Suicide Watch: Farmers Are Hurting, Mr. Trump

This article was first published by me on Talkmarkets:

Farmers are losing ground under Donald Trump. Farm gross receipts grew from the end of the Great Recession peaking in Q2 of 2014. Under Barack Obama, receipts looked good until a steady decline caused a likely defeat for Hillary Clinton in rural states.

The only problem is that Donald Trump is putting farmers on the front line with trade. There is a mental health danger discussed below as well as farmers being subject to demand shocks that come with trade uncertainty.

So the following chart is one to watch, though Trump was failing them miserably before the tariff applications, although NAFTA was in discussion. There will be financial and real bloodshed from suicide out in the field unless farmers can convince POTUS to stop sacrificing a group that is very important to the well being of all Americans.

Receipts Includes Wholesale and Retail Sales US Bureau of Economic Analysis

The decline was precipitious toward the end of 2014, and into 2015, which could have led to the success Trump had with farmers in the election. He campaigned on tax cuts and tariffs, but surely the latter was drowned out by dollar signs registering in the eyes of unwitting tillers of the soil.

Milk prices have joined soy and corn in dropping. Prices were weak before the tariffs were applied. But with China importing milk products the tariffs are already hurting. However, whey dropped to 39 cents before experiencing a dead cat bounce Thursday and it did not participate in the drop for other milk products on Friday.

The story was running that Trump is just a negotiator, that the stock market has nothing to worry about, and that negotiations were back on. Cramer was his usual self, no doubt pumping and dumping. But then Steve Mnuchin reported negotiations were back off. There is still time for this all to play out, but as Chuck Grassley has said, it is already catastrophic what is happening to soy and corn.

In a sign of a slowing ag sector, banks are not extending credit unless dairy farmers have a lot of equity, and even a contract in place. This is typical late cycle procyclical banking behavior.

Exports in April and May were up nicely in dairy prior to tariffs being applied. The tariffs kick in one to three months after orders are placed, according to Nate Donnay of INTL FCStone. He says it is difficult to assess how much orders will drop post tariff effect.

One thing is sure, even a small decline in dairy demand will be a shock, because dairy farmers' profits have been declining since 2014. Farmer David Meuer says that farmers often turn to suicidal thoughts. And this is before tariffs:

Farmers, as a group, have a higher suicide rate than any other occupation, according to the Centers for Disease Control and Prevention.

Agriculture across the board has higher suicide rates than any other occupation. And yet POTUS wants to squeeze them more and put them on the front line of his wayward experiment. 

Rebecca Shimoni Stoil at FiveThirtyEight asked awhile back if tariffs could cost farmers the Trump vote. Froma Harrop at Real Clear Politics wondered why an industry so vulnerable to trade wars would vote for a candidate who campaigned on trade wars!

She points out that Trump is a very untrustworthy human being. And of course, when you apply lack of trust to economics, the consequences can be devastating. A recent poll of Americans shows a solid majority feel that the US is on the wrong track. However the numbers have not changed much from last year. Farmers may be like that as well, not willing to dump Trump yet as a group.

From an economic perspective, it is hard to look at the above chart and know that farm commodities are declining in value, and not know that farming and the mental health of those in the industry will be hurt badly by dwindling sales.

Donald Trump is hurting the lives of farmers, their families and their workers. It should be unforgivable, but farmers apparently see their lives as somewhat of a punishment anyway, what with the impossible job that they do. They may abandon Trump someday, but it may be too late.


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