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Farmers stand to lose billions of dollars in gains, thousands of jobs, after Trump kills TPP

Amy Bickel
The Hutchinson News

Lane County farmer Vance Ehmke calls himself one of those guys who sees a dark cloud in front of every silver lining.

Ehmke, who sells certified seed, harvested the best wheat crop of his lifetime in June. But as a glut of grain piled high at many Kansas elevators, commodity prices collapsed, sending producers into a farm crisis not seen since the 1980s.

Now that cloud is appearing stormier. Ehmke expressed dismay after learning President Donald Trump killed a trade agreement that he says could have helped move grain to new markets, as well as soften the blow of the slumping farm economy. 

"Farmers might be sent to the front lines on this thing," Ehmke said, later adding, "I hope farmers don't get a bloody nose."

Farm groups, including the American Farm Bureau, had estimated the 12-nation Trans-Pacific Partnership would have added $4.4 billion annually to the U.S. agricultural economy.

But one of Trump's first actions in taking office on Monday, as expected, was to sign an executive order to leave trade deal negotiations - officially bowing out of TPP.

Trump favors one-on-one agreements with other nations over multilateral pacts.

Agriculture groups and rural leaders, however, have expressed concern about the order. Rural communities, after all, which voted overwhelmingly for Trump, rely on the farm economy. In fact, in Ehmke's home county of Lane, more than 80 percent of those who went to the polls voted for Trump.

“TPP and NAFTA have long been convenient political punching bags, but the reality is that foreign trade has been one of the greatest success stories in the long history of the U.S. beef industry," said Tracy Brunner, president of the National Cattlemen's Beef Association and a Kansas rancher, in a statement.

Amid the faltering farm economy, TPP's benefits for rural America include an annual increase in U.S. cash receipts by $8.5 billion. In Kansas, ag receipts and net exports would augment by $303.7 million and $213.7 million a year, respectively, according to the U.S. Department of Agriculture.

The American Farm Bureau also has noted TPP would bring the United States an additional 40,100 jobs - 1,600 in Kansas. 

Trump, however, has said that such agreements are hurting the economy and putting Americans out of work as U.S. companies move jobs abroad.

Congressional leaders have also weighed in, including Sen. Pat Roberts, R-Kansas.

“In my home state of Kansas alone, over 35,000 jobs are supported by agricultural exports," Roberts wrote in an email to The News Monday. "Our farmers, ranchers and growers depend on international trade, and it is imperative that the United States take the lead in writing and enforcing the rules, especially with sanitary and phytosanitary matters. Whether we’re talking about the development of future trade agreements, or enforcement of our current agreements, agriculture must continue to be a top priority. Rural America feeds the world, and I look forward to working with the Trump Administration to make sure it stays that way.”

Roberts, who chairs the Senate Agriculture Committee, also stated that in 2015, the United States exported agricultural goods valued at $133 billion. He added he has spoken with Trump's nominee for the U.S. Trade Representative post, Robert Lighthizer, stressing the importance of having a champion for agriculture in future trade negotiations.

Barton County farmer Keith Miller, the previous chairman of the American Farm Bureau Federation’s International Trade Advisory Committee, has been working the past few years trying to get TPP passed, making trips back and forth to Washington to tell congressional leaders why the United States needs TPP to compete in world markets.

It would inject millions into the Kansas economy alone, he said. Meanwhile, the partnership would also expand U.S. access to the Asian marketplace, where there is a growing middle class due to an improving economy.

According to the Office of the U.S. Trade Representative, about 20 percent of U.S. farm income comes from agriculture exports, but taxes on these products made trade prohibitive. 

For instance, with TPP, Japan would have eliminated duties on 74 percent of its beef and beef product imports within 16 years. Beef going into Japan currently has a 38 percent tariff. With the agreement, that tariff would have gone down to about 12 percent, Miller has said.

Keith Miller, then vice chairman of the U.S. Meat Export Federation, conducts a radio interview with Greg Akagi of Kansas Agriculture Network.

"There is no question that TPP would have helped the agriculture markets," he said. "I understand Trump’s point of view: He wants it to help all parts of trade. I understand why he did what he did."

However, Miller said, "He better start renegotiating right away with those individual countries - try to get lateral agreements right away."

Miller said some of the countries in the agreement have already began negotiating trade deals without the United States and have been "enjoying the lower tariffs of their negotiations." That includes Australia. Tariff cuts negotiated with Japan have dropped the country's rates on beef by about 20 percent.

Australia has taken part of the market, but Japan still wants quality beef, which is one reason they still buy some corn-fed U.S. beef, Miller said. Australia largely grass-feeds its cattle.

Also hurting trade is the high value of the U.S. dollar, Miller added.

"We need to make sure we keep Trump's feet on the fire and get those trade agreements negotiated," he said.

Ehmke noted one concern he has is about China, a country that has been scrutinized for currency manipulation and unfair trade practices. With America dropping out of TPP, the country is now trying to move in and fill the U.S. void.

His other concern is what would happen to commodity prices as American farmers wait to see how these trade wars shake out.

"We live and die by trade, that is all there is to it," said Ehmke, noting at least a half to two-thirds of Kansas wheat is export. 

Ehmke said the price of wheat at the Garden City Co-op in Dighton Tuesday was $3.22 a bushel, below break-even for most farmers. That is up a bit from this summer, when prices hit around $2.20 a bushel - lows he hasn't seen since he came back to the farm.

In February 1977, wheat fell to $2.17 a bushel, "and it was worth a hell of a lot more then," he said.

Farmers, seeing it will cost them to plant wheat this year, have cut back on acres - something he has noticed in his own seed sales. 

According to the National Agricultural Statistics Service, Kansas farmers this fall seeded 7.40 million acres to wheat. That is the lowest acreage plant since 1957 and the second lowest acres to wheat since 1912.

Ehmke said at a recent conference, the Kansas Farm Management Association predicted a preliminary state average accrual net farm income for 2016 at a negative $50,000. In northwest Kansas, that number could be as low as a negative $70,000. Officials with KFMA didn't return calls regarding the numbers on Tuesday.

"It's pretty shocking," he said. "This thing we are walking into is real."

Ehmke added that it is easier to "get a bunch of countries together" and come up with a multilateral trade agreement. It's more difficult to do that bilaterally, he said.

But that is the road the administration will go down, he said. Farm country needs to get braced, Ehmke said, but added, "We are already beat up pretty bad."

"Protectionism is not the path to prosperity, period," he said. "But that is where Trump wants to take the country."

For now, he and other farmers will see how it all plays out.

"At the end of the day - one of my favorite sayings - 'Oh well; after about a six-pack, it starts making sense.' "

Kansas Agland Editor Amy Bickel has been covering Kansas agriculture for more than 15 years. Email her with news, photos and other information at abickel@hutchnews.com.