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 These trade wars in recent
years resulted in higher tariffs and lower purchases of agricultural
products, adversely affecting many farmers, though recent deals
offer some hope and optimism.
During the long trade war, China was purchasing many agricultural
products like soybeans and pork elsewhere. That in turn affected
individual producers as higher prices resulted in lower sales. Some
farmers found it challenging to achieve sustainable sales volume.
Over the last two years, the United States Government offered a
bailout in the form of financial assistance to farmers hit hard by
the trade wars. Market Facilitation Payments, often known as Trump
bucks, offset the low grain prices and brought substantial aid to
farmers. News reports say that some farmers received up to $76 an
acre on soybeans.
Local farmers were among those who benefited from these payments.
For example, one Fall 2019 Farm Outlook article showed that Logan
County producers received over $20 million dollars of nearly $700 M
in MFP funds earmarked for Illinois producers. These funds helped
the recipients pay bills when grain prices were low and offset the
effects of the trade war.
As 2019 ended, the trade war had not been resolved, but there were
questions about whether the MFP program would continue. The recent
USA Today article “Trump Buck, China Tariffs. Will Farmer Subsidies
continue in 2020?” asserts, “the state with the highest payout was
Illinois [with] $2.6 billion across years.”
Early in 2020, Trump was promising to continue payments through
about $28 billion in subsidies earmarked to help farmers impacted by
the high tariffs.
Trade Deals appear to offer more hope
Fortunately, two recent trade deals appear to offer a positive
outlook with more favorable outcomes for farmers and the
agricultural economy.
In late January, Trump signed a trade deal with Mexico and Canada
known as the US-Mexico-Canada Agreement that will allow stronger
agricultural trade between the countries.
Illinois Farm Bureau President Richard Guebert responded by saying,
“This agreement is a great and vital victory that will set the stage
for increased agricultural opportunity in 2020 and the years to
come. One in every five acres in Illinois is planted to feed Mexican
and Canadian consumers.”
While expressing optimism about the US-Mexico-Canada agreement,
Guerbert also said, “As farmers prepare for the 2020 planting
season, hope is on the horizon for our Illinois farmers to sell what
they grow.”
After months of negotiation between the countries, a phase one trade
deal with China was also signed in late January. Like the other
agreement, this deal offers hope of bringing back the Chinese market
for American farmers and stepping up exports to China.
In the phase one trade deal, China promised to increase the purchase
of U.S. agricultural products by an average of $40 billion a year in
the next two years. These products include soybeans, corn, beef,
pork, cotton and wheat among others.
Various sources show soybeans made up over half of China’s purchases
from the U.S. before the trade war and soybeans are again expected
to be a significant part of China’s purchases.
Additionally, China agreed to remove some of the provisions
restricting imports of these products. Some of the changes in
regulations will even allow China to import genetically modified
foods.
Looking back at recent challenges, Guebert commended the Trump
Administration for the MFP payments that helped many farmers get
through the trade wars. However, in a recent House Ways and Means
Committee Hearing, Guerbert said, “We would much rather have
expanded trade, and that's why I am optimistic about the recently
signed phase-one China agreement.”
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The expected increase in sales
should help boost farm economy. As Guebert said, these purchases
"will provide a huge and timely economic lift to American
agriculture.”
The trade deal could have
political implications in this election year as Trump’s defense
against “unfair trade deals” appeals to some rural voters. It is a
deal welcomed by some farmers with hopes that it will bring a
turn-around in exports.
There is some optimism that negotiations toward a phase two deal
could further ease tariffs, open more Chinese markets and allow for
more exports. Right now, it is unclear when that deal will happen
since those negotiations are expected to take even longer than
previous ones. Many analysts do not foresee this deal happening
before 2021.
Still, with the recent deals, the future appears to be looking
brighter for farmers.
At the American Farm Bureau Federation Conference in January, Trump
said, the best years for American farmers are yet to come.” Let’s
hope he is right. Farmers are watching with great interest to see if
their soil-tilling experience will parallel the political rhetoric.
Sources:
Burger, Beth. “Farmers received billions of dollars to compensate
for tariffs. Will that continue in 2020?” USA Today. 21 Nov. 2019.
https://www.usatoday.com/story/money/
2019/11/20/trump-bucks-china-tariffs-farmer-
subsidies-continue-2020/4247648002/
Clayton, Chris. “Ag Waiting on
Phase-One Deal Impact: Two Farmers Voice Optimism, Pessimism on
China, Trade Disputes.” 26 Feb. 2020.
https://www.dtnpf.com/agriculture/web/
ag/news/world-policy/article/2020/02/26/
two-farmers-offer-optimism-pessimism
Illinois Farm Bureau.
“Statement from the Illinois Farm Bureau Regarding USMCA
Presidential Signage.” 29 Jan. 2020.
https://www.ilfb.org/media/statement-
from-the-illinois-farm-bureau-regarding
-usmca-presidential-signage/
Rayasam, Renuka and Cather
Boudreau. Trump touts promises after painful year for farmers.
Politico. 20 Jan. 2020.
https://www.politico.com/news/2020/01/
20/trump-touts-promises-farmers-101135.
Youngquist, Jim. “The Impact
of Trump Bucks, Donny Dollars.” 8 Nov. 2019.
http://archives.lincolndailynews.com/
2019/Nov/08/NEWS/FARMAG110819_JIM.shtml
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