The US agriculture industry, often the first to feel the hit of trade disputes, is bracing itself as nations threaten to retaliate

A farm in Arizona. US agricultural exports are worth about $140bn a year.

A farmer in Arizona.  US agricultural exports are worth about $140 Billion a year. Photograph: Zuma/Rex/Shutterstoc.   

America’s farmers are about to start harvesting the wheat crop. Close to 60m tonnes are gathered annually and almost half is usually exported. Where this crop will be sold, though, remains an open question.

As Donald Trump’s trade war escalates, a lot of farmers are worried. Trump was elected, in part, on a promise to put America’s interests first and crack down on what he characterizes as a world trade system rigged against the US.  But until recently the president has acted like many of his predecessors – talking tough on the campaign trail but backtracking in the White House.

As the harvesting season begins, China, Mexico, Canada and the EU are all threatening retaliation over Trump’s tariffs on steel and aluminium. Agriculture is in the firing line.

“Farmers are often the first to feel the hit in trade disputes that may not involve their own products”, said Salmonsen. This time, the scale of the dispute could hardly be worse: US agricultural exports are worth about $140bn a year. Canada and Mexico import about $39bn worth, China’s share is $20bn and the EU around $12bn. All those countries have threatened retaliation over metal tariffs.

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The dispute looks set to escalate. On or around 15 June, Trump will publish a list of $50bn worth of Chinese technology products to be hit with a 25% tariff. China is expected to hit back with a list of its own and US farmers expect they will be top of that list.

Negotiations over the North American Free Trade Agreement (Nafta) have turned toxic as Canada and Mexico decide how to retaliate. Nafta has been great for US agriculture: exports were just $8.9bn in 1993 before the agreement. “All we can say is, we hope this gets solved sooner rather than later,” said Salmonsen.

The problem is that no one, perhaps not even Trump, seems to know what will happen next. Days after the US treasury secretary, Steven Mnuchin, said a trade war with China was “on hold”, the senior trade adviser Peter Navarro dismissed that comment as an “unfortunate soundbite”.

Senior Republicans including the House speaker, Paul Ryan, have called for Trump to rein in his rhetoric. Conservative economists are disappointed. “It is just increasing tensions,” said Jacqueline Varas, the director of immigration and trade policy at the conservative American Action Forum. “Uncertainty is a huge factor.”

China is expected to hit back at Trump’s tariffs with tariffs of their own against US agriculture.

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 China is expected to hit back at Trump’s tariffs with tariffs with tariffs of their own against US agriculture.  Photograph:  Rex/Shutterstockn
The situation is little better in reliably Republican Kentucky, the state with the second-greatest exposure to a trade war after Michigan, according to a report from Moody’s. Kentucky is not just another car manufacturing state: its bourbon industry is also facing international retaliation. According to the Kentucky Distillers’ Association, whiskey is worth $8.5 Billion to the state and supports 17,500 jobs.

 

It’s not just farmers bracing for icy trade winds. Bourbon, alongside Harley-Davidson and Levi’s jeans, is on an EU list of potential targets for tariffs. The targeting is clearly political: it can hardly be a coincidence that Harley-Davidson, for example, is headquartered in Wisconsin: another state where Republicans have a slim majority and face a tough battle in November’s midterm elections.

“FAIR TRADE!” Trump tweeted last week. “Canada has treated our Agricultural business and Farmers very poorly for a very long period of time. Highly restrictive on Trade!”

“A lot of the talk so far has been about what might happen,” said Salmonsen. Now that matters are coming to a head: “June looks critical.

 

By Stephanie Mercier

Our history shows the way.  Hemp was one of the earliest crops grown commercially in this country, long before the United States actually became a sovereign nation.  The first formal record of its production appeared in a tax revenue document in the colony of Virginia in 1632.  Raw hemp and hemp products were a key export from the American colonies to Great Britain, used for ship rigging, clothing, maps, books, sails and tents.  Contemporaneous records indicate that two of our first three Presidents, George Washington and Thomas Jefferson, raised hemp on their Virginia plantations.  This crop, along with wheat and corn, was commonly planted on farms as the United States expanded westward, although not in large acreage overall.

Continue reading “Hemp — A New Opportunity for US Farmers”

Oregon cowboy kids. Photo: Baker County Toursim

In addition to the discretionary cuts to USDA funding described in last week’s blog, the President’s FY19 budget also proposed $254 billion in cuts over ten years to programs in the four main titles of the farm bill, nutrition, crop insurance, commodities, and conservation.

 

Continue reading “Mandatory Farm Program Cuts in FY ’19 Budget Proposal”

Georgia bank and silos by Neal Wellon

By Stephanie Mercier

The President’s FY19 budget would cut discretionary USDA funding by 28 percent, with significant cuts to international food aid, agricultural research, rural infrastructure, conservation technical assistance and farm and business loan and grant programs. On February 12, the Office of Management and Budget (OMB) released the details of the proposed budget for fiscal year 2019 (FY19) of the Trump administration, the second since the current President took office.  Overall, the budget proposes to spend $4.4 trillion in the upcoming fiscal year, generating a projected budget deficit of $984 billion, a 34 percent increase over the size of the deficit in FY17. These figures do not include the cost of the Bipartisan Budget Act of 2018, which I described in a blog posted on February 20th, which will substantially increase the deficits for both FY18 and FY19. Continue reading “Impact of the President’s FY19 Budget Proposal–Part One”

Biofuel corn warehouse by Dennis Schroeder/NREL

By Stephanie Mercier

 

The U.S. government has been enacting farm bills to provide financial support to farmers since the passage of the Agricultural Adjustment Act of 1933, in the throes of the Great Depression.  There have been 17 farm bills passed since that time, with the current legislation, the Agricultural Act of 2014, scheduled to expire on October 1, 2018.  The House and Senate Agriculture Committees have been at work since the spring of 2017, holding hearings to examine the impacts of shifting market conditions on the performance of U.S. farm bill programs, not just commodity and crop insurance programs but also a broad range of policies covering issues such as nutrition, agricultural trade, conservation, research and extension, forestry, farm credit, horticultural and organic agriculture, renewable energy, and rural economic development.   Many of these policy areas have been added to farm bills in the last few decades.

Continue reading “Federal Policies Affecting Farmers”

My Rural America - Common Ground. Common Sense

My Rural America is an independent, nonprofit news site that shares information from trusted investigative journalists.  We choose stories that connect to rural America. These stories, most often about the issues and policies discussed (argued about) in Washington and in State Capitals, are ones most often talked about at the kitchen tables of rural America, and on Facebook and many other social media websites, radio stations and on television.

The difference between the news stories My Rural America shares and all too often, some other news sharing sites is that we do our best to bring our readers documented, truthful information.  We also share the sites of other news sites that we believe you can trust, e.g., one of those is ProPublica https://www.propublica.org/about/ which specializes in doing their own investigative journalism.

Continue reading “My Rural America Welcomes Rural Readers”

Here at My Rural America, our priority is to make the decision-making that goes on in Washington, DC personal to our readers.  With this inaugural website release, we begin by sharing the chart below.  It was first released by Congressional Quarterly’s Roll Call newspaper on Tuesday, February 13, 2018.  The data is based on the Trump Budget as calculated by the Office of Management and Budget (OMB) which reports directly to the Office of the President.

In summary, the Trump/Republican Budget cuts State Department, Agriculture, Interior, HUD and Transportation the most.  For today, we choose to focus on Agriculture. There is a lot to worry about, including that the Budget:

Continue reading “President Trump’s Proposed Budget – Winners and Losers!”

Wheat harvest in Oregon by Jim Choate

Op-Ed, by Stephanie Mercier

 

Since the first farm bill, the Agricultural Adjustment Act, was enacted in 1933, there have been nine farm bills passed during the administrations of Republican presidents and nine farm bills enacted under Democratic presidents.  The upcoming farm bill, to replace the Agricultural Act of 2014 that expires on October 1, 2018, which is expected to be completed during the next few years during the Administration of President Donald Trump, would break that tie.

 

The new President has made few comments about farm bill policy during his first year in office, although he did promise to ‘support a farm bill that includes crop insurance’ in a recent speech to farmers attending the 2018 American Farm Bureau Federation convention in Nashville, TN.  

Continue reading “Presidents and U.S. Farm Bills – An Often-Uneasy Marriage”