[Analytics] US farmers swamped by trade war tariffs and unprecedented rains

Heavy weather is killing spring plantings, compounded by loss of Chinese market. The financial strain of low crop prices, aggravated by the poor weather and politics, may be escalating farm-related suicides. Daniel Bases specially for the South China Morning Post.

Minnesota proudly proclaims the state is the land of 10,000 lakes.

“I bet you there are 100,000 lakes in Minnesota right now. It’s just crazy,” says fourth-generation farmer Bill Gordon.

Gordon, much like farmers all across America, has missed most of the spring planting season on his 2,000 acres in Worthington, Minnesota, because of record-breaking snow, rain and flooding that continues to inundate prime farmland and threatens the next harvest and more.

The financial and mental strain on American farmers, brought on by decade-low prices for crops – the result of years of oversupply due to strong harvests – is being exacerbated by the weather and politics.

So even if farmers get the crop to harvest, they fear the trade war now raging between the US and China will rob them of a critical market. Beijing has sharply cut its purchases of US soybeans, which over the last decade has averaged, annually, US$11.3 billion in sales, according to US government data.

In 2018, soybean exports to China totalled US$3.1 billion, a drop of nearly 75 per cent from 2017, the US data shows.

America’s farmers are used to the uncertainty of the weather, but say right now they need two things: sunshine to plant their crops and a trade deal with China to sell what they grow.

In the last year they have had neither.

The record-breaking wet conditions have led to a record-low amount of acres planted with corn and soybeans, according to the US Department of Agriculture (USDA).

In the nine-state Midwest region – prime corn and soybean farmland – the 12 months through the end of May is the wettest on record, going back to 1895, according to the Midwestern Regional Climate Centre.

And the trade talks that began last year, which produced a temporary truce between Washington and Beijing in December, ground to a halt in May, and China’s retaliatory actions against US farm produce resumed.

Add up these outside factors, and it is not hard to understand why farmers say the financial and mental strains are escalating, and why new evidence suggests increases in farm-related suicides.

“There is a growing need to address suicide prevention in the [Minnesota] farming community, based upon preliminary data,” said Melissa Heinen, an epidemiologist at the Minnesota Department of Health.

The majority of the US farm belt states – though not Minnesota – voted solidly Republican red in 2016, and helped put Donald Trump in the White House. Winning those states in 2020 against the backdrop of farms falling into the financial ruin because of low commodity prices, bad weather and no trade agreements is not the kind of red Trump needs to hold onto his job.

Gordon, who grows soybeans and corn, thinks Beijing is using American farmers as a bargaining chip.
“China is using us to get to the president. We are 150,000 to 200,000 people in a country of over 300 million. It’s a tactic,” Gordon said, adding: “Maybe we have a little bit more voice than the average 100,000 people, but the administration will do what they want. They don’t need farmers’ votes to get elected.”

The trade war began in earnest last July, when Trump attached tariffs to US$50 billion in Chinese exports. China put agriculture in its tariffs cross hairs early on, targeting US soybeans and pork as part of its retaliation. That response helped to collapse well-established markets for American farmers.

In the first four months of this year, even though there was a tariffs truce between the two nations before trade talks broke down completely in May, US soybean exports to China slid even further – by as much as US$718 million, or 27.6 per cent – compared to the same period in 2018.

“Certainly it will affect us financially, no doubt about it,” said Brian Fruechte, a 36-year-old farmer in the small town of Lake Benton, Minnesota, population 683. But he and his wife Kim, who have been farming for 10 years, are quick to note that for the moment the weather is hitting them harder than the trade disputes.

“In the end it comes down to, are we doing the right things for the right reasons with our trade talks with China? And if we are, then people are willing to endure some short-term pain,” Fruechte said.
“If we are trying to do what’s right and moving in that direction, we’ll hang in there. We’ll be all right.”

The couple joined other farmers at the Lunch Box Cafe in Lake Benton to talk with the South China Morning Post about the trade discussions, the weather and their long-term impact on American farming.

Historic rains

The view along the highways of Buffalo Ridge, southwest Minnesota’s flat windswept prairie, should be mile after mile of tilled rich black soil, sprouting with corn and soybeans this time of year. Instead, fields look like lakes, some with new rivers cutting through where those crops should have been planted months ago.

As of June 2, plantings of corn and soybeans were the worst on record, according to Dennis Todey, director of the USDA Midwest Climate Hub in Ames, Iowa, surpassing previous records set in 1995.

“It’s bad. It’s very bad. It is a planting season I don’t think anyone can remember because in 1995 there was at least a dry spell in May that allowed for more planting later on,” Todey said.

Bob Worth, another Lake Benton farmer who works 2,300 acres of corn and soybeans with his son Jon, said, “Normally we’ll be sitting here just dreaming of putting the seeds in the ground and watching them grow and watch it become a bountiful harvest.

“And now this year we know we’re not going to have a bountiful harvest. Probably not even a harvest.”
Since farmers like Worth can’t get their grains in the ground, the negative impact will be felt across the agricultural economy. Dairy, beef, swine and poultry farms will be unable to feed their animals; truckers won’t have anything to haul to market; fuel providers will lack corn-based ethanol to mix into petrol; seasonal farm hands won’t find work.

The fallout from the trade war and lack of planting will also reach the farm equipment sector, since new purchases will give way to repairing old machinery.

Mark Wiering, the service manager at Kibble Equipment in Tyler, eight miles east of Lake Benton, explained that a farmer spends between US$6,000 and US$9,000 a year to service a combine harvester that reaps, threshes and winnows crops all at once.

“It should help the service department, although the weather at the moment is keeping it flat because there won’t be much of a harvest,” said Wiering.

If the harvest is limited, food companies will either do without or import grains at higher cost. For now, consumers have not felt the inflation sting. The latest data in April showed the US Consumer Price Index rose 0.3 per cent in April, less than economists had forecast and consistent with tepid inflation readings for the past year.

Government intervention

China’s turn toward South American grain markets has frustrated US farm associations, which are seeing millions of dollars spent over decades to build relationships squandered, fallout from the trade dispute that, at least from the US side, has centred on non-farm technology and intellectual property.

“This is a market that was built with farm dollars. So to see it disappear overnight, it is really disappointing,” Joe Smentek, executive director of the Minnesota Soybean Growers Association, said.

On May 23, US Agriculture Secretary Sonny Perdue announced a US$16 billion package of farm aid payments, to help offset losses endured by the farmers trapped by the trade war. The package followed an earlier US$12 billion in aid the Trump administration dispensed last year through the new Market Facilitation Programme (MFP), which provides some compensation for losses incurred as a result of the trade disputes.

“We’re a retaliatory victim, for lack of a better word, in this fight,” Smentek said. “The farmers want trade, not aid.”

Still, many farmers remain supportive of Trump’s stance against China and see him as at least standing up on their behalf.

“China has been bullying us around,” Jon Worth said as he moved through their tidy barnyard tending to idle equipment while a cool rain once again blanketed the farm.

At the Lunch Box, Jodi Weber, an agriculture instructor at a local college, and her husband Joe, a farmer, said they believe that without the federal aid, many farms would already be under water financially.

“I don’t need to like him, as long as he is doing his job,” said Jodi, who said she stood behind Trump because she regards the trade negotiations as a big business chess game, and thinks he’s a good businessman.

Joe thought Trump was trying to support farmers with the MFP. “I have a little bit of an issue with his remarks. I think he could be a little bit more diplomatic, but I think he has to stand firm,” he said.
“We need China, and China needs us,” Joe added.

Angry skies, dark thoughts

Wet conditions combined with cooler temperatures means there hasn’t been a stretch of five to seven days for fields to dry out enough for planting. Farmers risk damaging their fields if they bring heavy equipment to “mud in” the planting – and the equipment will likely get stranded in the process.

And whatever plantings have taken place are at risk of being drown out by the steady rain, which is different from past years when there were at least breaks in the rain to get seeds into the ground.

Data from the Midwestern Regional Climate Centre shows the prime April-May planting season in 2019 as the fourth wettest in the last 125 years of record-keeping. The last five years have included the four wettest April-May periods on record.

“This is something I’ve never seen before in my life. I’m 71 years old and I’ve talked to guys close to 100 years old, and they’ve never seen anything like it. We haven’t gotten anything planted,” said Ron Bunjer, a national director at the American Soybean Association.

As the reality of a poor planting season sinks in, prices for soy and corn have risen. Even so, this isn’t going to benefit the farmer who doesn’t have anything to sell now, and perhaps will have nothing to sell anytime soon.

“Mother Nature is doing an economic correction … the problem with a nationwide shortage of grain is that you help the price, but when does it get to the American farmer? High prices with no crop? I don’t get any more money,” said Gordon, who spoke in the living room of the house he built next to his farm for his wife and four children, one of whom he hopes will become his family’s fifth-generation farmer.

Gordon managed to get his soybeans in the ground since they can cope with a shorter growing season, but failed to plant the corn, leaving roughly half of his fields empty.

But even as prices may rise from the recent lows, having little or no crop to sell means the farmer missing out on the rebound. And there are still the high prices for seed, fertiliser, weed killers, extra labour and equipment that did not drop.

And as that pressure builds, Bob Worth pleads with his fellow farmers not to stay silent, not to be ashamed of running into financial trouble. It happens to everyone, he said. Perhaps most importantly, in rural communities, it is most important for neighbours to speak up when they see others withdrawing.
“I had to have help myself. I’ve gone through depression, numerous times,” Worth said.

In the last three years three of his friends have committed suicide. “And it is all financial,” he said, adding that farmers “like to keep everything to ourselves.

“So they keep it to themselves, and sometimes it takes their life.”

According to Heinen of the state health department, Minnesota is examining how suicides are being classified within rural communities.

“The way we define farmer from a public health standpoint is not really capturing what is happening in our farm/rural community world,” she said.

Looking at preliminary data, the number of suicides by people in the state’s farm families rose from 34 in 2014 to 41 in 2015 to 49 in 2016, the latest data available.

As the water levels rise and the grain prices have slumped, psychologist Ted Matthews said he was getting more phone calls from stressed-out farmers at his office in Hutchinson, Minnesota.

Supported with financing from the state of Minnesota, Matthews says his volume of calls from farmers around the country is up over the last three years. They are more stressed than ever because prices for their products have plunged while costs to do business have risen. And now the trade war with China has ratcheted up the pressure.

“The focus, oftentimes, is they don’t know what to do. They are in emotional situations where they are distraught, they have no one to talk to and in rural America, there is not a lot of help out there,” he said, adding the tariffs meant they cannot sell their product and therefore, much like the weather, they have no control.

“Farmers can handle a lot of stress. They have to. Farming is a very stressful occupation.

“But you can only handle so much stress.”