Farmers Are Hit Hard By Donald Trump’s Tariffs

0:07The U.S. economy has lots of big moving parts. services, you got consumer goods, manufacturing, all of it adds up to more than$30 trillion per month. But as Donald Trump's trade war slapped tariffs on goods from around the world, the sector hardest hit? Agriculture. Import duties on things like fertilizer and steel for machinery drove costs of production up, while retaliatory tariffs from foreign nations drove exports down. Economists project that growers could see roughly$44 billion in net cash income losses over the next year. Now, this is especially true for the people who farm soybeans, the nation's second biggest crop.

0:50But a new trade deal with China could ease some of the economic pain they've been feeling because of Trump's trade war. We heard from some of you. Farmers have already sold their beans for practically nothing at a loss to the Chicago Board of Trade members, the Cargill's, the ADM's. And now they've got the beans. Okay, now there's a trade deal. Boy, they stand to really make a buck or a trillion, don't they? Not the farmers. Hopefully people will open their eyes to the fact that these wounds were inflicted upon them by their own president. And if they think that the current treaty with China will hold, think again.

1:35So how much will it help? We'll get into it after a break. I'm Todd Zwilligan for Jen White. You're listening to the 1A podcast, where we get to the heart of the story. Stay with us. We've got a lot to get into.

1:51Joining me to check in on how the Trump administration's trade policies are affecting the short-term and the long-term health of U.S. farmers is Alan Rappaport. He's an economic policy reporter for The New York Times who focuses on trade. Welcome to the show, Alan. Thanks for having me. Also joining us from Chicago is Tom Polancic. He writes about food and agriculture for Reuters. Welcome, Tom. Hi there. And Philip Good is with us. He's a farmer and a cattle producer in Macon, Mississippi, and is the current chair of the United Soybean Board. Philip, thank you for being here. Thank you. Philip, let's start with you.

2:26Tell me a little bit about your farm, how big, what you farm, what your crops are, and sort of how things are going this year. Sure. Well, I live in Macon, Mississippi on a family farm, and what I mean by that is I farm with my wife, our son, who's 30 years old, our daughter-in-law. Everyone has a different role and contributes. It's a combination of soybeans, corn, cotton, cattle, and catfish. And yeah, we enjoy working together, but it has a lot of challenges. In addition to that, I'm also chair of the United Soybean Board. And what that is, is a checkoff where that means that every farmer, right now I have the responsibility and the honor of representing a half a million soybean farmers.

3:11They help contribute through a checkoff to a program that funds research, education, and promotion. So maybe the listeners have heard of the ad campaign of Got Milk. Well, that's funded by dairy farmers. Beef, it's what's for dinner. That's funded by cattle ranchers. And pork, the other white meat, that's funded by pork. So soy or soybeans are a little bit unique in that we don't have an end consumer. We are either in your food and we are a protein source for the world for both food, feed, and fuel. You don't have a slogan either. You mentioned the slogan for all the other guys. Where's the soybean catchphrase?

3:47Well, our mission is to provide sustainable soy solutions for every life, every day. And I don't think I'm sitting here sipping on coffee with my soy creamer in it. I don't think people realize when they had eggs, bacon this morning, maybe drank some coffee, soy was in all that. Same with lunch. If you're having chicken nuggets or eating some fish, soy's in that. I got it. Soy, is it in you? Boom, that's free. Philip, you can take that to the - You can take it. Absolutely. It's in everything. And besides that, we're actually in some new things like animal diets, shoes, asphalt, turf, even firefighting, soy foam.

4:24So all those are new uses and it's very sustainable. So gigantic market. How are things going for you this year? What's the bottom line and what's affecting how you do business on the farm? Oh, my gosh. It's been probably the most challenging year of my career in about 40 years. So I'm telling my age there. But I do wanna say that weather challenges, economic challenges, market challenges, all of it had been tough. It was the wettest start. I mean, it rained for 60 days straight on my farm and I don't care what plant it is, it's not made to live in or underwater for that period of time, but every day for 60 days straight.

5:05So that was the beginning of this year. Economic challenges were facing higher input costs, higher interest rates. And then we also have the whole thing where the latest report is showing net farm income for 2024, a crushing blow with an average net farm income plummeting to under$22 ,000 a year. And it's just been very tough. You said rising cost of inputs. What does that mean? Well, for me on my farm, it all goes to the soil, right? Soil is the basis of life. For me, The soil is my bank account. It is, what I mean by that is it's my retirement fund. Literally, I do not have a retirement fund.

5:46The soil is my retirement fund. It provides me my retirement when I retire. It provides income for the next generation and it is to be there for my grandkids as well. So when I talk about input costs, I'm talking about things like fertilizer, seed, equipment costs. All those are things that I have to do to produce food and fuel. Fertilizer, seed and equipment costs. Alan, Philip mentioned those market forces, the rising cost of inputs and plummeting incomes. Can you tell us a little bit more about the dynamics of the market here and what's been driving them? Well, tariffs have obviously been a huge factor in the U.S.

6:25economy during this year since President Trump took office. You know, he initiated and rolled out substantial tariffs on most of America's trading partners, basically every country around the world, and particularly China, based really steep tariffs. They've been sort of locked in this trade war for months now, which just finally has reached a truce, we think, if it holds. And that's caused huge implications for inputs across the economy, particularly things like steel and aluminum, which farmers rely on heavily for all kinds of products, from soybean bins to tractors and things like that. So it's definitely raised their costs.

7:08And the retaliation associated with this from China in particular has made it a lot harder for them to sell soybeans to their biggest customer, which has been China. over the last many years. So that has really put a lot of economic pressure on farmers around the country. Tom Polancic of Reuters, how do you see this picture that Philip is painting on his farm and that Alan has just laid out sort of in the aggregate of rising inputs? In other words, more expensive to farm, less income when you get the stuff out of the ground and try to sell it. Right. I mean, I'm really glad that we have Philip on to talk with us about what it's like down on the farm.

7:47It's been a really tough year. These producers plant the crops in the spring and they tend to them all summer and they're just finishing up the harvest now. And, you know, all of that work to lose money on every acre that they've planted. It's a really tough situation. And it's a combination of low crop prices and rising expenses. is. So, Philip, I think we've laid out the challenges from both ends of your business. There's another part beyond tariffs that struck my mind. Early on in the Trump administration, of course, we saw the near zeroing out of foreign aid in lots of different dimensions.

8:28That's drugs, health care, lots of different things. But it's also U.S. food aid. And as far back as 2000, the federal government spent$2 billion to purchase agricultural products from U.S. farmers to put them in sacks and send overseas. I think that number is even higher now. Has that affected your farmers and your members as well, the zeroing out of foreign aid in addition to the other things we're talking about? Well, the biggest market for our product is domestic. And of course, exports are extremely important, of which China is our number one customer in the export realm. I will say the one thing that's been real encouraging in the markets in my area in the nation is that markets outside of China have increased 30%.

9:15So there's been some diversification, but one of the things that we are trying to do and invest is on our side as farmers is we're putting money towards a program where we go and develop markets in countries where they are underdeveloped and have a growing population and need protein. And so we're trying to go to those nations and where farmers are helping to fund that through various programs, and that's to develop and grow markets and actually help to feed the world. So 3 ,500 acres, Philip, on Philip Good Farms, is that right? That is correct. It is a diverse operation that includes animals and plant life.

9:54So tell me what you've done to cope with plummeting market, plummeting revenue while, you said this is the worst year you've had in your lengthy 40-year career. What have you done to cope? Well, over the last number of years, I've invested in irrigation where I actually capture winter runoff water and use it in my hot, dry summers to put that water back onto the land. So all that rainfall that fell on my farm, that works in a dry year, but the wet, I can't handle that much water. So there's really nothing I could do about that extremely wet spring. When it comes to some of those costs that I talked about earlier, input costs, we've streamlined as much as we can streamline.

10:40I mean, the family's on a tighter budget. The farm, our business is on a tighter budget. We've eliminated any sort of extras. There's no new farm equipment purchases. So we're fixing as much as we can fix. We're running to parts instead of trying to trade up to go to maybe a newer model. So looking for cost deficiencies as much as possible and working as much as we can to squeeze a penny here or there. So Alan Rappaport, American farmers are looking forward to what appears to be a deal between the United States and China that just came out of President Trump's summit with President Xi. What are they getting back for this?

11:18One of the main criticisms of this deal for people like Philip is that it's returning them to the status quo ante or something like that. In other words, yes, soybean sales will come back. They're getting back to where they were before any of this started with no net benefit. Is that a fair criticism from the farmers that you talk to? That's pretty much where we are at the moment, yes. So they'll be getting, the idea is that they'll get 12 million metric tons purchased by the end of this year, over the next couple of months from China. And then the following three years, they'll be getting at least 25 million metric tons of purchases.

11:57So that's kind of in line with where we were the previous few years. So it's not really more than that. There's not a commitment. One thing that there have been some concerns about from farmers is that there's not actually like a commitment in terms of dollar value. It's going to be dependent on whatever the market prices are. So that's been something they've been concerned about. And, yeah, it's basically they're not getting anything more because of all the pain that they've suffered. It's just going back to the status quo. And I think there's a lot of disappointment there. There's also concerns of the fact that there's really no enforcement mechanisms to all this.

12:34There was a trade deal in 2020 that President Trump struck with China during the first term. That included promises and commitments to purchase a lot more soybeans over a two-year period. And China ultimately did not live up to those promises. They blamed the pandemic and the relationship basically unraveled from there. So at this point, if China does not do what it says, it's going to be just sort of more tariffs and export controls and a resumption of the trade war. Scott Besson, the Treasury Secretary, did say that he expects President Trump to continue to sort of push Xi Jinping, China's leader, to buy more soybeans than have been committed.

13:16But we'll sort of see what happens there. Well, Tom Palancic, what about the dynamics of the trade deal? One of the important factors, and Alan sort of covered the return to the status quo ante, tariffs have been on again, off again, on again, off again. They're there. They're not there. What about predictability in the business? And, Philip, I might ask you the same question in just a minute. Go ahead, Tom. Yes, you know, it's increasingly hard for producers and agricultural companies to operate when they don't know what the trade policy will be. You know, the markets like certainty and farmers like certainty, you know, at least to know that they'll have access to a market.

14:01In the case of China, the biggest soybean buyer in the world by far. And as Alan said, you know, the trade deal has not expanded China as a market for the U.S. farmers at this point. The commitments that he mentioned, those are minimums and it is always possible that China could buy more. But there has been disappointment that, you know, there wasn't a pledge from China to increase its purchases from what it had been recently. Philip, I know you're probably not in a position to talk politics and I get it, but can you talk about the on-again, off-again tariffs predictability and whether your members and indeed yourself on the farm feel like this trade journey has been a net benefit for you?

14:51Well, we're passionate about the dirt. We're passionate about food, but we're also a business and this is where we get our income to survive. And so we love a free market. We love to provide the good to the marketplace. So So we're already making investment purchases for the 26th year. So right now I'm at the thing of ordering and prepaying for seed, fertilizer, and everything for next year. And so where do I find my guarantee? It's from forward pricing in the futures market as I look towards the next crop. And so we're looking for the marketplace to get us the return that we need to cover all those bills for all those inputs.

15:30So we're starting to look at marketing for the next year. And so we love it when it's a free market and we're able to lock in either the profit, break even. We know where those price and budgets and ratios and everything are from the futures market. So we're trying to do that now for next year. Well, we're also hearing from lots of you. Here's Ryan in Missouri. Farmers have already sold their beans for practically nothing at a loss to the Chicago Board of Trade members, the Cargill's, the ADM's. And now they've got the beans. OK, now there's a trade deal. Boy, they stand to really make a buck or a trillion, don't they?

16:08Not the farmers. So, Alan, Philip just said he's looking toward the future and market futures and how the market will be a year from now, two years from now. Ryan says they just took a big loss. And you know who gets the benefit of the future? The big guys who just bought all the beans. Yeah, that's a great point. And I think it's a reason why the Trump administration is still going to need to roll out some farm aid, some federal assistance for farmers. It's something that has been talked about for months now. President Trump has suggested that perhaps tariff revenue could be redirected to support the farmers.

16:43And a lot of those plans have been stymied by the federal government shutdown. But I think, you know, there's analysts are predicting that farmers are going to need 12 to 15 billion dollars of aid this year anyway, just to sort of make them whole from the pain that they've been suffering. And I think that's something that you could expect to see either when the shutdown ends or as part of an agreement to conclude the government shutdown. Tom, we just have a moment before we have to take a pause. But what does it mean that now Congress and the president are going to have to fill a hole to the tune of 12 or 15 billion dollars to make people like Philip Hull?

17:19You know, it's this sort of a repeat of the 2018 trade war when the Trump administration had to give out billions and billions of dollars to offset the pain of the trade war. You know, we've seen this before, and it seems like we're back on the path for that again. I also just wanted to go back to the caller who was talking about the farmers selling their beans to the big players. Yeah, real quick. We have seen farmers holding on to their soybeans, putting them in storage. They're not selling it this time because they're hoping that prices will get better next year. We're talking about the Trump administration's trade deal with China and what it could mean for soybean farmers in the United States.

17:57We're going to take a quick pause here. We'll be back with more of the conversation in just a moment.

18:06Let's get back to the conversation now. We're going to turn to Argentina in just a second. But first, we got this comment from Tom, a listener, not Tom Polancic, who says, let me get this right. We bailed out Argentina to the tune of$40 billion so they could sell their soy crop to China, thereby devastating U.S. soy farmers, and now planning on doing the same to U.S. cattle farmers. And now doing some of the tariff monies, using some of the tariff monies to bail out the soy farmers when the tariffs might be determined to be illegal and therefore have to be paid back. Tom Polancic, what does other Tom, what is he driving out there in terms of the frustration of how our relationship with China, and we're going to talk about Argentina, soy and beef is working out?

18:54Yes, Argentina has turned into a point of frustration for U.S. farmers. The U.S., under the Trump administration, was extending financial aid to Argentina as Argentine farmers were selling soybeans to China. This was prior to the recent U.S.-China trade deal. So, you know, U.S. farmers felt as though, you know, they were losing out on global export sales to China for soybeans right as the U.S. was offering financial support to Argentina. And then more recently, President Trump said that he could see the U.S. boosting its imports of beef from Argentina to help lower prices here in the U.S. U.S.

19:48beef prices have climbed to record highs because of low cattle supplies and strong consumer demand. But U.S. ranchers felt betrayed when the president said that he thought the U.S. could bring in more beef from Argentina to help supplement our supply. Well, speaking of beef bailouts and Argentina, here's the president on Air Force One in October after a reporter asked him whether the import of beef from Argentina benefits Argentina more than American farmers. Argentina's fighting for its life, young lady. You don't know anything about it. They're fighting for their life. Nothing's benefiting Argentina.

20:29They're fighting for their life. You understand what that means? Alan Rappaport, I didn't hear an answer to the question there, but can you explain why the president said he's made this decision and what it will mean for U.S. cattle producers? There's a couple things going on with Argentina, basically. You know, its economy has been teetering for a while, going crisis to crisis. President Trump is a staunch ally with President Malay there, whose political party was facing midterm elections that could have put his sort of grip on power under risk. And so with the cattle ranchers, basically the U.S.

21:07has been facing high beef prices over the last year, and that's been being felt at the grocery store. President Trump is very concerned about inflation in the United States, you know, trying to keep that under control. And beef prices is something that he's been trying to tackle. So he came up with this idea that, you know, we could actually start importing more beef from Argentina by lifting the quota tariff rate that we have there, which pretty much caps it, you know, at anything more than 20 percent. They want to expand this to 80 percent, making it so that, you know, it's there's a lot more beef from Argentina that's allowed into the United States at affordable prices.

21:42This has gotten cattle ranchers very upset that, you know, after all these years, finally beef prices are up. They're making some money off of this because of growing demand for red meat protein in the United States. And now President Trump wants to, you know, bring in this new competition from Latin America. They say that the quality of Argentine beef is not as good and that this is basically going to get sort of, you know, mixed up with American beef and benefit the big meat processors. Philip, you have cattle on the farm, right? Yes, I have about 35 cows, which I'm sort of a small producer compared to many, but yes.

22:16Okay, well, I saw beef tenderloin in Costco,$30 a pound, very high price, bad news for consumers, great news for American cattle ranchers. You know, high prices are good for them. Forget about your soybean hat for a moment. What about cattle rancher hat, Philip? A new program to import beef just as the United States is having to make its own farmers whole. How does this whole thing strike you? Well, first of all, why do I have beef cattle? I love the animals, but I also use them on my farm because not every acre is suitable for row crop. So I have some grassland that works as a water filter, and it keeps the runoff water pure.

22:56I talked about that earlier on my farm with irrigation. So cattle are a natural grass harvester for me on my place. I think every farmer myself and every farmer that I talk to believes in free trade and believes in the market and wants to receive their money from the marketplace. And so the concern is, is that if you take the peak out of a market, and why do we have a peak in beef prices right now? It's because numbers of cows are at lows, record lows. And a lot of them are liquidated because of drought in the South and in the Southeast over the last couple of years. So cows went to slaughter because there wasn't enough grass to feed them.

23:34Now we have national numbers that are very low and beef prices are high. But yeah, so we've seen a lot of reaction in the market towards beef prices. Philip, farmers want to participate in the free market. They want to be paid by the market. It just doesn't seem like any of that is happening right now. A trade war of choice that dropped the soybean market to zero, then an agreement to return to the status quo ante, billions of dollars in relief to plug the hole, while I would say probably in your view, artificially suppressing beef prices with imports from China. So none of your ideal economic scenario seems to be in play right now.

24:15It's tough. And that's what I said earlier. It's been a very challenging year. You know, the market responds to facts, but it also responds to rumors. And so rumors sometimes have a bigger influence than the actual facts. Facts are we're short of the number of cows in the nation. Beef supply is down, therefore the market's high. But rumors of what could happen or may happen also affect the market. So when I saw a 40 cent price reduction in the market for feeder calves, and I'm, you know, I talked about forward contracting and forward pricing the product that I'll be selling some calves, hopefully this coming March, That affected the cost per calf that I sell by$200 each.

24:59So you take that$200 per animal times 35, that's a drop of$7 ,000 in my net income. Right away, just right off the top, yeah. Right off the top, pure profit. All right, we got this comment. I'm a Missouri girl in love with a Missouri farmer. As an American consumer, I want American beef, and I want it labeled American beef. I believe the price the farmer receives is dictated by the corporate packer processor that controls the price, both to the farmer and to the customer. If they are price fixing, then there's no competition to lower prices. Tom Polancic, there's one listener from Missouri who knows their beef market.

25:39Yeah, one of the effects of this suggestion from the president about bringing in beef from Argentina has been a renewed push to label beef with its country of origin. You know, this was an idea that was ruled illegal years and years ago. But, you know, ranchers believe that if you put, you know, product of the USA as a mandatory label on beef, then, you know, more people in the country may want to buy it. Or, you know, at least they'll have a choice of deciding whether they want to buy U.S. beef that's imported. And I just want to say, you know, the general feeling among economists and meat companies is that even if we do boost our imports from Argentina in the way that the White House is suggesting, you know, that it probably will not have a noticeable impact on grocery store prices for consumers.