If the Chinese tariffs imposed earlier this month on American soybean exports continue, Iowa farmer David Weaver says he’d likely be out $40,000 at the very least from this year’s crop. He worries the losses could reach as high as $80,000 for the 1,500 acres of soybeans and corn he farms with his father in rural Boone County.
It’s the reality many farmers across rural Iowa face as soybean futures have plummeted to a nine-year low and the price for a bushel dropped to $8.34 last week (down from about $10.50 in May). The fallout from President Donald Trump’s trade wars also comes on the heels of a three-year price decline in the crop that fuels a $5.2 billion industry in Iowa.
“We’ve had stagnating prices for three or four years in a row now, so most farmers don’t have a backstop,” Weaver explained. “In my opinion, it’s pretty bad timing for this to be happening now.”
But there is one way in which a continuing trade war could help Weaver: It might get him elected to the Iowa Legislature. That’s because he’s one of several Democratic farmers running for office in Iowa this year, all of whom are looking to win back rural voters who left the party in droves recently.
Rural Midwestern communities may have driven Trump’s victory in 2016, but it wasn’t that long ago that Democrats were at least competitive in many rural counties across the Hawkeye State. Barack Obama carried 38 of Iowa’s 99 counties in 2012 and 53 of them in 2008. Hillary Clinton won just six.
Weaver’s House District 47, an open Republican seat that covers Boone and Greene counties, was one of those mostly rural districts that Obama narrowly won in 2012 and that Democrats have represented locally in the not-so-distant past. And it’s one that Democrats hope to flip in part due to farmers’ frustrations over the Trump Administration’s trade policy.
The party may be well-positioned to do just that. In an interesting twist this year, only the Democrats have a full-time farmer on their statewide ticket. Fred Hubbell, the Democratic nominee for governor, selected State Senator Rita Hart, a farmer from tiny Wheatland, Iowa as his lieutenant governor running mate.
In one of their first ads since the primary, the Hubbell/Hart campaign rolled out a piece this week criticizing Gov. Kim Reynolds for not taking on Trump over the trade disputes.
And Hart herself set off a small firestorm of debate in the Iowa Senate in April when she encouraged Republican legislators to sign on to a letter she wrote urging President Trump to reverse course on the tariff talk.
“A trade war, even a short one, could mean long-term losses,” Hart said in her speech. “That’s because other countries will quickly replace Iowa’s agricultural products.”
The proposed letter drew sharp rebukes from Republicans.
“I’m thinking of writing my own letter, telling him to keep up the good work,” said Sen. Brad Zaun.
“This looks like a really good thing for Iowa,” Sen. Dennis Guth said his commodity broker told him.
“I think we need to hang tough with the president,” insisted Sen. Tim Kapucian.
Those words may one day come back to hurt the Republican ticket, but they haven’t yet. As any number of reporters who have traveled to farm country in the last few weeks have found, Republican-leaning farmers are still sticking with Trump in large numbers despite the worsening situation. Some of that may be due to political tribalism, some simply to the nature of farming.
“Farmers are naturally optimistic,” explained Iowa Soybean Association communications director Aaron Putze. “You have to be to be a farmer. They’re optimistic that before harvest begins, there will be a resolution to this. The U.S. does really well at growing soybeans and China needs soybeans.”
Tim Gannon, Democrats’ secretary of agriculture candidate and former USDA official, agreed that while the headlines look bad, the political fallout has been limited so far because the impacts aren’t fully felt yet.
“Some of it at this point in time is still theoretical,” Gannon said of the just-imposed tariffs. “People have different pain thresholds. If you’re a grain farmer in April and May when futures contracts were above the price of production and you sold a decent chunk of your crop, you might be in much better shape in November, December than a producer who didn’t take that step.”
Gannon is widely seen as the most credible Democratic candidate for Iowa’s top agriculture job that the party has put up in four cycles. His message on the campaign trail is that Iowa farmers haven’t gotten anything out of Republicans like Gov. Reynolds and Sen. Joni Ernst’s close relationships with the White House.
“Iowa Republicans who say they have the ear of the administration aren’t being listened to,” Gannon said. “There really hasn’t been much change in the administration’s position on tariffs that have been beneficial to farmers.”
The biggest pain right now is for dairy farmers in Iowa, Gannon notes. In the coming months, he sees pork producers taking a hit. Later in the year, it’ll be corn and soybean farmers under the gun.
“There’s anxiety in the field,” Putze said of soybean farmers. “The big purchase month for U.S. soy by the world is when it comes in from the field, October, November, December. Mid-late September is when the combines really get rolling. If the tariffs remain in place and if prices continue to fall lower and remain far below the cost of production during harvest, the concern could worsen quite precipitously.”
Putze noted there’s longer-term concerns like damaging the relationships that American soybean farmers built up with China for the past three decades. But the most immediate effect comes when farmers start to figure out their finances for 2019.
“The interesting conversation is going to be this Fall when you have to sit down with your banker,” Weaver said, adding that rising interest rates have hurt, too. “Farmers are cyclical. They can handle some bad years, a bad five years. But we’ve had a bad four or five years, and now you throw this in on top. I think people will eventually realize the damage, or their banker will get them there.”
Many of those conversations will start to happen in October as the harvest comes in, just in time for the midterm elections. And what is largely theoretical right now for many Trump-supporting farmers in Iowa will suddenly be very real as they sell their crops for much less money if the tariffs are still around.
“I think if Trump hasn’t figured it out by then, it’s going to show up in the voting booth in a big way,” Weaver predicted.