Trump Walks Ag’s High Wire

Trump is a president on a high wire—balancing above a field of agricultural land mines. ( MGN and Lindsey Benne )

“Trump kicked a hornet’s nest and now I’m feeling the pain, but the truth is somebody had to do it. I wish somebody would have done it 30 years ago,” says Iowa farmer Kevin Pope, 40. “One thing is for sure, I’ve never seen a president get this close to farming in my lifetime.”

With only two years worn from Donald Trump’s White House heels, the Manhattan billionaire’s waltz with the American farmer has shifted to a foxtrot, jumped to a blistering quickstep and now skirts the edge of a raucous trade mosh pit.

Stakes are high. The elimination of U.S. involvement in the Trans-Pacific Partnership in 2017 was one of the first steps. Then, a year ago, Trump initiated a series of tariffs on multiple countries, most notably China. When China lashed back with counter-tariffs against U.S. goods (including soybeans, pork, dairy, grain sorghum and wheat), Trump and Chinese President Xi Jinping began playing pingpong over the abyss, and U.S. farmers could only watch and grimace.

Today, Trump is a president on a high wire—balancing above a field of agricultural land mines. As of press time, the trade war with China was ongoing, and the U.S. had signed but not ratified the free-trade agreement with Mexico and Canada (USMCA, essentially the new North American Free Trade Agreement). The White House and Congress continued their standoff over funding to build a border wall, separating the U.S. from Mexico, which led to a partial government shutdown just before Christmas. With USDA offices closed, some Market Facilitation Program payments and loan checks for farmers were delayed, as was the release of the January USDA reports.

Trump’s act on the high wire will continue with discussions on expanding E15 for summer months and redefining Waters of the U.S. (WOTUS).   

“We’ll see key farm bill implementations dealing with farm programs, SNAP, conservation and crop insurance,” adds Randy Russell, president and partner of The Russell Group, an agricultural and food consulting firm. “I look for Congress to take on an infrastructure bill in 2019 that’ll cost several hundred billion dollars. Trump knows we need to reinvest in infrastructure now.”

Such ongoing volatility makes it critical for farmers to keep their focus on trade agreements, immigration policies and fed decisions, as well as the effects they have on economic growth for agriculture and the U.S. At the end of the day, the stakes are very high for ag and the outcome is very uncertain, say ag economists Brent Gloy and David Widmar in a Jan. 7 post on their Agricultural Economic Insights blog.

Time will tell. Despite what’s at risk, Trump’s overall farmer support remains strong, says Chip Flory, host of “AgriTalk” and “AgriTalk After the Bell” radio programs and Farm Journal Economist. “The situation is very tough and there’s no way around that, but growers don’t farm in the moment; they keep their eyes on the coming decade or 20 years,” he says.

“Trump has the backing of a big majority of farmers, despite contrary portrayals in the media,” Flory adds.

Yet, many farmers disapprove of the policy decisions Trump has made and are voicing their concerns. In a Farm Journal Pulse survey conducted in early December, we asked farmers: “How favorable do you consider current U.S. policies to be for agriculture and rural America?” Of the 640 who responded, 49% rated current U.S. policies for agriculture as mostly or very unfavorable, 24% were neutral and 27% viewed the current policy environment as mostly or very favorable.

“The RIN [renewable identification number] waivers seem to be, at least in my opinion, the most grievous fault that exists,” explains Victor Miller, 72, a farmer in Oelwein, Iowa. “I don’t know if Trump knew this or not, but it has cost about 2 billion bushels of corn grind, which really impacts carryout and finally the price all of us receive. Going forward, things don’t look a great deal better, so that’s Trump’s fault. What it comes down to is we should never become dependent upon government to secure our livelihoods. On the flip side, maybe it’s time ethanol stood on its own in the marketplace, but then so should oil.”

If he were grading Trump’s performance for the past two years, Miller says he’d give Trump a “B” on his report card.

Something had to be done. In the rich, black soils around north-central Iowa’s Cerro Gordo County, Pope grows 3,000 acres of corn and soybeans on gently rolling ground. A fourth-generation farmer, Pope latched onto Trump early.

“Trump started making positive changes from the get-go, doing things no one else would—and then came the soybean tariffs,” Pope says. “Take a 3' view from above, and it looks like he kicked us square in the gut, but keep going up and take a 1,000' view of the whole field to see long-term. Something had to be done and he stepped up to the plate; now our heads are spinning.

“Really, we should have seen the writing on the wall a year ago with so many soybeans planted,” Pope adds. “There’s more going on than China; a slow buildup in carryover and a rotten weather year in so many places created the perfect storm.”

Terry Wellmann, 43, grows 1,000 acres of corn and soybeans in south-central Minnesota, just outside of Hanska. The Trump tariffs were a bitter chaser to an already difficult crop season. Wellmann pre-sold some of his 2018 soybeans for $10 per bushel, and tucked roughly two-thirds in storage.

“With the tariff money, I’ll do well with the soybeans I’ve already sold, but the rest is waiting on the market, and that could be painful,” he says. “I’m willing to give Trump plenty of slack.”

“Farmers are generally no-bull**** people, which matches the attitude of Trump,” Wellmann continues. “We all have to operate solo as lone businessmen, and that naturally makes us opposed to groupthink. Along comes a president without a filter who speaks whatever crosses his mind or his thumbs on Twitter. I think that’s refreshing for many farmers.”

However, farmers are not a monolith of belief, and third-generation producer Jacob Goodman, 28, doesn’t shy away from voicing dissent regarding Trump. He grows corn, soybeans and wheat on 3,500 acres of flat, river-bottom ground in Fulton County, Ky.

Pointing toward the Carter administration’s grain embargo against the Soviet Union in 1980, and the Reagan administration’s high interest rates, Goodman is alarmed over the direction of the farm economy: “What it took two administrations to do, Trump has done in two years. Granted, things aren’t exactly the same, but I’m worried because I see the same themes.”

Will exports to China ever rebuild? Even if the ag commodity pipeline reopens with China, Goodman fears permanent damage and incursion from foreign competitors.

“We’ll have to adapt, and the after-effects may be worse. Several farmers in my area declared bankruptcy even before the tariffs. But now? A lot of guys are taking a huge hit,” he says.

“I realize tariffs could work,” Goodman adds, “but when you’ve already got a severely low farming income year coming down the barrel, Trump could have waited until after harvest and given us time to prepare.”

Eyebrows raised, farm groups responded to the tariffs with clear statements of concern: “ … a 25% tariff on U.S. soybeans into China will have a devastating effect on every soybean farmer in America,” says John Heisdorffer, a Keota, Iowa, farmer and president of the American Soybean Association.

Farmers don’t expect roses from Trump’s realpolitik negotiations with China, but neither will they accept a batch of thorns and thistles.

In December, the National Pork Producers Council called for an end to the trade dispute that cost U.S. pork producers an estimated $1 billion in 2018, according to Iowa State University economist Dermot Hayes.

“ … we have been the tip of the spear in trade talks. It’s tiresome to me to be there and watch efforts of checkoff dollars and commodity organizations get totally nullified,” says Brad Nelson, an Albert Lea, Minn., farmer. “When agriculture is a pawn, you understand why there are the ‘hated’ government payments. Only the next three or four years will tell if it was the right move or if it sets off another big expansion of South American acres.”

Even if they resume today, Purdue University ag economist Wally Tyner says he’s doubtful U.S. exports can get back to pre-tariff levels. For example, the U.S. could permanently lose 9 million acres of soybeans to Brazil if trade issues with China persist, he says.

From now until March 1, the timeline the Trump administration has given for the two sides to work through issues, is critical. If something isn’t resolved by then, additional tariffs could be put into place—and irreversible damage done to the $12 billion market for U.S. soybeans and $1.1 billion market for dairy, just to name two industries.

“We need to negotiate a long-term settlement that deals with the major issues—theft of intellectual property rights and the like—and gets rid of the tariffs,” Tyner says. “That’s what we can hope for the longer term.”

It’s gut-check time. As 2019 unfolds, the debt-to-asset ratio for many farmers is in the 20s, far past a caution flag, warns Pro Farmer Washington policy analyst Jim Wiesemeyer. “This will be a gut-check year for farmers,” he says. “Kicking China had to be done now or when would you? But was the escalation of significant tariffs the wrong approach?”

Farmers have granted Trump a long runway to land an improved trade deal with China, Russell contends. “Trump is at a pivotal moment with China, a nation that’s been mistreating us on a number of fronts as a trade partner,” he says.

Russell highlights an “untold story” that parallels most headlines. “It’s not often written, but there is another part of Trump’s legacy that will benefit farmers and landowners. He’s had more federal judges approved in his first two years than any president in modern history,” he says. “That includes two SCOTUS [Supreme Court] judges, with a possibility of a third before the end of the first term. That’s 85-plus federal judges in two years; Obama placed 40 in the same period.”

At the same time, 41 people in high-level positions in Trump’s administration have left or been fired in the past 14 months, according to The New York Times. The most recent, Secretary of Defense Jim Mattis, resigned in protest of Trump’s decision to withdraw American forces from Syria and his rejection of international alliances.

Trump has bought time to handle long-term trade issues by wading into waters where past presidents declined to go, according to Flory. “Deregulation and a change in WOTUS, progress with North and South Korea, tax reform and USMCA have all given him points with farmers,” he says.

“I think a framework for an agreement with China already has an endpoint, but requires negotiations that allow both Trump and Xi to appear strong,” Flory continues. “The best way for Trump to reach that endpoint is to not move the goalposts and not change the end zone.”

Crude plays well. A cursory look at the presidents of the modern era begs glaring questions: Why has a businessman from the Big Apple resonated with U.S. producers? Why has a real estate mogul put the agriculture industry on the front burner?

The common appellations tagged to Trump as crude, brash and uncouth might gain traction as criticisms in polite society, but in rural America, particularly with farming’s results-driven, high-pressure environment, such descriptions mean little. Pared down, Trump lacks tone, but tone is often of no consequence in crop and livestock production.

Wrap Bill Clinton, Barack Obama and both Bush presidents into one political ball, and their significance to agriculture pales beside Trump’s two years in office, Flory emphasizes. “With past presidents I wondered if they cared at all about agriculture,” he says. “This guy does care and when foreign reps come to bargain, but don’t put ag on the table, Trump’s advisers tell them to stick it up their a**. Sure, that’s crude, but farmers recognize and appreciate that stance.”

Rules don’t apply. The comparison between Trump and past presidents relative to agriculture involvement shows a chasm of separation, according to Wiesemeyer.

“It’s not even a little bit close,” he notes. “We’re watching a president that’s breaking, for good and bad, all the rules. He’s going high-risk and high-reward. If he gets victories it’ll be a reward solidifying his support from agriculture and rural America. If it goes the other way, it’ll provide opportunity for the Democrats to win back some farm support.”

Russell, who served as chief of staff for Secretary of Agriculture John Block during the Ronald Reagan administration, says Trump has no precedent. “He’s engaged with ag like no other president in my lifetime. Name the issue in agriculture and he’s somehow personally involved,” Russell says.

Why? The answer is found in Trump’s past, he says: “Read or watch old interviews. He’s a businessman who knows consistent, strong economic growth is important. He believes in rural America, agriculture and the values they represent.”

In an age when roughly 45% of tax filers give a goose egg to the IRS each year, farmers shoulder multiple tax burdens and a capricious market, despite few safety nets. Only 2% of the U.S. population is directly involved in agriculture, and the road to modern farming is littered with fallen growers who couldn’t outrun incessant Darwinian danger: Manage the farm gate successfully or go under the auctioneer’s gavel.

Despite the “crazy” time in agriculture, according to Pope, an overwhelming majority of farmers back Trump. “We all want to grow monster crops and see our fields explode, but we’ve got to have a home for the grain,” he says. “Trump has made great changes, but no doubt, there’s work to be done.”

Goodman urges an end to the trade war: “We’ve got to have things settled on the tariffs, and we’ve got to fix the RFS waivers hurting the corn market. I’ll flat-out say it—when I speak out against Trump in the ag community, people make assumptions about my support of the president. No, it’s my attempt to make our elected officials keep Trump’s feet to the coals.

“I don’t want to see Trump fail; if he fails we all fail. We’re in a fight, and he’s our boxer,” Goodman continues. “We want him to finish this out and do it right.”

Leverage for change. By necessity, political wrangling is typically a waiting game, Wellmann says. He points to a feast-or-famine truth: Farmers are the ultimate bargaining chip.

“I’m very willing to give Trump plenty of leeway, even though it hurts,” he says. “This is a nasty process no matter what angle you approach it. I don’t want to pay the penalty for a political game where everything gets pissed away, and I don’t believe it will because, as farmers, we’re in Trump’s mix like no president’s before.”

As 2019 kicks off Trump’s third year in the oval office, farmers remain true to their nature—patient, hopeful and wary.

 
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