Remember that trade wars are easy to win

“In January and February it’s the bankers who will largely decide farmers’ fates. Most farms have to borrow operating cash for each coming year to buy things like fuel, seeds and chemical fertilizer.

“Right now, it’s a question of what to plant to make those costs back. Not much in dryland is making money right now. Prices are at or below cost of production in this area for wheat, barley, rapeseed, lentils, garbs and peas.”

The largest importers of crops like lentils, garbanzos or peas ? China and India ? aren't buying because of trade wars and tariffs. But farmers already planted in anticipation of sales.

One thought on “Remember that trade wars are easy to win

  1. This is all true, butunderstand the economic context. It’s true that farmers have to care about bankers, but any banker will lend money against good farmland. And grain farming is an unstable business; the rule of thumb in Iowa where I grew up is that you’ll lose money 3 years out of 10, do OK in 4 years of the 10, and do very well in the remaining 3 years. Being able to mortgage your land means that you can smooth out that profit stream.

    Also, in the long run, the price of the land goes up and down with the profitability of the crops that can be grown on it; farming *work* (profits of the operation minus the rental cost of the land) will pay just well enough to keep the needed number of farmers from wandering off into other employment.

    The ugly thing is that if the export markets are permanently damaged, the price of farmland will go down and stay there permanently. That means that anyone who owns land (and a lot of family farms own multiple millions of dollars of land) will lose a substantial part of their wealth. Those who have it highly mortgaged will be wiped out.

    You can bet that the American Federation of Farm Bureaus (simply “the Farm Bureau” in Iowa) is working on this …

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