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Issue: Struggling Farmers
Struggling Farmers
By: Jonathan Broder
Pub. Date: August 6, 2018
Access Date: January 15, 2022
DOI: 10.1177/237455680424.n1
Source URL: http://businessresearcher.sagepub.com/sbr-1946-107643-2900054/20180806/struggling-farmers
©2022 SAGE Publishing, Inc. All Rights Reserved.
©2022 SAGE Publishing, Inc. All Rights Reserved.
Will Trump’s tariffs sink U.S. agriculture?
Executive Summary
Farmers in the United States are struggling to overcome an interrelated series of challenges that have driven many of them to the brink of
financial failure. The most recent arose when some of the biggest U.S. trading partners imposed tariffs on U.S. agricultural products in
retaliation for the Trump administration’s imposition of levies on those countries’ exports to the United States. This has come on top of a
steep decline in crop prices, a sharp reduction in the farm labor supply, rising interest rates, climate change and a congressional
stalemate over a new farm bill. “It’s all coming down on us at once,” said one Iowa soybean farmer. As many as one-fifth of that state’s
small farmers could go under in the next two years, some Iowa bankers predict.
Here are some key takeaways:
Farm commodity prices have fallen by 50 percent in the past five years, the greatest percentage drop since the Great Depression.
Agricultural products make up 10 percent of total U.S. exports, and 20 percent of total U.S. farm income is derived from exports.
Farm debt has more than doubled since 2000 and will reach the highest level in history this year, according to the U.S. Department
of Agriculture.
Click here to listen to an interview with author Jonathan Broder or click here for the transcript.
Full Report
Prices for agricultural commodities, such as this wheat being harvested in Illinois, have fallen in recent years, creating serious
financial stresses for U.S. farmers. (Daniel Acker/Bloomberg via Getty Images)
Farmers have been described as the biggest gamblers outside of Las Vegas.
Every spring, they borrow millions from banks to buy the seed, fertilizer, fuel and machinery upgrades needed to sow acres of soybeans,
corn, wheat and other crops on family-owned or corporate farms across the nation’s heartland. Once the seeds are in the ground, they
bank on good weather. And come the autumn harvest, they depend on exporting their crops to overseas markets for the revenue to pay off
their bank loan and leave them enough to live on.
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SAGE Business Researcher
©2022 SAGE Publishing, Inc. All Rights Reserved. For the past few years, that gamble has not been paying off. Global surpluses have driven down most farm commodity prices to half of what they were five years ago. This fall in crop prices – the largest percentage drop since the Great Depression – has pushed many U.S. farmers to the financial brink. 1 And now, with the Trump administration locked in a full-bore trade conflict with China and several trade disputes with U.S. allies, economists say the U.S. farm economy is in for more hard times. Trump argues his imposition of tariffs on $34 billion worth of Chinese products, as well as on steel and aluminum imports from Canada, Mexico and the European Union (EU), are aimed at correcting years of unfair trade practices by these countries, even if it means some temporary costs to the U.S. economy. But with China and the other targeted countries directing the bulk of their retaliatory tariffs at U.S. agricultural products, these analysts say U.S. farmers and ranchers will bear the greatest pain. To mitigate some of that pain, the administration in late July announced up to $12 billion in emergency aid for farmers. The move drew immediate criticism from Republican lawmakers and farm groups, who blasted it as a costly bid to provide temporary relief for protectionist policies reminiscent of those that exacerbated the Great Depression. 2 “This trade war is cutting the legs out from under farmers and White House’s ‘plan’ is to spend $12 billion on gold crutches,” Sen. Ben Sasse of Nebraska, a Republican but a frequent Trump critic, said in a statement. “America’s farmers don’t want to be paid to lose – they want to win by feeding the world. This administration’s tariffs and bailouts aren’t going to make America great again, they’re just going to make it 1929 again.” 3 But Trump’s use of tariffs to win better trade deals may have begun to pay off. After he imposed the levies on EU steel and aluminum exports and indicated that he might move on to European-made automobiles, European Commission President Jean-Claude Juncker flew to Washington for hastily arranged negotiations with Trump in late July. They announced that Europeans would buy billions of dollars of U.S. soybeans and liquefied natural gas while they worked on a deal that would eventually eliminate tariffs, as well as non-tariff trade barriers and subsidies. Both sides also agreed to hold in abeyance any further tariffs while the trade talks are underway. 4 However, the trade crossfire is just the latest threat to the U.S. farm economy. The Trump administration’s tough immigration policies have sharply reduced the number of seasonal and year-round farm laborers available to U.S. farmers, further threatening agricultural production and profits. The Federal Reserve continues to nudge up interest rates, making farm loans more expensive at a time when farmers can least afford it. As the Sept. 30 end of the federal government’s fiscal year approaches, Congress has yet to pass a farm bill, which could provide badly needed subsidies for certain commodities as well as crop insurance. Meanwhile, climate change continues to take a toll on the farm economy as the new normal of high temperatures and other weather extremes damages crops, livestock and fisheries. 5 After several years of just scraping by, some farmers are worried that the accumulation of these financial challenges could drive them out of business. Many small family farmers report they have had to take second and third jobs to keep their farms afloat, according to Will Rodger, a spokesman for the American Farm Bureau Federation, the nation’s largest farmers’ lobby. “We can’t have very many more years like the last few – it’s already starting to weed people out,” said Timothy Bardole, an Iowa soybean farmer and a board member of that state’s Soybean Association, a business advocacy group. “It’s all coming down on us at once.” 6 The Vanishing Farmer Ever since U.S. independence, agriculture’s share of the labor force has been steadily shrinking. In 1790, 90 percent of Americans were farmers. By 1860, manufacturing, transportation and other non-agricultural sectors had whittled agriculture’s share down to 58 percent. Today, agriculture makes up less than 1 percent of the country’s workers. Over time, agriculture’s share of economic production also has declined. Around 1860, farming made up 52 percent of U.S. GDP. By 1947, it had dwindled to 7.6 percent. Today it makes up less than 1 percent of the nation’s estimated $20.4 trillion GDP. 7 At the same time, U.S. farms have been enormously productive, thanks to larger, faster and more precise farm machinery, as well as genetically modified crop yields. U.S. farm products today not only provide the nation’s food supply; they also make up more than 10 percent of the country’s exports. 8 Those “amber waves of grain” exalted in the patriotic anthem “America the Beautiful” account for nearly half of the world’s exports of wheat, corn, soybeans and sorghum, says Rodger. He adds that American farms also grow and export cotton, fruits, vegetables, beef, pork, poultry, dairy products and fish. Exports made up 20 percent of the nation’s total farm income in 2017, Rodger says. U.S. Farm Income Is Declining Agricultural production and net income, 2010-18 Page 3 of 14 Struggling Farmers SAGE Business Researcher
©2022 SAGE Publishing, Inc. All Rights Reserved.
Note: Data for 2017 and 2018 are forecasts.
Source: “Value added years by State,” United States Department of Agriculture, Economic Research Service, July 17, 2018,
https://tinyurl.com/ycg4v299
U.S. crop production and net farm income have fallen from their 2013 peaks.
But over the past five years, global surpluses have steadily driven down the prices of farm commodities. In 2013, the nation’s net farm
income – the U.S. Department of Agriculture’s tabulation of total profits from all U.S. crops and livestock – was $123.7 billion. Even before
the trade disputes erupted, net farm income this year was expected to fall to $59.5 billion, a drop of almost 52 percent from 2013,
according to the most recent Agriculture Department forecast. A year-long trade war could shave as much as 10 percent off that total, says
Mark Zandi, chief economist at Moody’s Analytics, an economic research firm. Adding to this grim picture, the Agriculture Department
also anticipates farm debt will reach a record $389 billion in 2018, more than double the level in 2000, when it stood at around $160
billion. 9
Meanwhile, the majority of the nation’s agricultural production has shifted away from small and mid-sized family farms of less than 1,000
acres to large family farms with at least 2,000 acres. In many cases, the larger farms bought up the smaller ones because those farms
could not stay afloat in the face of falling commodity prices and high costs of the latest farm equipment. 10 As a result, there are only 2.1
million farms in the country today, down from 6 million farms in 1935. Still, 99 percent of the nation’s farms are operated by families, either
individual, family partnerships or family corporations. 11
With the China trade conflict adding to their woes, more small farms are at risk today. Even before the tariff tit-for-tat, some Iowa bankers
predicted that 10 percent of the state’s small farmers won’t make it this year and at least another 10 percent likely will fail next year. 12
Dale Moore, the Kansas-born executive director for public policy at the Farm Bureau Federation, says that, given the additional drop in
commodity prices that the trade dispute is expected to cause, “we’re going to be looking at a whole lot more delinquencies on farm loans,
as well as all the emotional and social problems that come with that.”
Foreign Markets Are Key
In April, one month after he fired the first shot in the tariff battle with China, President Trump assured U.S. farmers they would emerge
better off from the dispute. “There’ll be a little work to be done, but the farmers will be better off than they ever were,” Trump said. 13
David Salmonsen, a trade specialist at the Farm Bureau Federation, says the health of the U.S. farm economy depends largely on
maintaining and expanding access to key foreign markets, preferably through free-trade agreements. The Clinton, George W. Bush and
Obama administrations all pursued this policy vigorously.
By contrast, Trump believes the agreements negotiated by his predecessors were bad deals that disadvantage the United States. Since
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taking office in 2017, he has withdrawn the country from the Trans-Pacific Partnership, a free-trade pact involving 11 other nations, and
frozen negotiations for a free-trade agreement with the EU. He has also threatened to withdraw from the North American Free Trade
Agreement (NAFTA) unless Mexico and Canada agree to major revisions.
Trump’s top trade priority now is reducing the nation’s trade imbalances. He often points out that China sells the United States $375 billion
more in goods than it buys. With Mexico, the trade gap in goods is $71 billion. “Farmers have not been doing well for 15 years,” Trump
tweeted in early June. “Mexico, Canada, China and others have treated them unfairly. By the time I finish trade talks, that will change.” 14
In March, Trump began his offensive, announcing tariffs on a number of Chinese imports and limiting Beijing’s ability to invest in the U.S.
technology industry. China fired back with tariffs on 128 U.S. products, including pork, nuts, fruit and wine. 15 Later, in what China called an
anti-dumping measure, it levied a 179 percent tax on U.S. sorghum, a cereal grain used for sweeteners, livestock feed and ethanol. (An
anti-dumping measure seeks to remedy a situation in which one nation believes a competitor is pricing an export at below fair market
value.)
“Overnight, our sorghum exports to China went from around $1 billion annually to zero,” the farm bureau’s Moore says.
In May, Trump cited national security concerns to impose tariffs of 25 percent on steel and 10 percent on aluminum from Canada, Mexico
and the EU, a move that will make farm equipment from those countries more expensive. Mexico retaliated with 20 percent tariffs on U.S.
pork, potatoes, apples and cheese; Canada levied duties on U.S. maple syrup and mayonnaise, which is made from eggs; and the EU
imposed tariffs of 25 percent on bourbon whiskey, which is made from corn, and 10 percent on motorcycles. 16 Not coincidentally, many of
these goods are produced in states which the Republicans leaders of the House and Senate represent and which voted for Trump in the
2016 elections.
Then, in July, with China resisting Trump’s demands to shrink its trade surplus with the United States, the president ordered tariffs on an
additional $34 billion of Chinese goods – a move many analysts described as the start of a full-blown trade war. 17 Beijing immediately
struck back with a 25 percent levy on $34 billion in U.S. products exported to China, including agricultural items such as soybeans, corn,
wheat, cotton, rice, beef, pork, poultry, fish, dairy products, nuts and vegetables. 18
President Trump, shown speaking here to the American Farm Bureau Federation in January, has imposed tariffs on U.S.
trading partners that have prompted retaliatory duties on farm exports. (Luke Sharrett/Bloomberg via Getty Images)
Economists forecast the tariffs will have minimal impact on the overall U.S. economy. For example, Zandi of Moody’s Analytics says the
levies will trim third-quarter U.S. GDP by 0.03 percent, rising to 0.1 percent next year if the trade conflict persists. But with most of the
Chinese and Mexican tariffs aimed at U.S. farm products, agricultural trade specialists are not so sanguine.
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They say U.S. pork producers will be among those hardest hit by the combined Chinese and Mexican tariffs. Together with the earlier
tariffs and value-added taxes, the Farm Bureau’s Salmonsen says, the Chinese duty on U.S. pork products will total around 80 percent.
“Our pork producers now figure we’ll be out of the pork market in China,” for a loss of about $1.1 billion in sales, he says. He estimates
American pork producers will lose another $1.5 billion in sales from Mexico’s tariffs.
“That also translates into lower domestic prices,” Salmonsen says. “If you’re a farmer and you gear up for a certain level of pork
production, you’ve got to keep on producing pigs to keep up cash flow. So there’s product there that’s got to seek a market. But it will back
up domestically, and prices will drop with oversupply.”
Trade experts also expect U.S. farmers will take a major hit from China’s soybean tariff, although the full extent of their losses will not
become clear until October, when overseas buyers place their orders. Until now, China has purchased half of its imported soybeans from
the United States, an amount worth $12 billion in 2017, and 50 percent of total U.S. farm exports to China that year, Salmonsen says. As
early as this spring, he says, China began to reduce its U.S. soybean purchases and increase its imports from Brazil. Now, with the new
25 percent tax, trade experts expect that trend to accelerate.
Salmonsen says that because Brazil and several other countries cannot meet China’s huge soybean demand, he expects some U.S.
sales to continue under the new tariffs. But he predicts the volume will remain reduced even if Washington and Beijing resolve their trade
differences. “These relations are built on trust,” he says. “Once that trust is broken, it takes a long time to restore it.”
Meanwhile, Moore says market uncertainty has shaved $1.50 from the price of soybeans, dropping it to around $8.50 per bushel in recent
weeks. That, he says, is a dollar less than the $9.50 per bushel price farmers need just to cover their costs. “If our soybean farmers were
barely breaking even before, now they’re under water,” he says.
Trump has threatened to impose additional tariffs on another $500 billion in
Chinese goods. Before the Juncker visit, Trump was also eyeing new levies
on European cars, one of the EU’s major exports to the United States. In
response, the EU had warned of retaliatory action against as much as $300
billion of U.S. products, some of which are certain to be agricultural exports,
Salmonsen says. 19
America’s farm belt tends to be staunchly Republican, and many farmers who
voted for Trump in 2016 were still giving him relatively high marks in March, as
the trade battles began. In a nationwide Agri-Pulse survey of farmers and
ranchers conducted late that month, almost 51 percent of those surveyed said
they either “strongly approve” or “somewhat approve” of how Trump is
handling his job. By contrast, his approval rating in urban areas was only 36
percent, according to a Quinnipiac University national poll conducted in
February. Farm Bureau officials in agricultural states say Trump’s numbers have not changed much since then. 20
“I’m very comfortable with what President Trump is doing,” Matt Schwab, who raises soybeans, wheat, corn and beef cows on a 700-acre
farm in Michigan’s Arenac County, which Trump won by 33 percentage points, said in May. “He’s just leveling the playing field. He’s just
simply trying to balance the trade deficit.” 21
But the Agri-Pulse poll results also suggested that farmers’ support for Trump was softening somewhat because of their concerns over the
trade war. Two-thirds of the farmers surveyed said they voted for Trump in 2016, but only 45 percent said they would support Trump’s re-
election. Another 18 percent said they hadn’t decided how they would vote in 2020, suspending judgment to see how the trade tensions
are resolved. 22
“The farmers I talk to are very concerned about trade,” said Blake Hurst, a Tarkio, Mo., farmer who leads the Missouri Farm Bureau. “And
while they are willing to give the president the benefit of the doubt in the hope that his actions will result in better deals, folks are getting
pretty nervous.” 23
The Farm Bureau Federation, which represents family farmers, and lobbyists for large agribusiness companies, such as Cargill and
Archer Daniels Midland, have made their worries known to the Trump administration and on Capitol Hill, where a handful of Republicans
have sounded the alarm over the damage prolonged trade battles could cause to the overall economy – and to GOP prospects for the
November midterm elections. The next presidential election is also on their minds. Several farm states, such as Iowa and Wisconsin, are
traditional battlegrounds that likely will be closely contested again in 2020.
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President Trump’s threat to walk away from the North American Free Trade Agreement (NAFTA) unless Mexico and Canada
agree to major revisions worries many farmers, like this man attending a Farm Bureau Federation conference. (Luke
Sharrett/Bloomberg via Getty Images)
But all Republican attempts to push back against Trump have failed so far. In June, GOP Sens. Bob Corker of Tennessee and Patrick J.
Toomey of Pennsylvania unsuccessfully tried to attach an amendment to a must-pass defense policy bill that would have allowed Congress
to block tariffs that Trump imposed on national security grounds.
A small group of Republican senators, led by South Carolina’s Lindsey Graham and Iowa’s Chuck Grassley, adopted a less
confrontational approach toward Trump, quietly visiting the White House in June for meetings with the president in an attempt to steer him
away from his protectionist policies. But Trump dismissed those attempts too, say two senior U.S. officials who asked not to be identified.
In announcing the $12 billion emergency aid package to farmers, Agriculture Secretary Sonny Perdue told reporters that Trump would
press on with his trade war against all countries that treat the United States unfairly. “The actions today are a firm statement that other
nations cannot bully our agricultural producers to force the United States to cave in,” he said. 24
That same day, Trump defended his tariff policies. “Tariffs are the greatest!” he tweeted. “Either a country which has treated the United
States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that – and everybody’s talking! Remember, we
are the ‘piggy bank’ that’s being robbed. All will be Great!” 25
Farm Labor Crunch
In addition to the tariffs, the U.S. farm economy faces several other hurdles. One is a farm labor shortage, which is growing more serious
as the overall U.S. jobless rate falls. A 2015 report by the Partnership for a New American Economy, a pro-business organization that
advocates liberalized immigration policies, found that the number of farm laborers in the United States fell by 146,000 between 2002 and
2014. The causes of the decrease included a slowdown in the immigration of potential farm workers and the aging and retirement of farm
workers who had arrived in the 1990s. The report concluded that this drop in available farm labor resulted in $3.1 billion in lost agricultural
production and another $2.8 billion in lost business to related services such as transportation, manufacturing and irrigation. 26
U.S.-born workers have replaced less than 3 percent of the lost labor, the Partnership’s report said. 27 According to the U.S. Department
of Labor, roughly half of the country’s approximately 1.2 million farm workers are undocumented, which means that if the Trump
administration or Congress ordered their deportation, farmers would face an even more severe labor crisis. 28
As a remedy, many farmers are applying for H-2A visas to legally bring in seasonal farm workers. But they complain about costly
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bureaucratic delays in the application process. Farmers near Santa Barbara, Calif., last year reported losing $13 million in produce sales
because government officials held up approvals for visa applicants. In response, more production has moved abroad, resulting in
increased imports of fruits and vegetables and lost jobs and revenue in the United States. 29
By the end of the second quarter of fiscal 2018, the Labor Department had granted H-2A visas to 112,432 guest workers. If the rate of visa
certification remains the same for the third and fourth quarters, the administration will have granted these visas to some 231,000 guest
workers by the end of the fiscal year. 30
Farm economists say this number is not nearly enough to satisfy demand. House Judiciary Chairman Bob Goodlatte, R-Va., proposed
legislation that would cap all farm worker visas – including those of the existing immigrant labor force – at 410,000 annually. Farming
advocates said that over time the measure would help alleviate the labor shortage problem. But when the legislation came up for a vote as
part of a larger immigration bill in June, lawmakers who oppose increased immigration defeated it, arguing that other provisions offering
some undocumented immigrants a path to citizenship constituted amnesty for law-breakers. 31
Interest rates are another financial challenge facing farmers. This year, banks charged an average interest rate of 5.7 percent on farm
loans, about 1 percentage point higher than the national average for a 30-year home mortgage as of late July. The Federal Reserve has
indicated that its benchmark rate probably will be going up at least five more times by the end of 2019. With such hikes typically amounting
to a quarter of a point, farmers could face interest rates as high as 7 percent. 32
Farm economists say the rate hikes, coming on top of low crop prices and tariffs, could create a perfect storm of financial burdens that is
likely to spell bankruptcy for many small family farms.
Some struggling farmers in the heartland are beginning to draw comparisons between today’s situation and the farm crisis of the 1980s,
when high interest rates and low commodity prices combined to cause around 10,000 Iowa farmers to lose their farms. “The farm crisis in
the 1980s was much worse than what we currently have,” said Don Batie, a fourth-generation Nebraska farmer. “But we’re headed in the
same direction.” 33
Farming Is Less than 1 Percent of GDP
U.S. gross domestic product by sector, 2017
Source: “North America: United States,” The World Factbook, Central Intelligence Agency, 2017, https://tinyurl.com/2l9rcv
Agriculture made up less than 1 percent of the United States’ gross domestic product (GDP) in 2017.
In addition to the $12 billion in emergency aid, some additional relief for farmers could come if Congress passes a farm bill, which
historically has provided federal subsidies for crop insurance and major farm commodities. As in the past, most of the money in this year’s
10-year, $867 billion measure would fund food stamp benefits for the poor.
Until now, the farm bill, renewed about every five years, has enjoyed broad bipartisan support. Its farm programs are popular with
Republican lawmakers from rural states while its food assistance benefits win the support of urban lawmakers, who tend to be Democrats.
But this time, some deep philosophical differences divide the versions of the bill passed by the House and Senate. The House bill is a
purely GOP-crafted piece of legislation that includes stricter work requirements for food stamp recipients and cuts to crop and insurance
subsidies. The bipartisan Senate bill contains no similar provisions, setting the stage for difficult conference negotiations. It is not clear
how the administration’s aid package will affect the negotiations, but lawmakers must iron out their differences and send an agreed
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version of the bill to the president for his signature before Sept. 30, when funding in the current farm bill runs out. With midterm elections
looming in November, the Farm Bureau’s Moore and other observers of past farm bill negotiations predict lawmakers will meet their
deadline.
Perhaps the most formidable long-term challenge facing the U.S. farm economy is climate change. According to the most recent National
Climate Assessment, a study of the effects of climate change by more than 300 scientists and a 60-member federal advisory board, many
regions of the country will experience “declines in crop and livestock production from increased stress due to weeds, diseases, insect
pests and other climate change-induced stresses.” 34
A 2017 study of the impact of rising temperatures on crop yields published in the journal Nature showed that in the United States and other
countries located in mid- to high latitudes, yields from corn and soybean crops decline significantly for every day with temperatures higher
than 86 degrees Fahrenheit during the growing season. The study said the crop yield declines occurred even when increased amounts of
fertilizer were used. 35
“There are a lot of stresses for farmers – more than we’ve had in a long while,” said Bardole, the Iowa soybean farmer. “There’s no
shortage of things to think about when you lay awake at night.” 36
About the Author
Jonathan Broder is a Washington-based reporter and editor. He was a senior writer for Newsweek, a senior editor at Congressional
Quarterly and served as a foreign correspondent in the Middle East, South Asia and the Far East for the Chicago Tribune. Broder’s writing
also has appeared in The New York Times Magazine, The Washington Post, Smithsonian and the World Policy Journal, among other
publications. He previously reported for Business Researcher on managing corporate crises, workplace safety, corporate social
responsibility and commodities supercycles.
Chronology
1776-1820 U.S. farming expands amid war and independence.
1776 Americans declare independence partly because of British restrictions on farm exports, land titles and western
settlement; the Continental Congress offers land grants in exchange for military service.
1793 Eli Whitney invents the cotton gin, which separates seeds from cotton fiber, revolutionizing cotton production and
helping to make cotton the South’s principal cash crop.
1803-1819 The U.S. purchase of the Louisiana territory from France doubles the nation’s land size and opens up vast new areas
for farming. It is followed by the acquisition of Florida from Spain.
1820s-1840s Agriculture becomes mechanized and commercialized.
1834-1837 Cyrus McCormick patents his McCormick Reaper, which cuts and gathers crops, mechanizing harvests and reducing
manual labor requirements; John Deere begins manufacturing steel plows.
1843-1849 U.S. farmers begin using commercial fertilizers, increasing crop yields; farm exports reach $90 million. Texas, Oregon
and the southwestern territories ceded by Mexico after the Mexican-American War are added to the union, extending
the country to the Pacific coast.
1850s-1870s Civil War and the end of slavery topple King Cotton.
1850s Successful farming begins in the nation’s prairies in the Midwest.
1850-1861 With its agrarian economy based on slave labor, the South is strong both politically and economically.
1861-1870s With South’s defeat in the Civil War, slavery ends, to be replaced by the sharecropping system, in which white
landowners allow poor black and white tenants to farm land in return for a portion of their crops.
1880s-1950s Farmers experience boom, bust and recovery.
1889-1919 The U.S. farm economy flourishes, especially during World War I, when agricultural exports, mostly to Europe, reach
nearly $2 billion.
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1920s-1930s Crop surpluses lead to a collapse of agricultural prices, helping create the economic conditions that produce the Great
Depression. The 1930 Smoot-Hawley tariffs raise import prices, prompting other countries to retaliate with similar
levies on U.S. products and reducing U.S. farm exports. Severe drought in states such as Oklahoma and Texas
creates the Dust Bowl and turns 2.5 million people, mostly small farmers, into migrants.
1950s Increased agricultural mechanization and new methods of crop fertilization create large farm surpluses. Agricultural
exports grow to $3.5 billion by 1959.
1960s-1980s Growth continues before another crisis hits.
1966 Congress extends the federal minimum wage to some farm workers, who were previously exempt.
1972-1981 The United States increases grain exports to the Soviet Union, but exports are interrupted when President Jimmy
Carter imposes an embargo after the Soviets invade Afghanistan in 1979. President Ronald Reagan lifts the grain
embargo in 1981.
1980s U.S. farmers struggle under high interest rates; many lose their farms.
1990s Farms flourish amid free trade and GMO crops.
1994-1996 The North American Free Trade Agreement and other agreements lower trade barriers; in 1996, U.S. farm exports
reach a record $60.4 billion.
1997 The first weed- and insect-resistant genetically modified crops (GMOs) are sold commercially.
2000s-present Prices drop and trade disputes erupt.
2013 After nearly a decade of rising commodity prices, net farm income hits a record high of $123.7 billion.
2016-2018 Farm commodity surpluses drop prices by 50 percent, leaving estimated net farm income for 2018 at $59.5 billion.
President Trump imposes tariffs on Canadian, Mexican and European Union steel and aluminum and $34 billion of
Chinese products, prompting those countries to target U.S. farm exports in retaliation.
Resources for Further Study
Bibliography
Books
Elliott, Kimberly Ann, “Global Agriculture and the American Farmer: Opportunities for U.S. Leadership,” Brookings Institution Press, 2017.
An economist explores the harm caused by government subsidies for U.S. farmers, the federal mandate to use biofuels and the overuse of
antibiotics in U.S. meat exports.
Qaim, Matin, “Genetically Modified Crops and Agricultural Development,” Palgrave and Macmillan US, 2016. A professor of international
food economics analyzes how genetically modified crops can contribute to sustainable agricultural development and food security.
Articles
Daniels, Jeff, “Tough times in the heartland as some farmers hit by losses weigh exiting the business,” CNBC, Dec. 27, 2017,
http://tinyurl.com/yaxhgc4c. A veteran economics reporter paints a grim picture of the financial burdens and tough choices that U.S.
farmers already faced at the end of 2017, after more than four years of low commodity prices but before trade disputes erupted.
Linke, Maureen, and Josh Zumbrun, “Chinese Tariffs Hit Trump Counties Harder,” The Wall Street Journal, July 6, 2018,
http://tinyurl.com/yave35g4. Accompanied by a national map that shows strong voter support for President Trump in the nation’s heartland
in the 2016 election, two reporters conclude that China’s retaliatory tariffs in the trade conflict with Trump will cause the greatest pain to the
counties that voted him into office.
Reports and Studies
“Climate Change Impacts in the United States,” National Climate Assessment, 2014, http://tinyurl.com/y93f47nm. The most recent
assessment by the federally chartered U.S. Global Change Research Project examines the short- and long-term impact that human-
induced and natural climate change will have on the geography, economy and health of the United States and its people.
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SAGE Business Researcher©2022 SAGE Publishing, Inc. All Rights Reserved. “Trade War Rhetoric Shifts to Reality,” CoBank Knowledge Exchange, June 2018, http://tinyurl.com/y7vmcrpn. In a quarterly report, Colorado-based CoBank, which provides financial services to agribusiness, offers a detailed analysis of the impact that a trade war will have on every sector of the U.S. farm economy. Bronars, Stephen G., “A Vanishing Breed: How the Decline in U.S. Farm Laborers Over the Last Decade Has Hurt the U.S. Economy and Slowed Production on American Farms,” Partnership for a New American Economy, July 2015, http://tinyurl.com/y82o56t9. An economist examines the economic ripple effect of the nation’s severe farm labor shortage, showing how it has stunted the growth of U.S. farms and cost the economy tens of thousands of jobs in related industries, such as trucking and equipment manufacturing. Muhammad, Andrew, and S. Aaron Smith, “Evaluating the Impact of Retaliatory Tariffs on U.S. Soybeans in China,” Institute of Agriculture, University of Tennessee, May 4, 2018, http://tinyurl.com/y9qr8tqm. Researchers at the University of Tennessee’s Institute of Agriculture conclude that U.S. soybean exports to China, which totaled around $12 billion in 2017, are likely to drop by $4.5 billion if a 25 percent tariff is imposed. Schnepf, Randy, “U.S. Farm Income Outlook for 2018,” Congressional Research Service, Feb. 27, 2018, http://tinyurl.com/y9gkdxl4. Writing just before the trade disputes began, a specialist in agricultural policy for Congress’ research arm provides a grim outlook for the U.S. farm economy in 2018. The Next Step Climate Change Oates, Bryce, “In Farm Country, Grappling With the Taboo of Talking about Climate Change,” Civil Eats, July 11, 2018, https://tinyurl.com/yas2mt5j. Although more farmers are experiencing the reality of climate change, many are still not open to discussing its implications, according to a journalist. Patel, Neel V., “Can Carbon Farming Reverse Climate Change?” The Daily Beast, July 17, 2018, https://tinyurl.com/y9r56m3b. A farming practice that does not disturb the soil would reduce the amount of carbon dioxide in the atmosphere by preventing it from being released during tilling or plowing. Purdy, Chase, “The world’s biggest farms pollute more than any oil company,” Quartz, July 19, 2018, https://tinyurl.com/y7sx69o9. The five largest animal agricultural companies emit more greenhouse gases than major oil companies ExxonMobil, Shell and BP, according to a report by a research and advocacy group. Mental Health Bierschbach, Briana, “Minnesota is considering doubling its number of rural mental health counselors. To two.” MinnPost, March 28, 2018, https://tinyurl.com/ybzvhz2z. Minnesota legislators are considering a proposal to increase the number of state-employed rural mental health counselors from one to two to serve the state’s 100,000 farmers. Ivanova, Irina, “Farmers in America are facing an economic and mental health crisis,” CBS News, last updated June 29, 2018, https://tinyurl.com/y8ktwmr9. U.S. farmers are coping with high levels of stress in their lives, according to advocacy groups, and suicide rates are higher in rural areas than in cities or suburbs. However, the federal Centers for Disease Control and Prevention says there are errors in a 2016 study on farm suicide rates. Walrath, Rowan, “Stressed, Struggling, and Suicidal: America’s Farmers Are Begging for Mental Health Services,” Mother Jones, April 9, 2018, https://tinyurl.com/ybwlddpw. Farmer advocacy groups have asked Congress to provide funding for a mental health services program aimed at farmers, the Farm and Ranch Stress Assistance Network. Organizations The Agribusiness Council P.O. Box 5565, Washington, DC 20016 1-202-296-4563 http://www.agribusinesscouncil.org A communications network encompassing small and medium-sized agribusiness companies, university/research institutions and other nonprofit organizations, as well as public sector agencies relating to farming. Agricultural & Applied Economics Association 555 E. Wells St., Suite 1100, Milwaukee, WI 53202 1-414-918-3190 Page 11 of 14 Struggling Farmers SAGE Business Researcher
©2022 SAGE Publishing, Inc. All Rights Reserved. www.aaea.org This membership organization provides agribusiness professionals with information for applied economics in the fields of the environment, natural resources, food and consumer issues. Agriculture Network Information Collaborative 10301 Baltimore Ave., Room 115, Beltsville, Maryland 20705 1-301-504-6999 www.agnic.org This group, affiliated with the Agricultural Research Service of the U.S. Department of Agriculture, connects researchers to an alliance of institutions that provide access to quality agricultural information and sources. American Farm Bureau Federation 600 Maryland Ave., S.W., Suite 1000 W, Washington, DC 20024 1-202-406-3600 www.fb.org The nation’s largest farm lobby, advocating on behalf of farmers and ranchers. With affiliated branches in every state and U.S. territory, the organization analyzes problems facing the farming and ranching communities, crafts policies to solve them and lobbies lawmakers. International Food and Agribusiness Management Association 5775 Wayzata Blvd., Suite 700, Minneapolis, MN 55416 1-763-412-1988 www.ifama.org A group that brings together top executives, academics, policymakers and other stakeholders to stimulate strategic thinking across global food, plant and forestry systems. The National Agri-Marketing Association 11020 King St., Suite 205, Overland Park, KS 66210 1-913-491-6500 https://nama.org An association for professionals in marketing and agribusiness. North American Agricultural Marketing Officials 1320 Research Park Drive, Manhattan, KS 66502 1-785-564-6758 http://naamo.org/ An international organization of farm marketing officials who provide advice and services to state and international food industries. United Agribusiness League 54 Corporate Park, Irvine, CA 92606-5105 1-800-223-4590 www.unitedag.org A membership organization that advocates for agribusiness employee benefits with state and federal lawmakers and educates members on compliance with state and federal regulations. Notes [1] Ben Moshinsky, “You have to go back to the 1930s to find a worse commodities rout,” Business Insider, Jan. 7, 2016, https://tinyurl.com/y72mvh6u. [2] Julie Hirschfeld Davis and Ana Swanson, “To Ease Pain of Trump’s Trade War: $12 Billion in Aid for Farmers,” The New York Times, July 24, 2018, https://tinyurl.com/ydhwozhq. [3] “Sasse Statement on Trade War Bailouts,” U.S. Senator for Nebraska Ben Sasse, July 24, 2018, http://tinyurl.com/ybtfbrbb. [4] Mark Landler and Ana Swanson, “U.S. and Europe Outline Deal to Ease Trade Feud,” The New York Times, July 25, 2018, http://tinyurl.com/yag2au4b. [5] Kyle Rabin,“10 Ways Climate Impacts Agriculture and Seafood,” Ecocentric, Jan. 31, 2017, https://tinyurl.com/yasj4wh5; Stephen G. Bronars, “A Vanishing Breed: How the Decline in U.S. Farm Laborers Over the Last Decade Has Hurt the U.S. Economy and Slowed Production on American Farms,” Partnership for a New American Economy, July 2015, https://tinyurl.com/y82o56t9; Jim Tankersley and Neil Irwin, “Fed Raises Interest Rates and Signals 2 More Increases Are Coming,” The New York Times, June 13, 2018, https://tinyurl.com/ychhtbsy. Page 12 of 14 Struggling Farmers SAGE Business Researcher
©2022 SAGE Publishing, Inc. All Rights Reserved. [6] Donnelle Eller, “Low prices, trade disputes sow fears of ‘80s-style farm crisis,” Des Moines Register, June 4, 2018, https://tinyurl.com/y8das5qp. [7] Debra Spielmaker, “Growing A Nation: The Story of American Agriculture,” U.S. Department of Agriculture, 2006, https://tinyurl.com/lqo6r2g; “GDP-Composition, By Sector of Origin (%),” The World Factbook, Central Intelligence Agency, accessed July 20, 2018, https://tinyurl.com/8quw2u; Robert E. Gallman, “Output, Employment, and Productivity in the United States After 1800 -- Gross National Product in the United States, 1834-1909,” National Bureau of Economic Research, 1966, p. 18, https://tinyurl.com/ybaatzqb; “Value Added by Industry as a Percentage of Gross Domestic Product,” Bureau of Economic Analysis, April 19, 2018 (click on tab VAPercentGDP), http://tinyurl.com/y9ghaqlg. [8] “United States of America, Trade Profile,” World Trade Organization, accessed July 20, 2018, https://tinyurl.com/y78fgdpv. [9] “Value Added Years By State,” United States Department of Agriculture Economic Research Service, Feb. 7, 2018, https://tinyurl.com/ycg4v299; “Digging Into the U.S. Farm Balance Sheet,” United States Department of Agriculture Economic Research Service, Feb. 7, 2018, https://tinyurl.com/yavjkhg2. [10] James M. MacDonald and Robert A. Hoppe, “Examining Consolidation in U.S. Agriculture,” Amber Waves (USDA-ERS), March 14, 2018, https://tinyurl.com/ya842esh. [11] Roberto A. Ferdman, “The decline of the small American family farm in one chart,” The Washington Post, Sept. 16, 2014, https://tinyurl.com/y723ntjx; Robert A. Hoppe and James M, MacDonald, “America’s Diverse Family Farms, 2016 Edition,” United States Department of Agriculture Economic Research Service, December 2017, https://tinyurl.com/ybrloz86. [12] Robert Leonard, “Will Trump Crash the Farm Economy?” The New York Times, April 1, 2018, https://tinyurl.com/ycsd3rfy. [13] Jennifer Jacobs and Alan Bjerga, “Trump Vows Farmers Will Be ‘Better Off’ Because of Trade Fight,” Bloomberg, April 9, 2018, http://tinyurl.com/ych7embg. [14] Donald J. Trump, Twitter, June 4, 2018, https://tinyurl.com/yav4c6qq. [15] Damian Paletta, “Trade war escalates as China says it will impose tariffs on 128 U.S. exports, including pork and fruit,” The Washington Post, April 1, 2018, https://tinyurl.com/y7uwsvtm. [16] David Alire Garcia, “Aiming at Trump strongholds, Mexico hits back with trade tariffs,” Reuters, June 5, 2018, http://tinyurl.com/yarndlsp; “Canada to slap extra tax on quiche, mayo, toilet paper and dozens of other U.S. products,” CTV News, May 31, 2018, http://tinyurl.com/yau9vlfv; Lauren Eads, “EU Slaps 25% Tariff on US Whiskey and Bourbon,” The Drinks Business, June 8, 2018, http://tinyurl.com/y8a32txv; Bob Bryan, “IT’S A TRADE WAR: Europe, Mexico and Canada retaliate against Trump’s steel and aluminum tariffs,” BusinessInsider.com, May 31, 2018, http://tinyurl.com/y84h25mp. [17] Weizhen Tan, “Trade War begins: U.S. and China exchange $34 billion in Tariffs,” CNBC, July 5, 2018, https://tinyurl.com/yan6eomg. [18] Maureen Linke and Josh Zumbrun, “Chinese Tariffs Hit Trump Counties Harder,” The Wall Street Journal, July 6, 2018, https://tinyurl.com/yave35g4. [19] David Lawder and Elias Glenn, “Trump says U.S. tariffs could be applied to Chinese goods worth $500 billion,” Reuters, July 4, 2018, http://tinyurl.com/y8kg7okk; Jenny Leonard and Richard Bravo, “Trump Tariff Threat on European Cars Escalates Global Trade War,” Bloomberg, June 22, 2018, http://tinyurl.com/ycgdauu4. [20] “Trump’s Support in Farm Country Remains Strong, but Eroding,” Agri-Pulse Communications/Cision PR Newswire, March 27, 2018, https://tinyurl.com/y8ugd2we. [21] Jim Malewitz, “Rural Michigan helped elect Trump. Now, farmers are sweating a trade war,” Bridge, May 15, 2018, https://tinyurl.com/y7ho6pem. [22] “Trump’s Support in Farm Country Remains Strong, but Eroding,” op. cit. [23] Ibid. [24] Davis and Swanson, op. cit. [25] Ibid. [26] Bronars, op. cit. [27] Ibid., p. 27. Page 13 of 14 Struggling Farmers SAGE Business Researcher
©2022 SAGE Publishing, Inc. All Rights Reserved. [28] “Exporting Jobs Instead of Food,” The Wall Street Journal, May 17, 2018, https://tinyurl.com/yblrstbk. [29] Ibid. [30] Veronica Nigh, “H-2A Position Certifications Rise, Surprising No One,” Market Intel, Feb. 7, 2018, https://tinyurl.com/y7h4a8lg; Veronica Nigh, “Q2 H-2A Certified Positions Show Continued, Strong Growth,” Market Intel, April 19, 2018, https://tinyurl.com/ycr4r2te. [31] Erin Kelly, “House defeats latest immigration bill, turns focus to keeping families together at border,” USAToday, June 27, 2018, https://tinyurl.com/ycxutzwq. [32] “Mortgage Rates Barely Move,” FreddieMac, July 19, 2018, http://www.freddiemac.com/pmms/; “Era of Ultra Cheap Farm Mortgages Appears to be Ending,” Farmland Investor Center, accessed July 26, 2018, https://tinyurl.com/ybu9rjtm. [33] Jeff Daniels, “Tough times in the heartland as some farmers hit by losses weigh exiting the business,” CNBC, Dec. 27, 2017, https://tinyurl.com/yaxhgc4c. [34] “Climate Change Impacts in the United States,” National Climate Assessment, 2014, https://tinyurl.com/y93f47nm. [35] Toshichika Iizumi, et al., “Responses of crop yield growth to global temperature and socioeconomic changes,” Nature, Aug. 10, 2017, https://tinyurl.com/y9czoqqw. [36] Eller, op. cit. Page 14 of 14 Struggling Farmers SAGE Business Researcher
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