G. William Hoagland

Opinion contributor

Growing up on the farm, my father would always say that the two things you could count on were death and taxes. And then he would quickly add the one thing you could not count on but on which we were dependent: Mother Nature, the weather.

This year has been a particularly difficult time for our family farm in Indiana, as it has been for farmers throughout the Midwest, from Nebraska to Iowa, from Missouri to Ohio. Many are still waiting for the water to drain from their fields so they can begin spring planting of corn and soybeans.

There is not much farmers can do about the weather in the short term. The crops need to be planted and May is a critical month. It turns out, however, that our nation’s farms are underwater in more ways than one. On Monday, China announced it is putting tariffs on more than 5,000 U.S. products, including vegetables, in retaliation for President Donald Trump’s decision late last week to increase tariffs on $200 billion of Chinese goods from 10% to 25%.

Just like last spring, agriculture producers can once again add trade policy as another unknown to their business model.

US-China relationship, measured in soybeans

A very wet spring is delaying the planting of U.S. corn, which requires a longer growing season than soybeans. As a result, farmers will likely shift to more soybean acreage this year. Increased soybean production, in combination with sluggish demand for soybeans from our top importer, China, resulted in Chicago soybean futures dropping to their lowest level in years.

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Finally, combining the forces of nature with the forces of the recent presidential tweet to ramp up tariffs on more Chinese imports, commodity markets in America, China and around the world are seeing some of their lowest levels in months. While my Republican father would say there is nothing we can do about the weather, I think he would say there is something we can do about removing market uncertainty by curtailing unnecessary tweets from the Oval Office.

But when it comes to trade, are we better off now than a year ago? Two points come to mind.

First, the trade war has done nothing to reduce the trade imbalance with China. The imbalance between our export in goods to China versus our imports created a trade deficit of more than $375 billion in 2017. Even after the tariff war escalated last year, the trade deficit with China still increased to nearly $420 billion in 2018, a 12% increase in one year.

Second, agriculture and farm families in the bread basket states have borne the brunt of the trade war.

Last summer, after the Trump administration announced its tariffs on Chinese goods, China lowered its commitment to buy 366,000 metric tons of U.S. soybeans for the 2018 crop year. Then, in an unusual move, China announced a year in advance that they would lower their commitment for the 2019 soybean crop by an additional 66,000 metric tons — totaling 432,000 metric tons.

It comes as no surprise, then, that the value of soybeans exported to China from America dropped from $14 billion in 2016 to more than $12 billion in 2017.

Even more disconcerting and astonishing, the value of soybean exports dropped almost 75% in 2018 to only $3.1 billion.

In terms of a hit to individual farmers, the price of a bushel of soybeans has dropped more than 20% from a peak of about $10.50 per bushel in the summer before the tariffs were proposed last year, to a low of $8.

For farmers, policy storms on the horizon

Farmers are also major consumers of inputs into their production process. While the prices of their soybeans dropped over 20% over the past year, the cost of fertilizer to grow those crops is up, as is the price of the steel used to manufacture their farm equipment.

Put it all together, and the picture for farmers is bleak. Even with a one-time $12 billion government dole to farmers, prompted back in the summer of 2018 by the administration’s political concerns over the tariffs’ impact in the heartland, net farm income dropped from $75 billion in 2017 to $63 billion in 2018. That's a far fall from a net farm income of $123 billion in 2013.

Now that trade talks between Washington and Beijing have largely failed, U.S. farmers are put in an even more precarious position and are more vulnerable to policy decisions. As the tension escalates, the Trump administration should remember that tariffs have not benefited the farm community this past year, and yet another increase will not improve the outlook for the agricultural economy going into 2020.

Maybe the wet weather will retreat to improve the planting season back home in Indiana, but that is in God’s hands. Better if the climate for trade improves and an agreement is reached quickly. That is in politicians’ hands.

G. William Hoagland is a senior vice president at the Bipartisan Policy Center and a former staff director of the Senate Budget Committee. Follow him on Twitter: @billhoagland.