As American Farm Bureau President Zippy Duvall points out, trade isn't an easy subject to discuss these days. However, at a recent trade conference, Duvall, a third-generation farmer from Georgia, described recent trade disputes as part of a "perfect storm" affecting farmers — and that perfect storm involves more than just trade.
The conference, "What's on the Horizon for International Trade?" was hosted by the Yeutter Institute at the University of Nebraska-Lincoln in collaboration with the Nebraska Farm Bureau.
"The first thing everyone would say is the trade war has put us in a perfect storm," Duvall said. "I look at it as just one little piece of that pie. The farm economy was bad before Mr. [Donald] Trump got elected. We'd already lost 50% of our income. We went into a trade war limping as an industry, and that has really, really hurt us."
Other factors at play
That perfect storm also includes the need for updated infrastructure and broadband in rural America, and the ongoing need for more research and development dollars.
"China is outspending us 3-to-1 in research and development dollars," Duvall said. "That is not a good thing. Our land grant colleges and companies across this country need to be spending those research and development dollars because that's what keeps us on the cutting edge. And Lord help us if we get behind in that area."
With the economic hurdles facing producers, Duvall noted many farmers are looking for diversification opportunities — although expansion and certain value-added production systems aren't always viewed favorably by consumers.
"I didn't milk 300 cows all my life because I wanted to milk 300 cows," Duvall said. "I would have loved to just milk 100 cows. I couldn't make a living at it. I lived through the 80s, and it was very difficult, and I was a small dairyman."
By the middle of the 1980s, he had to expand, he said. "So we went into poultry, and poultry helped us get through that very difficult time."
"Our farmers are hungry for something to diversify," Duvall added. "I see poultry moving into this area of the country with Costco. If you have a hemp meeting, they will fill the room full and run out the back to see if it might be the next opportunity to grow. We don't want to be bigger just to be bigger. We have to be bigger because of economies of scale."
It hasn't all been doom and gloom, Duvall said. He pointed out the tax reform and regulatory reform that has taken place — most notably the repeal of the 2015 "Waters of the U.S." rule — as well as the ruling to allow for year-round sales of E15 ethanol blends.
Trade hurdles to overcome
Of course, there are hurdles ahead — and trade, while not the sole contributor, plays a big role in that perfect storm. This includes getting the U.S.-Mexico-Canada Agreement ratified by Congress.
"We have USMCA in front of us, and we're not going to get it passed unless our farmers rise up to the occasion and call our representatives, senators, governors, and go to town hall meetings," Duvall said. "I know a lot of farmers say, 'I've already done that,' but we need to be doing it every week. It's kind of like a child worrying you to death until you finally make a decision. We need to get them to make a decision. And if we give up now, we still can lose the ship on that one."
The U.S.-Japan Trade Agreement, signed by Trump in early October, removed an estimated $7.2 billion worth of tariffs on U.S. ag products. Many hope that the agreement will serve as a partial replacement for the benefits that would have been gained from the Trans-Pacific Partnership, a trade agreement between 12 prospective countries that Trump withdrew the U.S. from.
"[The U.S.-Japan Trade Agreement] is huge," Duvall said. "It's huge for pork. It's huge for beef. And it's huge for grain farmers because we've got to feed all that beef and pork before it leaves here. I don't think it quite takes us to where TPP was, but it sure does help us, because we know that Japan was a big part of TPP."
A different perspective
Of course, the biggest topic of discussion in trade is China — and the series of tariffs placed on U.S. ag products by China as retaliation for U.S. tariffs on Chinese products.
Duvall noted he recently traveled to Copenhagen, Denmark, to the European Union-North American Agricultural Conference
"The question most asked to me from other countries — Mexico, Canada and Europe — was, how long is it going to take your president to solve the problems in China?" Duvall said. "After about 10 times, I finally asked [a farmer from Europe] why? He said, 'Because our government's pushing us to expand, so that we can fill the markets that you're not.'"
Duvall's comments came just a day before Trump announced China's commitment to purchase $40 million to $50 billion worth of U.S. ag products, what he called "phase one" of a trade deal with China. However, officials in China have disputed the dollar amount, and have said the U.S. would have to roll back its tariffs on Chinese imports as part of a final trade deal.
Several discussions at the UNL trade conference focused on how the U.S. could or should have approached trade issues with China — including disputes surrounding forced technology transfer, intellectual property theft and nontariff trade barriers. One proposed solution is a unified approach — allying with other countries to address trade issues with China.
"Is it the right way to do it? Of course it is," Duvall said. "But I think saying you could rally the troops and all of us address the issues with China at one time is a whole lot easier said than done, because I think a lot of those other countries saw an opportunity to capitalize on what we were going to lose.