Pressure mounts on Trump to deliver for Iowa ahead of elections

[August 17, 2018]  By Jarrett Renshaw

DES MOINES, Iowa (Reuters) - Warren Bachman, a 72-year-old Iowa soybean farmer, is one of many who turned Clarke County into Donald Trump country, as the Republican president took 61 percent of the votes in 2016 in a county that went for Democrat Barack Obama four years earlier.

But Bachman’s loyalty to Trump is wavering under the weight of a trade war that has disproportionately hurt farmers due to big tariffs on agricultural exports. Other farmers, meanwhile, are upset that the White House has not yet followed through on a promise to reform rules that would boost demand for corn-based ethanol, one of the state's biggest businesses.

“I still support him, but not as much,” Bachman said between bites of pork chops and baked beans at the Iowa State Fair in Des Moines last week. “I am afraid we are close to seeing a repeat of the 1980s, where farmers across Iowa lost their land because they ran out of money and couldn’t get loans.”

November's congressional elections represent the first nationwide response to Trump's aggressive trade policies, particularly in the Farm Belt, which runs roughly from Indiana to Kansas and the Dakotas, which favored Trump heavily two years ago.

The administration's move to impose numerous tariffs on imports has sparked retaliation, particularly from top agricultural buyer China, which put levies on products like hogs, corn and soybeans, hammering those markets. Soybeans <Sv1> are among the hardest-hit, with prices down 15 percent since May 1.

The United States exported $138 billion in agriculture products in 2017, including $21.5 billion in soybeans, according to the U.S. Department of Agriculture.

Farmers say they are growing impatient as harvest season approaches. Trump is more popular in the Farm Belt than in the nation overall, but his support there has dipped from 59 percent approval in mid-June to 52 percent in early August, according to Reuters/Ipsos polling. Trump won Iowa by 10 percentage points in 2016 after Obama carried the state twice.

(For a graphic on how Trump's Farm Belt approval rating has fallen with soybean and hog prices, see: (https://tmsnrt.rs/2w8Hyv8) )

“The anxiety is starting to escalate," said Iowa Governor Kim Reynolds, a Republican locked in a tight race with Democrat Fred Hubbell. "They are willing to give him some more time, but the window is closing and they have to see some movement somewhere to alleviate the pressure.”

Bachman said he is a registered Republican, but has not decided whether to vote for Reynolds in November, saying he will pull the lever for whoever will best protect the state's agricultural industry.

He said the tariffs on imported metals have increased the costs for farming equipment, but that he had saved money for a down cycle. But his wife, Linda Bachman, who supported Hillary Clinton in 2016, said her husband is too proud to acknowledge the burden on their family, including their son, who is just starting out as a farmer.

"He’s stressed out. I see it every day, and we are worried about our son," she said.

Democrats are hoping to pick up two congressional seats in Iowa as part of their quest to win the U.S. House of Representatives; they need to win a net 23 seats to regain control of the 435-seat chamber.

"The president is using Iowa farmers and its families as poker chips in a trade war," said Abby Finkenauer, a 29-year-old Democrat running against Republican incumbent Rod Blum in a race for a House seat in eastern Iowa that forecasters rate a toss-up.

Blum, 63, has been a staunch Trump supporter in a region that generally leans to Democrats in presidential elections, but which flipped to Trump in 2016. Last month in Iowa, Blum publicly thanked Trump for his trade stance.

"You’ve taken some heat for it in the short-term, but in the long run, the farmers, the manufacturers, the employers are all going to be better off," said Blum, who did not respond to interview requests. The administration last month announced $12 billion in aid for farmers hurt by tariffs.

Finkenauer, however, said the state needs someone to stand up to the president, not pat him on the back.

President Donald Trump talks with Iowa Governor Kim Reynolds, Northeast Iowa Community College President Liang Wee and his daughter and senior advisor Ivanka Trump as the president tours the college's advanced manufacturing lab in Peosta, Iowa, U.S., July 26, 2018. REUTERS/Joshua Roberts/File Photo

HOG, SOY FARMERS RESTLESS

China's tariffs are a direct hit to Iowa, the nation's top exporter of corn and pork, and No. 2 exporter of soybeans behind Illinois. Iowa exported nearly $11 billion in agricultural goods in 2016, trailing only California, according to USDA data.

China is the world's biggest importer of soybeans and among the largest pork buyers. But Iowa farmers are also getting hit by levies imposed by Mexico, the leading importer of U.S. pork.

Dean Hamblin, 63, owns a farm in Buchanan County, which also flipped to Trump from Obama. In an August "town hall" event he urged U.S. Republican Senator Joni Ernst to push the president to act quickly.

"We can't wait for a year to settle this tariff business. If we lose those markets, they will be gone forever," Hamblin told Ernst, who agreed.

Prices for lean hog futures <LHV8> have fallen 14 percent since May 1. Ernst noted farmers are throwing away pigs' heads for the first time because the tariffs wiped out the market for them. Hog parts such as feet, tongue and heads are shunned by most Americans, but are considered a delicacy in China, and Iowa farmers had profited handsomely by exporting those products.

THE ETHANOL CHASE

Trump's energy policies also factor in to the election outlook. Iowa is the top producer of corn-based ethanol; it produced 95.5 million barrels in 2016, a quarter of the nation's total, according to the U.S. Energy Department, and as such, federal policy regarding this biofuel is a sensitive topic in the state.

Refiners are required by law to blend 15 billion gallons of biofuels yearly into the fuel supply, but the government has not increased that level for several years, causing domestic ethanol demand to flatline. To increase demand, farmers have asked Washington to rescind a ban on selling E15, a gasoline with higher levels of ethanol, in the summer.

That has not happened yet. Instead, over the last year, the industry has become embroiled in a related dispute with Washington. The White House has become more aggressive than the Obama administration in granting numerous requests from refiners seeking relief from having to blend, or pay for, the cost of adding biofuels to the nation's fuel supply. That undercuts demand for ethanol, farmers say.

Last month, Trump attempted to mollify the corn industry, telling a roomful of Iowa farmers that he was close to lifting the ban, drawing cheers in the state and surprise in Washington from those unaware of the plans.

Trump in recent weeks has told U.S. Agriculture Secretary Sonny Perdue and others to strike a deal with the oil industry that will lift the ban, according to three sources briefed on the meetings. Oil companies have opposed these efforts.

The goal was to get something done in August to help embattled incumbents like Blum. But summer is nearly over, and farmers have not seen the relief they expected.

"We are sick of the runaround on the E15," said Kevin Ross, an Iowa farmer from Pottawattamie County, which Trump won with 58 percent of the vote. "This is something that has gone on way too long."

(Reporting by Jarrett Renshaw in Des Moines, Iowa; Editing by David Gaffen and Matthew Lewis)

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