The drought monitor report as of Tuesday, April 29th shows a little more improvement across the state. Our entire area is still in moderate drought. The only deterioration is in extreme Southwest Kansas. The six to ten-day outlook (May 6 to 10) indicates normal to leaning slightly above normal for temperatures and a 40 to 60% chance leaning above normal for precipitation. The eight to 14-day outlook (May 8 to 14) indicates a 33 to 40% chance of leaning above normal for temperatures and a 33 to 40% chance of leaning above normal for precipitation. Not a bad outlook for wheat, alfalfa and our summer row crops.
Today, unless you have been totally out of touch, tariffs are a major topic of conversation. Much has been written and said about the effects on consumers and businesses. Today, let’s focus on how tariffs have and can affect agricultural production. This column isn’t taking sides in this issue. The purpose is to try and explain in general terms what the potential impacts are for agriculture.
Until the early 20th century when a permanent income tax was established, the Federal Government was primarily funded through tariffs. Simply, a tariff is a tax those importing goods pay. Not the exporter but the importer. When the US imposes tariffs on goods from another country the importer pays the tariff. They may or may not pass that tax onto the purchaser. Typically, some or all the tariff is passed on to the purchaser. When another country imposes tariffs on goods from the US, it works in reverse. The upshot is typically higher prices. And often, when one country imposes tariffs on one country’s goods, that country responds with tariffs of their own in retaliation. Tariffs are imposed for a variety of reasons we won’t delve into here.
Why is this challenging for agriculture?
• Many of the purchased inputs in agriculture are imported. For example, potash comes from Canada. Much, not all, of the farm equipment, whether John Deere, CNH, etc. is manufactured in Canada, Mexico, South America, and Asia. Even the equipment manufactured here typically has many components from overseas. Steel is often from abroad. Pesticides are often produced abroad. And the list goes on.
• US agriculture is efficient, very efficient. The industry produces far more than we buy. We rely on export markets to maintain prices. Previous administrations and various producer groups have worked endlessly to sell our agricultural products abroad, especially to Western Asia (China, Japan, South Korea). Mexico is also a large market. Tariffs imposed on their goods are reciprocated by tariffs on ours, especially ag commodities. A great deal of our meat and grain production is exported. As exports decrease it normally results in decreased prices. And our export market switches to other sources, Brazil, Australia, Argentina, and other countries. And when things return to normal, we typically don’t recover all of it. Furthermore, we tend to be viewed as an unreliable source.
Simply agricultural is hurt coming and going.
Dr. Victor L. Martin is the agriculture instructor/coordinator for Barton Community College. He can be reached at 620-792-9207, ext. 207, or martinv@bartonccc.edu.
