Economy

American Farms Are Finally Great Again

JM Ashby
Written by JM Ashby

Trump's greater trade war with our closest trading partners, not just China, is continuing to take a toll on American farmers and average farm income has dropped to the lowest level since 2004 according to Politico.

Some farm industry experts now fear conditions could become nearly as bad as they were in the 1980s if Trump's various machinations are not resolved this year.

“In the ’80s, the interest rates got out of control — 13 percent, 14 percent operating loans. Right now we’re at 5, 6 percent,” said Illinois Farm Bureau board member Randy Poskin, a corn and soybean grower who started farming in the early 1980s.

But there are other parallels. Farm debt is nearing the record levels set in the ‘80s, accounting for inflation, according to USDA statistics, and farm expenses are rising. Fertilizer and equipment have become costlier, due partly to Trump’s tariffs on steel, aluminum and certain chemicals made in China.

“It’s similar in that input costs have really gotten a big percentage of our profits,” Poskin said at the farmers’ conference. “Prices are not enough to cover sometimes if you have poor yields.”

As Politico points out, those rising "input costs" are a direct result of Trump's trade war, but so are the low commodity prices.

The price of basic commodities like pork or soy were already low, but they're even lower now because Trump's trade war has closed the door to the foreign markets where they were sold including the biggest consumer market in the world, China.

If farmers can't sell their products to China or other markets they've developed access to, that means they have to sell it somewhere else for less money just to clear their inventory.

Firesale prices on meat were a welcome sight in 2018 if you're someone like me who cannot necessarily spend a lot on food, but that did not come without a hidden cost that we'll all pay for in one way or another.

What happens with China at the end of this month when Trump's tariffs are set to increase from 10 to 25 percent could literally mean the difference between having an average economy or a recession.

  • mnpollio

    This is all bad news, but there is a part of me that thinks many of the farmers have it coming. They voted overwhelmingly for Trump and a huge majority of them still claim that they would vote for him again now that they are feeling the Trump crunch and must see what is on the horizon. And the only reason that I can fathom is that he still hates the same people that they hate, so they are willing to take one for the team in order to cheerlead his wrath on others. Ignorance and foolishness of that caliber do need some kind of penalizing and the only thing these people seem to understand is when it hits them in the wallet. Unfortunately, those that did not vote for this nightmare get to be taken down right along with those that did.

  • muselet

    If we’re very lucky (yes, I know, I’m using that phrase a lot lately), the US will still have a farm economy once the dust lof the Trump administration clears.

    –alopecia