Trade war and sagging prices push U.S. family farmers to leave the field

Recently, I wrote of the significant increase in farmer bankruptcies in several states. Already in a fragile state, the trade wars have pushed an increasing number of family farmers into bankruptcy.

In a Reuters article entitled “Trade war and sagging prices push U.S. family farmers to leave the field,” bankruptcy is not the only path forward for these farmers.

The article begins “Shuffing across his frozen fields, farmer Jim Taphorn hunched his shoulders against the wind and squinted at the auctioneer standing next to his tractors. After a fifth harvest with low grain prices, made worse last fall by the U.S.-China trade war, the 68-year-old and his family were calling it quits. Farming also was taking a physical toll on him, he said; he’d suffered a heart attack 15 months before.

Across the Midwest, growing numbers of grain farmers are choosing to shed their machinery and find renters for their land, all to stem the financial strain on their families, a dozen leading farm-equipment auction houses told Reuters. As these older grain farmers are retiring, fewer younger people are lining up to replace them.”

This a key reason tariffs and trade wars need to be well thought out and avoided whenever possible. Tariffs usually cast a wider net on the lives of people and business, harming far more than those intended for them to help. These farmers are one audience that is harmed.

The additional troubling aspect is the slow and lengthy impact tariffs and trade wars have on sales and supply chains. These chains are built on relationships. I often quote a CFO who echoes what I observed in 30 plus years of business that CFOs like predictable costs maybe even more than lower costs. Tariffs and trade wars upset that paradigm.

We must help our farmers, especially the family farmers. We also must make more thoughtful decisions with input from people in the know. Why? People are impacted, so we need to make sure we understand the scatter-fire of pulling the trigger on a change.

9 thoughts on “Trade war and sagging prices push U.S. family farmers to leave the field

  1. Note to Readers: Farming is a hard job. Unfortunately, it is even harder for smaller farmers. These large farming corporations can spread costs, weather uncertainty and invest more easily. So, placing additional burdens on farmers is a bridge too far for many.

  2. Given the current trend, we are looking at all agricultural products being produced by big agricultural corporations … those who have no concern for the environment, and little concern for the consumer or the quality of their product, but only for their bottom line. Unfortunately, Trump has little comprehension of how the economy works, or what effects his tariffs would have, and doesn’t really care. Tariffs almost always hurt the little guy, but never the big corporations, for they just pass their extra costs along to us, the consumers. It is sad to think the day of the individual farmer may be over, similar to the day of the small bookstores having largely gone by the wayside. There are times when “bigger” isn’t necessarily better. Good post.

    • Thanks Jill. The US President cares less about people and more about the perception of him. Sadly, these farmers are expendable pawns to him. Keith

      • Jill, very true. Even his Federal Reserve nominee Stephen Moore was surprised by his own announced withdrawal. His withdrawal letter arrived after Trump’s announcement and after Moore saying everything was still on go. With Trump’s disdain for vetting, he needlessly embarasses candidates. They are mere pawns. Keith

  3. Yes, CFOs like predictable costs maybe even more than lower costs.  Predictability highlights the difference between genuinely probusiness policies and the currently fashionable reliance on favors to cronies, gimmicks, and regulatory rollbacks.  The following quote from the article by D. Browning in the Winter 2019 issue of *Solutions* (from the Environmental Defense Fund) is so pertinent that I hope U won’t mind its length.  The article opposes DJT’s rollback of mercury standards:
    «
    In fact, the electric utilities that run America’s coal-burning power plants oppose any change in mercury standards.

    “Industry wants regulatory certainty,” says Emily Fisher of the … Edison Electric Institute.  “Whether or not we 100 percent agreed with every element of the rule, when rules are final, we comply with them.&nbsp: Having the rug pulled out from under us after we have made significant investments does not feel like regulatory certainty.”
    »

    • Well said. The President is oblivious to the impact of his mercurial temperament and decisions. The best example is his absolutely horrible travel ban which was pulled after two days – no vetting, no communication, no staging. This is how CFOs must feel. Tell them the rules and get out of the way. Keith

  4. Note to Readers: Several of us have discussed this before, but the President does not portray an understanding of how tariffs work. It is the importers who pay the tariffs, not China. The question is how much they pass along to the consumer.

    After this weekend’s tariff foray, Warren Buffett noted the whole world loses in a trade war with China. His second in command noted while Trump has some justification for some targeted tariffs, a trade war would be “massively stupid.” Note, these are not the words of Democrat legislators. They are not fake news. They come from one of the more successful companies in the world, whose advice is usually sought.

  5. Note to Readers: In Politico today, an article on the flight of Dept. of Agriculture economists is highlighted. Here is the opening paragraph:

    “Economists in the Agriculture Department’s research branch say the Trump administration is retaliating against them for publishing reports that shed negative light on White House policies, spurring an exodus that included six of them quitting the department on a single day in late April.”

    This story speaks volumes. I am 100% positive the President will call this “fake news,” the definition of which is any news critical of the President. Again, we need to demand answers from Congress and the White House.

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