ECONOMICS Bloomberg Businessweek September 23, 2019
31trade surplus, and not just with China—testimony
to the gains that have accrued to American farm-
ers from globalization.
Efforts to cultivate China’s appetite for American
soybeans stretch back almost four decades. China’s
purchases exceeded $12 billion in 2017, according to
U.S. Department of Agriculture statistics. But they’ve
pretty much dried up since the end of 2018, when
China made goodwill buys as the two countries
appeared to be close to a détente. Trump slapped
additional tariffs on about $110 billion in Chinese
imports on Sept. 1, including footwear and apparel.
China responded with tariffs on American-raised
pork, beef, chicken, and other agricultural goods.
Since then, the two sides have warmed. On Sept. 13,
China’s state media reported that the country would
exempt some American soybeans, pork, and other
agricultural products from more tariffs.
For American producers, the hit to exports has
further strained finances that are at a breaking
point because of a six-year slump in prices for agri-
cultural commodities. Net farm income is projected
to be down 29% this year from 2013 levels, and debt
to total $416 billion.
The weather hasn’t cooperated: Record floods
this spring prevented farmers from planting about
11.4 million acres of corn and 4.5 million acres of
soybeans, according to government estimates.
Producers have also expressed dismay that Trump
has failed to live up to his campaign pledge to uphold
national consumption mandates for renewable fuels.
Instead his administration has granted small refin-
eries waivers on quotas for corn-based ethanol and
soybean-based biodiesel. Farmers argue the exemp-
tions reduce demand for those crops.
Farmers will receive $19.5 billion in direct gov-
ernment aid this calendar year, the most since
2005, according to the latest USDA projections.
That doesn’t include an extra $10.5 billion forecast
this year in federally subsidized crop insurance
payments, the main vehicle for the regular farm
subsidy program.
Bret Davis, a fifth-generation farmer from
Delaware, Ohio, who grows soybeans, corn, and
wheat, says the subsidies “will keep us going.” But
things are still tight. “I had that conversation with
a banker, and he says, ‘Well, I see you didn’t pay
down your loan very much this year,’ ” says Davis.
“I said, ‘No, I paid off a lot of equipment that I had.’
He was understanding about that. But still the first
question he asked was, ‘What’s going on here?’ ”
The bailout funds won’t cover all of farmers’
losses. Producers in Iowa received $973 million in
direct payments from the first round of trade aid
covering a period in which Iowa State University
estimated the trade war cost them $1.7 billion.
Even so, there’s been no break in Trump’s sup-
port in rural areas, where his poll numbers are con-
sistently about 12 percentage points higher than
they are nationally. In August, 52% of rural residents
approved of Trump’s job performance, vs. 40% of
Americans overall, according to Gallup pollingLean Acres
U.S. farm profits
Net farm income
Federal crop insurance
benefits
Direct government paymentsValue of U.S. agricultural
exports to China$120b600
2010 2019*$ 24b120
2010 2019 †“The aid
package that
has come in
is a relief, and
it softens the
landing, but it’s
not a solution,
it’s a Band-Aid”