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Trade wars are tough on ag

About the Author
Pam Lewison
Director, Center for Agriculture

Before promising to impose tariffs on our nearest trade partners – Mexico and Canada – President Donald Trump announced American farmers should get ready to sell more of their products domestically.

The trouble is most farms are family operations that have their feet firmly planted in their local communities while being reliant on the global market for their annual income. Under the best of circumstances, food production is economically challenging. Nearly 70 percent of U.S. farms and ranches operate with a profit margin of 10 percent or less.

For example, payment for whatever has been produced by farmers and ranchers is made when that food leaves the farm at market price. Market price is determined based on numerous factors including how much of a given food is available on a global scale. If wheat growers in Australia or sugar cane growers in South America, have had a tremendous growing season, it drives down the overall income for growers in the United States by virtue of the amount of product on the market. 

Similarly, while grocery prices continue to rise, the average take-home for food producers has remained stagnant because their income was earned well before the food they produced ever reached the grocery store.

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Additionally, any time trade and supply chains are disrupted, it takes time for the agricultural economy to catch up. The average growth cycle for field corn is 45 days from seed to maturity plus additional time to dry in the field before harvest. American consumers continue to express an interest in grass-fed, grass-finished beef; that process takes between 2 and 2.5 years. All food production has a life cycle that requires farmers and ranchers to abide by the schedule of the plant or animal in their care.

Finally, while U.S. consumers can buy some of the food produced by American farmers and ranchers, they cannot buy all of it. It is estimated about 40 percent of U.S. ag production is exported. Nearly half of U.S. ag production is field corn and soybeans – neither of which are foods most people would choose to consume in their “unprocessed” state. 

Farmers can’t switch from growing hay for Japan to growing avocados for Austin.

Telling American food producers they must switch from a global production mindset to a domestic production mindset in a matter of weeks or months, is like diverting a plane to land on a runway that is too short – it can be done but there will be some wreckage to clean up. 

For a generation, or more, U.S. farmers and ranchers have been asked to feed a global populationestimated to reach 9.7 billion people by 2050. They have been asked to achieve this gargantuan task with fewer acres, fewer farmers and ranchers, and more efficiency with each passing year. And they have answered the call. In 1950, the average farm in the U.S. fed 26 people per acre. In 2024, the average farm fed about 170 people per acre.

The fear of economic destabilization from tariffs sent all the major markets tumbling, even when those tariffs were reversed or paused just two days later. President Trump imposed a 25 percent tariff on “all goods” imported from Mexico and Canada. According to the official announcement of those tariffs, the goal was to stem the flow of fentanyl and illegal immigration into the United States. About 48 hours later, it was announced 50 percent of the tariffs on Mexican goods and 38 percent of the tariffs on Canadian goods had been lifted or paused for at least 30 days.

When presidents announce farms and ranches must change their practices to meet the needs of consumers they are already feeding, with excess production being exported, tariffs do not help food producers. Increased tariffs add another layer of pressure that farmers and ranchers cannot relieve because, unlike other creators of goods, they cannot pass on the increased production costs to anyone.

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