Farmers Fond of Trump But Growing Nervous About Trade
When President Trump spoke to the American Farm Bureau annual convention this month he focused on the regulatory rollbacks and tax cuts that motivated many farmers to help vote him into office.
“We are doing a job for you,” Trump told an auditorium filled with farmers. “You’re seeing it like nobody else: regulation, death tax, so much.”
Dale Moore said farmers look to Trump for a better deal. Moore directs public policy for the Farm Bureau. He said net income for farmers hasn’t been this low since the Great Depression.
“What we have seen over the last four or five years is roughly a 50 percent decrease in net farm income,” Moore said explaining the mix of factors farmers face. “We are basically dealing with commodity markets, it’s supply and demand, it’s mother nature, it’s, you know, farmers doing what they do so well, which is producing good crops.”
Overproduction means stockpiles of soybeans, wheat and corn for grain farmer Kevin Smith from Shelbyville, Kentucky. Smith traveled to the Kentucky Commodity Conference in Bowling Green this month hoping for some bright spots in a gloomy market. One glimmer of hope is in the exports.
“I think everyone's got their attention on NAFTA,” he said. “We got a lot of stockpiles of grain and one of the big things is being able to export the grains and all that.”
Trump got a warm welcome from the farm bureau crowd. Farm country likes his promises to reduce regulation. But on trade, many growers are growing nervous. Smith thinks it is too early to see a direct impact from Trump’s first year in office, and he’s hopeful but nervous about Trump’s tough talk on NAFTA.
He wonders which President Trump they will get? The one who tells farmers that he wants a deal that is good for agriculture? Or the Donald Trump who tells the Wall Street Journal that he might pull out of NAFTA?
“Do No Harm”
Kentucky Agriculture Commissioner Ryan Quarles said he hopes Trump will follow the physician’s golden rule.
“Do no harm,” Quarles said.
Quarles also chairs the Republican Agriculture Commissioners Committee and was an advisor to the Trump campaign on agricultural issues. He said NAFTA has been great for farmers.
“For agriculture, one of the bright spots has been trade, with Canada and with Mexico with NAFTA,” he said. “It's not a perfect trade deal and it has room for improvement.”
Between January and November last year, Kentucky, Ohio and West Virginia together exported almost $242 million in agricultural products to NAFTA countries and South Korea. Over the past decade the exports from the three states topped $2 billion.
Hog farmers are especially nervous. The National Pork Producers Council, estimated that losing the current zero percent tariff-based status under NAFTA could result in a $1.5 billion loss for U.S. pork and could affect 17,000 jobs.The Ohio Valley region alone has roughly 5,000 hog farmers contributing more than $900 million in product value.
The sixth round of NAFTA talks are just wrapping up in Montreal.
Quarles said he is confident agriculture will be well represented in trade talks. And Quarles said other administration actions on regulations will help farmers. That includes the promised repeal of the Obama administration's controversial Waters of the U.S. rule.
“Repealing what we believed would have been a dangerous power grab by a federal agency,” he said.
With more than 680 thousand public comments on the repeal of legislation that redefined what waters fall under federal jurisdiction, the EPA extended the public comment period and plans to have a replacement rule by April.
Unsure About Insurance
Another bright spot for farmers has been the safety nets provided by crop insurance in the last Farm Bill. That’s something Trump told farmers he’d support during his speech in Nashville.
“And I support a bill that includes crop insurance, unless you don’t want me to?” Trump said, setting up an easy applause line. “I guess you like it. Right?”
But Trump has sent mixed messages about whether he likes crop insurance.
The 2014 Farm Bill shifted away from the flawed system of direct subsidies to farmers and moved toward a more market-oriented approach tied to crop insurance. University of Illinois associate professor Nick Paulson said it’s working.
“From a public perception standpoint, the taxpayers are willing to accept a program where the farmer pays a portion of the cost, they have a stake in it,” he explained. “A direct payment program is the exact opposite, they are literally just receiving support each year.”
Crop insurance now covers 90 percent of farmed land in the U.S., and crop insurance now accounts for $6 billion of Farm Bill spending. But that growth in the program also creates a big target for budget cuts, Paulson said.
“Best case scenario is kind of leave it as-is, don't make it worse, don't take away any of the options that we have,” he said. “Because I think most farmers view it as a necessary tool in managing their risk, especially in the environment we are in with really tight margins.”
Last year Trump’s Office of Management and Budget proposed $230 billion in budget cuts to the Department of Agriculture, including cuts to the crop insurance program.
Again, farmer Kevin Smith is left to wonder which Trump to believe: the one who pledges support for crop insurance, or the one who proposed cutting it. The idea of farming without crop insurance leaves him anxious.
“It would have to make you pretty nervous,” he said. “I mean, you got a lot of expense and inputs out into a crop and to go completely unprotected? I'm sure the banker would be a whole lot nervous.”
Smith and other farmers will be looking for answers in the President’s new budget in a few weeks.