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A Perfect Storm Is Brewing For Midwestern Farmers

A Perfect Storm Is Brewing For Midwestern Farmers

Unending rains and low crop…

America Has A Milk Problem

America Has A Milk Problem

America has a milk problem.…

Alex Kimani

Alex Kimani

Writer, Safehaven.com

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

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American Farmers Hit With Triple Whammy

Greenhouses

It’s not really a “good time to be a farmer”, despite President Trump’s desperate PR plea amid the unveiling of a $16-billion bailout for farmers hit hard by the trade war with China. Now China is halting the import of U.S. soybeans, and the question is whether the $16-billion bailout will be enough. Beijing won’t be cancelling orders it’s already made, but it’s putting any new orders on hold, essentially backtracking on an earlier agreement to purchase 10 million tons of American soybeans.

Calling them “true patriots”, Trump had trumped up the aid package by saying that the Chinese would be footing the bill for it; just as he has suggested that Beijing is paying for the tariffs the administration has slapped on Chinese goods. Neither are, of course, true, but serve to create a positive sentiment around the trade war by intensifying negative sentiment against the Chinese.

None of the rhetoric will help American farmers.

To put things into perspective, in 2014, China purchased some $14.5 billion in American soybeans. In 2017, China imported $12.3 billion. Last year, when the trade war began, China imported only $3.1 billion. For 2019 and 2020, the U.S. Department of Agriculture (USDA) predicts that Chinese demand for American soybeans will shed an additional 42 million tons. And this, at a time when soybean prices are trading at a 10-year low.

The USDA’s crop progress report shows that farmers have planted less than half of their intended corn acres for this year, and soybeans are taking up only 19 percent of acreage, down from the typical 47 percent.

Not only are they battling politics, geopolitics and even loss of land to foreign ownership, but they’re also battling severe weather. And it’s all shaping up to be an agricultural nightmare for the American farmer.  

Related: China’s Plan To Influence Global Commodity Pricing
The situation was already bad before the trade war, making the trade war the final straw--especially for the smaller farmers.

According to the Los Angeles Times, most of this aid money will more likely go to big-revenue-earning farms that are already benefiting from significant federal subsidies and low-priced crop insurance. In other words, the aid helps those who are already largely covered from the fallout of the trade war.  

In the meantime, the spectre of the mission creep of foreign ownership of American farmland is put into more glaring perspective.

According to NPR, foreign investors hold nearly 30 million acres of American farmland today.

While there’s been a steady increase over the past two decades, noticeable increases happened during the last recession, when investors could get their hands on land for the low prices of financial desperation.

The amount of agricultural land held by foreign investors doubled from 13.7 million acres to 27.3 million acres between 2004 and 2014, estimating it as roughly the size of Tennessee.

Related: Beijing’s Plan To Disrupt Rare-Earth Exports

About 2 percent, or the equivalent of 25 million acres of U.S. farm and forestland, was foreign owned in 2012, data from the United States Department of Agriculture (USDA) shows. Although a small percentage, it still caused the value of the foreign-owned U.S. farmland to soar from $17.4 billion to $42.7 billion during the same period.

By 2015, at least 26.8 million acres of privately held farmland were held by foreign owners, according to the USDA 2015 report on foreign investment in U.S. agricultural land.

Canada is the largest foreign owners of U.S. land, with 6.87 million acres, followed by the Netherlands with 4.87 million acres, Germany with 1.94 million acres, the UK with 1.7 million acres, Italy with 1.4 million acres, Portugal with 1.38 million acres and France with 1.04 million acres, according to USDA 2014 report on the Foreign Holding of U.S. Agricultural Land.

China also owns a big chunk of American farmland--most notably thanks to the high-profile 2013 purchase of the world's leading pork producer, Smithfield Food, by Hong Kong-based meat processor WH Group. This company instantly gained control over 146,000 acres of prime farmland becoming the largest overseas foreign owners of the American farmland.

By Alex Kimani For Safehaven.com

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