Multiple issues creating uncertainty for farmers

Some farmers in Clark County said they are cautiously optimistic about business prospects despite increasing uncertainty from issues ranging from a potential trade war, environmental concerns and and a farm bill that recently hit a snag in Congress.

Farmers in Ohio and across the U.S. are stuck in the middle of an ongoing trade dispute between the U.S. and China. Just a few weeks ago, China threatened to impose a 25-percent tariff on imports of soybeans as tensions between the two countries escalated. Soybeans are the state’s largest crop and top agricultural export, accounting for about $1.8 billion worth of exports last year, according to information from the Ohio Soybean Council.

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Soybean futures plummeted about 40 cents per bushel on that news, but have since recovered somewhat, according to local farmers. Tensions were also eased earlier this month after a vague deal was announced between the two countries in which China agreed to put a hold on the tariffs and purchase more U.S. goods.

Greg Kaffenbarger, who raises pork and various crops in New Carlisle, said that deal could actually potentially mean more business for Ohio farmers depending on the terms of the agreement. At the same time, China’s proposed tariffs also could cause turmoil in the pork industry if negotiations fall through, he said.

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The pork industry also took a hit when the proposed Chinese tariffs were announced, Kaffenbarger said. But he believes his industry will be better off if a long-term agreement with China is reached.

“We need to work with China, that’s a given,” Kaffenbarger said. “There are so many mouths to feed over there and we’re producing more hogs, cattle, corn and soybeans than we can use in this country because we have the resources to do it. We need to be able to keep them happy. However, one thing I’ve learned a lot of times is food is used as a political ploy and a bargaining chip.”

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In the meantime, farmers are also still waiting on an updated farm bill, which expires in September and touches issues that affect not only farmers but also nutrition programs that benefit residents in rural and densely populated urban areas.

A recent attempt to pass the U.S. House version of the legislation died last week, although the Senate is working on a separate version of the bill. The House version fell as a result of opposition by Democrats, who opposed strict work requirements on food aid recipients and a block of conservative Republicans who used their vote against the farm bill to push for tougher immigration policies.

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In the meantime farmers across the state are focused on the more immediate goal of getting all their crops in the ground, said Joe Cornely, a spokesman for the Ohio Farm Bureau. Along with China, federal officials are also trying to renegotiate the North American Free Trade agreement, which also affects agriculture.

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“There are quite a few balls up in the air right now,” Cornely said. “The farm bill, the trade issue, immigration, water quality, there are lots of big picture, ongoing types of things farmers are keeping an eye on right now. They always do that, but we have hit a spell here where there are quite a few things all at once.”

Trade issues

Even if an agreement between China and the U.S. is in the works, it isn’t clear what the impact on Ohio farmers might be said Ian Sheldon, a professor of international trade at Ohio State University. It’s also not clear where negotiations on the North American Free Trade Agreement are headed, he said.

He pointed out few details about an agreement with China have been released and it’s not certain that a potential fight over tariffs is at its end. He also said it’s not clear how China plans go about meeting pledges to buy more of certain U.S.goods, or how that would resolve the dispute in the long-term.

Sheldon said it’s a complex issue that can’t necessarily be resolved unless the nature of trade between the countries changes dramatically.

“Americans need to start saving more and consuming less and the Chinese need to start spending more and saving less,” Sheldon said. “That’s the only way this is going to really resolve itself.”

Allen Armstrong, a Clark County farmer and Green Twp. trustee, said he was relieved in the short term to hear China held off on its proposed tariffs. He noted China is a massive market for U.S. soybean exports. Armstrong said most farmers keep an eye on the news regardless of partisan politics, but said these talks have particularly high stakes.

“I’m not going to say its unusual because we’re always concerned but this whole tariff situation with China has been especially worrisome,” Armstrong said. “I’m extremely glad to hear the news announced on Sunday that we’ve got a tentative deal with China so they won’t put the tariffs on our soybeans.”

For his part, Kaffenbarger said he’s optimistic the countries are discussing trade imbalances at all. In the end he thinks some agreement will be finalized that will ultimately benefit farmers in Ohio.

“The way I’m looking at it is short-term pain for long-term gain,” Kaffenbarger said. “I don’t mind it. I know we’re a global economy but we were getting treated unfairly I thought on a global scale on quite a few different agreements.”

Farmers in Ohio are looking long-term when it comes to trade issues, but in general free trade has historically befitted the industry, said Cornely, of the Ohio Farm Bureau.

“In the broad picture, open free trade with as many countries as we can get is a good thing,” Cornely said. “Four out of five consumers in the world live outside the United States. We need access to those markets if we’re going to continue to keep the farm economy strong in the U.S. We’re often the supplier of first choice but we’re not the only supplier.

Farm Bill

In the meantime, a proposed Farm Bill failed in the U.S. House late last week due to in part to opposition by Democrats who objected to proposed changes to tighten work requirements in the legislation. A block of conservative Republicans also voted against the bill as a vehicle to push for tougher immigration reforms.

Many people believe the farm bill, which expires in September, mainly focuses on agriculture, said Ben Brown, a farm bill expert and program Manager for the Farm Management Program at Ohio State University. But the bill also provides funding for nutritional programs that impact millions of Americans and touches other issues ranging from conservation practices to energy issues.

After the bill’s collapse, Congress can either extend the current legislation for several months or a year, pass a new bill or do nothing, Brown said. The last option is unlikely because it could have several serious negative drawbacks he said.

The legislation is important because it sets the ground rules for farmers and gives them some certainty as they make plans for several years in advance, said Cornely.

“No one likes uncertainty and until we know what the rules of the game are its hard for farmers to plan,” Cornely said. “It’s safe to say for the most part farmers are pretty disappointed things went the way they did last week in the House. It’s crucial for farmers to know what the rules of the game are going to be.”

The Senate is writing its own version of the bill and the House could bring back a version of its bill later this summer, Brown said. He said passing legislation becomes more challenging though as more time passes, particularly when midterm elections are approaching. The crop in the ground now is covered under the existing farm bill but farmers are starting to make planning decisions earlier he said.

“Even though the current crop is covered, if we get into September and we don’t have a farm bill and they do an extension, that exposes farmers and agriculture businesses of all types to a great deal of uncertainty because they’re starting to make decisions about the 2019 crop without knowing the rules of the game,” Brown said.

In Clark County, Armstrong described some of the debate happening in Congress now as grandstanding by both parties and said he’s optimistic cooler heads will prevail to pass legislation. He said issues like the farm bill and trade disputes are related.

“If this whole tariff talk proves anything there is a necessity for a safety net like our farm bill because there are things that are totally out of every producer’s control that Washington DC can do that can affect our bottom line,” Armstrong said. “As long as Washington wants to use our commodity trade as bargaining chips we have to have some kind of stability because we’re making decisions for one, to three, five, ten years at a time.”

Sheldon argued the industry is already challenging and additional confusion is cause for concern.

“Generally you’ve got downward pressure on prices anyway, you’ve got downward pressure on farm income, there’s uncertainty about the farm bill, throw in general uncertainty about U.S. trade policy and I just don’t think that’s good for U.S. agriculture in general and the Midwest in particular,” Sheldon said.

Cornely said farmers know when they get into the business there’s a certain amount of risk involved.

“That’s kind of what farmers do, they recognize they live and operate in a very uncertain world,” Cornely said. “One thing farmers are masters at is mitigating risk and managing the downside.”

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