A Farmer’s Perspective

I ran into a friend of mine at a cocktail party a couple weeks ago. He’s a fifth-generation soybean and corn farmer from Humboldt, Iowa, and a seasonal resident here in Marco. I asked him how the President’s tariff regime is impacting his business and he gave me a quick earful. I had to leave for another engagement, so we agreed to meet up for a lengthier discussion.

A few days later, we met on our lanai for about an hour.

Because my knowledge of modern industrial farming is slim to none, I asked him to start with a description of his operation, which is quite complex.

“We have 3,200 acres of row crops,” he said. “Corn and soybeans and seed corn, and we custom harvest for a different company. Because we grow seed corn, we custom-spray other people’s fields in our area. That way, we are able to supplement our row crop revenue with custom operations.”

He said his early career after earning a college degree in agricultural finance was in farm lending and foreclosures in the 1980s, but that upon his father’s retirement from the Iowa family farm at age 65, he decided to move back to Iowa and take over the operation with his brother.

“I was in Minneapolis at the time with a very good job and lots of opportunities,” he told me. “I took a heck of a cut in salary and moved back into my grandparents’ house and then into my parents’ house, where we are now,” and where he and his wife raised their children.

He described the impact of the tariffs on his business in circumspect terms that reflected a sophisticated grasp of global trade, as you’d expect from someone with his education and work experience.

“We produce more corn and soybeans in the U.S. than we need,” he said. “So, we need export markets for our grains. But we also need to have fair trade for things we import, like fertilizer.”

The tariffs, he said, have dramatically upset the trade balance in place for years when it comes to global farming.

“Agriculture producers have always promoted free trade,” he said. “We used to export a huge amount of our soybeans to China, and because we’ve had issues with them, they’ve decided we’re not a dependable market. They’ve put a lot of infrastructure into Brazil and recently completed a new trade deal with Canada.”

He said the lack of exports from his farm has driven prices down at the same time import costs are rising, both from the tariffs and now the war in Iran. He told me that his business will survive but would be below break-even if it weren’t for the subsidies provided by the government to offset the impact, which he’s grateful for, but also uncomfortable with.

“There is huge support for American farmers in this country, and people want us to survive,” he said. “But I think most farmers would tell you we’d rather get our income from the market. Farmers are proud people and don’t want handouts or subsidies.”

He also described an unintended consequence of the government subsidies: “When I get a dollar from the government, there’s somebody asking me for that extra dollar. My landlord will ask for it. The price of land goes up. The people selling you inputs like seed, fertilizer, and chemicals are going to ask for it. That’s just the way it works.”

My friend isn’t a flame-thrower venting about the President or even the fact that tariffs have been put in place. As a self-described conservative independent who voted for President Trump, he would simply prefer a more measured approach.

“Trade negotiations are important and that is happening to some extent,” he said. “But in the past, we just sat down with our trading partners and hammered out a deal, particularly with Canada and Mexico. What I’d like to see is negotiation that’s more surgical versus chainsaw. Instead, we’re saying ‘let’s drop the big hammer and negotiate from there.’ That’s not my style. We’ve created a lot of uncertainty, and the markets have become volatile because the buyers and sellers of any commodity want to know we have stable markets.”

He described running into a fellow soybean and corn farmer from Ontario at the Crabby Lady bar. “I had my John Deere hat on, so we started talking about farming. We talked about how much it sucks for everybody. Nobody’s happy. Nobody’s winning. It’s not what the administration is doing; it’s how it’s doing it, how it goes about executing. Whether it’s the war in Iran or the tariffs, there’s just no forethought or wisdom behind these wild pendulum swings that are having huge impacts on people and creating volatility. But I guess there’s money to be made in volatility, right?”

Right, indeed.

Last week, Axios had a great story on exactly that, meaning the vast sums of money being made on all this volatility over the past year, most of it questionable. The latest was a nearly $600 million spike in oil futures trading roughly 15 minutes before the President announced his pause on strikes of Iranian power plants. Similar trading spikes occurred before other events were announced, from the start of the Iran war to the snatching of Maduro in Venezuela, to the pause of the President’s “Liberation Day” last April.

That is called a pattern. So yes, somebody’s making a lot of money. Just not my farmer friend.