“This is very worrisome for American agriculture generally,” said Dan Glickman, who served during the Clinton administration as agriculture secretary. “The business model of agriculture is an export business model, particularly for the program crops such as wheat, corn, cotton, rice and especially soybeans.”
Glickman also said there could be fallout for GOP lawmakers from the Trump administration’s actions on trade. He said farmers and rural communities are likely to feel the pain if there is a significant decline in agricultural exports.
According to Glickman, there are several statutes available to the U.S. Department of Agriculture that could be used to help farmers, including programs through the Commodity Credit Corp. The CCC, a federal agency set up during the Great Depression, could potentially buy surplus farm products and support growers.
“This [CCC] is the part of the USDA that has almost unlimited amount of funds to sometimes make up the difference in farm prices,” said Glickman. “Sometimes they can buy commodities for school meal programs or for other hunger programs.”
Glickman, who now is executive director of the Aspen Institute’s Congressional Program, said other options available include purchasing programs tied to food humanitarian relief for famines and natural disasters that also are part of USDA.
Regardless, the former U.S. congressman and Clinton administration official said it’s “doubtful that farmers can be made ‘whole’ for all economic losses resulting from a trade war impacting American ag exports. It leaves farmers in an unstable, vulnerable position.”
Glickman said the trade war with China and other countries “involves great risk because, from a macro perspective, about 40 percent of American agricultural products are for export.”
Overall, U.S. agricultural exports to China represent almost $20 billion annually for American farmers.
The U.S. exports about $14 billion worth of soybeans to China, according to the USDA. China buys roughly half of the U.S. soybean exports, and roughly one in three rows of soybeans grown on the nation’s farms goes to the world’s second-largest economy, according to the American Soybean Association.
China also is the world’s largest cotton consumer and ranks as the second-largest buyer of American cotton, with one out of every five bales headed there.
The latest round of tariffs by Beijing follows retaliatory action taken in April by the Chinese against other agricultural products. Effective April 2, China imposed new tariffs of up to 25 percent on U.S. pork, nuts, wine and fresh fruit. The move was in response to the White House earlier announcing a 25 percent duty on steel imports and 10 percent on aluminum imports.
Earlier this year, Trump instructed U.S. Agriculture Secretary Sonny Perdue “to use his broad authority to implement a plan to protect our farmers and agricultural interests,” according to a statement issued in April. But little details have been offered of any specific plans.
“It’s not probably very smart in these kind of things to lay all your cards on the table about what you’re going to do,” Perdue told reporters in April.
Still, Glickman said he has “a lot of confidence in the current agriculture secretary, Perdue, that he’s going to use all of his authorities available to him.”
Glickman said there’s also uncertainty out there for farmers when considering other tariffs U.S. trading can impose on U.S. agricultural products.