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Tariffs Could Hurt Indiana Farmers

by Caitlin Yoder

Published: Friday, July 6, 2018

The talk of tariffs on farming goods has many area farmers worried about the future of their farms.

Danny Young of Young Family Farms in Wolcottville is hoping that Trump has a good reason behind how he is handling the sit-uation. The Youngs farm around 4,500 acres of corn, soybeans, what and hay and raise 1,100 head of beef cattle and 6,000 pigs. He believes the lull in prices can't last forever, but if markets continue to decline it won't be good for any farm.

"I think any farmer's concerned because it's not like it was a really profitable year anyway," Young said. "I was hoping it was going to be a little higher than last year, but now it's looking like it's going to be the other way. It doesn't matter how big you are or how small you are, if it gets low enough it's going to hurt big time."

Chris Hurt, professor of agricultural economics at Purdue University, said there are two main things playing a part in the lower prices. Weather and growing conditions for June have been good so that has a negative impact on prices because it suggests there will be higher yields. The threat of tariffs is the main factor that is driving down prices.

Hurt compared the prices from June 1 to the closing prices on June 27 and used Purdue's estimates of cost of production on an Indiana farm with about 1,000 acres of corn and 1,000 acres of soybeans.

"The returns for that family on June 1 would have been about $42,000," Hurt said. "Those returns today, assuming the same yields and same costs but with the price de-crease they would have a loss of $106,000. (That is) shifting from $42,000 positive income this year to a minus $106,000 of loss this year."

While the main focus has been on the impact tariffs will have on soybeans and hogs, Young is also concerned about how it will affect equipment. He said when grain prices decline, equipment prices stay the same. He is worried that things will become worse if grain prices stay low and equipment prices remain high.

"If you have to replace equipment or anything, I think that's going to end up costing more," Young said. "Steel prices are going up from the tariffs, and that's what all the equipment is made from so that's going to make it even harder yet."

Young said he has sold some of his soybeans for a good price when they were high, but is holding on to the rest in hopes that the price will climb again. The Young family is making some modifications on the farm's finances to protect themselves long-term against the drop in prices, but hope the price will come back up soon.

"I just think it is what it is and you just have to try to make adjustments to try to make the best of it," he said. "I don't think it's going to be a long-term thing. I don't know how anybody would know."

With respect to Mexico and the U.S., Hurt said that the tariffs would not be good for either country involved. Although Mexico is talking about adding tariffs to U.S. crops, he believes they are hesitant to go through with them.

"I think Mexico really does not want to put that tariff in place," Hurt said. "They need that corn for their livestock industry and they need it for human consumption, so the Mexican government really does not want to put those tariffs on U.S. corn because that's going to have an immediate impact on the act of raising food prices in Mexico."

Farming may always be unpredictable, but Young wouldn't change his way of life. He said farmers are used to taking what they can get while other businesses set the price, so they are used to finding ways to get by in the hard times.

"Farming is a unique way of life and I wouldn't trade it for anything," he said. "I'm farming with three of my four kids, and all four of them are right here and we see the grandkids and great-grandkids all the time. Two grandkids are part of the farm now. There are not a lot of occupations that you can do that. That's why I enjoy it."

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