Today, Explained - Soy Story

Episode Date: July 25, 2018

The Trump administration stirred up a flurry of trade disputes that threatened to put farmers in the red. Then it threw out a lifesaver: $12 billion in emergency relief. A farmer in Minnesota tells us what she really thinks. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for Today Explained today comes from Uber. It's a ride-sharing app that you can sort of think of as an alternative to taking a taxi. You just pull it up on your phone and tell it where you want to go, and it comes and gets you, and you can share the car if you want to. You can learn more about Uber at uber.com slash moving forward. When I was a senior in high school, my government teacher started class one day with this thought experiment. Who gets the most welfare in America? He wrote it on the board. Some students guessed poor white people.

Some guessed poor black people. But the purpose of this thought experiment was to get us to rethink what welfare was. Because nobody in the room guessed farmers. I mean, do they receive a lot of government support? Yes. Would they ever describe it as welfare? Like, no, for their dead bodies. But farmers get a lot of support from the federal government. Caitlin Dewey writes about food policy for The Washington Post. They would say they really need it because, you know, farming is an inherently

deeply uncertain business. You know, you have bad weather one year, you don't want to wipe out our farming sector. You know, it's important for food security in this country that we have a farming sector. But at the same time, this notion that it's like really food security in this country that we have a farming sector. But at the same time, this notion that it's like really wild for us to provide government supports for farmers is not really true. We already subsidize farmers pretty heavily. Yesterday, the farmers got a big bailout from President Trump, a slush fund to make up for all the tariffs that are coming in from China and from Mexico because of the trade war he started. Twelve billion dollars.

What they're proposing is a three-pronged approach, basically. Number one, they're going to give direct payments to farmers and certain crops that have been targeted by China and Mexico. Number two, they're kind of revving up this pre-existing program through which the Department of Agriculture buys a lot of farm products and then gives them to food banks. And then the third thing they're going to be doing is, again, these are pre-existing programs, but basically different initiatives we have to promote U.S. farm products overseas. they're going to rev those up as well. The idea

being like, oh, you can't sell to China and Mexico. Well, like maybe you can sell to India. Maybe you can sell to Japan and try to create some alternative export markets there. I feel like the second and third are self-explanatory, but how does the first thing you mentioned work? How does the government make it rain for farmers? Are they just handing out cash? So the Department of Agriculture had a press call yesterday where they were asked a lot of questions about how this was going to work. Like, how are farmers going to enroll for this? Like, who's going to get paid? When are they going to get paid? How is that amount of money going to be calculated? And basically what multiple officials from USDA told us was like, yeah,

we realize that's important, but we're still working out all the details. What it seems like it's going to look like is for a certain range of commodities. So this isn't like every farmer everywhere. It's going to be farmers who are specifically targeted by China and Mexico. So they're saying soybeans, corn, cotton, wheat, sorghum, hogs, oh, and dairy. Soybeans and corn on an acreage basis are by far top crops. So that's huge. What they're suggesting is, you know, we're going to look at how much you produced this season, and then we're going to have a set payment rate. We're going to multiply that by how much you produced, and we're going to cut you a check. Have the tariffs imposed already hurt farmers? Is this why this

is coming now? Or is this sort of a measure to prevent farmers from being hurt? Yes, I think there's a lot of confusion about this. The reason being is that farmers basically sell their entire production after the harvest. So most of them have already sold last season's harvest and they obviously haven't harvested the season yet. So they haven't actually been affected yet. What the concern is, is that the futures prices for things like soybeans have plummeted. So their concern is when we get to harvest, if those soybean prices are still way down, like we're looking at major losses. In fact, we'd be selling our soybeans for less than what it costs to grow and harvest them.

What does that mean? How exactly do futures prices work? It is based on the price on the Chicago futures market. So that's a commodity market where investors are sort of predicting where they expect the price to go. Basically, all you need to know is that the futures prices of soybeans go a very long way towards determining how much money soybean farmers get. And those prices are at a 10-year low. So soybean farmers are rightfully freaking out. I've read that 67% of farmers voted for Donald Trump. Is there a sense that he's doing this to appease his base, that 67 percent, to make sure they're still cool with him?

Yeah. I mean, rural America went really hard for Trump. And I think that's why you have seen Trump make so many overtures to farmers, not only on Twitter, but I mean, he gave the keynote at a major farm convention this year in which he was basically like, you know, I'll make you guys really happy. I promise I have your backs. We're streamlining regulations that have blocked cutting edge biotechnology, setting free our farmers to innovate, thrive and to grow. Oh, are you happy you voted for me? You know, his agriculture secretary is always on the road vowing to farmers that President Trump is thinking about them all the time. There's not a farmer in this country that'd rather not have a good crop and a fair price. The problem is they haven't been getting fair prices because of the restrictions that other countries place on their productivity.

He definitely recognizes that they are an important part of his base and that they are extremely disgruntled. Obviously, the timing of this aid immediately before the November elections is going to raise some eyebrows. It already has, right? Not only among Democrats, but I think also among some Republican commentators, which is sort of interesting. When you have tariffs, they're a bad thing. And then you try to solve them with bailouts, another bad thing. You're not heading in a good direction. You're trying to make America 1929 again. We want to feed the world.

We want more markets. We want more trade. Has he said anything about these tariffs and why he's issuing them right now? Yeah, so he sent a really fun trio of tweets this morning about the tariffs and the trade war with China and specifically how it relates to farmers. So among other things, he said, you know, China is targeting our farmers who they know I love and respect as a way of getting me to continue allowing them to take advantage of the U.S. In addition to this, he did make some comments yesterday where he said,

The farmers will be the biggest beneficiary. Watch. We're opening up markets. You watch what's going down. Just be a little patient. He seems to have this idea, which virtually everyone in the agricultural community would disagree with,

that farmers are somehow being taken advantage of in China and Mexico. In fact, these are huge growth markets for farmers. And he claims that through these policies, he's going to sort of right those imagined wrongs. Do you have any sense of whether farmers are sticking by the president in all of this? I mean, I know you speak to a lot of farmers. How do they feel about the tariffs? And now the bailout? Is the bailout enough to appease them? Most farmers will tell you that while they are happy to have some income this season, this only helps them for one season. I mean, they are in it for life. When you

have a farm loan, that's usually something you're paying off for 20 or 30 years, right? They're very concerned about their income over the long term. So the quote-unquote bailout, which certainly the administration would not describe it that way, is not popular among farmers. That said, most farmers who I speak to who voted for Trump are still quite supportive of him. But generally, do they like the tariffs or do they just have faith in the president? No, they hate the tariffs. I just want to be clear. No one's happy about the tariffs? Or do they just have faith in the president? No, they hate the tariffs. I'm just going to be clear. No one's happy about the tariffs. They believe that the tariffs are kind of like an unfortunate play in a game that Trump will ultimately win.

In a minute, we head to a farm in Minnesota. It's got corn, it's got soybeans, it's got hogs. In other words, it's right in the middle of this mess. This is Today Explained. It's the middle of the show, which means it's another chance for me to tell you that Uber is moving forward. They're adding new features to their app, including Pickup Notes. Pickup Notes is this feature where you can communicate with your driver before he or she comes to pick you up in order to describe yourself so it's easier to find you. You could say, like, I'm the teenager who got a fake ID just so I could go get this sick forearm tattoo that I thought was really cool, but everyone keeps mistaking it for a birthmark.

Or I'm the guy on the sidewalk who really doesn't want to turn into his father. You can find out all the ways Uber is moving forward at uber.com slash moving forward. And another thing, it's Wednesday, and that means there's a new episode of Vox's new Netflix show, Explained, for you to watch. Today's episode is about weed. And I know what

you're thinking. I've already got three mason jars full of weed under my kitchen sink. What more do I need to know? But give this episode a chance. It's about how weed has become three times more powerful since the 90s. And there's all these new strains out there. And they're called Pineapple Express or Candy Cane or OG Kush, and what does that even mean? You don't know, but you will after you watch Explained on Netflix from Vox. Hello, this is Kristen. Hey Kristen, this is Sean from Today Explained. Can you hear me?

I can. Thank you. Thank you so much for making time for us. That's okay. I don't have a ton of time, but I've got some. We'll work with you, whatever you got. Thanks. Tell me about your life. My husband and I own Highland Family Farms, which is a diversified family farm operation in southern Minnesota. We've been at this for about 30 plus years.

My husband's a fifth generation farmer. Corn, soybeans, small grains, and we have a full circle operation where we utilize the manure from our hog operation on our cropping operation and feed the crops we grow to our hogs. Right on. So what's a typical day for you look like? Well, for me, I drive a desk. So it's anything from making sure our crew is keeping going to paying bills, answering the phone. I drive a desk too. I can relate to that. Yeah. I wonder if you could just kind of like describe what your farm's like,

what you see out your window when you look outside. You know, today I see out my window one of the most beautiful days in southern Minnesota we've had all summer. The humidity's down. It's 80 degrees, 82 degrees. There's a light breeze. The crop is beautifully green. The corn is a bit uneven, which means the plants are different sizes. Because we've had a lot of rain in the last few months, the soybeans look pretty good. It's a great time of year here in southern Minnesota. So we always are grateful for every day we get that's like this.

So how has your business changed in the last few months after all the tariffs the president announced? I think the first thing we noticed was that the market started trading up and down really quickly with the threat of tariffs. And that became a downtrend as the threat of tariffs and the implementation came into play. In our hog operation, it took a little longer before we saw the change and the downturn in hog prices. We've seen a change in our profitability and I think it's important to keep in mind that we've just had four to five years of really tight margins in our cropping and our hog operation. So it's a little painful and also pretty troubling. What about it is troubling? You know, we've cultivated relationships with our customers in China and in other foreign markets

for years, just like other businesses do. And these things are slow in coming and not easy to regain once they're gone. So it's not like it's a light switch that we just turn on and off. Yes, we understand that there's a package put together to help alleviate some of this pricing stress, but that's a short-term fix for something that's becoming a long term problem. We want to sell our goods to customers. We want to buy goods from customers, not have to worry about outside forces that are not directly affected to our bottom line. The tariffs were announced long before they were put into effect. Did you have a moment where you were calling your representatives to sort of let them know how you felt about them, how you felt they could harm your business? Yes. We are part of a coalition

called Farmers for Free Trade. We work really closely with our elected officials, both on the local and national level. We're really used to weathering weather. I mean, markets change because of weather threats or really good weather around the world. We know how to adjust to that. But when there's something that's so out of our control, it's tough for us to rebound. It's also really tough to plan. Have you talked to farmers who think this is a good idea, who think this trade war could result in better working conditions for all y'all. You know, I think there's farmers out there who still are really hanging on to the idea that this is all part of a bigger strategy to get a better playing field for all industries within a global marketplace. It's pretty much a mixed bag out there as far as where people are in the country and what sectors of agriculture

they're involved in. If you're a soybean farmer, if you're a hog producer, if you're involved in the dairy industry or any of those kind of things that were immediately on the list, this is a little troubling. Retaliatory tariffs are not a good way to run an economy. So now these $12 billion of relief have come down from the White House. Does that make it feel better? Like, oh, well, you know, now we're in the black again, we're breaking even? This type of situation is really short term relief, and it may be not enough relief. We're really good in the upper Midwest of growing corn and soybeans and raising hogs. We want to do that and be able to do it

in an open marketplace across the globe. Kristen, how do you see this ending up for you and all of your fellow farmers out there in Minnesota, this trade war we're now in? I don't know as if it's fair for me to speak on behalf of all farmers, but from where I sit at our farm, I'm not sure how you win a trade war. Somebody loses. The eye on the prize here is to work through what we consider a discord between the Chinese and the U.S.

on intellectual property or technology, this back-and-forth tit-for-tat, is just not the way to get there in my mind. This is so out of our control. It's just a few folks negotiating something they're not always really good about knowing about. Kristen Duncanson and her husband Pat own and operate Highland Family Farms in Mapleton,

Minnesota. I'm Sean Ramos-Firm. This is Today Explained. Thank you.