Kruse says farmers have ‘had a pretty interesting year, to say the least’
At the Farm News Ag Show, columnist talks about tariffs
Ongoing trade discussions with China could help alleviate problems Iowa farmers have been having over the past year, but it’s too early to say that for certain.
That’s according to David Kruse, president of CommStock Investments and weekly Farm News columnist, who spoke for about two hours Thursday at the Farm News Ag Show, held at the Iowa Central Community College East Campus.
Kruse said that farmers have “had a pretty interesting year, to say the least,” when it comes to the farm economy and tariffs, which have negatively impacted farmers in Iowa and across the country.
Negotiations between the United States and China hope to resolve the trade war, but Kruse said it’s hard to say how effective those negotiations will be.
“We’ve got tariffs galore,” he said. “I don’t know, one day it sounds better, the next day it sounds horrible. And this is one of the horrible days this (Thursday) morning.”
A summit between the United States, China and Argentina held last weekend seemed to go over well, Kruse said, saying the countries “came out of that with pretty high spirits, touting great victories.”
“At the same time, the next day, (President Donald) Trump still continues to threaten his tariffs,” Kruse continued. “We don’t make good progress. He keeps the pressure on.”
The arrest in Canada of the chief financial officer of Chinese telecommunications company Huawei caused the markets to react negatively, leaving the future of any agreement in question.
“(China is) supposed to be here in Washington to start these new negotiations,” Kruse said. “That was being tipsy as to whether that would happen.”
One of Kruse’s concerns is that these tariffs will drive away countries that do business with the United States and force them to look elsewhere.
It’s happened before.
Kruse highlighted when Jimmy Carter was president and he put sanctions on Russia for grain.
“At that time, we were selling a lot of wheat, feeding Russia,” Kruse said. “And what happened? Well, they looked at it and said, ‘Well, we can’t depend on the United States anymore.'”
He went on to say that these tariffs are destroying longstanding relationships between the United States and other countries.
“All these relationships that have been building for 10 to 15 years, all of a sudden, they’re gone and everything’s go to be re-established,” Kruse said. “It’s like taking a bunch of pick-up sticks and throwing them up in the air, seeing how they come down and have to start over again, putting everything back together. It becomes a mess.”
Tariffs aren’t the only issue impacting agriculture. According to Kruse, there is also a labor shortage.
That’s going to lead to more issues down the road.
“We’re short of labor, and it’s going to impact food prices in this country if it continues as it is,” Kruse said. “They’re going to see consumers going to pay higher prices as a result of the costs going up.”
This even impacts growing industries, such as the beef industry.
“They didn’t build any new brick and mortar for the beef industry,” Kruse said. “How did they handle more cattle? They expanded shifts. They hire another shift or whatever. That’s how they’ve been doing it.”
Not being able to find qualified workers is proving to be a challenge.
Kruse suggested that companies could turn to immigrants to fill that void.
“Right now, we could use the first thousand of those refugees to work in a packing plant,” Kruse said. “They’d put them right to work if they could get their hands on them.”
But he did say it’s not all bad news. A recent trade agreement with South Korea has the potential to be promising, as do trade agreements with Japan and the European Union.
He added, however, that there likely won’t be much change until Trump removes the tariffs on aluminum and steel.
“I don’t know what he wants for them to go away, but until they do go away, Mexico’s not going to eliminate the tariffs on pork and stuff that’s hurting us today,” he said. “We’d be selling a lot more ham to Mexico without those tariffs.”