Trump’s Trade-War Casualties

(Malcolm MacGregor/Getty Images)A visit to the battlefields of soy

Valley Springs, S.D.

‘I’m farming dirty!” says Kevin Scott, a father of six with one of those delightful Marge Gunderson Upper Midwestern tundra accents, who out here in his little house on the prairie right down the road from that little house on the prairie — the one Laura Ingalls Wilder wrote about — is living the simple farmer’s life, which in the early 21st century includes such combat-derived technologies as surveillance drones and satellite overheads, along with giant tractors decked out with multiple touch-screen arrays into which are pumped vast quantities of real-time corn-and-soybean-related data of various kinds, and sensors and GPS tracking doohickeys and a vast pneumatic seeding apparatus that no longer scatters the seed upon the ground in onanistically incontinent fashion but places this individual piece of specially treated seed corn right there, just exactly 1.75 inches below the surface and topped with a little dollop of fertilizer, just so, cleanly and precisely, every nine inches, 16 rows at a time in a 40-foot sweep. There are five grains of untreated kernels in every hundred — just enough to keep from breeding pesticide-resistant pests. “I can monitor this from my cell phone in Washington,” Scott says, and that’s a part of this farmer’s life now, too: the meetings in Washington or Dallas or Paris and the trade shows in Orange County and San Antonio, the calls with the secretary of agriculture and his staff, monitoring the political chatter and commodity futures. His customers are Chinese pig farmers, his competitors are in Brazil and Argentina, he and his fellow soybean and corn producers have problems from Brussels to Beijing.

But what’s really vexing Kevin Scott today is the million-dollar arsenal of high-tech farm implements sitting idle in his barn doing no farming at all, doing jack all, just sitting there depreciating. In this part of South Dakota, the farmers have planted only about 5 percent of their soybean crop and 25 percent of their corn. They like to plant corn by April 20 — this year, it was still snowing in May, and since then it’s been rain and rain and rain and rain, the Big Sioux River looking very big indeed, spilling over its banks. The highway medians look like Florida alligator swamps and there’s weeks of rain ponding all over the place, standing in the fields, halfway up trees in some places, making it too wet to plant.

After a severe drought a few years back, years of soft farm prices, and a trade war in which Beijing has jammed its collective hand right up the hickory-striped overalls of American farmers and taken a firm icy grip on their scrota in retaliation for President Trump’s punitive tariffs on Chi-Comm imports, now this, this Coleridgean nightmare of water, water everywhere. Farmers used to pray for rain. Now, they are praying that it will stop long enough to let them put in their crops. Corn prices are high and rising . . . because nobody can plant corn. So farmers will either miss out on the bull market or be forced into speculation, selling crops they haven’t planted yet and may end up not being able to deliver, putting them at the risk of getting woefully and dangerously upside down on those contracts.

Decisions. Kevin Scott looks out the window. Rain.

Things have been getting stuck in the mud so much that Scott has just left the tow rope tied to the front of his biggest tractor, the one with the tank-style rolling treads instead of the man-high tires, knowing that something else is going to have to be pulled out.

Farming dirty, indeed.

What “farming dirty” actually means is leaving the old corn stalks mulching on the fields when the next crop is planted instead of cleaning them off. It is an ecologically sound practice, but Scott, who says “There is a place for things” like a man who really means it, does not like the messy look of farming dirty. He points to some evenly and uniformly bear-colored fields of artfully plowed Houdek loam. (Does your state have an official state soil? Because South Dakota has an official state soil, and it is Houdek loam.) “I’d prefer my fields to look like that,” he says, with a little bit of gentle lamentation. “But this is a good way to plant.”

Scott is on the board of the American Soybean Association and sits on its governing committee, its trade, policy, and international-affairs committee, and its biotech working group. He represents the ASA on a railroad business council, because those soybeans are not getting to China on magic carpets. He’s a national-policy adviser for his state soybean association, too, and was its president for a decade. (Term limits: The South Dakota Soybean Association has them.) And his policy agenda is free trade.

This is Trump country, and the farmers here are the kind of conservative that usually gets described as staunch or rock-ribbed or something like that. Get them talking about trade, though, and they’re Manchester liberals. The farmers were on the opposite side of the free-trade debate during the controversy over the Corn Laws, but now they are frank and unapologetic and assertive owners of that most hated of all Trump-country epithets.

Globalists. Down on the farm.

So, here’s the thing about soybeans. Americans produce beaucoup soybeans. Brazil and Argentina, being in the Southern Hemisphere, produce gigantic crops in the U.S. off-season. China has a powerful hunger for soybeans, albeit a mostly indirect one. Two kinds of creatures walking this earth really like eating soybeans: pigs and hippies. Chinese people do eat soybeans, too, but what the nouveau riche Chinese palate has a real taste for just now is pork and, to a lesser extent, chicken. That’s a pretty predictable thing following a pretty familiar pattern: When poor countries become less poor — though with a per capita GDP of less than $9,000 a year, down there with Cuba and Kazakhstan, China is by no means a rich country — the first thing the people usually spend their newly disposable income on is more and better food, which in much of the world means more and better animal protein.

The world is hungry for protein, and the American Heartland is the Saudi Arabia, the de Beers, and the Fire Creek gold mine of protein, including soy protein. Kevin Scott’s soy protein comes out of the ground, goes into the hopper and then down to the silo, rides the rails from South Dakota to the Pacific Northwest or the Gulf of Mexico, is loaded into shipping containers or massive PANAMAX bulk carriers, some of which are specially outfitted for carrying grains or soybeans with their hulls sloped at 45 degrees to make stevedoring easier, and then continues on to ports around the world, Chinese ports such as those at Dalian and Nantong prominent among them. At some point along the way, the beans get ground into meal, and that meal goes into animal feed — down the gullets of Chinese chickens or, more likely, into the monogastric digestive tract of a Chinese pig. And thence into the butcher’s case at whatever the Chinese answer to Piggly-Wiggly or Whole Foods or Albertson’s is. That’s what used to happen. That’s what’s supposed to happen.

And along came Trump.

Donald Trump is obsessed with the so-called trade deficit — a confusing term used to mislead the lightly informed about the phenomenon in question — and he has been obsessed with it since Ross Perot’s “giant sucking sound” was a thing. Trade, and not illegal immigration, is Trump’s longest-standing hobbyhorse. And when he got into Washington, he rode that hobbyhorse all over town, leaving a trail of the stuff horses leave trails of. The first thing he did was to kill the Trans-Pacific Partnership, a trade alliance that would have made the United States an important member of a bloc intentionally constructed to counter Chinese dominance in the Pacific Rim. Soybean prices tanked. Trump went on to impose punitive tariffs on steel and aluminum imports, including those from the European Union and Canada. He ordered 25 percent duties on more than 800 categories of Chinese goods. After the failed trade negotiations with China, he ordered higher tariffs on another $200 billion of Chinese goods. The Chinese retaliated with tariffs on, among other things, U.S. soybeans — which had long been the biggest U.S. export to China after aircraft.

One of the nice things about being a totalitarian police state is that you can do things like just order your soybean importers not to do business with American producers, and that is what China has quietly done. Beijing has in fact been following a clever strategy. Its tariffs on and soft boycott of U.S. soybeans drove down U.S. soybean prices in absolute terms but also relative to producers in Brazil and other nations. Beijing then authorized its buyers to pick up those cheap U.S. soybeans as part of a program to replenish long-term reserves — which means that they can be imported without payment of the 25 percent tariff. Which is to say, U.S. producers suffered the consequences of the tariff, but Chinese buyers did not have to pay higher prices. China canceled billions of dollars in planned soybean purchases. By early this year, soybean prices were near decade lows. From 2016 to 2018, the value of U.S. soybean exports to China dropped by nearly 75 percent, according to G. William Hoagland of the Bipartisan Policy Center.

The steel used to make farm equipment? That got more expensive. So did many other inputs, from fertilizer to chemicals.

In 2013, U.S. farm income was $123 billion. This year, it is forecast to come in at less than $70 billion. President Trump is going to have a rough time of it going into rural America and asking farmers whether they are better off today than they were four years ago — the numbers do not bear that out.

And that is not a problem that stays on the farm. Sioux Falls, S.D., is a vibrant little city, one of those midwestern gems such as Kansas City and Grand Rapids that punch above their weight. It has a downtown that has the feel of being a couple of years past the apex of a pretty successful revitalization project — you know the scene: wine bars, ambitious little restaurants, those funny shops that always seem to stock three not obviously related categories of product — like scented candles, stationery, and petite little bottles of balsamic vinegar — that make you wonder how on earth they generate enough revenue to pay the rent. It is nice, and there’s a theater and people on the sidewalks and drunk young women on those sip-’n’-ride contraptions that are one part mobile cocktail party, one part tandem bicycle that look like a lawsuit just waiting to happen. But this urbane little core is built on soybeans and other farm products.

“It affects everything,” says Scott VanderWal, a fourth-generation South Dakota farmer and the vice president of the American Farm Bureau Federation. (The president of the American Farm Bureau Federation is a Georgia farmer who rejoices in the name “Zippy Duvall.”) VanderWal is a kind of farmer-wonk-diplomat whose office is so thoroughly out in the country that it doesn’t have an actual address. He just gives you the address to the nearest place that has one, which is a modest little house guarded by a dog that looks like it could have been an extra on Game of Thrones, and then stands outside and looks for whoever looks lost. A bad year for farmers is a bad year for a lot of people around here. “It affects ag services, obviously,” he says. “But it also affects Main Street businesses. It affects the flower shop and the furniture store. If farmers don’t have any money in our pockets, we aren’t out spending it.”

They appreciate that fact in town, too.

“We all live on farm dollars,” says a construction-supply salesman drinking an after-work Grain Belt–brand beer at a Sioux Falls bar with a sign that says there’s a two-drink minimum if you want to cash your payroll check at the bar. It’s not too far from a place with a sign straightforwardly offering “African Food and Cold Beer.” Out there in weird old red-Pontiac, leg-tattoo Middle America — which starts only a few blocks away from the cute little wine bars and the Orpheum Theater — the sense of prosperity is not what you would call evenly distributed. Sioux Falls is infested with these ghastly little hut casinos about the size and shape and smell of a not very well-run 7-Eleven, basically downscale adult daycare centers with adult video games. The farmers themselves seem to be a pretty thrifty, hustling, entrepreneurial bunch, but the edges of the local economies in communities such as this do not have a lot of room for error. Sioux Falls is nearly 90 percent white, and almost a third of the adults are college graduates. The median household income is just a little under the national average, but the cost of living is low. At the same time, Sioux Falls has a number of familiar problems, heroin and opioid use prominent among them. The number of drug-overdose deaths in the county doubled from 2017 to 2018, and it is expected to grow even more this year. The dead were overwhelmingly men, 43 years old on average.

The graybeards around here have seen what a bad farm economy really looks like. They saw it in the 1980s, when 20 percent interest rates crippled the financing-dependent agricultural sector. With farm income already taking a beating, the collateral damage from the trade war could very well have effects that will linger long after trade relations return to whatever is going to count as normal from here on out.

People are nice here. Not Minnesota nice — the real thing. Kevin Scott worries that the stress from his advocacy work and the frustration of being sidelined by the weather — with all the financial and professional complications that brings with it — might be making him a little bit cranky at home. His wife assures me this is not the case. “He does everything he can,” she says. “Eventually, that’s it. You do what you can, and trust God for the rest.” There’s a little sign in the kitchen, and it doesn’t say “Bless This House” or “Let Go and Let God” or anything like that. It says: “No Whining.” Scott’s son, who has recently joined him in the business, is the fifth generation of his family to work that land. His great-great-grandfather helped to found the Methodist church up the hill. It’s raining, and there are grasshoppers to worry about, and nematodes, and aphids. He’s proud to be a farmer. He says he likes producing something that’s real, that people need. No whining.

They want to keep doing this. Kevin Scott talks about a meeting with some of his French counterparts a few years ago. They warned him not to let the United States go the way of France, in which government takes the leading role in agriculture, micromanaging farming and dictating to farmers. “What they have in France, he said, is a ‘farm museum.’ Not farming.”

The thing is, even if none of these nice people will exactly say it, that none of them really likes doing business with the Chinese. The Chinese make promises and break them. They negotiate agreements and then back out of them. And the shenanigans — you would not believe the shenanigans. Everybody knows about the Chinese penchant for stealing intellectual property, but it isn’t limited to smartphones and automotive technology. In 2013, seven Chinese agents were arrested digging up experimental seeds from Iowa cornfields, planning to ship them back to China for examination and replication. The cell targeted products from Monsanto, Dupont Pioneer, and LG Seeds. The leader of the group was employed by Beijing Dabeinong Technology Group, a private firm that received funding from the Chinese government for “science and technology” research. Crazy stuff.

Broken promises, agreements reneged on, playing fast and loose with the rules, shameless rapacity: China is a nation of Trumps, and even Trump doesn’t want to do business with them.

But it is a funny old world. The Chinese are a pain in the ass and worse, but there are a whole lot of them, and they are hungry hungry hungry, and the United States is the world’s superlative agricultural producer. We produce so much that we don’t know what to do with it all. The soybean guys have spent years traveling the world teaching hog farmers and chicken mechanics how to improve their businesses and incorporate modern agricultural practices, expanding their own market by helping producers abroad to build up their own local markets. The American Soybean Association had an office in Beijing for 25 years before a single shipload of beans went to China. This stuff takes work.

It is also an interdependent world. There’s a terrible outbreak of swine fever rampaging through Chinese pork country right now. According to official estimates, more hogs have died from the outbreak than the ginormous U.S. pork industry produces in a year, and the smart little piggies think Beijing is probably lowballing that number. As VanderWal says, that means that even if U.S.–Chinese soybean trade goes back to normal, there may not be much of a Chinese market left to sell into. Dead hogs eat no beans.

The silver lining is that with China temporarily turning up its nose at American soybeans, those soybeans are available to other markets — often at a nice introductory price that the farmers hope will go up. In some cases, ships bound for Chinese ports have been redirected while at sea. (One ship even sat outside a Chinese port for days and days as the authorities decided whether they were going to allow it to go ashore: stateless beans!) So the U.S. soybean guys have been knocking on doors and shaking hands and making friends in Egypt, Algeria, Morocco, and in Europe, too. They don’t talk pork very much in the Muslim countries, but there’s chicken and beef to be fed, and the French love their rillettes de porc. Scott hopes that the U.S. soybean industry will come out of this with a more diversified market and a less China-dependent one. But getting there will be a long and difficult process — and one that’s going to be a hell of a lot harder if the soybean farmers don’t have any money to work with.

Farming is a business of relationships, VanderWal says, and it is critical that U.S. farmers be regarded as “reliable suppliers.” It took years for American farmers’ reputations to recover from the debacle of the Soviet grain embargo, a daft and botched attempt to starve the Russians into penance for invading Afghanistan cooked up by the great peacemaker Jimmy Carter and rescinded by the purported warmonger Ronald Reagan. The costs of the embargo were borne almost entirely by American farmers: The Russians just bought more grain from Argentina. VanderWal fears that the current situation may damage U.S. farmers’ reputation for being reliable suppliers. The Bernie Sanders Left is at least as hostile to trade as is the Trump administration, and if the nation as a whole is turning away from free trade, that cannot help but affect how farmers do business. VanderWal and his group were vocal supporters of the TPP and nervous about renegotiating NAFTA even though there were parts of it that they believed to be in need of reform. But the TPP is gone and it is not coming back. VanderWal believes that the best course of action is to press for bilateral agreements with the TPP countries, along with the European Union and the United Kingdom — “assuming they are ever able to actually break away from the EU.” That and the Golden Rule, he says: “Treat others how you’d want to be treated. Stick to the deal. Honor your agreements.” He thinks there’s room for reform at the World Trade Organization, and hopes that farmers can get Washington’s attention and put all those expensive diplomats to work on new trade deals.

And that includes, ultimately, a deal with China, too. There is not really any way around it. And, in the end, a way around that would not be desirable, anyway. The reality is that the world is interdependent, and our institutions should be in accord with that reality.

Farmers in large part are paying the price for somebody else’s crusade. This is really not their fight. They’re farmers. They don’t do drama and hysterics and Sturm und Drang: They do business. VanderWal said as much in congressional testimony not long ago: “Farmers are patriots. We were willing to step up and take one for the team. But, at some point . . .”

What’s really annoying to farmers is that none of this is really about them. This is about BMWs and Toyotas and steel and Boeing and the fact that Americans don’t like seeing “Made in China” on socks and flipflops they buy at Walmart because we are losing our position of worldwide sock and flipflop dominance, of front-runner status in the flipflop race, whatever. “For years, this was a nonpartisan issue,” VanderWal says. “I didn’t like Bill Clinton very much, but he did a fine job on trade. Obama worked on trade. The president is right about the theft of intellectual property, and we do broadly support what the president is trying to do.”

But is it getting done? VanderWal smiles. “The president doesn’t respond well to criticism.”

Back at the Scott farm, there’s an Eisenhower-era Farmall 300 tractor waiting for a new coat of red paint and a restoration. Kevin Scott’s office is full of family pictures, including the old timers as little children, back in the 1920s and 1930s, posing in front of old-timey tractors — and pictures of the same men, grown old, posing in front of more modern farm machinery. We talk on a Wednesday. He’s expecting another grandchild on Monday. Six children of his own — reliable producers, indeed: independent, cheerful, useful.

No whining.

These guys aren’t a bunch of Elmers out in the wilderness scratching a living out of the soil. “The soil is our factory,” Scott says, and his business is capital-intensive, high-tech, and demanding. And he very well could be managing a factory or a law firm or a hedge fund or another kind of business. These are smart guys, and more than a few of them are in fact managing other businesses, too: They’re on the boards of banks and insurance companies, they’re involved in real estate, this and that. But they love farming. They love the life and their communities, the way farming and family fit together. They are enthusiasts. One of them tells an old joke about the farmer who wins the lottery and says that he plans to just keep on farming until the money’s all gone.

“I want to let people know they need to make their planting decisions and cropping decisions, all production decisions based on where they see the market and where they see their own weather pattern and when they can get into the fields in their own area,” says Sonny Perdue, the secretary of agriculture. Translation: Don’t count on a bailout for tariff-crippled farmers to make you whole. There’s going to be something, yes, but that’s just a patch. It is a big wide complex world and, the grand tradition of U.S. farm policy notwithstanding, a check from the government is not a long-term solution.

It’s the tail end of May, and Kevin Scott is in his office looking at the calendar. May 25 was a big day, a red-letter day: That was planting day, not as determined by agronomic considerations or the cereal goddesses or Kevin Scott’s own personal sense of time, but as determined by the insurance company. If your crop is insured for x, that figure holds only if it is planted by the date the insurance company determines. After that, the value of your coverage declines by 1 percent every day. Farming is an up-and-down business with very little income security in the best of times, and the worst-case scenario of cashing in the crop insurance dribbles away, 1 percent every 24 hours, after planting day. Kevin Scott runs the numbers. He’s been farming for 37 years, and he’s used his crop insurance only twice. He uses the words “break even” fairly often. He talks about the “prevent plant” option, meaning an arrangement in which a farmer accepts a substantially reduced insurance payment for a crop that is not planted at all. The insurance companies say they are getting more calls about that than they are used to. Farmers are, by necessity, realists. And you can’t plant when it’s raining out and there’s water ponding in your cornstalk-littered fields. And you can’t control what’s happening in Washington, Beijing, Brussels, the Chicago Board of Trade, Brazil, the Panama Canal. You can’t control a wet, leaden spring of low skies and prairie thunder. What can you do? You can sit in this room, look at these pictures, think about that new grandchild, and, as your ancestors and predecessors have done for thousands of years, look out on those fields and up at the sky and hope and pray and get back to work.

This article appears as “A Battlefield Planted with Soy” in the June 24, 2019, print edition of National Review.

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