Growers are Implementing Strategies to Offset Risk
Row crops in the Mississippi Delta are planted, grown and harvested and, to a large extent, exported overseas. But with a trade imbalance that has built up over time that puts a burden on the United States, the current administration is seeking to “right the ship” and bring back balance by implementing trade tariffs on goods coming in. Tariffs are simply explained as taxes imposed on imported goods and they are often used as tools to regulate trade, protect domestic industries or respond to international disputes. Adding tariffs to foreign goods also causes those countries affected to put tariffs on United States exports—including the harvest coming from the Mississippi Delta. But the tariff war stops and starts and changes percentages more often than the spring weather that farmers fight to start their crop year.
According to the government site, ustr.gov (Office of the United States Trade Representative), Mississippi is the country’s 22nd largest agricultural exporting state, shipping $2.5 billion in domestic agricultural exports abroad in 2023 (latest data available according to the U.S. Department of Agriculture).
The Magnolia State’s Top Agricultural exports in 2023 were soybeans, worth $772 million, followed by cotton, worth $480 million, broiler meat, worth $306 million, soybean meal, worth $204 million and other livestock products, worth $161 million.
In recent years, farmers in Mississippi have increasingly relied on international markets to sell their goods, making them vulnerable to trade policies and global economic fluctuations.
China is one of the largest importers of soybeans but high tariffs make it go looking elsewhere for that commodity. And this leads to a decline in price as demand is reduced and Mississippi Delta farmers are left holding the empty bag that was supposed to be filled with money from the harvest to pay back all the farm loans and input costs.
Farmers were already contending with tight profit margins and now face additional financial strain due to reduced international demand. This has forced many farmers to rethink their planting strategies and diversify their crops to minimize risks.
The Federal government has implemented aid packages to support farmers across the county affected by tariffs. These are temporary direct payments and subsidies aimed at offsetting losses. But, these financial band aids don’t help with the more permanent problem. A new Farm Bill will help, and getting the trade imbalance back in balance will also, but in the meantime, farmers are stuck in the middle, trying to survive an already Titanic-esque sinking ship of low commodity prices.
Dr. Steve Martin, the retired former head of Mississippi State Delta Research and Extension Center in Stoneville, has been working for extension as an economist, explains more about tariffs and Delta farmers.
“Obviously, a tariff on whatever good, raises its price,” says Martin. “Usually, the end consumer is the one who pays for that. But those countries can impose retaliatory tariffs, which raise the price of, say, our soybeans to the Chinese compared to some other countries. The tariff is also on U.S. products because we may have, for example, put a tariff on steel to keep them from sending steel into the United States. Maybe it’s toys we get for Christmas presents or something that’s coming from China. And so, we put a tariff on those. They turn around and retaliate and put a tariff on something that they would import to us, which would be soybeans. or whatever. It makes our product more expensive and therefore it’s not sold.”
He notes, “If we’re exporting stuff in terms of ag products, it reduces the price our farmers receive. And that’s keeping our markets somewhat depressed. From a farmer’s standpoint, we’re not selling a lot now. We’ve sold most everything we had left last year, but we haven’t sold a lot of this year’s crop. If things remain as is, it’s going to be a downward pressure on prices”
One product coming into the US is potash from Canada that is needed for crops to help them grow.
“A tariff raises prices for inputs and lowers prices for outputs. And until it gets all straightened out, I guess it’s just going to be fluctuating,” says Martin. “On each side, but probably not in the favor of the farmer.”
Jeremy Jack in Humphreys County is a second-generation Delta farmer whose late father moved from Canada in the 1970s to start farming in the Mississippi Delta. Even with working more acreage to try and make up for the losses, tariffs are tightening farmers financial belts to notches never before seen.
“We’re concerned that we’re operating in a market of negative margins and tariffs are only increasing our cost of production,” says Jack. “Locally, we’ve seen movement of certain crops slow dramatically—and in some cases stop entirely. Long term, we believe rebalancing trade could benefit American agriculture but the short-term impact is putting extreme pressure on producers like us across the industry.”
Farmer Jacob Sartain continues his row crop production, as well as his farmland and recreational land real estate ventures alongside his family’s land investment business. Tariffs are making him lean on his other incomes more than usual to survive the trade imbalance.
“It’s kind of a moving target right now,” says Sartain. “Going into the fall into harvest, will the export market be there for export crops like soybeans is kind of the biggest question. Tariffs definitely have a major effect on export market countries to find cheaper crops somewhere else. And that’s being reflected right now in our commodity pricing. If you look at November beans, they’re down significantly. And so, that’s not a very good indicator going into the fall. There’s a lot of blues singing going on out there with a lot of producers. They feel like that there’s little to no chance of profitability this year, especially in beans and corn.”
When looking at the price of November soybeans on June 16, Sartain notes, “November bean prices are $10.58. From what I hear from most lenders out there, depending on who the customer is, they’re looking for $11.50 to $12 for break-even pricing for this year.”
And with the low commodity prices being pushed lower by tariff problems, farmers are losing ground—literally.
“There is a lot more land on the market right now,” says Sartain. “A lot of guys who are trying to create liquidity will either just get out entirely or hang on until things get a little better. I know several people at this point who are working their way out and are saying, ‘All right, I’m done. I’m creating my strategy.’ I don’t know that tariffs necessarily are the reason for that—as much as we’ve just had low interest rates with decent crop pricing for a while and people who were in trouble were artificially stabilized because of that. And now we’ve got higher interest rates with lower crop pricing. And so those people who were sort of staying alive just due to market condition and on life support, all the air’s been sucked out for them now.”