‘A Really Bad Deal:’ These Iowa Farmers Are Getting Clobbered by Tariff Escalation

Jul 24, 2018 - 2:00pm

Executive Director, Strategic Communications

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A farmer talks on a cell phone while tending to hogs in Walcott, IA.
A farmer talks on a cell phone while tending to hogs in Walcott, IA.

Bob Hemesath is a fourth-generation farmer in Winneshiek County, IA, where he and his brother, Ron, grow corn, produce hay, and raise pigs for domestic and international consumption. A couple months ago, he was starting to grow worried about all the rain his state was getting, noting on a local farm blog that he was crossing his fingers for some much-needed sunshine to support this year’s crop.

Now, there may be an ever more serious threat for farmers like Hemesath to worry about, due to the recent escalation of tariffs between the United States and some of its most important trading partners.

“If we lose the export markets, it will hurt us from an economic standpoint,” Hemesath said in a recent interview with NBC News. “It will hurt the ability to provide for our family, and it will hurt the state and the nation as it will hurt our economy eventually.”

For Hemesath, the pain has already set in. He and his brother raise about 40,000 hogs and farm 2,600 acres of corn a year, and since the United States first announced tariffs sparking the emerging trade war, markets for both have seen prices sink by about 15%. That has sowed seeds of anxiety across America’s heartland, including the Hawkeye State.

“Agriculture is one of the biggest industries in Iowa,” said Hemesath, who recently traveled to Washington to voice his concerns over the tariffs to lawmakers. “It supports a lot of jobs. If agriculture suffers, small-town main street suffers.”

Hemesath isn’t alone. Retaliatory tariffs imposed by China, Canada, Mexico, and the European Union threaten approximately $977 billion in exports from Iowa, making it one of the 10 hardest hit states in the country, according to analysis by the U.S. Chamber of Commerce. Iowa farmers in particular stand to lose up to $624 million, depending on how long the tariffs are in place and the speed producers can find new markets for vital crops like soybeans, according to Chris Hart, an Iowa State University economist. Another economist from the same school estimates the tariffs could cost Iowa’s pork producers approximately $360 million this year alone.

"This is not the news farmers wanted to see," Hart said.

And with every new development in the emerging trade war, concern mounts.

“Every week, the angst grows” as farmers move toward harvest, Iowa Gov. Kim Reynolds recently told the Des Moines Register. In the same story, Iowa Agriculture Secretary Mike Naig added: "People are patient to a point, but we're running out of time." John Heisdorffer, an Iowa soybean farmer and president of the American Soybean Association, echoed the same warning, as America’s soybean producers have been among the hardest hit by retaliatory tariffs from China.

“Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports,” Heisdorffer said. “The math is simple. You tax soybean exports at 25-percent, and you have serious damage to U.S. farmers.”

Like Hemesath, Benjamin Schmidt is already bracing for that damage. Schmidt and his father till about 2,500 acres of corn and soybean fields, including large parcels outside Iowa City. “China is our most important export market for soybeans,” he told the New York Times, “When your most important customer hits you with tariffs, there are going to be serious ramifications.”

He added, “My first reaction was this is going to hit us pretty hard.”

About 100 miles west in Polk County, Grant Kimberley, who with his father farms about 4,000 acres, noted that it won’t just be farming families like his that feel the sting of the escalating trade war. Every company that supports the state’s agricultural industry will feel the pain, too. "You can't make business decisions with this kind of uncertainty, Kimberly, it will be difficult not just for farmers, but ag lenders, equipment manufacturers, seed companies," said Kimberley, who also serves as director of market development for the Iowa Soybean Association. "It impacts everybody."

Noting that soybean prices have fallen about 20% since the start of the tit-for-tat tariff battle, Brad Davis, general manager for a agricultural cooperative in northern Iowa, noted that “in the best of years, that would be the entire profit... and this is not the best of years.” In an interview with the Des Moines Register, he pointed out that farmers must begin making decisions for next year – paying rent on farmland and buying seed, fertilizer, herbicides and other products they'll need to grow a crop.

“We’re looking at bold red ink right now,” he said. "This could be a really bad deal.”

He pointed out that farmers must begin making decisions for next year – paying rent on farmland and buying seed, fertilizer, herbicides and other products without knowing just how far the price of their crops might fall amid the escalating trade war. A lot of them, Davis added, “are losing confidence.”

Another one of those farmers losing confidence is Trent Thiele, who for the first time in two decades won’t be expanding his Howard County pig, corn, and soybean farm this year. It’s too risky right now, he told the local Gazette, in large part due to uncertainty spawning from the trade and tariff developments.

“We usually try to expand a little bit every year just so we aren’t going backward,” Thiele said. “We did not expand any at all this year due to where we’re at with the uncertainty.”

He’s not alone, according to Davis.

"Many farmers are just frozen,” he said. “They just don't know what to do."

To learn more, visit www.thewrongapproach.com to see a map showing how states are affected by tariffs from China, the European Union (EU), Mexico, and Canada.

About the Author

About the Author

J.D. Harrison
Executive Director, Strategic Communications

J.D. Harrison is the Executive Director for Strategic Communications at the U.S. Chamber of Commerce.