Mountain West Faring Well Amid Trade War Concerns

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Originally published on October 23, 2019 7:51 am

Drew Eggers stood at the edge of one of his stubble fields when he plucked a patch of mint left over from harvest.

“You can smell the spearmint,” he said, offering it up for a sniff.

This was his 41st year farming out in Meridian, Idaho. It’s also his last.

“Two weeks ago, I had rented the farmland out to other farmers, and so we're starting retirement,” he said.

Credit Madelyn Beck / The Mountain West News Bureau
Eggers says farmers anywhere have to be good business managers and prepare for all the good and bad years they'll face.

He’s seen plenty of ups and downs with crops ranging from mint to corn to beans. His last year was pretty good. He attributes that to planning, saying, “Ya know, a farmer anywhere needs to be a good business manager.”

And it was a good year for a lot of Mountain West farmers. That’s even though the national ag economy is strained from a trade war with China. Part of the reason farmers here are doing well is because of what they grow and where they send it.

Carrie Litkowski is the farm income team lead with the U.S. Department of Agriculture’s Economic Research Service. She pointed to the region’s diversity of crops, saying it generally helps farmers weather price drops “because then they aren't subject to, or they're not as vulnerable to price changes for a particular commodity.”

While farmers in the Mountain West grow quite a few big crops, Midwest crop farmers tend to focus on just two: corn and soybeans. And soybean farmers took the biggest hit from the trade war because China was their biggest customer.

Then look at one of the main ag products in the West: beef. A major market for it is actually Japan. The Trump Administration originally pulled out of the Trans-Pacific Partnership, putting that market at risk, but a recent deal gave beef breathing room there. 

Dairy, Idaho’s largest ag product, depends more on markets in Canada and Mexico. It’s struggled through several rough years due to overproduction, but finally saw improvements due a slight drop in production this last year. 

“Just recently, milk prices have gone above the break-even level to where our dairymen [are] starting to, you know, make back some of that money that they lost over the last four years,” said Rick Naerebout, CEO of the Idaho Dairymen’s Association.

He said big dairies in Idaho also fared a bit better than smaller operations in the Midwest and East over the last few years, with fewer dairymen going out of business. The future is still hazy, though, like most of the ag sector right now.

Credit Madelyn Beck
Rick Naerebout, CEO of the Idaho Dairymen's Association, stands outside his office in Twin Falls, Idaho.

“I hate trying to make any kind of forecast in the current political and trade environment,” said Michael Nepveux, an economist with the American Farm Bureau. “It's one of those things that can change with a single tweet."

Nepveux said that yes, Mountain West products are doing comparably well, depending on the metrics you look at. If you compare overall net income between the Mountain West and the Midwest, both look like they’re doing OK. But that data has a bit of a delay and Midwest farms are being propped up with federal aid. Even with that financial help, Nepveux said the rate of farm bankruptcies is going up faster there. 

Many Midwest farmers are also concerned that they’ll lose Chinese markets in the long term as the country finds other avenues to get soybeans. 

Still, Nepveux said farm debt across the nation is generally climbing more quickly than the value of what farmers own, “which means your debt-to-asset ratios are going what we would consider the wrong direction.”

Then there’s the weather, which is also a bit of a crapshoot nationwide. Torrential rains and flooding hit already struggling Midwest farmers this year, and last year’s hurricane season wasn’t great for the Southeast. But here in the Mountain West, while there’s always the threat of drought, we had a pretty good year.

And that’s a big deal in Mountain West states where ag plays a major role in state economies.

Garth Taylor, a University of Idaho economist, compiles a yearly report on how ag is expected to do in the state. This last year, he thought Idaho farmers’ net incomes would keep slipping.

“And when USDA put out their numbers in September, we found delightfully that we were wrong,” he said.

Net incomes were nearly 90 percent higher than projected. And it wasn’t trade wars that threw him off: it was day-to-day costs. Prices for fuel and fertilizer turned out lower than expected, and in turn, farm operation costs did, too. 

That’s all it took for the balance to shift between another down year and a regional resurgence.

Find reporter Madelyn Beck on Twitter @MadelynBeck8

Copyright 2019 Boise State Public Radio

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, KUER in Salt Lake City, KUNR in Nevada, and KRCC and KUNC in Colorado.

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