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Floods and Trump’s Trade War Create an Uncertain Year for Farmers

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Corn prices are rising as surging floodwaters and soaking rains — combined with President Trump’s trade war with China — are making it an exceptionally difficult year for farmers facing risky choices about what crops to plant, or whether to plant at all.

“It’s probably the most complicated decision season I’ve ever seen,” said Wallace Tyner, a professor of agricultural economics at Purdue University.

So far this year, farmers have planted only two-thirds of the corn they would have been expected to by now, based on the previous five years. And with their fields still wet or underwater, the window for planting corn is closing. The resulting rise in commodities prices could eventually mean higher food costs in the nation’s grocery stores.

Yet the standard decisions facing most grain farmers are already trickier than usual this year, as a result of President Trump’s escalating trade dispute with China, one of the most important foreign markets for agricultural products from the American Midwest.

Earlier in May, Mr. Trump imposed a 25 percent tariff on $200 billion of Chinese imports and threatened to do the same for another $300 billion. In response, China has cut back on its imports of agricultural goods from the United States.

To help farmers, the Trump administration has offered assistance payments designed to offset lost income from the trade war. However, those payments will be calculated on how many acres of crops a farmer plants this year — which means any cutbacks in planting due to floods or rain will hurt farmers even more, by reducing eligibility for the government assistance.

And there is yet another complicating factor. Often, farmers who aren’t able to plant corn choose soybeans instead, which can be planted later in the year. But that strategy might not make sense this time around, given China’s retreat from buying America’s soybeans.

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Jeff Jorgenson examined young corn plants this week on a partly flooded field near Shenandoah, Iowa, where he said flooding affected a significant proportion of his land.CreditNati Harnik/Associated Press

The American Farm Bureau Federation has urged the Department of Agriculture to change the way it sets the assistance payments, according to John Newton, the group’s chief economist. The bureau wants acres that can’t be planted to count toward a farmer’s eligibility for federal assistance.

Don Lehe, a farmer with 5,000 acres near Lafayette in western Indiana, said he would ordinarily be done planting his corn by now, but this year has put in just 20 percent so far. Mr. Lehe, who is 71 years old, said he’s never seen conditions this bad before.

He said he still hopes to be able to plant, and might go with soybeans instead of corn despite the concern about China. “The longer you wait, you’re going to take a hit on yields,” Mr. Lehe said. “The water gets away, and then we get another rain.”

Even if the administration changes the policy determining how farmers get assistance payments, the floods and rain have caused other problems that will continue to ricochet through the economy.

The most obvious effect will be on prices. Corn futures have jumped since mid-May, increasing by about one-quarter. Those prices will lead to higher costs for some foods.

“Where it would be felt most immediately is through milk, meat and eggs,” said Scott Irwin, a professor of agricultural marketing at the University of Illinois.

Those changes could take several months to appear, though, as livestock producers respond to higher feed prices by breeding fewer animals.

Another unknown is the effect of the flooding on grains that have already been harvested and are being stored by farmers. If water gets into those storage bins, those crops can no longer be used for food, animal feed or even ethanol, Mr. Newton said. It’s still too soon to known the extent of damage to stored crops.

Floodwater-destroyed grain storage on a farm near Bellevue, Neb.CreditNati Harnik/Associated Press

The greatest concern may be what happens if the Midwest suffers more such severe floods and rains in future growing seasons. Scientists say the increase in average surface and air temperatures over time is likely to lead to increasingly extreme precipitation patterns.

While it’s not possible to definitively attribute any given storm or flood to the changing climate, Mr. Irwin pointed out, the recent activity in general “is consistent with more extreme climate events.”

The question is whether, and how much, farmers are able to adapt to what seems likely to become the new normal, according to Jim Mintert, director of the center for commercial agriculture at Purdue. Mr. Mintert listed the changes that some farmers in Indiana have made to prepare for more extreme rainfall, including spending money on systems to help drain their fields more quickly and experimenting with different types of cover crops.

Still, he said that whether farmers are able to cope with a future of more frequent heavy rain and floods is “an open question.”

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Source: NYT

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