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
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.

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