Published
February 08, 2019
In his State of the Union address, President Donald Trump touted his trade policy that includes imposing tariffs on billions of dollars of imports into the United States. He said it’s to “defend American jobs and demand fair trade for American workers.”
What he didn’t say was Americans, such as farmers, are paying a steep price for them.
Increased agricultural production across the globe has depressed commodity prices, but the Trump administration’s trade fights have exacerbated farmers’ plights, The Wall Street Journal found:
Trade disputes under the Trump administration with major buyers of U.S. farm goods, such as China and Mexico, have further roiled agricultural markets and pressured farmers’ incomes. Prices for soybeans and hogs plummeted after those countries retaliated against U.S. steel and aluminum tariffs by imposing duties on U.S. products like oilseeds and pork, slashing shipments to big buyers.
Low milk prices are driving dairy farmers out of business in a market that’s also struggling with retaliatory tariffs on U.S. cheese from Mexico and China. Tariffs on U.S. pork have helped contribute to a record buildup in U.S. meat supplies, leading to lower prices for beef and chicken.
With exports making up 20% of farm income, according to the Department of Agriculture, these trade conflicts are crushing farmers’ finances:
Bankruptcies in three regions covering major farm states last year rose to the highest level in at least 10 years. The Seventh Circuit Court of Appeals, which includes Illinois, Indiana and Wisconsin, had double the bankruptcies in 2018 compared with 2008. In the Eighth Circuit, which includes states from North Dakota to Arkansas, bankruptcies swelled 96%. The 10th Circuit, which covers Kansas and other states, last year had 59% more bankruptcies than a decade earlier.
States in those circuits accounted for nearly half of all sales of U.S. farm products in 2017, according to U.S. Department of Agriculture data.
This has taken a personal toll:
For Nebraska farmer Kirk Duensing, filing for bankruptcy was a last resort, his only choice after several years of low corn and soybean prices meant too many bills he couldn’t pay.
Mr. Duensing has managed to keep farming, hiring himself out to plant crops for other farmers for extra income and borrowing from an investment group at an interest rate twice as high as offered by traditional lenders. Despite selling some land and equipment, Mr. Duensing remains more than $1 million in debt.
“I’ve been through several dips in 40 years,” said Mr. Duensing. “This one here is gonna kick my butt.”
And some tolls are more than financial:
Conversations with distressed farmers have become more frequent for Frank Friar, a retired agricultural lender who mans phones at the Wisconsin Farm Center. The organization advises dairy farmers and crop producers on financing options, bankruptcy and when to leave the farm behind. Last year, it received more than 2,300 calls, the most since 2010, and the center has hired more staff in the past two years.
About a dozen times a year, Mr. Friar and his colleagues talk with a farmer who seems to be contemplating suicide, he said. The center’s staff often calls family members or neighbors who can check on the farmers, and sometimes Mr. Friar drives out to farms himself. “The uncertainty, will they survive on the home farm, is [causing] more people to think negatively,” Mr. Friar said.
We saw the beginnings of this problem last year after countries imposed retaliatory tariffs in response to the U.S. Last summer, farmers were already losing thousands of dollars:
Dennis VanDaele is feeling the sting in Illinois. “It’s cost me 50 cents a bushel on about 25,000 bushels of corn,” VanDaele, who also grows soybeans on his Reynolds, IL, farm, told a local news station. All told, “it’s cost me $10,000 to $12,000,” he said of the tariffs. Going further east to Indiana, Larry Enders, who runs a 700-acre farm in southeastern St. Joseph County, says he has already lost about $23,000 on the value of last year’s harvest since the trade dispute began.
The financial stress, the insecurity, the fear of losing a farm that’s been in the family for generations, these are the effects of trade conflicts that look to have no end.
It’s a stark reminder that “Nobody ever wins in trade wars.”
Whether it’s farmers who sell overseas, small business owners who sell abroad, or companies that rely on imported materials to make their products, tariffs are imposing unnecessary pain.
They’re the wrong approach to settling trade conflicts, and the administration should reverse course before more damage is done.
About the authors
Sean Hackbarth
Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.
