 to 10 percent from the beginning of this year. The news is no better for row crop farmers as soybean prices have dropped 18 percent and corn futures are down 16 percent. Fruit, nut and vegetable growers are seeing similar price impacts and decreased demand due to tariffs. Almond exports in June were reported down from May, including to China (down 48 percent), Western Europe (down 18 percent) and the Middle East (down 26 percent). During the last two weeks of June, Washington apple exports to Mexico were off about 40 percent compared with this same time a year ago, according to the Washington Apple Commission. Farmers also saw costly delays in China with added customs clearing times on arrival going along with the first round of tariffs for products like oranges and cherries, and exporters fear more of the same with the newest round of tariffs. These kind of market swings can mean the loss of hundreds of thousands of dollars in farm income. The cost could be even steeper if banks are unable to extend loans to farmers barely able to hold on through this trade war.

Let’s not lose sight of the fact that China is not our only ag export market. In countries where we have free trade agreements, U.S. ag exports take off and make significant gains. Between 2003 and 2017, U.S. ag exports to countries where we have trade agreements increased more than 146 percent – from $24.1 billion to $59.3 billion. While, the U.S. has FTAs with only 10 percent of the countries around the world, those countries account for more than 40 percent of our ag exports. Now is the time to bring certainty with our NAFTA partners. Let’s get a deal finalized with Canada and Mexico and show the world that we can be counted on to follow through on our agreements.

While the U.S. rains down tariffs on our leading ag markets, the rest of the world continues to move forward with trade deals that don’t include us. Unfortunately, the U.S. removed itself from one of the largest deals, the CPTPP—formerly the Trans Pacific Partnership—which promises market gains across the Pacific for our neighbors in Canada and Mexico. America’s farmers and ranchers cannot afford to get left behind. At the American Farm Bureau Federation, we ran the numbers and supported TPP when it was first introduced. It may not have been a perfect deal—no trade deal is—but it would have brought an extra $4.4 billion a year to net farm income and added more than 40,000 jobs to the U.S. economy. We need more free and fair trade deals like this if U.S. agriculture is going to hold onto its spot as a global leader.

Farmers continue to have faith that the President’s commitment to hold our trading partners accountable will go a long way in securing fair trade in the future. We know he is focused on the long game and has been an advocate for farmers and ranchers on many important fronts already. We believe he will remain true to his word to look out for farm country in this trade war. Holding onto that optimism can be tough, though, when you begin to watch your livelihood slip away. For today, agriculture needs a win if we’re going to survive to see that future.