Remember the last election when the majority of farmers in the Midwest excitedly went to the polls and voted for Donald Trump? He promised real change in Washington. He promised to put the brakes on the EPA, support the RFS, and limit government regulations. That was just what we wanted to hear. He also promised to get out of TPP, tear up NAFTA, and get tough with China. Well, so far we have got most of what we voted for, but now it does not look so good.
The President has said if the NAFTA talks don’t produce an agreement by the end of May, he is going to walk. He has already walked on the TPP deal that would have lowered tariffs on U .S. farm exports to 11 Asian nations by 40%. Now steel import tariffs have been placed on Chinese steel, prompting a pending retaliation by China on U.S. soybeans, pork, beef, ethanol, wine, and more. This has prompted a definite turn in farmer opinions. The latest Purdue/CME Group Farmer Attitude Barometer showed a dip in optimism related to the announcement of steel tariffs and the possibility of a trade war with China. This dip in optimism is with good reason as the stakes are high for U.S. agriculture. Ag Economist at Purdue Dr. Wally Tyner has estimated a worst-case scenario could see Chinese imports of U.S. soybeans drop by 71 percent, total U.S. soybean exports could fall by 40 percent, and total U.S. soybean production could decrease by 17 percent.
Some arm chair economists say this is not going to happen since a trade war would be just as disastrous for the Chinese economy as for the U.S. economy. One tells us farmers just need to “Don’t flinch. And don’t undermine U.S. leadership as that will accomplish Beijing’s goal.” This is easy to say from a room full of books rather than from a barn full of soybean seeds, bought on credit and ready to be planted. Farmers are about to risk it all hoping mother nature will give them enough rain and sun to grow the crop and that the market will give them a price high enough to at least cover costs. Yet, some leaders are asking farmers to sit quietly and trust Trump which is a tall order for many growers.
Secretary of Agriculture Sonny Perdue said this week in Ohio that President Trump is not going to let farmers be the losers in a trade war, “I spoke with him personally last night. He called me to say, ‘while you’re in Michigan, Ohio, and Kentucky, you make sure our farmers know that I won’t let them be the casualties in these trade disputes.’ He understands that agriculture, based on its bountiful production, is always the tip of the spear in retaliatory measures, and he’s convinced (that won’t) be the case.” While these are reassuring words, the escalating war of words between Washington and Beijing are keeping farmers and the farm markets on edge.
So can we trust Trump? I hope so because, if he wins this high stakes global deal making game, it will lead to expanded trade opportunities for U.S. agriculture. Yet I remember the Russian grain embargo, when President Carter and the U.S. State Department sold American agriculture down the river and used food as a diplomatic tool. This plunged the farm economy into a depression that it did not recover from for a decade. We should always be skeptical when we hear words from Washington, especially when our future is at stake.
By Gary Truitt