Drone’s-eye view of tobacco cutting
Farmers are a key ingredient in the rural economy but might soon become an extinct breed. Both US tariffs and retaliatory tariffs are placing farmers between a rock and a hard wall in an already compromised situation, due to severe impact from climate change.
Some farmers support tariffs as they think it’ll force China to import more and, if they had enough savings, they could wait it out. Others are shaking their head, while some believe in promises like this one from President Trump in January: “Our farmers deserve a Government that serves their interest and empowers them to do the hard work that they love to do so much.”
But the Government’s actions seem more like a disservice to farmers:
- Tariffs on Chinese goods are equivalent to higher taxes via imports from China collected by US Customs and paid for by US customers. As an example, John Deere has estimated that tariffs on imports of metal and raw material come to around $100 million in additional cost. John Deere says it needs to cut costs (wages and jobs) and increase prices to protect its profits. The effect is higher prices on farm equipment.
- China’s follow-up tariffs on US soybeans have shifted Chinese imports to Brazil. As a result, the US is losing export revenue, at the farmer’s expense.
- The Department of Agriculture’s (DOA) federal budget saw a 16% drop to $19 billion, which includes transfers to wildfire suppression and other programs, not leaving much to serve farmers.
- Another disservice to farmers is the marginalizing of its economic division (under DOA) which for decades provided data to policymakers. When it concluded that tariffs would hurt farmers, people were removed, and the division silenced.
Farmers think of themselves as independent. The reality is, they are the most dependent economic sector there is. What needs to happen? Extreme weather patterns are already hurting farmers. Last year, the costs of all weather-related catastrophes in the U.S. reached a high of $91.6 billion according to the National Centers for Environmental Information. How bad does it have to be before the effect of climate change is recognized by all farmers and they too call for our leadership to act?
Over the past 3-4 decades, the US market has gone low on cost, where other markets have gone high on quality. The US market is dominated by cheap stuff and a long supply chain that doesn’t add any value, rather quality is deteriorating. We eat stale produce, add unnecessary ingredients from stabilizers, colors, brine solutions to hormones all wrapped in plastic. To more and more people, that’s all they can afford. This must change.
As a result, the US imports way more than other countries relative to size. Even within the category “food, feed and beverage”, we import more than we export. That must change. The long supply chain adds profit, but it’s all stuck in stockholders’ pocket. Farmers have become followers rather than leaders left with no leverage and little profit.
Investments are needed to chop up and develop shorter supply chains to improve quality and develop export markets. The European Union (EU) is a trade organization with 500 million people and an economy close to same size as the US. The EU is the world’s largest net-exporter after China and does not use tariffs except retaliatory tariffs. The EU market recognizes quality as well as higher process standards. Environmental and human considerations are part of a product too.
The US could export more to the EU and other countries if we fulfill their quality requirements. Bourbon does that. Profits and progress need to go hand in hand. The US federal deficit, debt and trade deficit are all escalating. Cheap imports must be replaced by investments in the US. Quality and a stronger domestic market are needed, not tariffs.
Community columnist Kris O’Daniel of Springfield is a scientist and native of Denmark who raises beef cattle and trains horses.