There is a very old adage that farmers tend to do well economically when there’s a war on. Obviously not in the exact location where the war is being fought — war is a disaster locally for anyone caught in the crossfire. But wars have historically meant an increase in demand for agricultural goods for farmers who were still in a position to grow and harvest their crops. On the flip side, during wars there often wasn’t enough food available for non-combatants and prices tended to be higher: thus, the “Victory Garden” where people were encouraged to grow more of their own food themselves.
In the 21st century, things have gotten more complicated. When Russia invaded Ukraine, it caused a shortage of wheat that drove the price up, since both countries were very large wheat producers. But it also led to a glut of sunflower seeds grown by California farmers, as a large percentage of the state’s crop was destined for farmers in Russian and Ukraine who used them to plant their own sunflower crops. At the time, Russia was the largest producer in the world of sunflower oil while Ukraine was number two. From one year to the next, Yolo and Solano counties’ sunflower acreage dropped by 80%. Farmers have still not found a crop to replace it.
But Trump’s war against Iran is an unmitigated disaster for farmers in the U.S. and all over the world. (Not just for farmers, of course, but this is a CSA newsletter so that is my focus). Modern agriculture, even small-scale agriculture like we practice at Terra Firma, is utterly dependent on diesel and gasoline. The war, and the administration’s complete failure to anticipate the closure of the Strait of Hormuz, has caused the price of oil to skyrocket. It has also resulted in a worldwide shortage of conventional fertilizer, most of which is produced in the Middle East.
The timing of the oil price increases: one in the spring (i.e. “planting season”) when the bombing started, and another a few weeks ago when the peace talks broke down — just as harvest of most crops ramped up — is almost comically bad for farmers in the U.S. And it is coming on top of the overall inflationary environment in which just about everything else farmers spend money on costs more.
But what of prices for agricultural goods? Retail prices for just about all food just keep increasing, so it’s understable to assume that prices paid to farmers are higher as well. Unfortunately, any price increases farmers have seen are not enough to cover their increased expenses, and for many crops prices have actually dropped. The USDA anticipates that the average farmer in the U.S. will once again see negative income this year, offset only by federal support payments. Retailers and processors all claim that they simply can’t pay more to the farmers, because all of their own costs are rising so much and that consumers won’t support prices going any higher. Trump’s tariffs have also caused lower demand for exports, as I have discussed in past newsletters.
Farmers overall may have supported the current administration initially — not me of course — but going into the midterm elections, that support is now muted at best. Like a majority of Americans, farmers are pretty tired of hearing about all the great and amazing things that our current President has accomplished while they find themselves struggling to pay the bills and find a home for their crops. The vote in November will likely be a simple “thumbs up” or “thumbs down” on the track record of the last two years, and on the person and party that has been in charge. Even some hardcore partisans may just skip voting entirely, essentially casting a vote for the other party.
My concern is that Trump has opened a Pandora’s Box with this war and his other actions, throwing the world completely off balance in a way that will be difficult to fix any time soon. Farmers of all shapes and sizes need certainty in order to take the leap of faith required to plant a seed in the ground and expect it to yield food six months or six years later. We can’t handle any more chaos.
Thanks,
Pablito