Farmers all over the Midwest have been feeling the effects of a trade war, unstable market prices, and other economic catastrophes. As a consequence, many are outraged at the recent government bailouts meant to alleviate their fiscal woes. Raising livestock, corn and soybeans, Mark Legan can’t remember a time when the environment wasn’t at risk. He calls the assistance a “band-aid” solution that fails to address the root causes of the crisis — collapsing crop prices and rising production expenses.
The negative effects of the current trade war on agricultural markets have been severe. In May, China stopped its purchases of U.S. soybeans, sending prices crashing down to as low as $10 per bushel. This steep decline has left a great number of farmers unable to make ends meet with their production costs. Legan stresses that government assistance can offer short-term relief. It’s not going to address the day-to-day realities that farmers like him continue to experience.
Brad Smith, another fellow Farmer from northwest Illinois, has a somewhat more optimistic outlook on the matter. He recognizes that federal assistance may be necessary for the long-term viability of his business. Smith, for one, is loading up his grain storage bins as he waits for better prices in the spring. As for him personally, he’s cautiously optimistic about the relief that is coming.
“If you’re swimming in red ink, an infusion of cash helps stem the tide.” – Brad Smith
Legan and Smith don’t see eye to eye on the success of the bailouts. They both concur, outside forces have defined today’s economic reality. The ag community is understandably concerned about the long-term effects of localized financial assistance. Legan argues that government money fails to account for the increasing cost of equipment, land, and labor.
Moreover, the effects of tariffs go beyond agriculture. Megan Wyatt is the owner of Toad Hollow Toys, in Granite Bay, CA. She imports roughly 80% of her products from China, and the resulting tariffs are causing her store to lose money. Wyatt’s sentiment sums up a key concern at the heart of small business owners. Not only are they getting hit hard by the mounting financial pressure of extreme supplier inflation that has gone up as much as 40%.
“I’m not upset that other people are getting bailed out. I just wish that none of us were in this situation, and I think that we could very easily not be.” – Megan Wyatt
In Hudson, Wisconsin, craft brewer Justin Turbeest has had to make some hard choices from the economic pinch created by tariffs. In July, he closed his tap room and furloughed 20 employees. Turbeest articulates a sense of unfairness regarding the situation faced by many businesses and underscores the political nature of these economic challenges.
“On a personal level, of course it feels unfair. The position we’re in now is due not to normal economic factors. It’s political costs.” – Justin Turbeest
As President Trump’s administration proposes plans to send billions in support to farmers, particularly soybean growers, skepticism remains pervasive within the agricultural sector. Research conducted during Trump’s first term indicated that previous bailouts disproportionately benefited larger farms, raising questions about equity in assistance distribution.
So says Chris Barrett, an economics professor at Cornell University. He tells us that our farmers have been “clobbered” by profound changes in trade policy this year. These policies will affect a whole lot more than agriculture. Once in effect, they will create ripples across multiple sectors that rely on exports. Even the California Wine Institute recently announced an unexpected 30% drop in wine exports this year. At the same time, the Distilled Spirits Council zeroed in on a shocking 85% decrease in exports to Canada.
Legal’s concerns bring to the fore a rising uneasiness within the agriculture community about the durability of government actions. He contends that temporary financial assistance provides a short-term solution to long-term issues. It doesn’t address the real forces that drive price volatility and high costs of doing business.
For these farmers, the ground has been shifting underfoot as trade relations sour and government responses shift. Still, they remain optimistic for an outcome that provides permanent restoration and improvement over episodic emergency relief.