Trade war adversely affecting Ag producers

Trade war adversely affecting Ag producers

Posted: Updated:
LUBBOCK, Texas -

Farmers who were already in a financial pinch due to low prices are now facing a new wave of adversity.

"Every Ag commodity is being hit with these 25 percent tariffs," said Wesley Spurlock, the Chairman of the National Corn Growers Association. "Tremendous amounts of soybeans go into China and they no longer, they're going to go in, but they're going to go in at a higher price so it might be that those companies, countries look for somewhere else to buy them."

Spurlock farms 9,600 acres of corn, cotton, wheat and sorghum in the upper Panhandle. He will feel the impact of these tariffs first-hand.

"Our prices will continue to drop as this continues on," he said. 

To help producers ailing from the tariffs, President Trump is floating the idea of utilizing the Commodities Credit Corporation, a Depression-era program, to bail out producers.

"There are some loan guarantees, things like that they can use to shore up producer financing in an emergency," said Darren Hudson, Professor and Larry Combest Chair of the Agricultural and Economics Department at Texas Tech. "They do have some liquid cash funds that they can draw on in order to just disperse, sort of whatever you want to call them. Bailouts and those kind of things, and there are mechanisms for them to go in and actually purchase commodities off the market to help bolster those prices."

Hudson said the scope of those bailouts is limited at best.

"What ends up happening there is that then the government accumulates stocks of these commodities, so one the government is having to pay for the storage costs so that's a cost to the tax payer but two it means that that cotton, soy beans whatever are still out there and their still going to go on the market at some point in the future. Direct cash transfers would be preferable but they've got a lot more limited pool of money to work with."

A bailout is not what Spurlock wants or needs though.

"When they put something together coming out of CCC or just a USDA deal of some kind, it will have payment limits on it," Spurlock said. "They're going to limit it so i may lose a dollar and get 10 cents back."

What he wants are the trade deals, such as NAFTA, to be finalized, allowing producers to sell their goods in other markets.

"Lets get some deals done, let's get them signed and continue your battles where you think you have to do them but take care of American business and the American agriculture by getting these trade deals they're working on finished," he said.

The White House has announced it will impose a new round of 10 percent tariffs on more Chinese goods.

In response, ranking Republican senators are urging action to limit the President's ability to levy tariffs.
 

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