When you drive from Minneapolis to West Okoboji Lake, Iowa – as I did early last summer – you pretty much see just one thing: farmland. And those farms are pretty much just growing one thing too: soybeans. The state of Iowa is the second largest producer of soybeans in the US – and can you guess their biggest customer? An estimated one out of every three rows of soybeans grown there are shipped to China. I didn’t see any pork farms from my car, but I’ve also learned that Iowa is the largest exporter of pork to China as well.

The Iowa farmers on the frontline of Trump's trade war with China Read more

So the news that Iowa farmers – as well as other farmers around the country – are hurting in the wake of the Trump tariff war with China doesn’t surprise me.

A just-published study from the Federal Reserve Bank in of Minnesota has revealed that 84 farm operations filed for Chapter 12 bankruptcy in the upper midwest which is above the previously reported peak of 2010 that followed the 2008-09 recession and is more than double the number of bankruptcies in 2014.

Across the country, according to Reuters, grain farmers are “plowing under crops, leaving them to rot or piling them on the ground, in hopes of better prices next year”. 15% of oilseed crops in Louisiana are being plowed under and millions of acres of crops in Mississippi, Arkansas, North and South Dakota are going to waste.

US farmers are scrambling to find places to store their crops wherever they can in the hopes that their Chinese customers will soon return – a huge gamble in itself. “I’ve heard farmers and commercial companies are putting corn and soybeans into tool sheds and caves,” Soren Schroder, chief executive officer of Bunge Ltd, the world’s largest soybean processor, said in a Bloomberg report.

No one can argue that it’s a tough time for these US farmers. But did it have to be so tough?

Trump has been quite vocal about his disagreement with China’s trade practices going way back before he was even a candidate. That rhetoric only grew as his popularity increased. His hardline position further solidified when, soon after being elected more than two years ago, he appointed Wilbur Ross, a steadfast proponent of Chinese tariffs, to be his secretary of commerce. He also appointed Peter Narravo, the author of Death by China, as his newly established director of the Office of Trade and Manufacturing Policy.

Yet amazingly, and in the midst of all this rhetoric, farmers in the US planted more than 90 million acres of soybeans in 2018, which was the second highest planting ever because they expected China’s rising demand would turn into lucrative orders.

I’m no forecaster or farmer, but no one in Iowa or Nebraska could see the writing on the wall back in 2016?

I’m no forecaster or farmer, but c’mon: no one in Iowa or Nebraska could see the writing on the wall back in 2016?

So let me ask you: if your business was producing a single product where 90% of it was being sold to just one big customer (ie China) and the newly elected president of the United States said as recently as May 2016: “We can’t continue to allow China to rape our country and that’s what they’re doing. It’s the greatest theft in the history of the world,” you wouldn’t have considered hedging your bets just a little?

Maybe grown another crop or two? Diversified your customer base? Looked for other markets? Hold back on spending and stored away extra cash to wait out a trade war? Or at the very least secured storage facilities in advance just in case there was a disruption in Chinese trade and to avoid the mad panic that we’re seeing now?

These are not easy decisions or easy things to change. But over history, farmers – like any business owners – have learned to rotate and change the products they grow based on the markets they serve. Even two years may not have been enough time to fully switch from soybeans to something else, but for sure it would’ve been a headstart.

I feel terrible for our farmers. These are good people and good businessmen and women and they are dealing with enormous challenges. But there’s something to be learned. It’s about looking ahead. If you’re running a business, I hope you’re looking forward a few years and making a few calculated decisions based on the realities of what’s happening around you.

That’s what smart business leaders do. Not doing so will put you in the same awful predicament that many US farmers now find themselves in – and that’s a shame not only for them, but for their employees and families who rely on them for their livelihoods.