By STAN MADDUX
WEST LAFAYETTE, Ind. — A dose of gloom has set in over the recent sharp rise in hope expressed by the nation’s farmers. The escalation of the trade war with China and growing doubt over the economic slump ending soon were among factors cited in the latest Purdue University/CME Group Ag Economy Barometer’s sharp drop in optimism.
The barometer’s overall score of 124 in August was down 29 points from the previous month. The score in July, though, was the highest in three years and 52 points above June – which was the lowest in nearly three years.
Such rollercoaster movement may reflect just how much farmers are pinning their hopes on quickly settling matters with China, judging by reports of trade deals being close one minute, then far apart the next. Sharp declines in most commodity prices during July and early August weighed heavily on the 400 farmers surveyed across the nation, according to the barometer report.
It also revealed that farmers expecting agriculture to benefit from the outcome of the U.S-China trade talks had dropped five points since March, to 72 percent. The percentage of farmers believing a quick resolution to the trade war likely also declined from 55 to 45.
Farmers’ sense of despair could have been greater without federal payments being received to compensate for losses from the trade war. The barometer for August shows 71 percent of those surveyed believe the 2019 Market Facilitation Program will either “completely or somewhat relieve” their concerns about the tariffs’ impact on farm income.
The remainder of farmers indicated the payments won’t make up for their losses.
Improving crop conditions following an extremely wet spring and a late-spring/early-summer crop price rally were cited in the report as major factors for the dramatic spike in July’s barometer reading.
Varying views on tactics
U.S Rep. Ron Kind (D-Wis.) said it’s time for Congress to take back some of its authority in trade negotiations, alleging President Trump has no apparent vision, strategy, or exit plan in his talks with China. He said all Trump seems to do is “double down,” leading to further retaliation from China as U.S farmers in record numbers file bankruptcy or teeter on the edge of doing so.
“Once you start losing these export markets, it’s awfully difficult to get it back,” Kind said.
He also said Trump is operating beyond the international legal framework in his trade dealings with China and other countries. Doing so allows those nations to respond with tariffs on U.S products, but they couldn’t retaliate if Congress kept trade talks within the legal boundaries.
Kind suggested building an international coalition of “like-minded” countries through the World Trade Organization, which has provisions to deal with accusations of cheating against other nations. Another better option, he said, is to out-compete China with special emphasis on science, technology, engineering, and math, in developing better products.
“That’s probably the best way we can beat China right now, but the President lacks any type of vision or agenda to do just that,” he said.
Republican U.S Sen. Mike Braun of Indiana supports Trump in the tough stance he’s taking with China. He said China has taken advantage of the United States overlooking its underhanded trade practices, especially under the Obama administration, and if not dealt with seriously now the task at hand will be even more challenging in the future.
Braun also said the U.S. has the upper hand in dealing with the financial impact of tariffs because China exports four times as many goods here than what it imports from the U.S.
“Tell me what other countries steal intellectual property, lure you in and do forced technology transfers, and produce these huge gluts, and then dump them on the market with, I think, the strategy of trying to take down strategic industries in other countries,” he said. “I think if we don’t do it now, it’ll be a much bigger job down the road.”
Braun said the payments from losses incurred from the trade war are helping farmers, who should consider raising hemp and other products with stronger markets right now, rather than soybeans. He also suggested farmers look for buyers who use soybeans for products other than food.
If the trade war ended right now, he said soybean prices would go up, but only slightly because of the worldwide glut and the time it takes for such a surplus to work its way down.
Braun, of Jasper, Ind., is the owner of a distribution and logistics business and has land he rents to farmers. He said tariffs alone are not strictly to blame for the hurt agriculture is feeling right now. Fewer corporations with more control over the price of seed, pesticide, and other supplies is among the drains on the bottom line of farmers.
“There are deeper, longer-term problems any of us involved in farming need to be worried about. These are issues that all industries, sectors of the economy, come across sooner or later,” Braun said.