April 4, 2018

Indiana Farmers Feeling Impact Of Tariffs, Fear More



All of the talk about a possible trade war with China has a lot of Hoosiers worried – especially farmers.

China implemented tariffs this week on more than 120 goods from the United States, including pork products. Indiana is the fifth leading pork producer in the country, so farmers here will feel the impact.

And, now China is threatening to add soybeans to the list.

Farmers Already Feeling Impact Of Retaliatory Tariffs
David Hardin is a third generation farmer in rural Hendricks County. He grows corn and soybeans, but his primary income comes from hogs.

“There’s actually four buildings back there, and each one of them has around 1,500 animals in each of them,” Hardin says as we walk along a field on his property.

The four large, rectangular buildings he’s pointing to house hogs, which Hardin primarily sells in the Midwest. Some of them go to a processing facility that exports pork to other countries. As far as Hardin knows, none of his pork goes to China – so it won’t be hit with a new, 25-percent tariff.

But, he says that doesn’t matter.

“If there’s more pork on the market domestically because it’s not moving to China, it’s going to lower prices for all U.S. producers whether they play export space or not,” he syas.

Farmers are used to coping with the unknown – much of their job depends on factors outside of their control, like the weather. Hardin says that’s what makes these tariffs difficult to accept. He sees it as something the U.S. government can control.

China initially put tariffs on some U.S. imports to retaliate against President Donald Trump’s decision to slap tariffs on imported steel and aluminum.

“Since the original, the idea or the notion of putting tariffs on imported steel and aluminum were introduced, we’ve seen such a large drop in pork prices, it equates to about a $3,000 per week drop in our income here on our farm,” Hardin says.

Hardin’s farm is one of more than 3,000 family-owned pig farms in Indiana.

And, they aren’t the only ones who could see losses because of tariffs.

Threat Of Soybean Tariffs Could Devastate Some Farmers
China is now threatening to put a 25 percent tariff on more U.S. products, including soybeans. Nearly two-thirds of the soybeans grown in the U.S. go to China.

A recent Purdue University study looks at what that could mean for the U.S. It predicts the impact if China were to adopt tariffs on soybeans ranging between 10 and 30 percent.

“For the 10 percent tariff, our estimate is, and we did a lot of sensitivity on it, but the average estimate on it is that exports to China would fall 33 percent,” says Wally Tyner, who helped author the study. “And, with the 30 percent tariff, a 71 percent [drop in exports].”

Tyner says it’s important to look beyond just the direct impact of the potential trade war. It’s not just producers of some of the products who will feel the effects.

“Indiana produces steel, Indiana produces aluminum,” he says. “First brush, you would think that’s really going to help Indiana because we produce both of those and we produce quite a bit of both of those. But, it turns out, that we also consume in our manufacturing sector a lot of steel and aluminum.”

The threat of tariffs on U.S. soybeans is coming when farmers are on pace to plant more soybeans than corn for the first time in more than two decades. The USDA says the largest increase will be in Indiana, where farmers will plant more than six million acres of soybeans this year.

And experts say the timing couldn’t be worse.

“Because we’re in a down economy for agriculture,” says Robert White, director of national government relations for the Indiana Farm Bureau. “And, we’re about 50 percent lower than we were in ag income than we were about four years ago. So, that doesn’t bare well.”

White says it could be enough to put some people out of business.

But, it’s all up in the air right now, and Hardin says that uncertainty makes it even worse. Hardin says the future’s price for pork is already declining all the way into some of his 2019 contracts. And on top of that, he’s paying more to replace equipment around the farm.

“Many of the products like replacement gates and flooring that we use on the farm are made out of steel,” he says. “Any new tractors obviously have steel as a component. So if the price of any of the products that we buy that are made out of steel go up, we’re getting hurt kind of on both ends of the equation.”

He’s trying to cut back where he can, but it’s hard when he has hogs to feed and workers to pay. In his eyes, there’s no winner in this potential trade war.

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