It’s clear that the most prominent aspect of Donald Trump’s high stakes casino game – known to us as his trade war with China, is the economic impact it is having and continues to have on American farmers. We know that Trump’s history with casinos was a colossal failure, so Trump’s gambit on trade, not only looks like a bad bet, but he might also be gambling his presidency on it.
To illustrate the reality of the “successful Trade battle” Trump refers to in the tweet, falsely claiming that the U.S. is “taking in $Billions” – Bloomberg News reported in April 2019 that farm incomes fell the most in three years, largely tied to the trade war. One might reasonably ask if that is what winning looks like, you’d hate to see failure.
National Compass has been keeping a close eye on the tariffs during the last two years, because it has both economic and political touch points.
At the outset, farmers in the U.S., based on Trump’s blustery banter on the subject, stood behind his aggressive posture on tariffs. It’s mostly been true for the first two and a half years of his presidency and has continued into the spring of this year.
A farmer in Mississippi, Richard Fontenot, despite having to leave 1,000 acres of soy unharvested – a loss of $300,000 – remained hopeful in January, saying, “He’s costing me money today, but I think he’s going to make me money in the future.”
Fontenot thinks the lost markets for his crops will reappear miraculously when Trump emerges from the tariff battles with the winning hand. Maybe he sees pigs growing wings in the near future as well.
Trump has kept such men energized with pep talks laden with bold and imaginary promises, such as this one to a crowd at the American Farm Bureau Federation’s annual meeting in January:
“We’re doing trade deals that are going to get you so much business, you’re not even going to believe it. Your problem will be: What do we do? We need more acreage immediately. We got to plant.”
After over two years of witnessing extravagant and unfounded claims from Trump – on all variety of his administration’s policies that subsequently fail to materialize, observers wonder how it is possible for the president to sustain the credulous optimism of farmers, especially after going on 20 months of growing financial losses.
Farmers willingly led to the cliff’s edge with logical fallacies
Part of the self-deception – perhaps much of it can be credited to a willful suspension of disbelief. Farmers in the rural Midwest and South, are socially conservative and found Trump’s trash talk regarding minorities, race and liberals to be refreshingly candid, propelling him to electoral wins in every Midwest state except Minnesota, Illinois and Colorado – and each Southern state except Virginia.
That Trump was going to humble China was icing on the cake. Trump was a “successful businessman”, they were led to believe, and as such, how could he possibly fail to “win” as he repeatedly claims he always does?
They bought into the myth of Trump’s master negotiating skills and the notion that he is capable of mental processes approximating “3-D Chess” – or some say, “4-D Chess”, which, by the way, doesn’t exist. But do the experts of the game of Chess, three dimensional or otherwise, believe Trump is intellectually suited for such abstractions? No, they don’t – not even close.
Most farmers would still like to have both Trump’s ugly politics and continued prosperity if that could be accomplished. Last month, a producer survey conducted by the Purdue Center for Commercial Agriculture found that 78 percent of the respondents still believe Trump’s trade war will ultimately benefit them.
The confidence that Trump would prevail on trade, (some would call it wishful thinking), has carried through the summer months and as recently as July, Trump’s backing in a survey conducted by the Farm Journal, showed 79 percent still siding with him. Yet, last month, another poll of 1,100 farmers showed a drop of 8 points.
Despite their quixotic faith in Trump, the farm belt economy is taking a beating from Trump’s insistence on playing a deadly game of chicken with the Chinese. According to the U.S. Department of Agriculture, Chinese imports of American agricultural goods have dropped over 50% from $19.5 to $9.2 billion.
They WILL replace us
The impact is not merely on Corn and Soy. Growers are losing contracts on numerous other Ag exports. Softening of trade markets are relegating Montana wheat farmers to break even status at best. While Chinese consumers purchase more dairy products than ever, they aren’t buying them from American ranchers. The conflict over tariffs between the two countries has cut dairy exports by over 50 percent.
Chad Bown, trade specialist at the Peterson Institute for International Economics told NPR Weekend Edition host, Scott Simon that:
“The concern for American dairy farmers is, if they lose access to the Chinese market and Chinese consumers start to buy this stuff from New Zealand or Canada instead, they might like it. And they might stick with them even if the trade war is ever resolved. You know, they might not come back to the American farmers.”
Echoing Bown’s assessment is American Farm Bureau Federation economist Veronica Nigh. “China’s punitive tariffs on U.S. soybean imports have prompted pig farmers on the mainland to find alternative sources of feed. It’s not clear whether they’ll ever resume purchases on the same scale, even if Beijing commits to buying more U.S. soybeans as part of a trade deal. “
U.S. farmers’ loss is our trade competitors’ gain. The S&P Global reported that Argentine and Brazilian Soybean exports are projected to increase over the next marketing year, while U.S. sales are expected to fall. A USDA report shows Canadian shipments of wheat to China have grown over 400% in two years.
Moreover, it is reported that China itself, is in the process of expanding domestic production of Soy in order not only to limit the need to import the crop, but to bolster food security in the nation of nearly 1.4 billion citizens.
Roger Johnson, president of the National Farmers’ Union told KFGO 790AM’s Joel Heitkamp in Fargo, North Dakota that, “A win for farmers would be to get the markets back but listen, and I’ll tell you, I don’t think we get China back. I think China is a lost market for agriculture and there’s just too much damage done there.”
Johnson added that Trump has “offended the leaders of pretty much every ally we have on Earth, and America’s reputation in markets around the world has taken a long-lasting hit. It’s going to take much different behavior from future presidents in order to repair this damage.”
Apple growers in the Northwest are feeling the sting of Trump’s literal food fight – not only with China, but India. Washington state’s apple exports have fallen almost 30 percent since last spring. “We’ve been through these kinds of things before, but not with as many markets,” says Mark Powers, president of the Northwest Horticultural Council. “It’s not like we can divert the millions of cartons that are going to India to Costa Rica”, Powers added.
Trump is hitting growers below the farm belt and the pain has them doubled up
There are growing indications that the patience of folks in the American Ag community is reaching a breaking point and it has everything to do with their finances. The Farm Bureau reports that “the delinquency rates for commercial agricultural loans in both the real estate and non-real estate lending sectors are at a six-year high and … were above the historical average of 2.1%.”
There are about $184 billion in agricultural loans held by 1,315 farm banks, according to the Federal Deposit Insurance Corporation (FDIC). As ag revenue and profits decrease for their borrowers, these banks will have no alternative but to bring more pressure to bear on growers that are delinquent.
As Vern Jantzen, a farmer in Plymouth, Nebraska puts it, “The president says we’re patriots because we’re taking a hit for the team. But that doesn’t work for the banker. He’s more interested in me making a payment than whether I’m a patriot.”
Pushed to the brink by Trump trade war
The stress and anxiety is more than some growers can bear and accordingly, there is a substantial uptick in the number who are either suicidal or at risk to become so.
Says Patty Edelburg, vice president of the Washington-based National Farmers Union, representing about 200,000 U.S. farms, “It has been insane. We’ve had a lot of farmers—a lot more bankruptcies going on, a lot more farmer suicides. These things are highlighting many of the news stories in our local news.”
Mike Rosmann, a seminary student, who opted for a career in clinical psychology, deals with growers at risk of suicide and their families. He attributes the depression and suicidal impulses to the economic reality of agriculture – the impacts of climate (droughts, flooding), volatility in market prices – but since Trump took office, more significantly, the piling on effect of the trade war.
Rosmann writes in the New Republic:
“Farmers are becoming dismayed about the tariffs. He knew that he needed to take care of people who voted for him, and the farm population by and large voted for him. But Trump administration policies fly in the face of what is needed for a long-term solution. I don’t understand why farmers support him, or why many people support him, because of what he’s doing to actually hurt them.”
More agricultural leaders are speaking out with more frequency. There is Brian Thalmann – president of the Minnesota Corn Growers Association, who pointedly rebuked Trump’s Agricultural Secretary Sonny Purdue, telling him in a meeting that, “We’re not starting to do great again. Things are going downhill and downhill quickly.”
Thalmann said he could no longer support the president as he did in 2016. “At some point we have to quit playing games and get back to the table and figure this out. There’s no certainty to any of this.”
“This trade thing is what’s brought on by the president and it’s really frustrating because he took away all of our markets.”
– Bob Kuylen, farmer and Vice President of the North Dakota Farmers’ Union
Agricultural leaders in the farm belt are starting to tear a page out of Donald Trump’s playbook and using his own bullying tactics to get his attention, threatening a mutiny in 2020 if Trump doesn’t put the losses and uncertainty that hang over them to a halt.
Blake Hurst, a soybean farmer and president of the Missouri Farm Bureau said recently that “many of my neighbors, particularly younger farmers with a little bit of a more leveraged balance sheet, a lot of that patience is beginning to go away. So I think there’s going to be some challenges for the Trump administration come election time if we don’t see a turnaround in these trade markets.”
Hurst also alluded to the possibility that China might filibuster the trade negotiations until Trump is turned out of office by voters. “China is following the polls just like the rest of us and (they) clearly think there’s a chance there will be a change and that the next administration will be easier to deal with.”
This interview, with Christopher Gibbs, a corn and soy farmer in Shelby and Logan counties in Ohio, is indicative of a growing sentiment in America:
So far we’ve heard from soy farmers, but corn growers are up in arms as well. Trump is getting hit with fusillades from growers in Nebraska – a traditionally solid Red state and one that Trump did well with in 2016. “Many of our corn farmers have stood with Trump for a long time, but that may soon change,” said Dan Nerud, a Dorchester farmer and president of the 2,400-member Nebraska Corn Growers Association.
In a joint statement, both the growers association and the Nebraska Corn Board, told the White House, “As harvest approaches after an extremely difficult year for agriculture, many Nebraska corn farmers are outraged by the Trump administration’s lack of support for the American farmer.” “All we’re getting is lip service,” says David Bruntz, farmer and chairman of the Nebraska Corn Board.
The major bone of contention with the Trump administration – aside from the loss of export markets and the corresponding plunge in commodity prices, is the president having signed off on the Environmental Protection Agency’s relaxed standards on energy producers – allowing 31 oil refineries to cut back on ethanol production, which according to the USDA, comprises about 40% of the domestic market for corn.
Pardon me for asking, but isn’t this just another of those “burdensome regulations” that Trump has gotten so much praise from conservatives for eliminating?
As you can see in the graph below, Trump’s trade war and Chinese retaliation on it, is affecting the markets for and prices of a diversity of crops, not just Soy.
Farmers who still stand by Trump at this late hour as he demolishes their business, are sadly analogous to residents who refuse to evacuate when a raging inferno or a tropical storm is headed straight towards their homes.
Despite them, there are signs of the Trump iceberg breaking – and who knows what will be left of it by next November. If the trend continues, Trump will not only lose the swing states he captured in 2016, but several other states that are the only path he has to 270 electoral votes will escape from his leaky bucket.
Recent polling already indicates that trend in a number of states where Trump’s vulnerability on the tariffs and their consequent damage, may scuttle his chances for a second term. Trump’s approval in Wisconsin, one of the states hardest hit by the loss of dairy income, has retreated from +3, to -14. In Michigan, he’s down 18 points to -11, where the Michigan Soybean Growers Association is decrying the trade war because China is their largest customer and apple sales are getting hit there as well.
- In Florida, where Citrus growers are feeling the pain from their products winding up on China’s retaliatory tariff lists, Trump is in free fall, from a previous 22 point lead in approval, to a minus 1 – well out of the range of margin of error.
- In Pennsylvania, where ag is the state’s leading industry and China is their second largest export customer, farmers are reeling from the drop in soy from $10.30, to $7 and change – Trump’s numbers are also reeling, down 18 points.
Any combination of two of the above 4 states going in the Democrat nominees’ column, can threaten to close Trump’s remaining lanes to victory. Any 3 of them will shut them down completely. He’s also behind in Iowa, Arizona, Ohio and North Carolina – all states he won in 2016. In Kansas, his reversal of fortunes, has him down 18 points from his previous approvals, clinging precariously, to a 1 point margin – and likewise he’s now only within the margin of error in Missouri.
Keep in mind, what we’ve just outlined are not election polls against a hypothetical Democrat, but shifts in approval ratings. In that category (election surveys), including those from Fox News, Trump is losing to the top tier of Democrat nominees in all of those key battleground states of Pennsylvania, Michigan and Wisconsin. Also of note, Trump’s national approval rating has never hit 50 percent and remains in the low 40s.
His campaign is seeing the same thing in their own internal polling. Amidst all of these alarm bells ringing for the GOP and Trump, it should be noted that not all of his looming election problems are strictly accountable to the trade issue, or specifically the aspect of it having to do with agriculture. Even so, trade as it affects growers and ranchers is a substantial part of the overall mix, because drops in farm income, have a collateral effect on the broad economy of those states in terms of the workers and businesses farming supports.
One last burr in the saddle of farmers in this trade debacle is the indignity of those “Market Facilitation Payments” – a clever euphemism for subsidies ($28 billion) being paid to growers whose income has plummeted from the tariffs. These subsidies chap their backsides because they destroy one of the cherished narratives that was in currency with them – the notion that urban dwellers were the predominant beneficiaries of “socialism”. Thanks to Trump, they can no longer hang their MAGA caps on that. That is inexcusable.