OEFFA Farmers’ Thoughts on Tariffs

Tariffs, tariffs, tariffs. They’ve been on our minds for months, as we’ve all followed the roller coaster of announcements, retaliations, negotiations, and pauses. But what exactly are tariffs? More importantly, how might the recent trade war impact our farmers?

Tariffs 101

A tariff is essentially a tax placed on goods that are imported into (or sometimes exported out of) a country. Think of it like a toll companies pay when they bring in goods from other countries. 

Why do Governments Use Tariffs?

Governments use tariffs for a few reasons:

• To protect local industries: In theory, making imported goods more expensive can give local businesses a better chance to compete. 
• To respond to unfair trade: If one country is dumping cheap goods into another market, tariffs can serve as a countermeasure.
• To generate revenue: Tariffs can bring money into the government, although this is less common today than in the past.

Tariffs and American Agriculture

Tariffs might seem like something that only affects big importers and exporters, but they can have a direct impact on a farm’s bottom line.

When countries impose tariffs—especially during trade disputes—agriculture often ends up in the crossfire. For example, if another country places a tariff on U.S. soybeans, that crop becomes more expensive overseas, reducing demand. Less demand can lead to lower prices at home, squeezing farmers’ profits. It can also lead to further competition for those who sell domestically.

On the flip side, tariffs on imported goods like fertilizer or machinery parts can raise the cost of inputs. This puts pressure on operational costs, making it harder for farms to stay profitable.

Liberating Uncertainty

The ever-changing nature of the current trade war has contributed to growing uncertainty in an industry where decisions have to be made well in advance of harvests or sales. Farmers in the OEFFA community and beyond are facing difficulties when it comes to deciding whether to plant seeds, cull or keep dairy cows, expand into new markets, hire labor support, or place much-needed infrastructure and equipment orders. 

Our farmers are reeling. Many are already grappling with the impacts of a funding freeze of billions from the United States Department of Agriculture (USDA) and the increasing frequency of extreme weather events. Now they’re caught in the throes of what’s been described as a “full-blown crisis” by a leading export trade group for farmers. When one country applies broad tariffs on goods, other countries often do the same to us through retaliatory tariffs. Worse, they stop buying from us altogether. In late April, China made its biggest cancellation of pork orders in years, halting a shipment of over 12,000 tons amidst delayed shipments of other agricultural products like beef, dairy, and almonds. 

What Our Community Thinks About Tariffs

“It’s going to be very interesting to see how the tariffs affect organic grain farmers because there are other sources that don’t have tariffs that are sourcing into the U.S. Even though the tariffs on Canada are driving buyers to look elsewhere for organic grains, U.S. growers shouldn’t get too excited thinking that they can overplant and move those crops. We have to create awareness around how much organic grain is imported. There are plenty of domestic organic growers, but buyers are already used to sourcing it elsewhere. These tariffs are putting a band-aid on bigger issues of trade, and creating a false narrative that domestic farmers are going to get a lot of support out of this. The reality is that several countries export organic grain to the U.S.

The last thing you want to do as a farmer is overproduce something without a buyer down the road. It’s getting farmers thinking that there’s this real, sustained demand, just because of these tariffs. You can’t farm with trends or in response to demand, given how much time it takes to plan and plant. These market trends resulting from the tariffs aren’t real market projections. With organic farmers, the rule of thumb is that you don’t change your rotation because of the markets, because it takes so long to get your soil to where it needs to be, so organic farmers are not able to farm in such a reactive way.  The reality is that markets are driven by imports, and not all the countries that are importing organic grain to the US are hit with a tariff. We need to start educating consumers about these realities of organic grain (such as organic soybean meal; most of it is imported). There’s a story behind every organic grower and why they choose to grow organically.

Anyone who is putting anything in a can is in panic. We and everyone else are stockpiling our resources because we don’t know when we’ll be able to get them at a reasonable price again.”

“It just feels like another hit during a time when we’re already dealing with uncertainty and income loss from the federal funding chaos. It’s a precarious start to the season. The tariffs add one more question mark to the list; it’s hard to plan, hard to make a budget. 

Some suppliers are being very transparent by adding a tariff surcharge to show how much it’s impacting the price. Other suppliers seemed to have generally raised prices in anticipation of the tariffs. It’s hard to know what is actually because of the tariffs and what might just be a supplier taking advantage of an opportunity to charge more.

We hear supporters saying that the tariffs will benefit farmers; certainly not our type of farming. We sell our products locally. The biggest impact is the price increase of farm supplies and small equipment that we purchase this time of year. We’re a small operation, so we basically purchase our supplies at retail price and then sell our products at wholesale price; that’s already a tough equation. 

Meanwhile, I’m locked in on my own prices. I have already set prices for seed contracts, CSA shares, and wholesale produce. As my costs go up, I’ll just have to absorb them and make less this season. That’s particularly tough after the financial hit we took last year from the historic drought. The hits keep coming, and this one was avoidable.”

“The only thing that seems to be affecting us so far is packaging. I am not terribly worried about it at this point, but I’m not sure how it’s going to affect the US dairy farmer. I buy most of my equipment used. We have a lot of exports already in the dairy industry, but tariffs are in place with those countries.”

But What About the Promise of Aid?

Officials at the USDA have suggested that aid will be offered to impacted farmers again. However, a rollout of support could be hindered by recent staff and budget cuts. It’s also important to look back at the support provided during Trump’s last trade war. The Market Facilitation Program (MFP), established during Trump’s first administration, provided farmers with compensation for income lost as a result of China’s retaliatory tariffs against U.S. exports. 

As reported by our colleagues at the Institute for Agriculture and Trade Policy (IATP), the MFP aid provided in 2018 and 2019 was funded through the Commodity Credit Corporation (CCC)—with no input from Congress. Not only did the loose rules pave the way for fraudulent farmers to cash in, but they also largely benefited big agribusiness firms, like meat giant JBS. Specialty crop producers received just 2 percent of payments, and historically underserved producers received just under 4 percent of payments. Commodity crop producers received over 94 percent of payments. 

“These bailouts actually hurt rural communities by helping the largest companies and corporate farms get bigger and push out smaller farms. When future assistance is warranted, the government must act responsibly and ensure payments are targeted to farmers in need and not big corporations already flush with cash.” – Farm Action

The Big Picture

Tariffs are tools in the global economy, and their effects can land on farms and in grocery store aisles. Global trade impacts all of us. We mentioned earlier that tariffs are used to help level the playing field for American businesses.

However, as our colleagues at Farm Action pointed out, America’s antitrust efforts leave much to be desired, and large corporations now have control over much of the market, especially the food and farming sector. So, with few domestic alternatives to fill the gap, across-the-board tariffs get passed on to U.S. buyers and their consumers, with local farmers bearing the brunt.

Whether it’s the price of soybeans or the cost of equipment, understanding tariffs helps you make informed business decisions and speak up when policy hits home. It’s important for farmers to stay informed and involved in agricultural policy discussions. Your voice matters when it comes to shaping trade rules that affect Ohio communities.