When all the news organizations look back at the top story of the year, there is a good chance it will be the White House decision to apply tariffs on Chinese, Europeans, Mexicans and many other goods imported into the United States.

Even newspapers in other parts of the world are covering the story, and, it could be the top story within agriculture for 2018. 

That is not because of how the tariffs increased the price of imported products, since farmers and agribusiness rarely rely on imported products. It will be due to the retaliation against U.S. goods being sold abroad.

The number two story in agriculture will likely be the $12-billion aid program created by the U.S. Department of Agriculture with direction of the White House to assist farmers which have suffered substantial loss of product sales, particularly to China. That includes $12-billion worth of soybeans, and billions more in lost sales of pork and other farm commodities.  As Agriculture Secretary Perdue said when announcing the trade aid package, it will not make farmers whole financially after the lost export business.

The number three story for agriculture may well be the difficulty with the “trade aid” package, and possibly the fact that while it was promised at Labor Day, it is possible it still might not come to fruition by the end of the calendar year. Farmers may have been lead astray, thinking the check was in the mailbox, when it is really a long time until it is mailed.

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Kansas State University agricultural economist Art Barnaby raises a bushel of issues with the $12-billion plan, but more specifically the $6 to $7 billion that will be allocated for direct payments to farmers in return for market losses due to the Chinese switching their soybean purchases away from the U.S. to Brazil.  He says calculating cents per bushel price loss and multiplied by 2018 production would be nearly impossible to attribute a trade loss to the market price, as opposed to any other market driver.  And he says any decision would draw a lot of critics. 

One can easily see the USDA economists debating how much of a 20-cent drop in soybeans on a given day was due to trade or a better weather forecast.

Although the funds were promised to be distributed to farmers after Labor Day, they will have to be computed based on yield and production, and those numbers will not be known until harvest is complete.  By the way, will the Missouri farmers suffering a short yield from lack of rain also suffer a short check due to their drought-reduced yield? 

Barnaby believes there are some adverse political considerations that will hit farmers before any check might arrive.  He says it is not a “bail-out” because the loss of exports is a direct action of the White House trade policy, not because of any adverse decision by farmers.  And he’s also concerned about retaliation by urban members of Congress voting this fall on a new Farm Bill, who might contend farmers have already gotten a payment under the table.

But maybe the number one story for agriculture turns out to be the billions of bushels of soybean sales to China that were lost permanently, and never regained because Brazil was seen as a more dependable supplier.

Stu Ellis is an observer of the Central Illinois agriculture scene. In addition to his weekly column, you can view his “From The Farm” and “Harvest Heritage” reports on WCIA 3 News.




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