It’s been a long, strange summer for America’s corn belt. The weather has been perfect. Farmers are expecting a record soybean crop. But at the world’s largest farm show in Boone, Iowa, this week the talk was of where they will sell it, tariffs and Twitter.
For months, America’s farmers have been “at the spear point” of an international trade dispute started by the Trump administration, says Davie Stephens, a Kentucky farmer and vice-president of the American Soybean Association. Now there are signs of a breakthrough as Canada and Mexico get closer to cutting a deal.
Even before he started running for office, Donald Trump railed against Nafta – the 25-year-old North American Free Trade Agreement that guides trade relations between the US, Canada and Mexico – famously calling it “the worst trade deal ever”. While farmers at Farm Progress have their issues with it, and many voted for Trump, what they really want is certainty. Corn, and soy, doesn’t grow in a day. Sadly, for them, certainty is not a Trumpian trait.
Still, Stephens is hopeful about the tentative deal with Mexico, and is impressed with Trump’s team. “The hope is that we are closer to a resolution. They can call it Nafta or whatever, doesn’t matter to us,” he said.
Stephens’s sentiment was echoed across the 80 acres of Farm Progress, which ended on Thursday. Chatting besides the 600-plus exhibits of farming equipment – the site is punctuated by colossal spiky harvesters and other Lovecraftian machines that look better suited to space exploration than food production – farmers seem cautiously optimistic that Trump has their back.
It helps that the Department of Agriculture has drawn up a $12bn aid package for farmers to help offset losses from retaliatory tariffs on American exports. But “trade not aid” is what most farmers say they want. And they want a deal now. Harvesting has already begun in parts of the country. Soon the seed sellers will be calling and farmers will have to start planning how much – and what – they are going to grow next year. Commodity prices have collapsed thanks to the tariffs and oversupply. Loans need to be renegotiated. Farming is a slow business and planning is everything. Disquiet now could soon become something closer to panic if a deal isn’t done.
“We need a deal sooner rather than later. A deal that will be good for everybody,” says Rich Schwemen, a local crop consultant.
Iowa farmers alone are facing a $2bn loss from tariffs so Monday’s announcement that the US had reached a tentative agreement to resolve its differences with Mexico was a big deal. But on Friday Chrystia Freeland, Canada’s foreign minister, who had cut short a trip to Europe this week to try and broker a deal with the US, said talks had hit an impasse and Trump continued to threaten to kill Nafta and go it alone with Mexico.
That threat may be bluster. Canada is the largest market for US exports and Nafta has allowed the three countries to work in unison in industries, particularly auto manufacture, that will suffer mightily if a three-way pact is not agreed. And even if Trump does get a deal, it is not yet clear whether it will have to go through Congress or if Congress would approve it.
The tariffs have been terrible for business, says Dennis Slater, the president of the Association of Equipment Manufacturers (AEM), and their consequences are spreading far beyond farming. Trump’s steel tariffs, which started the disputes, added 10%-20% to the cost of manufacturing the huge machines baking in the Iowa sun. Given that those machines can cost $500,000 and up, that’s a lot of money. “Even if we used American steel, prices are still up,” he says. “The economy has been strong, there’s no supply, everyone upped their prices.”
About 1.3 million people are employed by AEM members, 350,000 in making agricultural equipment. The losses farmers face will hit the entire manufacturing sector and the people who rely on them. “If you lose your job tomorrow, you’re not buying another car,” says Slater. “There’s no dispute that Nafta needs updating and we need a better deal with China,” he says. But the industry needs certainty otherwise “Americans are going to get laid off”.
Day one of Farm Progress ended early on an ominous note. Sudden thunderstorms turned the site into a slick, black mud bath and organizers asked visitors to go home. Some of those who hadn’t turned up in farm-ready four-wheel drives (including your reporter) had to have their cars pushed back on to the road by souped-up golf carts.
‘It’s the whole atmosphere’
On Wednesday the sun was out again and with it came Sonny Perdue, Trump’s avuncular secretary of agriculture and a dead ringer for Ed Asner. In a softball question-and-answer session Perdue praised farmers (“They embody that great American spirit, risk taking, entrepreneurship, hard work, the values of faith and family that are inspiring to me wherever I go”) while safely skirting around the hard questions.
He acknowledged that farmers have told him they want trade not aid. “There’s not a farmer in America that wouldn’t rather have a good crop at a fair price than a government check,” he said. But the markets are unfair to exporters. Trump said “enough is enough. We are going to have free trade and fair trade,” said Perdue.
Many farmers at the show worry that Brazil and other South American suppliers could step in and permanently erode their markets in China and elsewhere as the dispute continues. A third of US soy ends up in China at present and those “unfair” trade practices – and China’s booming economy – have allowed soybean exports to grow from $400m in 1997 to $14bn in 2017.
Perdue said he doesn’t believe the dispute has done irreparable damage long term. “The world knows we have high-quality products that we can depend on.” But he did concede that it could take “a little while to get those markets back”.
The applause was as warm as the Iowan sun inside the tent where Perdue was speaking. Outside the reaction – like the weather – was more mixed. One farmer who didn’t want to be named (“I don’t want to get into a Twitter war”) said he was skeptical and worse news could soon come. “What’s the plan? Piss off our biggest trade partners? Shout at them? I don’t know that’s the best way to get things done. Today things look better but who knows what’s going to happen tomorrow. We could get screwed by some 6am tweet.”
International visitors – and there are plenty at the show – were less bullish too. Lu Tan, who works for corn producer Dekalb in China’s Hunan province, had travelled 30 hours to see the show. (“A lot of China’s farming is smallholders. We’d need smaller machines,” he observed wryly). The trade dispute isn’t good for anyone, he said. “It’s not good for our two countries. Friendly trade relations should be entertained.”
A Canadian visitor, who wanted to remain anonymous for fear of losing customers, was more blunt. “Trump is a menace. You can’t trust a word he says. Sure there are things that need sorting out but who says he’ll keep his word? The guy’s a liar.”
But if farmers blame anyone for this mess, it’s Washington not Trump. The other big topic at Farm Progress was the farm bill. The massive bill that covers an array of agricultural and food programmes is renegotiated every five years and expires at the end of September. It is always a political hot potato and now more than ever, adding another layer of worry for already fretful farmers.
When Stephens first started going to Washington to lobby 13 years ago there was more bipartisan cooperation. “Now there is such dislike. It’s not just this administration, Obama also. I’m not blaming them, it’s the whole atmosphere.”
