Farmers prosper in spite of Trump’s trade battle with China

Anti-Trumpers agree: The president’s trade battle with China is hurting our economy and, in particular, America’s farmers. We are told that the tariff tiffs have caused a collapse in U.S. agricultural exports to China, and consequent heartbreak in our heartland.

It isn’t true.

As with most criticisms lodged against the Trump White House, this oft-repeated narrative is way overblown. Turns out, far from suffering what CNBC recently described as “a devastating year for farmers” the farmers of America overall are doing quite well.

The Department of Agriculture recently forecast that net farm income will rise nearly 5 percent this year, to $88 billion. That growth comes on top of increases in both 2017 and 2018 and is, just for the record, faster than the overall growth of the economy.

For sure, times could be better. The forecast for this year means that real net farm income would come in 36 percent below its peak of $136.5 billion in 2013 and slightly below its 2000-18 average ($90.1 billion). Farmers suffered a severe drop in total revenues during the Obama years, collapsing from $484 billion in 2013 to $412 billion in 2016. Weirdly, I don’t remember the media paying much attention.

Not all farmers are expected to enjoy rising income this year. Commodities receipts are forecast to decrease $2.4 billion, or less than 1 percent, to $371 billion, while sales of animals and animal products should climb modestly.

And that dreadful soybean collapse? The DOA is estimating that revenues for all crops will decline $3 billion, or under 2 percent, thanks to crimped soybean sales. But payments to farmers under the administration’s Market Facilitation Program, in addition to other subsidies, will rise almost $6 billion this year, more than offsetting the fall in crop receipts. 

Perhaps most startling, the DOA forecasts that the average farm will see net cash income increase more than 11 percent this year, “the first annual increase after 4 consecutive years of declines.” Moreover, the median income of farm households will be up almost 4 percent this year.

At the same time, farmers are getting richer; the net worth of the farm sector is likely to rise slightly this year, to $2.7 trillion, mostly because of higher real estate values.

In short, it turns out that as a whole our farmers are doing ok, or maybe even better than ok. 

None of this prevents the liberal media from hyperventilating about farm-belt misery. A recent headline from an industry journal blares: “USDA Slashes U.S. Corn, Soybean Export Estimates To China.” Indeed, the USDA predicted that, thanks largely to a drop in corn and soybean shipments, total agricultural exports will decline 6 percent this year, to “the lowest level recorded since 2016.”

That sounds ominous, and seems to bolster the notion that Brazil is swooping in to supply Chinese soybean demand, thanks to the trade spat. But the story is not quite so simple. Brazil’s soybean exports to China, as it happens, are also falling, down 40 percent in August and off 14 percent through the first eight months of the year.

The reason? The dreaded swine fever, which through June had killed some 22 percent of China’s pig herds, the major consumers of soybeans. Some analysts are projecting that as much as half of China’s pig population could die. Fewer pigs, less soybean demand.

The real story is that even as soybean exports to China have dropped, pork exports have increased, due to the swine flu. Overall, the USDA projects that U.S. agricultural exports will be up slightly in the current fiscal year. 

So how are America’s farmers responding to these fluctuations in markets and tariffs? The media would have us believe that the trade battle is sabotaging support for President Trump in farm country, throwing his reelection in jeopardy.

The Hill recently ran a story pumping that notion and quoting John Hansen, president of the Nebraska Farmers Union, who, the article states, “ripped President Trump” over his escalating trade war with China, calling it a “huge unforced error.”

The piece failed to mention that the Nebraska Farmers Union is a chapter of the National Farmers Union, a left-wing organization that donates money exclusively to farm-state Democrats and is committed to green energy and federal price supports for farm products. It opposes large-scale corporate farms and President Trump.

The reality is that yes, the trade confrontation with China has hurt the farm community. But many in that group continue to support the president, confident that his quest to rein in Beijing’s unfair trade practices and theft of intellectual property are worth some short-term pain.

It isn’t just the farm economy about which the liberal press is raising concerns; the media are doing their level best to paint the worst possible picture of the economy overall, hoping that consumers will lose confidence, and that our growth will consequently slow. They know Trump’s best argument for reelection is a hot jobs market and rising incomes.

But farmers are an especially important target, given that 62 percent of the nation’s farmers and ranchers voted for Trump in 2016, helping to swing some important states in his direction.

It is ironic that even as Democrats in Congress scold Trump for hurting farm exports, they resolutely sit on the USMCA, the revised NAFTA deal, which could provide a boost to U.S. dairy shipments to Canada. Who might benefit? Dairy producers in Wisconsin, among others.

Since Wisconsin has been identified by some political analysts as the ultimate swing state, the state that could determine whether President Trump gets four more years in the White House, it’s not shocking that Democrats are blocking the USMCA.

Turns out, Democrats don’t seem to care about farmers that much after all.

Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.