Outside Influences

Uneasy Times for Commodity Farmers

A worldwide glut of crops like corn, soybean, and wheat has fueled calls for help from the Trump administration.

AP Photo/Charlie Riedel
Jerry Hagstrom
Add to Briefcase
Jerry Hagstrom
Feb. 27, 2018, 8 p.m.

ANAHEIM, Calif.—When Agriculture Secretary Sonny Perdue addresses the Commodity Classic here Wednesday, he will face a gathering of corn, soybean, wheat, and sorghum farmers who are experiencing their lowest prices and greatest uncertainty since the farm crisis of the 1980s.

The core of the farmers’ problem is a glut of commodities due to increasing acreage worldwide, good weather across the globe, and consumer shifts away from the packaged goods that use commodities for ingredients.

These basic trends are outside the control of the Trump administration, but farmers do look to the government for help during downturns. How President Trump and his appointees handle the situation may determine how farmers vote in November with the House and Senate up for grabs.

In nearby Palm Springs last week, Farmers National Company, a farmland-management group based in Omaha, Nebraska, told a seminar for landowners that the increased production overseas has boosted competition for U.S. exports. The Soviet Union imported wheat from the United States, but Russia has become a major wheat exporter.

“Worldwide, over 180 million acres of new land has been brought into production since 2006” and “21 million more productive acres in Ukraine alone are still on the sideline,” Farmers National said.

The Trump administration’s policies on ethanol, trade, the budget, and the farm bill have added to the uncertainties.

Trump has maintained the support for ethanol that he promised before the Iowa caucuses, but Environmental Protection Agency Administrator Scott Pruitt and Sen. Ted Cruz seem determined to find a way to respond to oil-industry complaints that the Renewable Fuel Standard, which requires the use of ethanol in gasoline, is costing them a lot of money.

Jeff Broin, the founder of POET, the South Dakota company that builds and runs ethanol plants, traveled to Washington in January for a “state of the union” conference sponsored by Vice President Mike Pence to highlight his view that continuing current levels of corn in ethanol is vital to keeping rural America from sinking into a depression. Broin said the way out of the global grain glut is for the Trump administration or Congress to remove barriers to increasing the percentage of ethanol in gasoline. But that idea doesn’t seem to be going anywhere.

A White House meeting with oil- and ethanol-state senators Tuesday resulted in Cruz lifting his hold on Bill Northey, Trump’s nominee for Agriculture undersecretary for farm production and conservation. The Senate quickly confirmed Northey but Sen. Chuck Grassley of Iowa tweeted afterward that there was no resolution to the problem.

For both farmers and agribusiness, the greatest frustrations with the Trump administration are over trade. U.S. agriculture exports have grown exponentially in the quarter-century since the North American Free Trade Agreement was reached and China joined the World Trade Organization. Farmers and meat producers were hoping for big gains out of the Trans-Pacific Partnership from which Trump withdrew.

When Trump makes one of his bombastic statements about Mexico, Canada, China, or the WTO, farm leaders cringe in fear of losing markets.

Every farm meeting this winter has had a session at which analysts have tried to help producers understand what Trump will really do on trade. The International Sweetener Colloquium, sponsored by the Sweetener Users Association and the International Dairy Foods Association last month in Florida, featured William Reinsch, the former head of the Foreign Trade Council who is now at the Center for Strategic and International Studies. Reinsch said a senator who met with Trump to urge him not to withdraw from NAFTA reported, “We didn’t disarm him, we just re-aimed him” toward China.

But Trump’s attitude toward China scares the farmers at least as much as his criticism of NAFTA. When Commerce Secretary Wilbur Ross recommended punitive tariffs on imported steel and aluminum, American Soybean Association President John Heisdorffer noted that China purchases a third of the soybeans grown in the United States, more than all other foreign customers combined, and that the Chinese have already identified soybeans as a target for retaliation.

“These potential tariffs have the potential to make life very hard for soybean farmers,” Heisdorffer said. “Prices are down 40 percent and farm income is down 50 percent, and we simply can’t afford for those numbers to get worse.”

Then there’s the farm bill. Trump pledged his support for crop insurance to the American Farm Bureau Federation annual convention, but his budget would reduce spending for it and other farm programs and eliminate an international food aid program that takes U.S. commodities off the market.

Commodity producers are unlikely to boo Perdue here the way anti-hunger advocates booed an Agriculture Department official this week over the administration’s proposal to replace food stamps with boxes of food. But the frustration is growing and warrants watching from now to November.

What We're Following See More »
Supreme Court Punts Gerrymandering Cases
38 minutes ago

"The Supreme Court on Monday passed up its two opportunities this term to rule on when and whether states violate the Constitution by drawing electoral maps that sharply favor one political party." In a dispute over Maryland's congressional map, the Supreme Court "upheld a district court judge’s decision not to grant a preliminary injunction" blocking the map. In the Wisconsin case Gill v. Whitford, the justices ruled that Democratic voters lacked standing to challenge the redrawn electoral boundaries at the Supreme Court. Seven justices
"agreed to give the challengers another shot at making their case in the lower courts."

Ross Still Has Stake in Chinese Companies
1 hours ago

Commerce Secretary Wilbur Ross failed to keep his promise to divest from his company holdings upon entering government, a Forbes investigation has found. Ross reportedly kept his stakes in companies co-owned by the Chinese government, a firm linked to Vladimir Putin’s inner circle, and a Cyprus bank caught up in the Robert Mueller investigation. Forbes reports that Ross’s family continued to have an interest in these holdings while he dealt with China and Russia in his official role, even while knowing that his family’s fortunes were linked to the countries. Although the arrangements appear to be legal, Forbes says Ross may have broken the law by submitting a sworn statement to officials in November saying he divested of everything he promised he would. His spokesperson said Ross did not lie and has filed amended paperwork.

Pentagon Greenlights Offensive Cyberattacks
1 hours ago

"The Pentagon has quietly empowered the United States Cyber Command to take a far more aggressive approach to defending the nation against cyberattacks, a shift in strategy that could increase the risk of conflict with the foreign states that sponsor malicious hacking groups." The policy change empowers the command to conduct cyberattacks against adversaries, including "nearly daily raids" against enemy networks and "non-kinetic" attacks against military targets. The purpose of the change, according to policy documents, is to “contest dangerous adversary activity before it impairs our national power" and to impel adversaries to "shift resources to defense and reduce attacks.”

Border Patrol Chief Weighs In On Family Separation
2 hours ago

Manuel Padilla, the Border Patrol chief for the Rio Grande Valley, expressed his desire to CBS News for action to be taken to address family separation at the border. Separations have spiked under the Trump Administration's "zero-tolerance" policy. "We created this situation by not doing anything," Padilla said, arguing that previous immigration policy had created a "vacuum" for other families to attempt to cross the border.

Senators Want to Rubber Stamp Any North Korean Deal
5 days ago

"As Trump signed a joint statement with Kim Jong Un that offered few details on how the North Korean leader would make good on his vow to denuclearize, Republicans on Capitol Hill said Tuesday that they want and expect the White House to submit any final agreement for their approval." Senate Majority Leader Mitch McConnell called for any agreement to be in the form of a treaty.


Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.