Living on farms is hard. Bankruptcies have risen 24% this year and farm debt is projected to hit a record high of $416 billion.
The trade conflict between the US and China has multiple facets, not all of them easy to understand. According to expert opinion, farmers–who were supposed to be one of the main beneficiaries of President Donald Trump’s approach–have reason to be wary.
2019 has been a tough year for US farmers. Chapter 12 bankruptcies have risen 24% and farm debt is projected to hit a record high of $416 billion.
Nevertheless, farm income is expecting to reach its highest total since 2014. Farmers are getting 40% of this income from trade assistance, disaster assistance, the farm bill and insurance indemnities, according to the American Farm Bureau Federation.
Trump signed a $28 billion bailout package earlier this year, increasing the percentage to a level “we’ve not seen in a while.”
The amount of US agriculture buys from China that Trump has cited —$40 billion to $50 billion— would go a long way toward getting farmers “back to a level playing field,” along with the revamped NAFTA deal. But analysts have expressed some doubts about the reality of such figures.
“Even if the deal is signed, it’s unlikely that either side could deliver on its bloated promises to sharply increase US farm exports to China to $50 billion annually, or anywhere near that total,” Peterson Institute senior fellow Jeffrey Schott wrote Monday.
Schott, a former Treasury Department international trade official, also noted that “Trump has many times announced Chinese plans to buy US farm products like soybeans, only to pull back and charge Beijing with reneging.”
Chinese imports of US agricultural products totaled $24 billion in 2017 and peaked at $29 billion in 2013, according to US government data. They fell to $9 billion last year as a result of the trade war.
Increasing imports to $40 billion would require removing a number of major technical and political hurdles.
These include China changing its laws banning hormones and drug residues in meat and reversing already made investments in Brazilian soybean shipments, industry analysts told Reuters in October.
The trade deal, which is supposed to be signed in a matter of weeks, is largely dependent on China agreeing to meet that $40 billion to $50 billion metric. If the deal falls apart, it’s likely Trump will again escalate the trade war.