When the farmer struggles,
they're not going down
and buying a new vehicle.
We're not making that purchase.
And it hurts your small mom-and-pop shops,
the equipment dealerships,
and then that continues to be broaden.
And it just continues to ripple
out and the impact trickles
through other industries and economies
throughout the community and state.
- [Jason] American farmers are suffering.
They're caught in the
middle of a trade war
between the US and China.
I think they very much wanna make a deal,
and the longer they wait, the
harder it is to put it back.
If it can be put back at all.
From 2017 to 2018, Chinese
imports of soy beans,
pork, milk, and other products
dropped by more than $10 billion.
In the first half of this year,
they've dropped another 20%
from the same time in 2018.
We went to the Farm Progress
Show in Decatur, Illinois,
where we spoke with a range of
farmers affected by tariffs.
They represent some of the industries
that have felt the most impact:
pork, corn, soy, and dairy.
Raise your hands if you
expect your business
to be profitable this year.
Larry, you're in one of the
toughest areas right now, dairy.
How is it you're profitable
when things are so difficult?
He's wicked smart.
(farmers laugh)
We're diversified.
We're diversified in both the grains
and in hogs and beef yet too.
So while we may be loosing,
I know the numbers,
but several tens of thousands of dollars
on the dairy side of it,
we're making it up on our
hog side of it yet too
as a contract finisher.
And because we have maintained
a very low debt-to-asset ratio
and we are very prudent
as to what we invest in.
I think there's a general awareness
that this is not the easiest time
to be a farmer in this country.
So for you, what is your
pain point at the moment?
I think a big pain point
would just be uncertainty.
We have a lot of trade deals
that have kind of been opened up here
and we have some major
uncertainties with trade.
And farmers came through
a really challenging
growing season here.
We've lost a lot of dairy farms.
In my county alone, we've
lost two close neighbors
that basically just threw
in the towel and said,
"We're selling the cows and
getting out of business."
We're along the Mississippi River,
so for us trade is really important.
American farmers in general
produce a very high-quality product
and we need a place for it to go.
And for us, a lot of that
depends on the export markets.
We know on our farm, 2/3
of our soy beans hit China,
100% of our non-GMO corn goes to Japan.
And Japan's a big market
for our beef cattle as well.
And so for us, without certainty
and consistency in that
market, it's troubling.
Heather, what about you?
I think the most frustrating
thing, two things.
We don't have an app
to control the weather,
so that is a variable that
continually can yank us around
and cause a lot of heartache and stress.
But secondly, those
people that we've elected
to be our leaders need to lead.
This has been a tough year?
Yes.
One tweet can take away decades
of relationship-building
in building markets, right?
But we can't make one
week of a market rally
make up for 18 to 24
months of lost revenue.
When you don't have a seed in the ground,
you have nothing to market.
What one word would you use to describe
the challenge you're facing right now?
Unprecedented.
Unprecedented?
Unpredictability.
It's uncharted territory
in the business world.
We've never have been at a point in time
where we're so reliant upon
exports to move our products,
and then we find we have these
trade tariff retaliations
against us that what we're
selling our products for
are at below cost-of-production levels.
We're sitting on a lot of inventory
that we don't know what
to do with right now
because of all the
uncertainty in the market.
Same with the pork supply.
We're going into fall,
you've got holiday hams.
So this fall market's a tough one
to get your head wrapped around
to see what we're going
to do here in the future.
The US has many trade partners.
How important is trade with China?
It hasn't always been that important.
I think it's taken a
long time to get there.
I mean, we've spent the
last two or three decades
building that relationship
to make them the partner they are today.
When you're looking, for
us, when we're talking
whether it's the meat, the
protein side or the grain side,
our consumer, our end user is
gonna be that middle class,
so where can we build a middle class?
And to date that has happened primarily
we're looking at China and Asia
and where those population
growth has occurred.
You build that middle class
and that's where our product's going.
So to find another China
we need to build a middle class like that
to scale somewhere else.
You get could fit the entire population
of Illinois, Indiana,
Iowa, and half of Nebraska
would fit in the city of Shanghai alone.
So just to see that many
people in one place,
you have to wrap your head around
how big the middle class is
and what their demand
is for animal protein.
China's cut dramatically
the amounts of soy
that they're importing from the US.
That's from two factors.
One, the African swine fever
that's reduced their hog population.
They don't need as much feed for them.
They don't need as much feed.
Right now, China, its attitude
towards the United States,
if I can avoid the
United States purchasing,
I'm gonna buy from South America.
This isn't just a chess match
that's over whenever we
sign a deal and shake hands.
There is active movement
to build infrastructure
and build up capacity in
other parts of the globe,
and they are willing and
ready to eat our lunch.
We need three things to be
successful in the future.
It's trade, transportation,
and trust, okay?
I'll start with trust,
because when you have trust
in those people who lead us.
Then we need trade agreements
that we have right now
that need to be ratified.
The US-Mexico-Canada agreement is one.
Japan seems to be on the horizon, is two.
China, get it done.
I'd like to build on trust.
That word, trust, is paramount.
When we have this political sideline here
and we lose customers,
these people don't come back
just because you sign a
document and the tariff is over
or ended or whatever.
You have to build up trust
over many years of time.
And that's the greater concern I have too,
the long-term ramifications
of this tariff retaliation.
Do you think farmers are being
caught in the tug of war,
especially leading up to the
presidential race of 2020?
Something better get settled
before November 2020.
Or what?
It's extremely complicated.
It's hard to extract just one factor.
And when you ask the fight,
there's so many fights being
waged on so many fronts.
If we're just talking about
the trade renegotiation
with China, it does need to happen.
We have been taken
advantage of for decades.
And again, to add to that complication,
we've also had many companies
and investors in our country
who have gained from that.
It may be a bitter pill to swallow.
I think it would be nice if
more people had to swallow it.
So you feel like the farmers
are taken the brunt of this trade war?
I thought Wall Street--
It goes back to the fact
that we can't set our prices.
So other industries
that are being impacted
by these tariffs (mumbles).
If were to put up a new grain
bin or buy a new trailer,
a lot of those costs have gone up
upwards of 20% on our cost.
So those industries have a chance
to pass that along to their end user.
We can't do that.
President Trump just
announced a deal with Japan
for the US to be exporting
more agricultural products
to Japan.
In the short term, it's
really gonna be good
for the livestock producer.
So when we decided, we
as the United States,
decided not to agree to TTP,
we lost a lot of our beef market
and saw an increased tariff--
That's the Trans-Pacific Partnership.
Correct.
We lost a lot of that to
New Zealand, Australia,
and their beef market.
So this is really gonna
help open up the doors
to further bring in our
high-quality beef and red meats
into Japan.
And then like I said, our non-GMO,
100% of that ends up in Japan.
And so hoping to see that
market grow and expand as well.
If we can find one country
to actually be able to
complete an agreement with us,
it looks more favorable
for other countries to say,
"Hey, we can make an agreement,
they are a trusted partner,"
and hopefully we continue
to grow these markets
instead of having doors shut.
I want you to raise your hands for me
if you've received a
payment from the government
from the Market Facilitation Program.
This is the aid that's being offered
because of the trade war.
We've all weighed in on how
that calculation was done,
with the impacts to each of our industries
directly through the
trade issues with China.
At least I've worked on that very closely
through the National
Corn Growers Association
and other associations that I belong to.
We've all looked at those issues
and had a direct economic figure
that we can attribute
to bottom-line issues
in that situation,
directly attributable to China tariffs.
It's never gonna cover you fully
for what we believe the
entire market loss is.
I don't expect that to happen either.
But it's a gesture that certainly helps
in a struggling agreconomy right now,
and I think that was
really the understanding
that they tried to go
for, and also to say that,
"Hey, we understand
it's having an impact."
Dereke, do you think the president
is picking the wrong fight right now?
So it's a time and a
fight question together.
The fight probably is not the wrong fight,
and maybe not at the same
point the wrong time.
It's taking a lot of time.
12 to 18 months to solve
something like this.
I have some stayability
for a short-term fight.
It's more the long-term trend
that I'm concerned about.
You want to know what we want
President Trump to do for us,
and I think we'd all agree
that we can't be
sustainable without trade.
But there is something we
can do here domestically
without fighting with another country,
and that's working with
our renewable fuels.
So I say we have two ethanol
plants in our county.
For us, ethanol is very important.
And getting the EPA to reallocate
those gallons of ethanol
is really important.
For a high-octane, low-carbon
fuel source that's affordable,
you can't beat corn ethanol.
And for me, as a corn farmer
with two ethanol plants,
I want that.
Why should Americans be concerned
about the plight of the farmer?
The average consumer, the average American
is three-to-four generations
removed from the farm.
And it's really easy to
not be concerned about that
when you go to the grocery
store and the shelves are full
and you don't have any concern
over where that's coming from.
And for me, another frustration,
you talked about a tweet
or a social media post,
not just from leadership
but from the average person.
They see these big numbers
about a Market Facilitation
payment, for instance,
that comes out, or crop insurance,
the support that we need
to actually survive,
it becomes a negative
and it looks upon that farmers
are looking for a handout
or farmers are just
wanting to be on welfare,
and that's not it.
I don't think any one of us
would say that's what we want.
We want markets and free access.
And feeling like we have to
fight and prove ourselves
over and over again to
the average American
for me is really frustrating
and disheartening.
Are you optimistic about
the farming industry?
Is it something you think you'd recommend
young people go into?
I think agriculture to me,
as a fourth-generation
farmer who has two sons
that are interested in farming,
is that it's like a life's mission.
It's why you know you were
put here on this earth.
This is what I'm gonna do,
I'm gonna produce food.
(gentle music)
