I'm a farmer who wants fair trade, but Trump's tariffs shake future of US agriculture
−− U.S. agriculture enjoys a trade surplus, making it an easy target in trade disputes. But tit-for-tat tariffs make it harder to plan for the long term.
Oct. 5, 2018
Farmer in field near Albany, New York on May 18, 2018 (Photo: Angela Major/The Janesville Gazette via AP)
By Krista Swanson
Trade and tariffs. These words stir emotions and elicit reaction, but the realities are more complex than the debate, and they impact consumers as well as farmers.
My family and I farm in Illinois, where farmers like us send about 30 percent of the corn and 60 percent of the soybeans we grow to other countries. Nationally, more than 20 percent of agricultural products are exported. With America exporting more farm and ranch products than we import, the U.S. economy has had a trade surplus in agriculture for decades.
In addition to farming, I have an off-farm job as a policy research specialist in the Agriculture & Consumer Economics Department at the University of Illinois. My perspective on agriculture as a whole is expanded through this role. With agriculture at the center of the escalating trade conflict, and historically a prime target in trade disputes, my colleagues and I have been analyzing how trade issues impact farm finances and management.
Trade wars are risky for farms
Farmers have little control over price. We choose the day we sell and the outlet we sell to. We can use market options. Ultimately, our buyers tell us what they are willing to pay based on prices on the board of trade. Because we can’t raise our sale prices to improve our income, we must make adjustments on the expense side by finding all possible ways to conserve cash, postpone investments, and reduce costs.
Expectations for big corn and soybean crops and surplus supplies, combined with the escalating trade conflict, are weighing down crop prices. Soybean prices approached a 10-year low this month.
Although the influence of U.S. trade policy cannot be completely isolated from other economic factors, the timing of trade conflicts has coincided with drops in market prices for many U.S. agricultural products.
My colleagues and I estimate that the difference between selling an entire soybean crop at the highest price in 2018, compared with the lowest price, could mean the difference between a modest net profit and a net loss this year. Farmers typically sell portions of their crop throughout the year, and end up with an average price between the high and low points.
Right now, farmers are facing inflation-adjusted incomes at the lowest level since 2009, and the outlook for 2019 is considerably worse. The U.S. Department of Agriculture is stepping in to help this year, but concerns are more long-term. Farmers may have an acceptable average price for 2018 but head into 2019 not knowing whether there will be a higher price to offset the current, below break-even prices.
Like our trade officials, I want fair trade that fits the needs of our country as a whole. I support the notion that some trade policies need to be reviewed and updated — with a well-planned and effective approach. But I also question whether using tit-for-tat tariffs will be effective and the potentially dire consequences of this strategy.
There are signs these tariffs could work, which would be great, but whether they do or don’t, farmers are concerned this will bring long-term damage to our international reputation.
Resolve trade disputes, don't disrupt markets
Tariffs hurt our standing as the most reliable supplier to the world market, especially high-quality farm and ranch goods. The agriculture industry is positioned to increase exports, further reducing the trade deficit. What’s more, restoring trade partnerships will build global relationships and strengthen our reputation as a reliable supplier.
Those of us in agriculture, and other international industries, need free trade, open markets and positive global relationships. Just as important, Americans need access to necessary and affordable products produced by our trading partners.
Like many farm families, my husband and I hope our children will continue our family’s five-generation farming legacy. Unfortunately, dropping commodity prices and a shrinking international market could jeopardize that for farm families across the country.
It’s time for the Trump administration to focus on restoring relationships with our international trading partners. Going forward, we must find a way to address trade disputes without disrupting markets. Gaining and maintaining positive, fair trade relations is important to my family and to all consumers who reap the benefits of a global market.