Tariffs are hitting family farmers on both the front and back ends of their business.
Romans don’t have to go far to get an understanding that they’re living in a global economy. Farmers across Floyd County are feeling the impact of trade tariffs that are impacting the prices they pay for machinery on the front end and the prices they’re getting for the crops on the back end.
Brothers Charles and Irwin Bagwell said the tariffs on steel and aluminum have driven the prices of farm machinery up significantly. Irwin said the price of a John Deere combine they bought three years ago has already gone up $100,000. He’s glad they made the investment when they did, because they’re not getting any more at market for their corn or soybeans.
In fact, they’re getting less. Charles Bagwell said the prices of soybeans have dropped from the $12-$14 per bushel range three years ago down to between $8 and $9 a bushel. And the price of corn has also dropped from $5-$6 a bushel down to between $3 -$3.50 a bushel.
Just last week, Leif Magnusson, president of CLAAS Global Sales America, expressed serious concern about the impact of tariffs on steel and aluminum. Magnusson was quoted in an article in the online edition of DTN The Progressive Farmer as saying, “How can we go out in the market right now and ask for higher prices from the farmers when their income is going down?”
The same article includes fears expressed by Jim Glazer, president and CEO of Elliott Equipment Co., about the tariffs creating an inflationary spiral as costs are passed on to consumers.
Tariffs are at the heart of a trade war between the U.S. and China. Chinese purchases of U.S. agricultural commodities have taken a nosedive since China imposed tariffs on them in retaliation for steep U.S. import taxes on items like steel and aluminum.
In mid-summer China slapped a 25-percent tariff on imports of U.S. soybeans. By October, Chinese imports of American soybeans were down 95 percent as compared to a year ago. China is the world’s largest consumer of soybeans, much of it used as feed for the Chinese pork market.
Jamie Jordan planted about 675 acres in soybeans this year out in extreme western Floyd County. We caught up to him on the phone in Guntersville, where he was between the sampling office and the area where farmers dump off their beans. He brought up the “R” word, rain.
“Early-season guys got most of theirs out, but midseason and late-season it’s been raining ever since we’ve been trying to get in,” Jordan said.
Jordan said the crews in the sampling section of the mill have been working extra hard because so many beans in Northwest Georgia and Northeast Alabama have been sitting in the field, needing to come out and deteriorating.
“Of course you’re going to get penalties. Then the drop of a couple of dollars from back when we’re contracting during the winter to during harvest season, you know it’s pretty hard to swallow,” Jordan said.
Then you figure in the impact of the tariffs.
“As soon as the tariffs were talked about the price immediately took a hit on the Chicago Board of Trade,” Irwin Bagwell said. “It has been detrimental.”
While a relatively small amount of beans grown across the Coosa Valley are used in the export market, Bagwell said that it’s the export market that has a major impact on their prices.
“There is nothing we can do, so we are at the mercy of the government to protect our markets and open those markets up,” Irwin Bagwell said.
Jordan said he believes the administration in Washington does have the interest of farmers at heart.
“Most politicians don’t give us (farmers) much credit because we’re such a small percentage of the voting population, but I think things are heading in the right direction,” Jordan said.
It’s not unusual to hear farmers referred to as the ultimate gamblers. Their willingness to gamble on futures contracts can help sustain higher prices, or lead to disasters if the weather has a negative impact on their crop.
While Jordan still has a large amount of acreage that hasn’t been harvested due to the fall rains, the Bagwell brothers said rains during the growing season really helped their yield this year.
The Bagwells did not put a lot of their beans under contract this year. “You can’t do too much because you don’t know what the growing season is going to bring. You don’t want to contract a lot of bushels and then not be able to produce it,” Irwin said.
On the other hand, Jordan said he did pretty well this year by locking in a lot of contracts last winter.
“We always try to pre-sell some,” Jordan said. “I did pretty good locking those prices in back last winter before planting. I have sold a little bit this fall, and I’m holding a little bit in the bins with anticipation that things are going to get better.”
The Bagwell brothers are also holding beans in their bins locally. Charles Bagwell said some of that has to do with logistics, but there is also the desire to hold some beans in the hope of better prices.
Todd Hice, with the U.S. Department of Agriculture Farm Service Agency in Rome, said he believes the acreage planted in soybeans locally has decreased with the price at market over the last several years.
“Floyd County has turned into a cotton and corn county because that’s where the money is at,” Hice said. He said it costs a good bit to put the beans in the ground.
“And the prices just haven’t been high enough with average yields to make a lot of money.”
Bagwell and Jordan both stressed that all of the commodities grown in the Coosa Valley, beans, corn, cotton, even wheat, have been impacted by the tariffs, which have just become the latest challenge to Coosa Valley farm families.
‘Earlyseason guys got most of theirs out, but mid-season and late-season it’s been raining ever since we’ve been trying to get in.’ Jamie Jordan Coosa farmer