Trade Fight Threatens Farm Belt Businesses

Wall Street Journal ^ | July 2, 2018 | Jesse Newman

[reaganaut1]

The U.S. Farm Belt helped deliver Donald Trump to the White House, drawn to his promises to revive rural America and deregulate industry. Now, the president’s global trade offensive is threatening the livelihoods of many farmers.

Mounting trade disputes, spurred by U.S. threats to withdraw from the North American Free Trade Agreement and tariffs on billions of dollars’ worth of goods from key trading partners, have cut U.S. agricultural exports and sent commodity prices tumbling. Many farmers, who depend on shipments overseas for one-fifth of the goods they produce, say they are anxious, especially because they are already expecting bumper harvests or grappling with a dairy glut.

“We live and die by trade,” said Arkansas farmer Rusty Smith, who joined dozens of other farmers in a sunlit hotel ballroom in Grand Rapids, Mich., last week to discuss trade and agricultural commodities.

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For farmers like Mr. Smith, who grows corn and soybeans on 1,500 acres in Cotton Plant, Ark., the 16% decline in soybean prices alone translates into a nearly $100 per-acre drop in the value of his crop. “That’s $100,000 that has disappeared into thin air,” he said. “We were already in the red, and now it’s even worse.”

Researchers at the University of Illinois and Ohio State University estimate that over four years, a 25% tariff on U.S. soybean imports by Beijing would result in an average 87% decline in income for a midsize Illinois grain farm. The loss would pressure farmland prices, they say, prompting a more than $500,000 decline in the farm’s net worth by 2021.

Farmers for Free Trade, an advocacy group, recently rolled out its third advertisement warning about the harmful consequences of trade fights for farmers.

[redgolum]

That is easy. The margin on soy beans is much higher than veggies, and the market for veggies is much lower.

You can’t just start growing onions. The market for veggies is at capacity already.