President Donald Trump’s trade disputes with China, Mexico and Canada are already eroding the value of American agricultural production, with soybean growers alone expected to lose at least $3.2 billion during the next crop season.
But many farmers – including some whose incomes are plunging as exports stall – are sticking by the man they helped vote into office. They’d just like him to win the trade war quickly, before the fall harvest starts compounding the problem in a couple of months – when congressional midterm elections also will be heating up.
“President Trump is a businessman,” said John King III, 57, who raises soybeans, corn and rice with his father and nephew outside Helena, Arkansas, about 100 miles east of Little Rock. “He’s making a high-risk business decision that probably should have been made a long time ago. But it’s definitely a risk.”
Agriculture is the third-biggest U.S. export industry and a global juggernaut that’s generated six decades of trade surpluses. It’s also become a flash point in tariff battles with China, which bought $12 billion of soybeans last year and now is shifting to supplies from South America. Separate duties are affecting sales to Canada and Mexico, which are renegotiating the North American Free Trade Agreement with the U.S.
Trump’s trade policies already are changing the outlook for U.S. exports and farmer income, mostly because China, Mexico and Canada accounted for 43 percent of American farm exports last year.
The U.S. Department of Agriculture on Thursday predicted domestic soybean stockpiles will be 51 percent larger than expected a month earlier and cut its export forecast by 11 percent. The USDA also reduced its price forecast by 75 cents a bushel, citing reduced purchases by China, the top importer. That amounts to almost $3.2 billion in lost revenue based on the government’s use estimate.
While the situation could get worse if the trade war escalates, the president has urged patience.
“Always thinking about our farmers,” Trump said via tweet Wednesday from the North Atlantic Treaty Organization summit in Brussels. “Other countries’ trade barriers and tariffs have been destroying” U.S. farm businesses, he said. “I will open things up, better than ever before, but it can’t go too quickly. I am fighting for a level playing field for our farmers, and will win!”
To be sure, farmers were big winners until recently. High commodity prices led to record net income of $123.8 billion in 2013, before a global glut sent markets tumbling. This year’s projected net income of $59.5 billion would be the lowest since 2006, and the average farm business will see a 7 percent drop in 2018 to $339,300, compared with $437,400 in 2013, USDA data show. The country would still have an agricultural trade surplus of $21 billion.
Because the U.S. exports almost a third of its agricultural production, the industry is a logical target for foreign retaliation. It’s also a key group among voters in rural counties that gave Trump 60 percent of the vote in the 2016 election. That, in theory, gives trade rivals an opportunity to inflict damage on his political base.
This article provided by NewsEdge.