Farmers in Upper Midwest hurting: 'I don't see an end in sight'

When farmers don't have enough money in their pockets, neither do local business owners or other residents in their small, rural communities.

"It doesn't matter what you do in North Dakota, your income is based somehow off of agriculture," said soybean farmer Tyler Stafslien, who lives in Makoti, N.D.

Buffeted by a two-year trade war, followed by a disappointing — at least so far — trade deal and then a worldwide pandemic, there aren't a lot of farmers, or rural communities, feeling flush right now. Worried farmers and business groups are urging the United States and China to fulfill their obligations under the first stage of the trade agreement, even as the coronavirus scrambles its assumptions.

"I'm worse off today than I was before the trade war," Stafslien said, "and I don't see an end in sight."

Whether it's in agriculture, manufactured goods or energy, neither country is on track to meet its obligations of the Phase One trade deal signed six months ago. Then, as soon as the deal went into effect a month later, the pandemic spread, and reduced demand for many agricultural products.

"The market tends to, especially on the downside, respond to the rumors and then the realities," said Mark Watne, president of the North Dakota Farmers Union. "The reality was we had this Phase One deal. The rumor was that [China] couldn't deliver, and now that rumor is playing out. It tends to keep the market at bay or lower."

During the trade war, soybean-growing states bore the brunt of China's tariffs on American agricultural products because China was the biggest buyer of U.S. soybeans, according to a March report from the Federal Reserve Bank of Minneapolis.

While U.S. agriculture exports fell to $142.7 billion, down 5% from 2017 to 2019, by contrast they were down 10% in South Dakota and 6% in North Dakota and Minnesota. Before the trade war, soybeans accounted for 39% of Minnesota's agricultural exports, a third of South Dakota's and a quarter of North Dakota's.

While China has been increasing its purchases of agricultural goods since the trade deal went into effect in February, it's also a seasonal buyer of soybeans and typically buys more during the last quarter of the year.

"When we start getting into our harvest seasons is typically when China comes in and buys large amounts of U.S. agriculture products," said Frayne Olson, a crops economist at North Dakota State University Extension in Fargo. "There's still time for them to meet those targets but they're going to have to get at it."

In the run-up to harvest, farmers, experts and others are somewhere between cautiously optimistic and worried.

"At this especially challenging time, rural America needs one of its greatest potential export markets for food and agricultural products," 192 groups representing agriculture, rural economic development and business interests said last month in a flattering letter to President Donald Trump expressing optimism that the "agreement will accelerate and be fulfilled by China."

On July 6, the U.S. Chamber of Commerce and more than 40 associations encouraged White House officials and Chinese Vice Premier Liu He to "redouble efforts to implement all aspects of the agreement," including purchases of "agricultural goods, where implementation appears to be lagging."

Meanwhile, farmers and ranchers will tighten spending, make only necessary equipment purchases and forge ahead.

"We just buy what has to be bought. We don't need any of the extras, if we can help it," said Josh Geigle, whose family has been farming and ranching his land since 1907. The family raises beef cattle, wheat, corn, sunflowers, alfalfa and grass hay about 20 miles north of Wall, S.D.

"You just don't get a wheat crop overnight," Geigle added. "You harvest it in early July or August for the following year. You still have to plant those crops. You still have to get the cattle bred. Because if you don't do all that stuff, and the market comes back, you don't have anything to sell."

In North Dakota, the farm economy is deeply entwined with manufacturing, transportation and financial institutions.

"For every job that we would directly attribute to the farm economy, there are probably at least an equal number of jobs in supportive activities that are coming into play," said David Flynn, professor and chair of the economics department at the University of North Dakota.

North Dakota also is suffering from a sharp drop in oil prices, diminishing profits from the Bakken Basin, and the eastern part of the state's retail businesses are taking a hit because the Canadian border is closed to nonessential travel.

"This lifestyle is harder for a young family to come and want to embrace," said Ryan Taylor, a fourth-generation cattle farmer in Towner, N.D., and the former Democratic minority leader of the state Senate.

"Your town shrinks in size. Your school shrinks in size and that makes it that much harder for everyone who is left out here on the land when your town is under that kind of stress."