Dear President Trump,
In a recent speech, you said, “Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now.” The statement doesn’t match the experience farmers face today.
If we stay on this road, there is no way to know how many farmers and ranchers will weather what was supposed to be a short-term pain for a long-term gain.
In Washington, the newest round of tariffs could mean a loss of approximately $1 billion for agriculture. Among the Washington agricultural products that could feel the squeeze are cherries, wine, and wheat.
At risk is more than a trade agreement with the world’s largest importer of goods. The trade war risks the character of rural communities.
Trade relationships – food relationships – take a long time to mature and become beneficial for both parties.
When this trade dispute with China is coupled with commodity prices that are reaching historic lows, it is enough to give even the most patriotic farmer cause for concern.
In modern agricultural circles, the benchmark for how bad it can get is the 1980s. Called the Agriculture Crisis, the 1980s began with high land debt and soaring equipment purchases. By 1985, the crisis peaked with commodity prices in free-fall because of record production and a lack of exporting options, high oil prices, a strong dollar and high interest rates.
At the height of the crisis, farm economists estimated that approximately one third of the nation’s farms were in foreclosure.
By the 1985 peak, 62 agricultural banks had failed, exports fell and land prices bottomed out.
We may be headed toward a similar situation in the early 2020s.
Beyond the economics, the rural communities in which farmers and ranchers live are among the most patriotic around. In 2004, it was reported that approximately 44 percent of the U.S. military was comprised of recruits from rural communities.
Finally, let’s talk about the proposed buy-back program the U.S. Department of Agriculture (USDA) announced it was working on. Buy-back programs that direct basic commodities to other countries through the U.S. Agency for International Development (USAID) are not a solution. In fact, they are a detriment to both the U.S. ag community and the recipient countries.
On the domestic side, the USDA would have to find the resources necessary to purchase commodities, creating a cycle of artificial demand.
On the international side, the secondary sale of commodities has the potential to destabilize agricultural economies in recipient countries.
Pam Lewison is the Director of the Washington Policy Center Initiative on Agriculture.