PostEverything | Perspective
October 24, 2017 at 6:00 AM
Rick Hammond said he wasn’t worried. In more than 30 years of working his wife’s fifth-generation farm in York County, Neb., and steadily acquiring more acres to leave to their kids, he had seen it all: the high inflation and rapid land devaluation of 1980s, the consolidation of farms that followed those bankruptcies, the steady depopulation of rural populations ever since. But he wasn’t worried about a repeat of history. Despite falling grain prices, stalled land values and mounting farm debt, his family was more than equipped to weather a bad year. “Now, if we see sub-four-dollar corn for two more years,” Hammond continued, “yeah, you’ll see some people going broke.”
That was the fall of 2014. Today, corn prices remain perilously low. At just $3.50 per bushel, it now costs more to grow corn than a farmer can sell it for. Soybeans, which surged in planted acres when corn prices went into free fall, are only marginally better. Now below $10 per bushel, beans are trading at less than two-thirds of their price of just a few years ago. To get through these lean times, farmers have been taking out more and more loans. U.S. Department of Agriculture statistics indicate that while farm income has been cut nearly in half in the past four years, farm debt has increased by more than a quarter — with projections that it could surpass $390 billion in 2017, the highest level since the farm crisis in the 1980s.
And yet, President Trump — whom many farmers voted for specifically because of plunging income — may be about to make things far worse.
With those unsustainable debts and dwindling profit margins in mind, more than 75 percent of rural voters in the Farm Belt cast their ballots for Trump in the last presidential election. They cheered Trump’s promise to support the Renewable Fuel Standard (which props up the ethanol industry), his pledge to eliminate estate taxes on inherited farmland and roll back regulations on farm runoff, and, most of all, they liked his tough talk on trade policy. Roughly one-third of their combined corn and soybean harvest is shipped overseas, so farmers said they were heartened by Trump’s reputation as a hard-nosed negotiator, a businessman renowned for his skill at the art of the deal, who could strong-arm trading partners into paying higher prices for American commodity grains. Instead, Trump is threatening to withdraw entirely from the North American Free Trade Agreement (NAFTA) — a move that farm lobbying organizations, market analysts and trade experts universally agree would be disastrous for farmers.
Some officials in Mexico and pundits here have suggested that Trump’s anti-NAFTA rhetoric may be just a bargaining strategy, but in the past nine months, he has shown himself to be more interested in being a dealbreaker than a dealmaker. He withdrew from the Trans-Pacific Partnership despite vocal objection from the American Farm Bureau Federation, which estimated that the TPP would have raised net farm income by $4.4 billion per year and added more than 40,000 jobs, mostly in rural areas. Next, Trump threatened to cancel the U.S.-Korea Free Trade Agreement, calling it “a horrible deal.” This prompted the American Soybean Association to issue a strongly worded denunciation of Trump’s “misguided” plan, warning that it could have “disastrous consequences for the nation’s soybean farmers.” Trump has since relented, saying the United States could remain in the pact with a total overhaul. “Even the threat to withdraw from this or any trade agreement is a dangerous course of action,” ASA President Ron Moore said.
Now, at Trump’s behest, U.S. Trade Representative Robert E. Lighthizer has assumed a hard line in talks over reconfiguring NAFTA, including demands that the United States get new protections for the auto industry. In the past 25 years, NAFTA has earned a reputation as a job-killer for U.S. car manufacturing, and Rust Belt voters rallied around Trump’s isolationist saber-rattling, in hopes that redrafting — or simply scrapping — NAFTA would force the manufacturing sector to reinvest in American factories and workers. Instead, Canada and Mexico have seen Trump administration demands as unreasonable — requiring that all cars made outside the United States have at least 50 percent American-made parts, for example. Both countries have balked at such overreaching requirements, and discussions that were supposed to wrap up by year’s end will now extend into the spring.
Such uncertainty is depressing demand for U.S. grains, as our NAFTA partners hedge against the agreement’s collapse by seeking out other sources — a shift that is already proving harmful to farmers. In 2016, Mexico accounted for nearly 12 percent of all American agricultural exports, including roughly a quarter of all corn and soybean exports. In response to Trump’s rhetoric about forcing Mexico to pay for a border wall, the Mexican Senate considered a resolution to ban all imports of U.S. corn. Even after that resolution stalled, Mexico has begun establishing new bilateral trade agreements, especially with South American countries, to be prepared for the possibility of Trump canceling NAFTA. As a result, Mexican orders for corn were down by 6 percent this summer, and orders of soybeans were down by 15 percent.
All of this comes amid an uncertain harvest. Heavy rains on the Great Plains have made it difficult for the USDA to project the overall size of the critical corn and soybean crops. As the fields dry and the harvest comes in, every additional bushel will push prices lower — forcing farmers to take out still more loans and to rely ever more on federal subsidies. Trump, in the meantime, has proposed slashing or even eliminating these lifesaving supports — and other federal programs that have been critical to rural communities.
The White House budget recommends making billions of dollars in cuts to rural development, rural utilities and rural housing. Trump has even proposed capping crop insurance payouts, which have served as a safety net for farmers since the rampant farm failures of the Dust Bowl. In 2013, the administration’s nominee for the USDA’s top scientist position, Sam Clovis, a conservative radio host whose main job qualification appears to have been co-chairing the Trump campaign in Iowa, questioned whether crop insurance was constitutional. Trump has even suggested cutting the USDA Agricultural Research Service’s budget by $165 million.
In short, Trump wants to slam the door on trade while also kicking out the supports for farmers and rural communities. There’s no way around it: The policies he is pushing will devastate the American farm.
Trump and the Republican Party, in general, clearly believe that the sea of red states, stretching from Arkansas to Idaho, will remain squarely Republican, no matter what. They’re gambling that the party can appeal to Rust Belt and coal-country voters with tough talk on trade and big cuts to government aid programs without losing the staunch support of the Great Plains, which they have come to take for granted.
But that support may be cracking. Rick Hammond was no fan of Trump’s from the beginning, and now a growing number of his neighbors are openly questioning the policies of this new administration — and Trump’s personal commitment to farmers and the rural communities that support them. If enough farmers join Hammond, they may turn the backing of their large lobbying organizations and even reverse the polarity of these Republican strongholds. One way or another, farmers are soon going to face an existential crisis: Do they remain loyal to the political party that has defined their identities for decades and, in so doing, risk losing generations of hard work, or do they make a political change to save not only their livelihoods but their very way of life?