My maternal grandfather was, by his own admission, an ornery old cuss. He dropped out of school as a teenager, but he had the rural equivalent of street smarts. One of his observations that’s stuck with me for decades is that farmers are the first to get into an economic depression and the last to get out. If Grandpa were here, he’d add trade war to that statement.
Let’s look at the present situation. After the current administration proposed tariffs on Chinese steel and aluminum, the Chinese retaliated with potential tariffs on US agricultural products such as soybeans. The commodity price of soybeans fell immediately. While this may look like a short term adjustment to people used to stock trades, it will affect farmers for years. Most of them have already bought their seeds and planted, if not prepared the fields for this year’s crop. If the price continues to fall, farmers may lose money big time on their investment come harvest. They can’t easily plow under the crop in July and switch to planting arugula. This can have a ripple effect on other industries. Farmers may not be able to invest in new tractors and other equipment, or complete deferred maintenance on buildings. Banks could see increased loan defaults. The rural economy is already shaky, and could get worse if the trade war is declared.
Agriculture is the ultimate faith-based occupation. Farmers have faith that bad weather won’t ruin their crops and that they’ll get a fair price at harvest. Unfortunately, the actions of this administration are shattering the latter.
Recent Comments