Farmers mull tariffs' profit pinch

Beam anticipates his soybean harvest will approach the 2017 level of about 55 bushels an acre.

Pennsylvania has a thriving agricultural economy that is vital in rural areas and plays an important role in the state's overall economy said Jim Dunn, professor emeritus of agricultural economics at Penn State University.

"Certain counties are some of the highest agricultural counties in the nation," Dunn said.

Agriculture, more than many other industries in the US, is heavily dependent on exports. "China is our second biggest export customer behind Mexico," said Dunn. "China is an important dairy customer for the US, and dairy represents a big part of the state's agricultural economy."

What makes the current environment particularly challenging for the farm economy is that in addition to China, the US is also engaged in trade disputes with Canada, Mexico and the EU. Last week the US announced an agreement with the EU that may mean rising US soybean exports to the region.

Canada and Mexico, part of the North American Free Trade Agreement with the US, account for about 43 percent of the US pork export market. Hoffman said exports added $53.47 to the average price of $147 for a hog last year.

Depending on how the situation unfolds, all of this may mean that a perfect storm is brewing for Pennsylvania's agricultural economy, noted Dunn. "Taking an aggressive stance against China is not helpful for the US right now," he added.

The potential losses that Beam, Boyd and Hoffman are facing helped inspire Trump to offer an agricultural aid package valued at about $12 billion to make up for the lost income. However, all three farmers in Pennsylvania — a key state that helped propel Trump into the White House in 2016 — would prefer to avoid tariffs and the safety net offered by the government.

"I would rather see no tariffs and not need any government assistance," said Boyd. "I want to see us free to export and produce as much as we can and sell it on the world market."

Hoffman, who is appreciative of the relief package for farmers, said it is not a long-term solution. "I would prefer that we just get trade done," he said. Because the government hasn't released any details on how farmers will qualify for the aid, Hoffman isn't sure if he will apply.

"I really appreciate the help, and it's nice that we are being noticed," said Beam. "But most farmers are very proud people and we would rather sell their soybeans for $15 a bushel and pay taxes rather than sell them for $8 a bushel and take some government aid so we can pay all of our bills."

Beam said he will probably apply for aid under the program. "If I don't take it and my neighbor will that could put me at a competitive disadvantage," he said.

Neither Beam or Hoffman has had to curtail or cancel any spending yet. Beam and his wife have three children who live on their own. Hoffman and his wife have four children and three grandchildren.

Beam, Boyd and Hoffman all supported Trump in the 2016 presidential election. Despite the specter of damage to their balance sheets from the trade and tariff disputes, two of the three still back the president.

"There is more to being president than just the price of soybeans," said Beam, who has visited China. "There were other issues that were affecting farmers, and I really think this whole trade issue could work out to benefit both China and the US. We need China and China needs us and our soybeans. So let's sit down and make it happen."

"The president understands how trade has been unfair at times for the American people," said Hoffman. "I stand beside him as he moves to set America on an even playing field with the rest of the world."

Boyd, however, no longer backs Trump, and it's not just because of soybean tariffs.

"It's because of his heavy handedness in everything he does. He is cuddling with our enemies — Russia and North Korea — but is fighting with our closest neighbors and best customers — Mexico and Canada."