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.

 

Farmer interest in hemp as a crop waned during the early part of the 20th century, in part because equipment enabling mechanical breaking and processing of the crop was not widely available.  U.S. hemp area rose briefly from 8,400 acres in 1915 to 41,200 acres in 1917 to meet military demand during World War I.

 

In addition, this period marked a change in public attitude toward the narcotic properties of this plant, cannabis sativa, which until the early 20th century had largely been viewed as beneficial.  However, with its increasing use as a recreational drug, now known to the public as marijuana, and stigmatized in at least some parts of the country due to its popularity among Hispanic immigrants, the plant got caught up to certain extent in the public revulsion toward a range of substances that cause intoxication, an effort focused but not limited to alcohol.  Massachusetts was the first state to outlaw the use of marijuana in 1911, followed by 10 other states by 1927.  In 1937, Congress established federal jurisdiction over the production of cannabis sativa, in the Marijuana Tax Act, which did not differentiate between growing it as an industrial crop or for less licit purposes.

 

U.S. entry into the Second World War prompted authorities to revisit their attitude toward growing hemp, as the main U.S. supplier of the product, the Philippines, was invaded by Japan. The U.S. Department of Agriculture produced a 15-minute film entitled “Hemp for Victory”, to encourage farmers to consider growing the crop.  The effort succeeded in inducing farmers to plant nearly 150,000 acres of hemp by 1943.

 

Production of cannabis sativa was restricted in the United States in 1970 when the Controlled Substances Act was enacted, with no legal distinction drawn between production for industrial purposes as opposed to marijuana.

 

Today, industrial hemp is legally grown in 30 countries, primarily in Europe and Asia.  Although the crop is taxonomically the same as marijuana, the seeds used for hemp cultivation are bred to be low in THC concentration, the substance which provides the intoxicating effect.  As of 2013, Canada had the largest area of hemp, followed by North Korea, China, and France.  To the extent that U.S. products utilize hemp fibers, seed, or oil, they are entirely imported, primarily from Canada and China.  Although not separately tracked by the U.S. government, an industry association estimates that hemp-based products sold in the United States had a value of nearly $600 million in 2015.

 

Ironically, marijuana can now be used legally for recreational purposes in nine states plus the District of Columbia, and in a total of 29 states for medical purposes.  It is licensed for production in many of those states, although such production remains in violation of federal law unless it has a permit from the Drug Enforcement Administration (DEA).

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In the Agricultural Act of 2014, a provision (Section 7606) was included allowing state departments of agriculture and other entities to establish pilot programs to study the impact of growing industrial hemp. Under this authority, farmers had planted nearly 13,000 acres of hemp as of 2015, with the largest area found in Kentucky, Colorado, and Tennessee.  On March 26, 2018, Senator Mitch McConnell (R, KY), the Senate majority leader, announced his plans to introduce the Hemp Farming Act of 2018, which would remove the crop from the list of controlled substances and allow it to be sold as an agricultural commodity.  He and his co-sponsors, Senators Rand Paul (R, KY) and Ron Wyden (D, OR) hope to have their bill added to the upcoming farm bill.

Note from the Editor:  Right now we wear jeans, sweaters and other clothing made from hemp.  We eat hemp hearts mixed into our cereal.  Commercial uses for Hemp include making body lotions, pet food and even for making plastic, but all these applications are made from imported hemp since our farmers are forbidden to grow it.  Why restrict our farmers from growing it?