Thursday, July 26, 2018

What Trump's Tariffs Have Unleashed for Farmers

Like most would be autocrats - and certainly most malignant narcissists - Donald Trump, a/k/a Der Trumpenführer, thinks he knows everything about all things.  As a historical note, Hitler and Nicholas II both thought they knew more than their top generals and the end results ended badly for both of them.  In Trump's case his Waterloo - for Fox News viewers, that was a horrific military defeat suffered by Napoleon - may be in the Mid-West in the center of "Trump country" and so-called flyover country.  The match that started the conflagration will likely be Trump's self-created trade war that is well on the way to decimating farming operations in places like Iowa.  States where the populace fell for Trump's siren song of racism and xenophobia and voted against their economic self-interest.  A piece in the New York Times by the  news director for the radio stations KNIA and KRLS in Marion County Iowa looks at the economic coming disaster Trump has unleashed, the beginnings of which should be evident before the vote in the midterm elections in November.  Here are excerpts:

Today President Trump is visiting Dubuque, Iowa, where every year at harvest time, millions of tons of grain come via rail and truck to be loaded onto barges on the Mississippi River and shipped to Mexico, China and much of the rest of the world. Harvest puts coin into the hands of farmers, and they and their communities — indeed all of America — profit. Not this year.
The president is here to trumpet a $12 billion plan to aid American farmers. Why do they need aid? For Iowans, it’s because 33 percent of our economy is tied, directly or indirectly, to agriculture, and Mr. Trump recklessly opened trade wars that will hit “Trump country” — rural America — hardest and that have already brought an avalanche of losses. Indeed, the impact of his tariffs will probably be felt by family farms and the area for generations.
The cost of being shut out of overseas markets for soybeans, beef, pork, chicken and more will be in the billions. Once those markets are gone, they will be difficult to recover. Commodity prices continue to drop, and good weather suggests an excellent crop is in the making, which will drive prices further down.
Brazil is ready to step in with increased soybean production, and China has already shifted its purchasing power there.
In farm country, U.S.A., the Trump tariffs have poured gas on what has been a slow-burning conflagration.  Rural America is about to undergo a major demographic shift. President Trump didn’t start it, but he has accelerated a crisis that might have taken a generation or two to play out. Now it might take only a few years. Rural America is going to be hollowed out very quickly. Farms will become consolidated, and towns that are already in trouble will certainly die.
Iowa’s farmers are aging, and younger farmers aren’t replacing them proportionately. Sixty percent of Iowa farmland is owned by people 65 years or older, and 35 percent of farmland is owned by people 75 or older. . . . This isn’t because young people in rural America don’t want to farm; it’s because, if it isn’t already the family business, the costs are much too high to allow many of them to get into it.
A friend, a small-town Iowa banker who specializes in working with farmers, offered a local example. It’s time for Mom and Dad to retire, get off the farm and move to town. Much of the time, if no heir is interested in continuing the operation, the farm is auctioned to the highest bidder. . . . but a big operation “bid it up more than it was worth, some guy from out of town no one knew — probably from one of the big operations up north. The kid didn’t have a chance. It was heartbreaking.”
I use Iowa in my examples, but much of rural America will be affected in a similar way. In the worst possible outcome of this scenario, losses and farm consolidation accelerated by Mr. Trump’s tariffs will make the devastating 1980s farm crisis look like a bump in the road as it drives a significant rural-to-city migration.
In my community, I learned this week that a hog operation I drive by every day is folding. The confinements are being dismantled, and anything portable can be found on Craigslist. A friend close to the family told me pork prices have been down for years, and with the tariffs it’s just not worth it anymore.
Another casualty: our community banks. As farms get larger, farm loans are less likely to be local. A big operation with farms in dozens of counties that maybe even cross state lines probably won’t use local banks for credit.
At a certain point, populations won’t be enough to support rural hospitals and clinics, and they, too, will be gone. Rural hospitals are one of the major employers in the community. Even if you have a good manufacturing company in town, if you lose the hospital, they won’t be able to attract the employees they need.
Those plants may be forced to leave as well — especially since the tariffs have hit them hard also. One friend who has a small manufacturing business says his costs have doubled since Mr. Trump announced tariffs on aluminum and steel, and that his business is down 40 percent.
Some of the farmers I speak with are unwavering in support of the president; they’d vote Republican even if Mr. Trump personally slapped the heck out of the preacher at the church potluck. But others are starting to recognize how the economic impact of the tariffs is hitting them personally.
This is why, earlier this summer, Vice President Mike Pence came to the Midwest for a reassuring visit and why Sonny Perdue, Mr. Trump’s secretary of agriculture, offered his $12 billion band-aid of a handout Tuesday. . . . Trump is here now, crowing of those billions. What farmers really want are the markets restored.
Farmers take out lines of credit in the spring — usually due the following Jan. 1 — to pay for seed and other input costs, and then pay the loans back after harvest. Like any other loan, there are consequences to not paying, including losing the farm. Farmers are going to know before the midterm elections if they are going to be able to pay back loans.
[W]hen the Trump payments are made to farmers, the larger operations will be the ones that gobble them up.
Mr. Perdue, and likely President Trump, know the $12 billion won’t make a difference, even in the short term. Farmers and others in the industry know the offer is meaningless. But most rural Republicans aren’t farmers, and many are Fox News devotees.
The destruction of a way of life cuts as deep now as it did back then, especially when it comes from this president. The only thing he knows about food is that it always comes served to him on a silver, or maybe gold, platter.
As I have noted before, while I worry about children and youths in these areas and what happens to them, for the adults who voted Trump/Pence, they need to reap the whirlwind of their actions and the suffering needs to be intense. 

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