Farmers at Chicago Federal Reserve conference say tariffs are hurting them

Tariffs on China, Canada and Mexico have increased the cost of agricultural products like fertilizer, and retaliatory tariffs from those and other countries have hurt American farmers who export crops, Austan Goolsbee, CEO and president of the Federal Reserve Bank of Chicago, said at a conference Tuesday.

“When they announced the tariffs … especially in manufacturing, also in agriculture, it was a hair on fire kind of moment,” Goolsbee said. “Now when I’m out talking to people, it feels like they’re just wary (and) uncertain.”

Goolsbee spoke at a conference at the Federal Reserve Bank of Chicago, where economists, farmers and agricultural business owners from across the Midwest gathered to discuss how agriculture in the region has been affected by the Donald Trump administration’s changing trade policies, and by other economic factors like inflation and interest rates. The Chicago Fed serves the Seventh Federal Reserve District, which comprises Iowa and most of Illinois, Indiana, Michigan and Wisconsin, states with high agricultural production.

For farmer April Hemmes, who spoke at the conference, tariffs are hurting her business at different stages of production. Hemmes, who has been growing corn on a 1,000-acre site in north-central Iowa for the last 40 years, said the price of nitrogen she uses as fertilizer has increased by about 30% from last year. Hemmes said she and other farmers were grateful the Federal Reserve modestly reduced interest rates this month, but noted that the change didn’t provide much relief to farmers because the cost of inputs like the large machinery that farmers lease, such as combines, have increased because of tariffs on steel.

“Farmers are used to dealing with tariffs or dealing with high inputs and … low prices, just not all at the same time,” Hemmes said.

Changing trade policies and tariffs have had several impacts on agricultural goods, but none as clear as the impact on soybeans. This year, China hasn’t bought a single bushel of soy beans from the United States. Last year, China bought half of American-produced soybeans. The impact is even closer to home in the Midwest where Illinois, Indiana and Iowa farmers accounted for 37% of the nation’s soybean production last year, according to U.S. Department of Agriculture data.

“We’re not going to get anybody that can step in, in the short run to take on that market potential … to fill the role of China,” said Shawn Arita, associate director of the Agricultural Risk Policy Center at North Dakota State University.

While the trade war has had drastic impacts on the market for soybeans, the impact on American corn has been more nuanced. This year, American corn exports reached record levels in terms of volume and remained competitive in the international market, Krista Swanson, chief economist for the National Corn Growers Association, said. However, she noted that it was not a record year in terms of profits.

“It costs more to grow these crops than what farmers can get for them,” Swanson said, “when adjusted for inflation, this is not a record year when it comes to value.”

Kreg Ruhl, vice president of Crop Nutrients, a division of Growmark Inc., the Normal, Illinois-headquartered firm that sells agricultural inputs like seeds, grain bins, fuel and fertilizer, represented the perspective of suppliers at the conference. He said tariffs have made other countries fear the risk of collaborating with American companies.

“The uncertainty of doing business with the United States right now has left us in last place with anybody that wants to import,” Ruhl said.

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