Bret Davis voted for Donald Trump in 2016, as did many of his fellow farmers in central Ohio. But as a brewing Chinese trade war begins to threaten U.S. exports, Gordon fears his fifth-generation farm will suffer.
The farm, where Davis and his stepson grow 1,300 acres of soybeans, corn and wheat for Ritz crackers, may not withstand the long-term drop in crop prices a trade war could bring, Davis said. And although he supports President Trump’s goal of making foreign trade more “balanced,” he’s increasingly concerned that Trump’s methods could harm the rural Americans who helped put him in office.
Soybean-producing counties went for Trump by a margin of more than 12 percent, according to a Washington Post analysis. And yet on Wednesday, Davis and thousands of other farmers woke to the news that China had proposed retaliatory tariffs on soybeans, corn and other row crops as part of a trade war the president started.
Farmers say they haven’t given up on Trump. But they’re increasingly alarmed by his approach.
“The way he’s going about this is not the way I would’ve done it,” Davis said. “My way would’ve been talking about it first, rather than just [imposing tariffs]. But Mr. Trump’s way to deal with anything is to throw a diversion into a room and then sit down and talk about it.
“It’s worked with some things,” Davis added.
Like most large-scale soybean farms in the United States, Davis’s business relies heavily on foreign markets. China buys 60 percent of all U.S. soybean exports to feed a growing fleet of hogs, fish and chicken.
The high demand has made soybeans a bright spot of profitability for farmers at a time when many other crop prices are down. But Trump’s aggressive tariffs against Chinese goods, meant to protect U.S. intellectual property and manufacturing interests, have incited retaliatory actions that farmers say threaten their profits.
On April 1, China announced plans to enact tariffs on 128 U.S. products, including pork, in response to proposed American tariffs on steel and aluminum. Days later, Trump proposed tariffs on an additional $50 billion of Chinese goods, citing intellectual property theft — and prompting the Chinese to again up the ante with proposed 25 percent tariffs on soybeans and other U.S. products.
In the hours after China floated a levy on soybeans, futures prices dropped 4 percent, or 40 cents, to $9.97 a bushel. That price is approaching the break-even point on many farms, said Arlan Suderman, chief commodities economist at INTL FCStone.
Long term, the prospects are even worse. Although soybean prices rallied Thursday morning, they were still down more than 20 cents. And even if prices stabilize, tariffs will erode farmers’ Chinese market share, said Wallace Tyner, a Purdue University economist who has modeled the likely effect of the tariffs. Within three to five years, Tyner’s model shows, Brazil and Argentina would replace the United States as China’s main source of soybeans. That could force U.S. farmers to switch to less lucrative crops, such as corn or wheat.
Dave Walton, who tends soybeans, corn and livestock in eastern Iowa, is not sure his farm could take the added stress.
“If this turns into a longer-term thing, we’re going to see friends and neighbors go out of business,” he said. “If this stretches into years, we ourselves won’t be able to sustain it.”
Like Gordon, Walton voted for Trump. Polling commissioned by the trade site Agri-Pulse suggests that most farmers did: In a March survey of 750 farmers, largely concentrated in the Plain states and the Midwest, 67 percent said they voted for Trump and 45 percent said they would do so again.
But Walton is scrutinizing the president’s next steps. His farm — 800 acres of corn and soybeans, plus hay, beef and sheep — has been in his family for 118 years, and has faced tough times of late. Like many other farmers, he’s coming off several consecutive seasons of falling crop prices, and had hoped that a record drought in Argentina would boost income this year, but the tariffs could cancel those gains.
Walton said he understands why the United States got tough on trade with China: There’s a small steel mill in Wilton, Iowa, and he’s glad to hear that the workers there say sanctions have helped them. He just wants the tit-for-tat retaliations to stop and an actual deal negotiated.
“Right now, soybean growers in Iowa and across the nation are encouraging the administration to engage positively with China,” Walton said.
And if that doesn’t happen, he added: “Iowa leads the nation in many things. The presidential election is one of them.”
On Bill Gordon’s farm in southwest Minnesota, the anxieties are similar. Gordon farms 2,000 acres of corn and soybeans in a county that supported Trump by nearly a 2-to-1 ratio. Corn has not been profitable, Gordon said; soybeans were his “shining star.” But the 40-cent price drop Wednesday effectively wiped out his gains, and he’ll face a break-even season if they don’t recover.
“The administration needs to understand that the livelihoods of 300,000 soybean farmers are important,” said Gordon, who also voted for Trump. “Not that the livelihoods of steelworkers aren’t. But how can we justify helping steelworkers at the expense of so many farms?”
How this unease plays out politically remains to be seen. During an appearance in Ohio Wednesday, Agriculture Secretary Perdue sought to reassure farmers, calling their anxiety “legitimate.”
“I talked to the President as recently as last night,” Perdue said. “And he said, ‘Sonny, you can assure your farmers out there that we’re not going to allow them to be the casualties if this trade dispute escalates. We’re going to take care of our American farmers. You can tell them that directly.'”
Farm groups seem unimpressed. That same day, the American Soybean Association — which has contributed hundreds of thousands of dollars to Republicans through its political action committee, according to the Center for Responsive Politics — issued a harshly worded statement criticizing the administration for failing to “address China in a constructive manner.”
Meanwhile, Farmers for Free Trade, a nonpartisan coalition, has begun running ads on TV shows that the president is known to watch, urging the administration to reconsider its policy on China and featuring farmers who supported Trump.
Democrats have also taken advantage of the discontent. In Iowa, a liberal candidate running for state Senate tweeted a chart of plummeting soybean prices juxtaposed with a tweet from Trump saying that “we are not in a trade war with China.”
“It’s no secret that a lot of rural America voted for President Trump,” said Kristin Duncanson, a Minnesota soybean farmer who says she sees growing anxiety among her neighbors and friends. “A lot of them were looking for change. I don’t think this is the change they anticipated.”
As for Davis, the Ohio farmer, he’s waiting and watching the president — for now. He believes the high-stakes brinkmanship is a way to get China to the negotiating table, where Trump will advocate for rural Americans, as he promised on the campaign trail.
That’s Davis’s current hope, at least. Farmers have plenty of practice with optimism.
“We take our whole income from the year before, put it into seed and fertilizer, throw it in the dirt and hope we have a crop next year so we can survive,” he said. “If you’re not optimistic, you can’t be a farmer. You wouldn’t make it.”
This story has been updated to include a statement from Agriculture Secretary Sonny Perdue.
On – 05 Apr, 2018 By Caitlin Dewey