Thursday, May 30, 2019

Trump's $16 Billion Farm Handout - It Turns Out - Will Do Little Or Nothing To Save His Midwest Farmers

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A week ago, watching the evening news, it was confounding to see and hear midwest farmers (i.e. in Iowa) proclaiming they plan to stick with Trump through thick and thin as he wages his trade war with China. They are 100 percent convinced he is firmly behind them, in their corner against those "evil' Chinese.  And woe betide any fool who thinks they will vote Dem.  Well, I just hope they have a nice fat $$ cushion (preferably a lotto win)  to cover their coming losses and possible foreclosures!

In fact, the outlook for these farmers so dedicated to Trump is grim.  They are already drowning in losses and ever higher costs including for fertilizers and farm machinery.  The tariffs and trade tensions are also pushing makers of farm machinery into a deep ditch, this according to a WSJ piece yesterday, p. B1.  We learn, for example, that during the first three months of this year, U.S. agricultural exports to China were 40 percent below the same period last year according to Agricultural Dept. data.   That 40 percent drop translates into very major loss in income for the farmers who voted Trump, and it means a major hit to their families' future economic security. That income could be the difference between holding onto farms and homes or losing them.

Worse, the more sober farmers understand they  have likely permanently  lost their precious soy and other markets to South America and elsewhere, all places quite eager to sell to the Chinese - and at the prices they want.

And indeed it's not just the lost markets - which once patiently cultivated - may never be recovered. It's also the ding that farm machinery sales are taking. As noted in the same cited WSJ article:

"Farmers interested in buying new machinery are finding it tougher to trade in their older models because dealers are already stuck with inventories of used equipment that can't sell."

That used equipment compliments of the farmers who've already bailed out, realizing that not even Trump's raiding of the public purse for a $20,000 odd handout won't be enough to save their farms.   As Barry Alexander, manager of 13,000 acre Cundiff Farms in western Kentucky put it:

"That used market is fairly saturated now."

And likely to get even more so as thousands more farmers realize they are batting on a losing wicket no thanks to their "star boy" Trump.  Left unexamined until now, is how farmers are being hit from another end: higher costs on their machinery including hay balers.As reported in the WSJ piece, one corporation  (Vermeer) that makes such machines expects to pay $4 million more in direct tariff costs this year, thanks to Trump.

Vermeer's steel costs alone rose by 50 % last year but prices have declined in recent months as steel inventories rise.  The WSJ piece also notes (ibid.):

"Lindsay Corp,, based in Omaha, Neb., said profit from its irrigation business fell 51 % as sales dropped by 16 percent in the three months through February."

So who's benefiting from Trump's steel tariffs? Well, the U.S. steel industry which has added some 13,000 jobs as reported in the WSJ last week. However, each job has been added at a cost of $906,000 each  - carved out from the hides of U.S. taxpayers. (Just like Trump's farm bailout of $16 billion).

Speaking of the last, as the cited WSJ article goes on:

"The Trump administration has said it would spend $16 billion to offset the impact on American agriculture from the trade dispute between the U.S. and China. Yet even if the dispute is resolved, some manufacturing executives say say U.S. farmers may still be worse off than before if China continues to buy grain from South America, which has increased output to accommodate China's demand."

Quoting CNH Chief Executive Hubertus Muhlhauser:

"Once those supply chains move it's not guaranteed they will return .  Brazil will keep its customers. They'll put more acres under the plow."

And U.S.   farmers, so dedicated to Trump and buying his bullshit, will be left holding the bag - an empty one. Well, almost, given they'll a few bucks from his handout.

The takeaway is that Dotard's tariffs and trade war on the Chinese have generated a relatively few winners, i.e. in the American steel industry, but left millions of others (including American consumers) sucking salt.   As for the Chinese returning to the American farmers and renewing those supply chains, why would they? So long as an unstable Vulgarian criminal named Trump is President there's no assurance another trade war or more tariffs wouldn't upset the apple cart.  And so long as midwest farmers stick to this swine, you can be sure the Chinese won't budge in moving to the U.S. from Brazil for their grain supply.

There's 'case closed' for the Dotard, if he needs one!

See also:

Trump Hates Farmers

by Jim Hightower | March 29, 2019 - 6:03am  

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