Farmers Feeling Effects of Trade War, Farmer Bailout
President Trump just signed a $12 billion bailout
MOORHEAD, Minn. — President Trump’s tariffs on international trade from countries like Mexico and China and the European Union are hitting American farmers hard.
His $12 billion farmer bailout is what many agriculture experts say is a band aid.
“It’s a short–term bandage where we may be bleeding long in agriculture. In the long run, it really doesn’t help our global competitiveness,” said David Kohl, emeritus professor of agriculture economics at Virginia Tech.
Sometimes insufficient producers are subsidized, meaning farmers who don’t focus on a marketing or business plan could be hit the hardest.
While that’s just one of the long–term symptoms, farmers are already feeling other domino effects.
Mike Clemens owns Clemens Farms in Wimbledon.
He says the trade dispute is cutting off relationships in markets farmers have worked to build for 20 years within a matter of a few months.
“Now we have to start developing new markets,” Clemens said.
Which millennial farmers will have to take over, but Clemens isn’t so sure the future is bright.
“They’ve never experienced this so this is going to be new territory for them so they’re relying on wisdom from me and wisdom from economists that have been around a long time,” Clemens said. “For them, going into next year and meeting with their bankers is going to be a very difficult situation when they can’t cashflow anything.”
Especially when the price of crops is already falling. Clemens grows corn which is down $0.50 and soybeans are down $2 a bushel.
“That’s been pretty devastating. This is the time of the year when we should be rallying our corn markets, our weather patterns, predictions and stock supplies,” Clemens said. “All of a sudden, now we have surpluses of both these commodities because our markets are in the uncertain range right now.”
“Two dollars a bushel doesn’t seem like a lot but if farmers are averaging 50 bushels an acre, you’re deducting $100 an acre,” said Lynn Paulson, senior VP of Agriculture Business Development at Bell Bank. “If they grow 1,000 acres of soybeans, that’s $100,000. The number that starts out pretty small gets pretty big, pretty fast.”
That’s where the farmer bailout is supposed to help with the loss of funds, which Kohl expects to be funded by reserves from the Department of Agriculture.
Since it’s only meant to be a short term solution though, he has some advice for farmers as they try to gain new markets.
“It’s going to be a very, very splintered type of market place and so we’ve got to beat innovation. We’ve got to be aligning to the consumer needs, not only here in the United States but around the world. Producers in Canada, producers in Mexico, producers in Brazil are definitely looking at these trends,” Kohl said.
Agriculture experts recommend farmers meet with their lenders to develop a business plan moving forward, if they don’t already have one.