When exports account for a huge portion of agricultural production, any trade war is going to have a profound effect on US farmers. In fact, between 2017 and 2018 soybean exports fell 75%. These massive drops in exports as a result of the trade war is forcing farmers to look for ways to improve their existing operations, many with the help of farm loans


Trade War Is Having a Massive Impact on Agriculture Industry

US farmers are at the behest of government policies. China is one of the biggest buyers of US agricultural products, so when their relationship with the US began to come under pressure, these products fell victim to retaliatory tariffs. These tariffs have resulted in significant declines in the number of exports, directly affecting US farmers. It has been reported that 84 farms in the Midwest filed for bankruptcy between 2017 and 2018 and an increasing number of borrowers are defaulting on their farm loans. This is a trend that has continued as the trade war carries on.


How are US Farmers Affected? 

Farmers have been growing crops intending to export them to China. However, as China has drastically scaled back its imports of US agricultural products as a result of the trade war, US farmers find themselves with excessive surpluses. This has led prices for these products and other commodities to plummet. The retaliatory tariffs that China has issued against US agricultural products have affected:

  • soybeans
  • wheat
  • cotton
  • dairy
  • pork
  • fruits
  • nuts
  • and many more


Potential Problems Caused By the Trade War

With China spending $9.2 billion on agricultural products in 2018, the blanket order to cancel all agricultural purchases is likely to have a profound impact. Some of the major issues that could arise from the trade war between the US and China include: 

  • China importing agricultural products from South America
  • Demand problems setting the US ag industry back years
  • Increased prices of consumer goods domestically
  • Massive revenue losses for US farmers


How US Farmers Can Protect Themselves

The US and China have yet to come to an agreement to end the trade war. As the trade war drags on the impact on US farmers is intensifying. Therefore, farmers need to take proactive measures to protect themselves. There is little that can be done about the initial yield of crops affected by tariffs. Moving forward, farmers can focus on improving their operations. As revenues have suffered as a result of the trade war, farmers may want to consider farm loans to implement new farming methods that will reduce operating costs and increase the variety of crops being grown on their farms.


Plan Ahead

The best way to hedge against the risk of the trade war continuing is to plan ahead. AgAmerica works with numerous farm loans to help you improve and expand your farm. This can help you strengthen your operations and even implement specialty crops to diversify your farm income. Contact a loan officer today to see what financing options we have to help you make a plan to protect your farm.