As the fall harvest season approaches on nearly 87,000 Iowa farms, no sector of the U.S. economy is in more turmoil, whipsawed by trade and immigration policies and the weather.
Grain prices have plummeted for a fifth consecutive year. Spring flooding foiled planting along the Iowa-Nebraska border. A shortage of workers has caused problems in the fields and packing plants in the West and Southwest.
Bankruptcies are trending up, including 18 the past year in Iowa. Congress just passed a bipartisan bill raising the Chapter 12 (farmers and fishermen) bankruptcy debt ceiling from $4.2 million to $10 million. Otherwise, Chapter 11 doesn’t have the same protections for keeping a farm and assets.
Deere & Co., which employs nearly 5,400 in the Cedar Valley, including almost 1,300 assembling farm tractors, recently cut its profit forecast for the second time this year because export concerns are prompting farmers to put off purchases.
For Iowa farmers — the leading U.S. pork and corn producers and No. 2 in soybeans — each glimmer of hope is quickly extinguished.
As President Donald Trump’s most committed constituency, farmers are in the crosshairs for retaliation over tariffs that have alienated allies (Canada, Mexico and the European Union) and adversaries (China).
A possible lessening in the Trump-China tensions seemed in the offing in midsummer when Beijing made its largest grain and pork purchase since February. By the end of August, Trump threatened higher
tariffs, and China backed
“They want to trade with us and we want to trade with them, but there are restrictions on how we can get it done. China is a very open market for us if we could work with the imports and exports. They’re willing to trade with us, but they’re not allowed to,” said Plainfield farmer Rick Juchems, part of the Iowa Soybean Association delegation to Asia this summer.
“They like our beans. Our beans are better beans, but they’re getting them from a different place,” he said. Brazil and Argentina are filling the void.
Juchems noted the largest soybean processor in China was running at 45% capacity, because African swine fever has killed almost 27% of its herd. Soybeans are a primary hog feed.
The Wall Street Journal reported on July 25 U.S. soybean exports to China were down 63.2% year-to-year and 70.9% against two years ago. Overall, they’re down nearly 25%.
In May, farmers cheered as Trump announced the Environmental Protection Agency approved summer availability of E15 fuel — gasoline blended with 15 percent ethanol — that could increase demand for corn by 100 to 200 million barrels in the short term and 2 billion long term.
Nearly all gasoline has a 10% ethanol blend. Iowa corn produces 30% of all ethanol.
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Then came another whiplash.
In August, the EPA granted waivers to 31 oil refineries that would have been required to blend 1.4 billion gallons of ethanol and biodiesel into gasoline. Waivers meant to ease the burdens on small refineries were granted to the likes of ExxonMobil and Chevron.
The Trump administration now has approved 85 waivers compared with 10 during the Obama administration.
Corn demand will be reduced by 1.4 billion bushels. Ethanol plants are at risk. Fifteen already have closed, including one in Iowa.
Hope bloomed last spring when Trump renegotiated the North American Free Trade Agreement, putting his own imprint on the U.S.-Mexico-Canada Agreement.
After imposing tariffs on Canadian and Mexican steel and aluminum, the ensuing retaliation cost U.S. farmers dearly. Pork exports to Mexico were down 13% in volume and 29% in dollar value through the first quarter.
Rather than working with House Democrats to secure USMCA changes on their objections to labor and drug provisions, Trump pressured for all-or-nothing passage. It’s gone nowhere.
He did get a deal on border security cooperation with Mexico after threatening to impose staggered 5 percent tariff increases.
He tweeted, Mexico would buy “large quantities of agricultural product from our great patriot farmers!” But it was news to Mexico.
The administration is reportedly planning to minimize the ethanol fallout, as it did trade pain with a $12 billion farm subsidy package last year and $16 billion this year. Those outlays can’t be sustained.
Farmers, though, have kept the faith. A Farm Journal survey of 1,100 in July found 79 percent backed Trump, falling to 71 percent in August (a critical difference in Iowa, which he won by 9 percent).
They agree with the president that China needs to play by the rules. So do we. Where we disagree is how to achieve it. Trump is going it alone while threatening friends. We prefer free trade and
Our long-term concern is a generation of farmers may be dissuaded from pursuing a critical profession because political forces are negating their best efforts to succeed, including losing markets after taking years to make inroads.