Soy farmer Caleb Ragland on his farm in Magnolia, Kentucky
Courtesy: American Soybean Affiliation
Caleb Ragland, a soybean farmer in Magnolia, Ky., voted for President Donald Trump in 2016, 2020 and 2024. Now, nevertheless, he has to navigate a tariff minefield at a time when the sector is already dealing with main headwinds.
Ragland works along with his spouse and three sons and has deep roots locally. His household has been farming on the land for greater than two centuries. However over the previous few years, he has seen a double-digit proportion decline in crop costs whereas manufacturing prices rise. Soybean futures have gone down greater than 40% over the previous three years together with corn futures.
Soybean futures vs. corn futures since 2022
As pressures mount within the business on account of tariffs imposed by the second Trump administration — in addition to retaliatory levies from different nations — he is nervous in regards to the longevity of his enterprise.
“My sons probably may very well be the tenth era in the event that they’re capable of farm,” Ragland, who can be the president of the American Soybean Affiliation, informed CNBC. “And when you’ve insurance policies which are utterly out of our management – that they manipulate our costs 20%, 30%, and on the flip aspect, our prices go up – we cannot have the ability to keep in enterprise.”
This is not the primary time farmers have needed to take care of new tariffs. Again in Trump’s first time period, the commerce battle with China in 2018 — a time when Ragland mentioned the agricultural financial system was “in a a lot better place than it’s proper now” — value the U.S. agriculture business more than $27 billion, and soybeans made up nearly 71% of annualized losses.
That commerce battle has brought on lasting harm. To this present day, the U.S. has but to totally get better its loss in market share of soybean exports to China, the world’s number one buyer of the commodity, in response to the ASA.
“Tariffs break belief,” Ragland mentioned. “It is lots tougher to search out new prospects than it’s to retain ones that you have already got.”
‘Insult to damage’
The White Home final week imposed a 25% tariff on goods from Canada and Mexico alongside a further 10% responsibility on Chinese language imports.
Whereas Trump quickly reversed course by granting a one-month tariff delay for automakers Wednesday, then pausing tariffs a day later for some Canadian and Mexican goods until April 2, he mentioned in an interview that aired Sunday on Fox Information that tariffs “could go up” over time.
Tariffs on China weren’t included in these exemptions. China retaliated with levies of its personal, which mainly target U.S. agricultural goods. Particularly, U.S. soybeans at the moment are topic to a further 10% tariff, whereas corn will get hit with an additional 15% cost.
“We’re already on the level that we’re unprofitable,” Ragland mentioned. “Why on earth are we attempting so as to add insult to damage for the ag sector by mainly including a tax?”
Ragland identified that he “appreciates the president’s capacity to barter” and needs Trump to achieve success for the sake of the nation. Nonetheless, he emphasised that these within the business, particularly soybean producers, haven’t any “elasticity in our capacity to climate a commerce battle that takes away from our backside line.”
“Of us are upset,” Ragland mentioned about sentiment from different farmers, stressing that all of them want reduction by way of offers that cut back obstacles to commerce and a brand new five-year complete farm invoice – laws that gives producers with key commodity support programs, amongst others. “You are speaking about individuals’s livelihoods,” he remarked.
Agriculture Secretary Brooke Rollins mentioned final week that the Trump administration was reportedly weighing exemptions on some agricultural products from tariffs on Canada and Mexico. Trump’s adjusted measures Thursday included a reduced 10% tariff on potash, which is used for fertilizer.
Greater than 80% of American farmers’ potash wants are equipped by Canada, mentioned Ken Seitz of Nutrien – a crop inputs and companies supplier based mostly in Canada – throughout the BMO International Metals, Mining & Vital Minerals Convention final month.
“As we take a look at the implications of tariffs for Nutrien, after all the most important dialogue is round potash, and that is as a result of in a market that is sort of 10 million to 11 million tons in any given 12 months, we ourselves provide about 40% of that market,” the corporate’s chief government underscored throughout the convention. “We imagine that the price of tariffs shall be handed on to the U.S. farmer.”
Weighing the outcomes
Even within the runup to the implementation of Trump’s tariffs, American farmers had been sounding the alarm. Regardless of the newest Purdue University/CME Group Ag Economy Barometer studying displaying that farmer sentiment total improved in February, 44% of survey respondents disclosed that month that commerce coverage shall be most necessary to their farms within the subsequent 5 years.
“Normally once you ask a coverage query, by far and away a very powerful coverage is crop insurance coverage,” Michael Langemeier, agricultural economist at Purdue College, mentioned. “Crop insurance coverage is correct up there with apple pie and baseball. It is a program that is very properly appreciated, as a result of it gives a really efficient security web.”
“The truth that crop insurance coverage was a distant second to commerce coverage speaks volumes,” he additionally mentioned.
The February survey additionally confirmed that just about 50% of farmers mentioned that they suppose a commerce battle resulting in a major lower in U.S. agricultural exports is “doubtless” or “very doubtless.” Langemeier estimated that between mid-February and early March, there was a 33% per acre drop in web return for soybeans and corn associated to the tariffs. That is on prime of the truth that 2025 was “not ending as much as be an especially worthwhile 12 months earlier than this,” he revealed.
The economist thinks there could also be a little bit of a downward adjustment in total farmer sentiment within the close to time period. Nonetheless, a constructive consequence of the tariffs may very well be that they pace up the signing of a brand new farm invoice, he mentioned.
“Properly, how on this planet are you able to provide you with the quantities for the commerce funds in the event you do not even know what the quantities for the farm invoice are going to be,” Langemeier asserted. He expects that the brand new farm invoice signing will happen sooner or later this 12 months.
Trying to the upcoming spring season, Financial institution of America analyst Steve Byrne wrote in a Feb. 25 be aware that tariffs may result in “extra conservative purchases of crop inputs.” That might imply a danger of decrease fertilizer purchases, which may have an effect on not solely Nutrien however others like Mosaic and CF Industries, the analyst famous.
Shares of these firms, in addition to different farming-related shares like AGCO and Deere, all offered off on March 3 and March 4 on the heels of Trump’s tariff announcement.
“I feel we have seen the ag inventory sell-off simply due to basic considerations that the farmer goes to not be as worthwhile this 12 months,” Morningstar’s Seth Goldstein mentioned in an interview with CNBC.
Over the previous month, Mosaic has slid nearly 8%, whereas CF Industries has fallen greater than 8%. Nutrien has additionally misplaced greater than 1%. AGCO and Deere have fared higher in that point, gaining round 2% and about 1%, respectively.
With regards to how this commerce battle will have an effect on American farmers in the long run, Goldstein does not see that significant of an influence. He anticipates that world commerce flows will shift and cancel one another out over the following two to a few years or so.
“Whereas there could also be a near-term influence this 12 months of soybeans sitting in warehouses with out actually out there consumers, I feel finally we’d see different nations then begin to purchase extra U.S. soybeans,” the fairness strategist mentioned. “Possibly China buys extra soybeans from Brazil, however possibly a spot like Europe then buys extra soybeans from the U.S., and we get … not that a lot distinction.”
Because it stands, Brazil is forecast to be the world’s largest soybean producer forward of the U.S. for the 2024/2025 advertising 12 months, accounting for 40% of worldwide manufacturing within the interval, per the Department of Agriculture. For corn, alternatively, the U.S. is forecast to be within the prime spot, making up 31% of global production within the advertising 12 months.
Others on Wall Road imagine that tariffs shall be extra consequential on commerce dynamics, nevertheless.
Kristen Owen, an analyst at Oppenheimer, predicts that the duties will doubtless solidify Brazil turning into the first world producer for each corn and soy, whereas the U.S. will turn into a type of incremental provider to the world.
“Brazil particularly has extra capability to develop their acreage, extra capability to develop to extend their share of the worldwide grain commerce,” she mentioned to CNBC. “Tariffs and a number of the different selections that the administration is making simply speed up a few of that.”
