The era of Trump is marked by important stories that go without much attention because of the major damage he is inflicting upon the country in so many areas. So please indulge me with a couple minutes of your time to bring more attention to a group that is suffering from the way Trump is conducting his “easy to win” trade war—farmers.
We have seen stories about how the trade wars are causing lower prices for soybeans and other US farm exports. Farming is a low margin business with relatively large capital requirements. The basic cash flow problem is that you have to do a lot of work, and allow time for growing, before you collect your cash. So even small farmers have to rely upon the availability of loans and credit to stay in business.
Reuters sent some reporters to investigate what is happening in the agricultural credit sector. After examining filings of the 30 largest bank holding companies, they reported that “after years of falling farm income and an intensifying U.S.-China trade war - JPMorgan and other Wall Street banks are heading for the exits” Wall Street banks bailing on troubled U.S. farm sector Lending by the largest banks fell “by $3.9 billion, to $18.3 billion, between their peak in December 2015 and March 2019,...a 17.5% decline.”
The trade wars have made a tough business worse:
The trade-war losses further strained an agricultural economy already reeling from years over global oversupply and low commodity prices.
Chapter 12 federal court filings, a type of bankruptcy protection largely for small farmers, increased from 361 filings in 2014 to 498 in 2018, according to federal court records.
“My phone is ringing constantly. It’s all farmers,” said Minneapolis-St. Paul area bankruptcy attorney Barbara May. “Their banks are calling in the loans and cutting them off.”
And, of course, the story of individuals who have spent their lives building a business is disheartening:
Gordon Giese, a 66-year-old dairy and corn farmer in Mayville, Wisconsin, last year was forced to sell most of his cows, his farmhouse and about one-third of his land to clear his farm’s debt. Now, his wife works 16-hour shifts at a local nursing home to help pay bills.
The new highs in the S&P 500 don’t quite seem to be reaching the lives of average Americans.