Amid Trump Tariffs, Farm Bankruptcies And Suicides Rise

Farmers are pretty much under stress all the time since many factors that affect their livelihood are outside of their control. However, over the past few years the combination of lower prices, rain that has created havoc with their ability to plant and finally China freezing the imports of U.S. grown crops due to President Trump’s tariffs has unfortunately created almost the perfect storm against them.

Corn and soybeans are the largest cash crops grown in the U.S. per NASS, the U.S. Department of Agriculture’s National Agricultural Statistics Service. In 2018 the value of corn was $51.5 billion, with soybeans second at $39 billion. The next largest crop was hay, a distant third at $17 billion. For comparison the value of apples grown in the U.S. was about $4 billion and oranges was $2 billion.

Body blow to farmers

After China made its announcement that it would stop importing U.S. agricultural products American Farm Bureau Federation President Zippy Duvall said, “China’s announcement that it will not buy any agricultural products from the United States is a body blow to thousands of farmers and ranchers who are already struggling to get by.”

He added, “In the last 18 months alone, farm and ranch families have dealt with plunging commodity prices, awful weather and tariffs higher than we have seen in decades. Farm Bureau economists tell us exports to China were down by $1.3 billion during the first half of the year.”

Duvall pointed out, “Now, we stand to lose all of what was a $9.1 billion market in 2018, which was down sharply from the $19.5 billion U.S. farmers exported to China in 2017.”

China bought $9 to $10 billion in soybeans per year

China had been buying 30-35 million tons of soybeans, which is 22% to 25% of total U.S. production.

In 2018 the U.S. produced:

·     4.6 billion bushels of soybeans

·     One bushel weighs 60 pounds

·     Equaling total production of 276 billion pounds

·     Or 138 million tons

China buying 30-35 million tons:

·     Is 22% to 25% of the total U.S. production

·     Or 1 to 1.15 billion bushels

·     At a price of $8.50 per bushes this equates to

·     $8.5 to $10 billion in revenue from China to U.S. farmers

Corn farmers are also being impacted by Trump

China had not had nearly the same effect on corn farmers. However, in early August when China announced that it would stop importing U.S. agricultural products corn prices dropped by about 10%.

The recent decision by Trump’s EPA to exempt an additional 31 small oil refineries from incorporating ethanol, which is made from corn and accounts for 40% of total corn use per the USDA, will put even more stress on farmers.

Farmer loan delinquencies and bankruptcies are rising across the U.S.

The American Farm Bureau Federation, also known as the Farm Bureau, published a report in July that dove into farm loan delinquencies and bankruptcies based on Federal Deposit Insurance Corporation and U.S. court data.

The information showed that, “the delinquency rates for commercial agricultural loans in both the real estate and non-real estate lending sectors are at a six-year high and … were above the historical average of 2.1%.”

The Farm Bureau report showed that farmer bankruptcies had risen in every region of the U.S. for the year ending in June except for the Southwest. Wisconsin, Kansas and Minnesota led the nation in Chapter 12 filings; bankruptcy filings in Kansas and Minnesota increased so significantly in the past year that they reached the highest levels of the past decade

While Trump’s decision to impose tariffs on China and its subsequent retaliation is not the only reason for the stress farmers are under, it is a self-inflicted wound. John Newton, the Chief Economist at the Farm Bureau, summarized the farmer’s situation as, “The deteriorating financial conditions for farmers and ranchers are a direct result of several years of low farm income, a low return on farm assets, mounting debt, more natural disasters and the second year of retaliatory tariffs on many U.S. agricultural products.”

2019 farm income should be in the bottom 25% of the past 90 years

In another report from Newton, his analysis shows that while farm income in 2019 should increase by 10% from 2018, that would put it in the bottom 25% of the past 90 inflation-adjusted years. His analysis also includes direct payments from the Trump Administration’s Market Facilitation Program, and while it is not on the chart, 2018’s was even lower than 2019’s projected result.

Farmers live off of thin margins

Farmers have high fixed costs including the land that they own, the equipment they must buy and the seed they need to grow their product. However, their revenue is variable and can change based on factors totally out of their control. The chart below shows farmer’s rate of return on their assets has fallen to under 2% for the past 6 years and for 2019 Newton projects it to be 1.3%.

China will find other suppliers or grow more crops themselves

Farmers are probably the first to realize that they will have lost a lot of Chinese market share to other countries or that China will start to grow more of the crops they have been importing. It has taken decades to grow the Chinese market but a significant amount will be lost in just a few years due to Trump’s tariffs and China’s retaliation. 

A USDA study shows that Canadian shipments of wheat to China have grown over 400% in two years. The report said, “Canada’s share of total Chinese imports of wheat has rocketed above 60% in marketing year 2018/19, up from 32% in marketing year 2017/18, as U.S. wheat exports to China have plunged and Australian exportable supplies have fallen sharply.”

The Farm Bureau provided these facts.

• From 2017 to 2018, U.S. agricultural exports to China fell more than 50 percent, dropping to $9.1 billion
• In 2014, U.S. agricultural exports to China exceeded $24 billion
• From 2000 to 2017, U.S. agricultural exports to China increased by 700%

China will also increase the amount of soybeans it grows itself. It will be difficult to almost impossible for U.S. farmers to find a market for the amount of soybeans that China won’t be buying.

All of this has led to increased stress levels for farmers

The Farm Bureau and Morning Consult did a survey of rural adults and farmers to understand multiple aspects of mental health for this population. One of the findings was that 91% of farmers and farm workers think financial issues impact the mental health of farmers.

Dr. Michael Rosmann has a Ph.D in Clinical Psychology, serves as a counselor for farmers and ranchers and spends 15 to 25 hours a week, seven days a week responding to requests for help. He wrote an article in The New Republic in April that describes the types of phone calls and situations he helps people with.

He passed along that, “When the AgriWellness Inc. board holds telephone conference calls (usually every few weeks), the state coordinators of services for farmers have a similar message—that the number of calls to their hotlines or to them personally have increased slowly and fairly consistently over the past three years. They reported more concerns about farmer bankruptcies and suicidal contemplation until about July when the farmers became busier with crops that were maturing.”

Suicide data is anecdotal but prevalent

It takes quite a while for the Centers for Disease Control to collect national violent death data, which are based on coroner reports. Municipal coroner reports are funneled to their respective states and then to the CDC. However, multiple people involved in the farming community have spoken out about increased suicides in the past few years.

National Farmers Union has seen more farmer suicides

A Newsweek article in May detailed a Fox News interview with Patty Edelburg, vice president of the Washington-based National Farmers Union, which represents about 200,000 U.S. farms. In the interview she said, “It has been insane. We’ve had a lot of farmers—a lot more bankruptcies going on, a lot more farmer suicides. These things are highlighting many of the news stories in our local news.”

She added, “We have more commodities, more grain sitting on the ground now because we lost huge export markets. We’ve lost export markets that we’ve had for 30 years that we’ll never get a chance to get back again. Farmers are hopeful to get their crops in the ground this year but really hopeful we have a place to sell it come fall.”

Soybean farmer in Minnesota has seen increased suicides

In a CNN interview in May, Minnesota soybean farmer Bill Gordon said, “With these added tariffs farmers are not getting their credit lines renewed, banks are coming in and foreclosing on their farms, taking their family living away and it’s too much for some of them. We have seen a definite increase in the suicide rate and depression in farmers in the U.S., especially in the Upper Midwest.”

Even a corn maze in Wisconsin is highlighting the issue

Govin’s Meats & Berries/Govin’s Farms created a corn maze this summer to highlight the concerns it has about suicides and to provide a way for someone to get help.

Farm Progress hearing of more suicides

A Farm Progress article in May reported that, “those of us in the field know we’re hearing about more of them.” The reporter added, “I can think of two farmers I know who’ve committed suicide in the past year.”

Farm Aid saw a 30% increase in calls last year

Farm Aid’s mission is to build a vibrant, family farm-centered system of agriculture in America. It released a statement in June that included, “Based on a 30% increase during 2018 in calls to their farmer hotline and feedback from family farm partners around the country, Farm Aid says it will continue to prioritize farmer stress.”

It added, “Increased calls to Farm Aid’s hotline and our work with partners around the country confirm that farmers are under incredible financial, legal and emotional stress. Bankruptcies, foreclosures, depression and even suicide are some of the tragic consequences of these pressures. America’s family farmers — reduced in numbers since the Farm Crisis of the 1980s — have approached endangered status. At Farm Aid, we spend our time on the phone with anxious farm families who cannot make ends meet, and who will not be able to improve their situation simply by working harder. Confusion and lack of resolution on policies like trade, immigration and healthcare accelerate the crisis.”

This could be worse than the farm crisis of the 1980’s.

A March opinion column in SC Times noted, “Times have not been good for farmers the past several years. Many have compared it to the farm crisis of the 1980s. Others think the situation for farmers is even worse now than 30 years ago.” In the column, Jennifer Fahy, a communications director for Farm Aid observed, “The farm crisis was so bad (in the 1980s), there was a terrible outbreak of suicide and depression.” But today, she said of stress and farmer suicide, “I think it’s actually worse.”