According to History.com, “The stock market crash of 1929 – considered the worst economic event in world history – began on Thursday, October 24, 1929”. We are coming up on the 90th anniversary of that calamity. Will 2019 be the 1929 for the American family farmers?
This morning the Arizona Daily Star announced that Trump’s tariff increase on $200 billion in Chinese imports takes effect. As they typically would say in North Dakota (my home state), the consequences for our economy could be better. North Dakota is one of the agricultural states negatively impacted by Trump’s trade war.
Already North Dakota soybean processors hit hard by tariffs as China cancels orders reported CNBC back in July.
… Simon Wilson, executive director of the North Dakota Trade Office. “We are in a trade war and the farmer and processors are taking the brunt” of it. … Wilson says that Chinese customers are sure to look to Canada and other growers to fill their needs for food-grade soybeans.
And now Trump is at it again with more tariffs on China. As the old saying goes, if you are in a hole, stop digging. But Trump is not one to heed common wisdom.
This last February The Huffington Post reported Trump Trade War Helps Push Farmers Into Record Number Of Bankruptcies. Dairy farmers were counting on China milk buyers before the trade war. “The problem is both nations have stubborn leaders,” an industry analyst said.
Hard times for farmers got tougher with President Donald Trump’s trade war. Now Midwestern farmers are filing the highest number of bankruptcies in a decade, according to a Wall Street Journal analysis of federal data.
And farmers aren’t hopeful about this year.
Twice as many farmers in Illinois, Indiana and Wisconsin declared bankruptcy last year compared to 2008, according to statistics from the 7th Circuit Court of Appeals, the Journal reported. Bankruptcies in states from North Dakota to Arkansas leaped 96 percent, according to figures from the 8th Circuit Court of Appeals.
Farmers are being battered by sinking commodity prices — and stiff tariffs from China and Mexico in retaliation for Trump’s tariffs on imports.
The new 11-nation Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) treaty last year slashed tariffs — but not for U.S. farmers since the Trump administration pulled out of negotiations. That drove customers to farmers and ranchers in competitive countries, like Australia, serving another dunning blow to American operations.
Farmers fear it will take years to rebuild those trading relationships.
Soybeans were also a major victim. “Agriculture prices live and die by exports. In all commodities, we’re heavily dependent on China, especially for soybeans,” Kevin Bernhardt, agribusiness professor at the University of Wisconsin in Platteville, told the Milwaukee Independent.
Government subsidies to farmers were up 18 percent last year over the previous year, due to the $4.7 billion in tariff aid and $1.6 billion in disaster payments for farmers impacted by hurricanes, floods and other disasters. But it wasn’t enough to stave off the end for some
And that’s just the beginning for those agricultural states (that mainly voted for Trump).
In March Forbes reported that 2019 Is The Year Farmers Will Feel The Pain From Trump’s Trade Wars (h/t AZBlueMeanie).
To understand the potential financial impact to American farmers it is important to know that corn and soybeans are the largest monetary crops in the U.S. per NASS, the U.S. Department of Agriculture’s National Agricultural Statistics Service. In 2017 the value of corn was $48.5 billion, with soybeans a close second at $41 billion. The next largest crop was hay, a distant third at $16.2 billion. For comparison, the value of apples grown in the U.S. was $4 billion and oranges was $2 billion.
Per the University of Illinois’ Agricultural & Consumer Economics Department forecast in September last year, corn could lose $68 per acre in 2019 (down from a loss of $2 per acre in 2018), and soybeans could fall even more, from a profit of $32 per acre to a loss of $92. While farmers seem to be rotating some acreage from soybeans to corn, 2019 could be a very tough year no matter what crop they plant.
Also see the AZBlueMeanie post, Trump’s trade war is devastating America’s farmers, which concludes:
Democrats running for president and for federal offices in farm country need to devise an agriculture commodity-trade policy that allows farmers to sell their product at prices high enough for their operations to be financially viable and to turn a small profit, and no longer need to be on federal farm subsidy assistance just to survive. If Democrats can offer a solution to the farm economy, they can win back those farm states that Republicans have taken for granted.