George Myers, Mark Saluke and Lilly St. Angelo, Kokomo Tribune
Farmers are concerned this week over looming threats to Howard
County’s agriculture industry, ranging from a wet start to the season
and a trade war with China that has amplified in recent days and
intensified worries about certain crops’ economic viability.
The
week started ominously for many farmers when China announced higher
tariffs on $60 billion worth of American exports on Monday, a move that
came in response to President Donald Trump’s latest penalties on Chinese
products.
While Trump has in recent days promised farmers will be
taken care of – he has pledged an additional $15 billion in aid to
American farmers after last year’s $12 billion Department of Agriculture
plan – concerns continue to fester inside an industry that relies
heavily on revenue from China’s consumer market.
Mathias
Ingle, the associate ag and natural resources extension educator at
Howard County Purdue Extension, said concerns about the profitability of
crops like corn and soybeans exist throughout Howard County and have
been on the minds of farmers since the U.S.-China trade war began to
escalate last year.
“Definitely, yes,” he said. “I would say some of those concerns started about the time the tariffs started to go into effect.”
And
while farmers understand the Trump administration’s thought-process
behind holding China accountable for unfair trade practices, the
industry-wide impact has been harder to accept.
Farmers, noted
Ingle, have seen Trump’s tactics as “something that probably needed to
be done at some point in time. They just wish it would have been done in
a different way.”
Tom Madru, grain manager at Kokomo Grain Co.
and a corn and soybean farmer, said farmers in Howard County are
frustrated with the low crop prices and unpredictable market caused by
Chinese tariffs.
Madru said he’s personally upset about the effect of Trump’s rhetoric on the grain market, especially the president’s tweets.
“I’m
really disappointed in the president because he’s making these tweets
that are really impacting farmers and not making it profitable to sell
these grains,” Madru said.
He said circumstances may get better if
the president is able to lift China’s tariffs on agriculture products,
but Trump did not accomplish that goal in recent talks with China.
“He keeps tweeting that they’re getting close and then he tweets, maybe not,” Madru said.
One example of a Trump tweet storm came early Tuesday when he said a deal with China will be made “when the time is right.”
“Our
great Patriot Farmers will be one of the biggest beneficiaries of what
is happening now. Hopefully China will do us the honor of continuing to
buy our great farm product, the best, but if not your Country will be
making up the difference based on a very high China buy,” said Trump.
“This
money will come from the massive Tariffs being paid to the United
States for allowing China, and others, to do business with us. The
Farmers have been ‘forgotten’ for many years. Their time is now!”
Much
of the concern in Howard County is attached to corn and soybeans –
which Ingle said is the “primary cash crop for a lot of the rural
farmers today out in our county” – and their markets.
“They just
came off of years of making all this money, but yet at the same time now
they’re kind of in the down-swing. I expect it to go back up some point
in time, but it’s just a matter of when,” he noted.
Another
concern this spring is weather and its influence on area farms. Rain has
been abundant, leading to a delayed start to the season. The impacts of
a wet spring can include a lesser yield at harvest time; a shorter
window to get crops into the ground; and changing varieties.
In some instances, farmers will switch from corn to soybeans.
“They’re
always antsy to get out into the fields and to get that crop into the
ground. But it’s just kind of delayed them,” said Ingle. “It’s just made
them more – I don’t want to say more nervous, but yet at the same time
it’s a little more concerning to them.”
Farmers in many Midwestern areas have suffered from a wet and cooler
spring, which has prevented them from planting corn. Typically when it
becomes too late to plant corn, farmers will instead plant soybeans,
which can grow later into the fall before harvest is required.
Regarding
how weather has played into worries about the trade war, Ingle said: “I
think they’ve gone hand-in-hand. I don’t know if [weather has]
amplified [existing concerns]. I think it’s just another piece of the
puzzle. It’s not the whole picture, but it’s a piece of the puzzle, in
my opinion.”
About farming, and specifically the inherent gambles
that come with stockpiling crops, Ingle said that right now “the risks
are higher. Profitability is the biggest thing.”
Meanwhile, an
increase in stockpiling, in part due to what Ingle called a “bin-buster”
of a year in 2018, has become a talking-point for many across the state
and nation when discussing the trade war’s impact on the agriculture
industry. As crops sit in bins, worries mount about their worth.
A
slowdown in soybean sales, and the huge stockpiles that result, has a
ripple effect, reported the Associated Press on Monday. Soybean farmers -
who had expressed hope about potential Chinese sales since December,
when U.S. and China negotiators called a truce on tariffs and began
signaling that an agreement might be reached - have stored a record
stockpile of nearly 1 billion bushels.
In conjunction, Bloomberg
reported Monday soybean futures fell to the lowest level in a decade, to
below $8 a bushel for the first time since 2008.
Yet now,
planting soybeans with the overabundance already in bins and scant hope
for sales to one of the biggest buyers in China, could raise the risk of
a financial disaster.
The
two countries have given themselves something of an escape hatch: The
higher Chinese tariffs don’t kick in for 2.5 weeks. The U.S. increases
apply to Chinese goods shipped since Friday, and those shipments will
take about three weeks to arrive at U.S. seaports and become subject to
the higher charges.
In the meantime, talks between the international heavyweights are expected to continue.
Still, Kathy Parkison, an Indiana University Kokomo economics
professor, sees the ongoing back-and-forth tariffs struggle as playing
hardball with people’s lives.
Mixed in with the cool and wet spring, it’s been a nasty combo punch to farmers in the Midwest.
“Between
the weather and the tariffs, a farmer’s usually tough decisions just
became even tougher,” said Parkison, who is also an area farmer. “As
many economists have noted, the tariffs Chinese are leveling on America
will impact the farming community.
“This spring with its very wet
weather and the late planting season and now the tariffs have really
complicated farmers’ decisions,” Parkison added. “I have heard from some
farmers that they are not sure what, if anything, they will actually
plant this season. Will they switch from corn to beans? Is there enough
short-season corn out there to purchase if they do decide to stick with
corn?”
With those types of decisions on the horizon, Parkison
noted it will be interesting to see if some of Trump’s area supporters
in the farming community will sway.
“Will it change? Are they
willing to bite the bullet and have a bad year? I don’t know,” Parkison
said, “but the weather just makes this one absolutely horrific.”
Parkison
said that on her drive to work Tuesday, she noticed a few farmers had
crops planted, while 95 percent along the route she drives did not.
While
she equates bailouts to following bad money with bad money, she also
noted that once the mistake has already been made, maybe the bailouts
are what could keep the Midwest from metaphorically drowning in a
literal wet season.
Farm income was up in the early 2010s,
according to Parkison, but many farmers who had a cushion going into
last year and then this year will likely see that cushion being depleted
soon. She said for those who are heavily leveraged with debt, this
season could be the nail in the coffin.
“As a kid I remember
making a mistake and trying to cover it up and the cover up was worse
than the mistake,” Parkison said. “And I think that’s kind of what’s
going on here. There’s a mistake with the tariffs and now I do
understand why some people like the tariffs. I just don’t know that this
was the right way to do it.”
The Associated Press contributed to this story.