U.S. farmers are in distress amid falling crop prices, rising costs and the U.S.-China trade war, as a threat looms over the American rural economy. Experts say that the situation may exacerbate due to tensions with India and China. A farmer from Ohio who grows soybeans, corn and wheat on 3,000 acres of land, says, “Commodity prices are very low and input costs are skyrocketing. We are now running old machines for a longer time; we do not dare to buy new ones.”
Massive production but no buyers, and the impact of the Trade War On US farmers
The US Department of Agriculture (USDA) has estimated that corn production will be at a record level in the initial September. Although soybean sowing has decreased, the yield is likely to be at an all-time high. It simply indicates that farmers will have a mountain of grain, while China, which was once America’s largest soybean buyer, has not dealt with a single cargo this time.
Furthermore, the US-China trade war has severely affected the demand for soybeans. The American Soybean Association has warned that farmers are on the verge of a trade and financial crisis. Simultaneously, the National Corn Growers Association has expressed apprehension of an economic crisis in rural America. The Kansas City Federal Reserve Bank report stated that the credit situation of farmers is continuously deteriorating and the cases of bankruptcy are also increasing.
Pressure on the machinery industry and Significant Challenges to US Farmers
Companies such as CNH, John Deere and AGCO displayed machines with new technology connected to the Internet at the Farm Progress Show. Sales were very low due to the weak financial condition of farmers. The cost of manufacturing machinery has also risen due to the increase in duty on steel and aluminium. The significant challenges for Farmers amid the US-China trade war include a drop in commodity prices, an increase in fertiliser and input costs, Trade tensions with China, reduced exports, and difficulties in getting loans from banks. Amid all of this, small purchases are the only alternative.