Brian Kuehl Explains Farmers for Free Trade
March 21, 2019
- Author: Cindy Stevens
March/April 2019
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Tariffs on China have had a significant impact on farming. At CES 2019, i3 had the opportunity to talk with Brian Kuehl, co-executive director of Farmers for Free Trade, about the intersection of tech and farming and why free trade is essential to keep our global food chain working efficiently. The following interview has been edited.
Can you tell us what Farmers for Free Trade does?
Farmers for Free Trade is a national nonprofit — it’s an organization of farmers, ranchers, agriculturalists and food processors, all working to defend free trade. Trade is important obviously not just for farmers, but for the companies that farmers buy products from, whether that’s tractors, agricultural inputs of all different kinds, drones, etc. It’s important for going up the food chain to food processors, to companies that make the food that you eat. We have a global food chain — your daily diet is coming from all over the world and its only happening because of international trade. If you live in the U.S. and want to eat fruits and vegetables in the winter, there is a good chance your produce will be imported from warmer climates.
Can you talk about the intersection between technology and food production?
It’s important to understand that with population growth on the planet, the prediction for how many mouths we are going to have to feed in five years, 10 years, 20 years — it can't happen without improving the efficiency of agriculture. It’s the only way we can keep the planet from starving. And so, to improve efficiency, we must improve technology — whether that’s biotechnology, improvements of technology to harvesting, drones, fertilizer or pesticides. Technology and agriculture go hand-in-hand. The other thing that is cool — if you want to geek out a little — is that in agriculture we are seeing a move to vertical farming and indoor farming. There are some interesting companies that are growing — no pun intended — in inner cities, taking over warehouses or dilapidated structures downtown and growing microgreens and tomatoes in vertical farms indoors. Consumers are getting a fresher product and also making use of dilapidated structures.
Do you believe that tariffs are taxes?
Yes, tariffs are taxes. Think of it this way. A tariff is a country putting a tax on an incoming product. The U.S. has put taxes on steel and aluminum coming into our country, as well as thousands of products from China. The argument for doing that is it helps our domestic steel and aluminum manufacturers because domestic products ostensibly should cost less.
But really, you’re taxing local manufacturers. If you build tractors in Kansas or Indiana, and you’re using steel, your steel costs have now gone up, and tractors are more expensive. The federal government has also put a sales tax on incoming products from China, and it’s happened without Congress being involved. Congress hasn’t put this tax on American products, the White House has. President Trump decided unilaterally that he wants to put millions of dollars of taxes on products that we use for manufacturing. So yes, tariffs are taxes.
How does tariff-free trade open new markets for American farmers?
American farmers and ranchers benefit from free trade in a couple ways. Number one, we are huge exporters of food. The food that American farmers export and agricultural products shipped to other countries support more than one million U.S. jobs.
When you think about the number of people in the U.S. versus the number of mouths around the world, American agriculture exists because we export food. Sure, we feed America, but we also literally feed the world. Twenty percent of farm revenue in the U.S. comes from exports, so if you take away exports, you take away American farming.
That is one way we benefit from free trade. But we also benefit from imports. Whether it’s the chemicals we use in agriculture, or equipment like tractors, or the components in drones, all of those exist in a global supply chain. You can’t have agriculture today without technology. The two are so intertwined. With agriculture you might think, “Someone is out in a field planting a product and harvesting a product,” but increasingly agriculture is automated. We’re using technology to measure the amount of water in the soil, to measure the application of pesticides and herbicides, we’re using drones to microtarget nutrients we’re putting in the soil, we’re using satellite imaging to assess the health of our crops, we’re using tractors and combines that are self-piloting and that use AI. It’s very high-tech equipment.
What effects are tariffs having on small business and family farms?
The tariffs from the trade war are having terrible effects on U.S. agriculture. There are farmers that have gone out of business. Agriculture tends to be a very low margin business. You must do a large volume to make any money and if you cut that margin down even slightly, you can put farmers out of business. Farmers are being squeezed in two ways. First, the largest soybean customer for the U.S. is China. We export most of our soybeans to China each year, and they use them for feed for livestock. U.S. exports of soybeans to China are down 96 percent because of the trade war. Our barges are full, there are stockpiles in barns, there are literal mountains of soybeans rotting in fields because there is nowhere to ship them. So, if you’re a soybean farmer, you’re getting a lower price for your product and you’re having a hard time making your loan payments. Banks are foreclosing on soybean farmers and that’s only half of the equation.
The other half is your input costs. If you’re buying a tractor, the tractor is more expensive because of trade war tariffs. If you want to use a drone, the drone is more expensive because of the trade war. Farmers are getting squeezed on both ends.
Does that open an opportunity for others to step in and compete with farmers?
It absolutely does. The biggest U.S. competitor for soybean sales is Brazil. Typically, we’ll ship soybeans one part of the year and they ship another part of the year, but the trade war with China has cut down the number of soybeans China is purchasing from the U.S. — that 96 percent drop. Instead, China bought stockpiles from around the world and if they make it to the spring, they can start buying Brazilian soybeans again. The U.S. farmer basically is going to miss an entire sales cycle. One of our big concerns is that once those trade relationships shift — once Brazilian soybeans become the norm in China — it's going to be hard to get those markets back.
How are you getting the word out?
We’re doing a lot of things. Farmers for Free Trade is working in partnership with a large group of businesses — not just agriculture but others like CTA, the National Retail Federation and the National Fisheries Institute — to raise awareness about trade and how important it is to the U.S. economy. We’re holding town hall events all over the U.S. and we’re at conferences talking about trade. One easy thing you can do if you care about trade is text TARIFFSHURT to 52886, where you can sign up for our updates and send messages to your members of Congress. You can also follow us at @FarmersforTrade.
How do you see the tariff situation playing out?
There are already a lot of tariffs in effect — tariffs on steel and aluminum are coming in from all countries, along with tariffs on inbound products from China. The first two rounds of tariffs on China capture intermediary products. A lot of engines and widgets that we use in manufacturing — those are at 25 percent. The third round at 10 percent is more consumer products. So, you’re paying more for products imported from China because of this trade war. Those 10 percent tariffs may go up to 25 percent. Our hope is that the U.S. and China will work out a trade agreement and won’t escalate the trade war, but a lot depends on what happens before March 1 — the date 10 percent is set to go to 25 percent.
What is the potential long-term damage from tariffs and shifting markets?
The long-term damage could be catastrophic. You’ve seen how the stock market is swinging — a lot of that is because of trade. In fact, if you look at some of the stock market swings, with good news on trade, you see the market go up. When you hear about tariffs, the market goes down.
It’s following the trade war very closely. So, you have the immediate possible impact of going into a global recession, but you also have disruption of trade relationships. There are manufacturers who have gone out of business or, ironically, they are moving production overseas because it is cheaper for them to manufacture where tariffs are not placed on their inputs. And once those factories leave the U.S., they are gone.
How is this tariff situation bringing industries together to work more closely?
If there is a silver lining that’s it. If you work in technology, you understand the importance of global supply chains. Part of what we need to do is to explain how trade works. Part of the silver lining is that FFT, CTA, the National Retail Federation, the National Marines Manufacturer Association, and 200 companies and associations are working together to educate people about trade and why it’s important to our economy.
How optimistic are you that this issue will be resolved?
I am 50 percent optimistic. We’re going to resolve this issue, but the question is how quickly and how much damage will be done before we get it resolved. In the meantime, real families and real businesses are being hurt.
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