WASHINGTON (Reuters) – Lenders supporting tens of thousands of American farmers last week warned White House officials that 2019 could cause more producers financial losses if the trade dispute with China is not resolved.
In a meeting with the National Economic Council, the chief executives of three Farm Credit institutions lending to the agriculture industry said the majority of American farmers have so far weathered depressed commodity prices and a supply overhang. The financial footing of the industry was far more solid compared with the great farm crisis of the 1980s, they said.
But they warned that some farmers were about to run out of options after years of lower corn and soybean prices unless there is an end to President Donald Trump’s trade war with China, which all but wiped out the main export market for U.S. soybeans this year.
“Our message is that this is very serious,” Farm Credit Council President Todd Van Hoose told a media briefing.
“We are seeing four years of accumulated problems hit home … They have now weathered it for four straight years and a lot of producers are coming to the end of their ability to weather it.”
Farm Credit is a network of lending institutions with half a million customers nationwide.
The U.S. agriculture industry has been among the hardest hit by Trump’s trade policies. Beijing imposed a 25 percent tariff on U.S. soy shipments in July in retaliation for American duties on Chinese goods.
Since agreeing to a 90-day truce on Dec. 1 when Trump and Chinese President Xi Jinping met at the G20 summit in Argentina, China has bought around 5 million tonnes of U.S. soybeans from the 2018 harvest, a fraction of the more than 23 million tonnes it booked the year before.
Talks between Washington and Beijing continue but disagreements over structural issues persist.
The relatively low level of debt to asset ratio in the farming industry, the resilience of real estate values and the fixed rate structure of loans are some of the reasons the farm economy has so far held up, Mark Jensen, CEO of Frontier Farm Credit and Farm Credit Services of America said.
“A high percentage of our customers are supportive of the long-term trade agreements putting U.S. in the best position it could … but everyone wants to see those completed sooner versus later,” Jensen said.
“Don’t be surprised if you hear more percentage of producers that are really struggling,” he said.