Farmers weigh Trump's trade war like they watch the weather, waiting to see how things go
WAVERLY, Minn. (AP) — Minnesota farmer Dan Glessing isn't ready to get too upset over President Donald Trump's trade wars.
Farm country voted heavily for Trump last November. Now Glessing and many other farmers are taking a wait-and-see attitude toward the Republican president's disputes with China and other international markets.
China normally would buy about one row out of every four of the Minnesota soybean crop and took in nearly $13 billion worth of soybeans from the U.S. as a whole last year. More than half of U.S. soybeans are exported internationally, with roughly half of those going to China, so it's a critical market.
Trump last month raised U.S. tariffs on products from China to 145%, and China retaliated with 125%. But Monday's announcement of a 90-day truce between the two countries backed up the reluctance of many farmers to hit the panic button.
More good news came in an updated forecast from the U.S. Department of Agriculture on Monday that projected higher corn exports and only slightly lower corn prices. The report also predicted somewhat lower soybean exports but higher domestic consumption, resulting in higher prices. Soybean futures surged.
After he finished planting his soybean crop on Monday, Glessing said he was excited by the news and hopes to see more progress. But he said he wasn't really surprised.
Tariffs, weather and other uncertainty
On a bright, sunny day last week, as he began planting soybeans, Glessing said tariffs were only one of the things he's worried about — and not necessarily the biggest. Farming, after all, is an enterprise built on loose soil, the whims of weather and other uncontrollable factors.
'Am I concerned about tariffs? Yeah. I mean, there's uncertainty that comes with that,' Glessing said. 'Is that the number one driving factor in these poor commodity prices the last two years? No.'
As he steered his 25-year-old Case IH tractor over a gently rolling field near the town of Waverly, he towed a planter that inserted his seeds through the stubble of last year's corn crop. As he laid down the long rows, he rumbled past a pond where wild swans paddled about.
Riding shotgun was Georgie the Corgi, who alternated between roaming around his cab and half-dozing at his feet.
Perhaps more skeptical than Glessing is Matt Griggs, one of many soybean farmers in Tennessee paying close attention to the trade war. On Monday, he said the ripple effects on farmers might still be coming.
'We're only on a 90-day pause,' Griggs said. 'Who knows what is going to come after that?'
Joe Janzen, an agricultural economist at the University of Illinois, said the commodity markets have largely shaken off the initial shock of the trade war, including Trumps' declaration of April 2 as 'Liberation Day,' when he announced stiff worldwide tariffs.
'Our markets have largely rebounded and are back where we were around April Second,' Janzen said. 'Tariffs have not had a major impact on prices yet.'
Even something that might seem like good news — ideal planting conditions across much of the Midwest — has its downside. The potential for bigger crops sent prices downward, Glessing noted. High interest rates, seed and fertilizer costs pose additional challenges.
'There's so many other factors besides just tariffs and my market price,' Glessing said.
Looking for signs of progress
But Glessing said he was encouraged by that morning's news of a trade deal with the United Kingdom, and said he hopes the current uncertainty in talks with China and other countries ultimately leads to better trade deals going forward.
Glessing had finished planting his corn the day before on the other half of a field that he rents from his father's cousin, split between 45 acres of corn and 45 acres of beans. It's at the farm where his grandfather grew up, and it's part of the approximately 700 acres he plants on average. He locked in those planting decisions months earlier as he made deals for seeds, fertilizer and other supplies.
Back on his 'home farm' closer to Waverly — where his late grandfather's house, made of local brick, still stands and a cacophony of house sparrow songs filled the air — Glessing was pleased to spot the first signs of corn he had planted there about 10 days earlier poking above the soil.
Waverly is about an hour west of Minneapolis. Its most famous resident was Democratic former Vice President Hubert Humphrey. It's in the congressional district represented by Republican House Majority Whip Tom Emmer.
Glessing's post as president of the Minnesota Farm Bureau puts him in close touch with other influential politicians, too. He and his wife, Seena, were Democratic Sen. Amy Klobuchar's guests at the Capitol for Trump's inauguration in January. Glessing declined to say who he voted for.
The Glessings have three kids, milk about 75 dairy cows, and grow corn, soybeans and alfalfa on a combination of parcels they own or rent. He uses the alfalfa and corn primarily to feed his cows. He sells his soybeans to a processing plant in Mankato, where some of them become soybean meal he adds to his animal feed. The milk from his cows goes to a co-op cheese plant in Litchfield that sells internationally.
Because Glessing has local buyers locked in and doesn't directly export his crops, he's partially cushioned from the volatility of world markets. But he's quick to point out that everything in the agricultural economy is interconnected.
Lessons learned during Trump's first trade war
On his farm near Humboldt, Tennessee, roughly midway between Memphis and Nashville, Griggs weathered the 2018 trade war during Trump's first term and said he feels more prepared this time around.
'Back in 2018, prices were about the same as what they are now, and due to the trade war with China, prices dropped around 15%,' he said. 'They dropped significantly lower, and they dropped in a hurry, and due to that, we lost a lot of demand from China.'
Griggs said exports to China never fully rebounded. But he doesn't think the impact of the current dispute will be nearly as drastic.
Griggs — who raises approximately 1,600 acres of cotton, corn, soybeans and wheat — said tariffs were just one consideration as he planned out this year's crops. Growing a variety of crops helps him minimize the risk that comes with weather, volatile prices, and now the prospect of a trade war.
Griggs said he's going to be watching for opportunities to sell when market volatility causes upticks in prices.
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'The main thing I learned in 2018 was that if you do have a price period where prices have risen some, go ahead and take advantage of it instead of waiting for it to go higher,' said Griggs. 'Because when it comes to the tariffs and everything, the markets can be very unpredictable. So my lesson learned was, 'Don't hold out for a home run, be satisfied with a double.''
He said a temporary subsidy called the Market Facilitation Program helped soybean farmers withstand some of the losses last time could help if something similar is revived this year. But he said no farmer wants to make a living off government subsidies.
'We just want fair access to markets,' Griggs said. 'And a fair price for the products we produce.'
___
AP videographer Kristin M. Hall reported from Humboldt, Tennessee. AP videographer Mark Vancleave also contributed from Waverly.
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