Since most Corn Belt farmers supported the presidential candidacy of Donald Trump, many are privately beginning to wonder how the global trade saga will end.
Inwardly they are not lamenting their voting decision, because few could see any preferred alternative. But the ones leading commodity organizations are in a tough position publicly on the growing trade war.
While their members voted for Donald Trump, the daily headlines about trade wars with many of our trading partners has created havoc with commodity prices.
Since the tariff battle began, significant percentages of value have been lost from soybeans, pork, beef and, to a lesser extent, corn as the other nations retaliate against the main core political group that supported a Trump presidency.
Logically they are wanting those farm voters to apply political pressure on the White House to call a cease fire.
Those commodity group leaders have not yet done that, but are sending strong messages daily to the White House about how bad those farm voters are financially bleeding in the conflict.
The seriousness of the wounds, and how quickly farmers can recover from the battle scars may come Thursday with the U.S. Department of Agriculture's next report on domestic and global supply and demand for grains and other commodities. The National Agriculture Statistics Service (NASS) will look at the planted acreage numbers revealed at the end of June, use trend yield estimates and calculate a supply, which will be compared to demand with and without the trade retaliation from importing nations.
Since it is his agency, Secretary of Agriculture Sonny Perdue will have to accept the estimates, regardless how bleak the trade conflict seems to impact U.S. farm exports.
Perdue has already promised that he will have a plan by Labor Day to compensate farmers for the financial losses, but as everyone knows who is familiar with government programs, “the devil is in the details.”
Kansas Senator Pat Roberts knows that as well and his doubts were expressed recently, as he said, “I’m just saying I don’t know how we implement this, I don’t know what kind of cockamamie scheme that we could come up with that would be fair, that would be at least somewhat responsible.”
There are really only three ways to “cover the farmers’ back,” as Perdue likes to say he will do. One of those is income support, which would be some type of support payment equated to the loss that NASS attempts to estimate from the loss in farm income. Purdue University ag economists say payments would be hard to determine and farmers would be disappointed working through the math.
A second is some type of price support for commodities suffering a loss of value due to the trade retaliation, to establish a floor price prior to the trade retaliation. And the ag economists say that could compound issues if it boosts future production.
A third would be a supply management program, designed to limit the supply of a commodity that is produced in an effort to establish a higher price based on supply and demand formulas. But that is hard to manage when yields impact production, reminiscent of the last time such a program was used in 1983. Mother nature signed up for the PIK program, when a drought further reduced the supply due to limited acreage.
Good luck, Mr. Secretary.