Farmer’s Double Whammy: Tariffs And Now Coronavirus

Farmers have endured a lot of financial hardship the past two years after President Trump imposed tariffs on China. Subsidies implemented by his Administration helped, but they did not entirely make up for the farmer’s lost income. While the U.S. and China signed the Phase One deal, the coronavirus has kept it from being implemented. COVID-19’s impact has led to a leg down in commodity prices.

John Newton, the Farm Bureau’s Chief Economist, said, “the downward price movement in the commodity markets is making it all but impossible for farmers to be profitable. They’ve seen their returns diminish significantly, and I think longer-term really depends how long of a tail we have on this, when the U.S. economic recovery efforts get underway, and we get these restaurants and other parts of the foodservice sector up and running again.”

Newton added, “When it comes to where we end up on farm income, I think it depends on what the administrative aid packages look like, it depends on how the stimulus efforts to the wider economy help, and then I think it depends on ultimately what our crop growing conditions look like this year, and trade and demand for our products, how those continue to materialize as we move forward through the year.”

American’s can be complacent regarding where our food comes from. With farmer’s financial livelihood at stake, there are potentially major disruptions to the food supply if prices remain depressed.

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. The two of them accounted for 62% of the Field and Miscellaneous Crop category’s $135 billion value in 2019. It is also worthwhile to note that while the total value fell by $7.4 billion over two years, this was entirely due to soybeans decreasing by $10.1 billion.

Corn is seeing its lowest prices of the past three years. With it being farmer’s largest crop, unless prices rebound this will cause major financial and other problems (such as potentially higher suicide rates) for them.

  • 2017: $49.6 billion
  • 2019: $52.9 billion and 39% of U.S. Field and Miscellaneous Crop value

Soybean prices have not just been impacted by Trump’s tariffs but also by African swine fever leading Chinese farmers to cull a large number of pigs.

  • 2017: $41.3 billion
  • 2019: $31.2 billion and 23% of U.S. Field and Miscellaneous Crop value

And it is not just corn and soybeans that have seen a drop in prices. Newton said,” Ethanol prices were down significantly, as were many of the livestock and dairy products.” With prices declining in multiple farm categories any relief from the U.S. government will have to be substantial.”

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