How do farmers feel about the trade aid? In a word, bad.
Not that I should be putting words in farmers’ mouths, but the majority of farmers that I’ve heard from would rather have good market demand and a good price for their commodities than receive government money to keep their farms in business.
To go back to the beginning and really understand this issue, you must have a good understanding of supply and demand. The basics are, when supply is high and demand is low (you have a lot of corn and no one wants it), then the commodity price for corn is low. When demand is high and supply is low (you have very little corn and everyone wants it), the commodity price for corn is high. What farmers really want is both of those things in moderation – good steady supply and good steady demand. Both of these things would help maintain farm incomes at a reasonable place for farmers to stay in business and for customers to be able to afford the corn they are growing.
The only piece of this equation that farmers can really control is supply. But when farmers are growing crops for a supply that they thought existed, and then the government screws the demand side of the equation up, all of the sudden there’s no demand for the steady supply farmers were providing when they put their seeds in the ground.
That’s what happened here. Farmers were growing for a very exciting and vibrant export market when they put their seeds in the ground, but now those markets aren’t there. All the additional supply without the vibrant demand is sending corn prices into a hole.
Because the export demand failure is not the fault of the farmer, President Trump is trying to keep them in business another year with a trade aid package.
Is this what farmers really want? No.
Will farmers take the few cents offered to them? Yes.
If a big tax refund were planned for 2019, wouldn’t you take that cash even if you thought the politics behind the cash were wrong?
The bottom line? This trade aid stinks and farmers don’t want to see the government outspending itself any more than the next guy. But tariffs stink too and if farmers have to live with tariffs, they will also have to live with the trade aid.
What are your thoughts?
ICGA/ICMB Marketing Director