“Dark Path Ahead”: Why American Farmers Dread The Trade War

While automakers – and their dealerships – are getting most of the headlines this week, the effects of the escalating trade war (sorry, officially a trade tantrum, or trade discussion according to The White House) between Presidents Trump, Xi, and Putin are rippling across numerous US industries – directly, and indirectly.

Makers of whiskey, cheese, auto parts and more are contending with the global tariff battle – but it is US farmers that appear to be suffering the most.

Casey Guernsey, a spokesman for Americans for Farmers and Families, says in emailed statement that:

China dealt its latest blow to American agriculture today with threats of even more tariffs on the horizon,”

“Following Canada’s tariffs on U.S. products earlier this week, America’s farmers and families are staring down a dark path with no signs of relief in sight”

“We are counting on the administration and Congress to reach a resolution on responsible trade policies — before we’re forced to shut down our operations for good”

And he was not alone, American farm groups, companies and officials reacted as China’s tariffs on agricultural products went into effect on Friday.

Iowa Senator Joni Ernst appeared on CBS’ “Face The Nation” warning that”

…farmers, ranchers are “always the first to be retaliated against” in these types of “trade negotiations,” adding that farmers have been put in “very vulnerable position.”

Iowa Secretary of Agriculture Mike Naig says in statement on website:

“The continued escalation of trade tensions with China is having a real impact on Iowa farmers and businesses,”

“We have seen a significant drop in prices for both crops and livestock and this is creating even more stress and uncertainty during what was already a difficult time for the ag economy

“There are real issues in our trade relationship with China that need to be addressed, but Iowa agriculture cannot continue to bear the brunt of the retaliation from our trading partners”

 Jim Heimerl, president of the National Pork Producers Council and a hog farmer from Johnstown, Ohio, says in statement:

Tariffs from China, Mexico mean “40 percent of total American pork exports now are under retaliatory tariffs, threatening the livelihoods of thousands of U.S. pig farmers.”

“We now face large financial losses and contraction because of escalating trade disputes. That means less income for pork producers and, ultimately, some of them going out of business.

“We need these trade disputes to end”

U.S. Wheat Associates says in statement on its website:

“Unable to accept the risk of escalating import prices, Chinese customers stopped making new purchases of U.S. wheat last March,”

“The exchange of punitive tariffs between Washington and Beijing today represents the next phase of what could be a long and difficult struggle that will likely inflict more pain before we reach an unknown resolution”

“Farmers are eager to move past this dispute and start trading wheat and other agricultural products again soon”

John Heisdorffer, a soybean grower from Keota, Iowa, and president of the American Soybean Association, says in statement on website:

“Soybeans are the top agriculture export for the United States, and China is the top market for purchasing those exports,”

“The math is simple. You tax soybean exports at 25 percent, and you have serious damage to U.S. farmers”

Cheese producers have had to discount their products to keep customers; some have had orders put on hold. Companies will struggle to find customers quickly for the extra cheese, given high reserves in storage and international competition, producers and analysts said.

“We have seen large drops in our dairy product sales prices at all levels,” said Catherine de Ronde, economist for the Agri-Mark Inc. dairy cooperative. “It will create a significant backup of dairy products.”

“We are going to see more significant impacts to inventory,” said Tom Bailey, executive director of dairy for Rabobank, a food and agricultural lender. “We will struggle to move this product into other markets.”

All of which fits perfectly with the fact that US stocks soared as the trade tariffs struck home

The impact on agricultural community comes at a particularly painful time as the suicide rate among American farmers is already soaring.

Agriculture

Finances are probably the most pressing reason: Since 2013, farm income has been declining steadily according to the US Department of Agriculture. This year, the average farm is expected to earn 35% less than what it earned in 2013.

“Think about trying to live today on the income you had 15 years ago.” That’s how agriculture expert Chris Hurt describes the plight facing U.S. farmers today.

Farmers are at the mercy of extreme weather like hurricanes that threaten crops to agricultural commodity prices that have fallen below breakeven production levels. And prices will likely only continue to fall as America’s trading partners slap tariffs on American agricultural products.

 

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Author: Tyler Durden

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