Tariffs from the trade war with China have made a significant impact on the US agricultural industry as a whole. However, states whose economy is largely comprised of agriculture have been especially hard-hit. As experts in farm financing, we hear a lot of conversation revolving around this topic. Below, we’ve provided some information on what we know about how tariffs are affecting U.S. farms at the state level.
Both Farmers and State Governments Are Affected by Tariffs
The tariffs imposed on the agriculture industry via the US-China trade war are essentially a blanket ban against purchasing US agriculture products. This has yielded massive revenue losses and has had an impact far beyond simply not being able to sell their crops.
Impact on US Farmers
At the local level, US farmers are feeling the direct impact of tariffs. The most obvious impact is that they are left with the season’s crop but they must sell it at deeply discounted rates due to the excessive surplus. However, US farmers are also experiencing:
- Plummeting prices for crops and other commodities
- Declining revenues
- Sinking land value
- Restriction on farm financing
- Rising numbers of bankruptcies
- Increasing financial stress and suicide rate
Impact on State Governments
The state government itself is not immune, especially in states where agriculture accounts for a significant portion of its GDP. As farmers are under financial strain and the number of farms filing for bankruptcy continues to increase, states are losing a vital part of their economy. Some of the biggest issues states are facing include:
- Decreasing economic revenue
- Falling tax revenues
- Significant job loss
US farms are major employers in the states where they operate. When one of these farms files for bankruptcy or ceases operation, jobs are lost as well as the injection of cash into the remaining economy. As a result, the rest of the state’s economy has also suffered due to the trickle-down effect of these bankruptcies. This has caused a significant contraction in state budgets.
Get More Information
As the agriculture industry waits with bated breath for the tariffs to be lifted, now may be an ideal time to find farmland at a discounted price. An AgAmerica loan officer can discuss what farm financing is available and help you choose the one that’s best for you. Contact us today to learn more and start the process.