Farmers in three Midwestern states say the China-U.S. trade war is hitting them in the pocketbook but they support President Trump’s policy of piling tariffs on the one-time top customer for U.S. agriculture exports, say Iowa State University researchers. The view on the farm is “short-term pain/long-term gain,” so much so that farmers are using the same planting, marketing and storage strategies as before the trade war despite its disruption in exports.
“It is important to note that farmers experience significant income shocks but that did not affect their support for the president’s approach,” said the researchers. All but a small minority of farmers participating in the study said their farm income fell in 2018 due to the trade war. Eight out of every 10 of them said the Trump tariff payments created by the administration was helpful; 25 percent said it was very helpful.
Some $6.5 billion has been paid to farmers and ranchers in trade-war aid for this year’s production since disbursements began in late August. The administration said in July that a second tranche, of up to $3.65 billion, was possible this month “if conditions warrant.” A USDA press aide was not immediately available to respond to questions if the money was forthcoming. Producers received $8.6 billion in cash to mitigate the impact of the trade war on 2018 crops and livestock.
Trump has said China would purchase $40 to $50 billion of U.S. agricultural products under a “phase one” agreement that would be signed in mid-November, somewhere in the United States. China wants large-scale tariff relief in exchange for the agricultural purchases and reforms to its financial services sector and intellectual property protections, an unnamed source told Politico.
The study by ISU’s Center for Agricultural and Rural Development (CARD) was one of the first to evaluate farmers’ perceptions of the trade war and its consequences. Through internet and mail surveys, CARD compiled responses from 693 farmers in Iowa, Illinois and Minnesota who grew at least 250 acres of corn of soybeans. The largest group, 44 percent, were from Iowa, followed by 32 percent from Illinois and 25 percent from Minnesota. The three states are agricultural powerhouses, together leading the nation in corn, soybeans, hogs, turkeys and eggs.
Some 56 percent of respondents support higher tariffs on Chinese products and more of them than not—43 percent vs 26 percent—said the trade war would benefit the U.S. economy.
Three-fourths of farmers said U.S. agriculture would bear the brunt of the trade war. In a 48-27 split, they said the battle of tariffs would hurt U.S. agriculture in the long run. Respondents were fairly equally divided on whether the trade war would enhance long-term U.S.-China economic relations, with 30 percent staying neutral.
Growers kept the same mix of corn and soybeans in 2018 and 2019 as they did before the trade war and they sold roughly the same portions of their soybean crop before, during or after harvest as they did before the trade war, said the CARD study. Sixty percent of soybean growers said they would not increase storage for the 2019 crop while 30 percent said they would increase storage by “a little” or “a lot.”
Soybeans are the leading farm casualty in the trade war. With a market share of around 60 percent, China is the world’s largest soybean importer. Before the trade war, China bought nearly one in three bushels of soybeans grown in America. Soybeans exports were worth nearly $21 billion before the trade war and are forecast for $17 billion this fiscal year.
When asked about the trade war’s impact on their net farm income, 29 percent said their income fell by more than 20 percent in 2018 before Trump tariff payments were included, 42 percent said income was down by 10-20 percent, nearly 15 percent said income fell by 5-10 percent and 5 percent said income dipped by less than 5 percent. A small portion of growers — 8.4 percent — said their income held steady or increased in 2018.
The study, “Midwest crop producers’ perceptions of the U.S.-China trade war,” is available here.