Farmers have been feeling the weight of the most recent trade negotiations, as tariffs on both agricultural inputs and soybean exports have become a sticking point in the redrafting of American trade relations. President Donald Trump has sought short-term fixes, namely repurposing tariff revenues for farm bailouts and preventing Robert F. Kennedy Jr. from implementing new federal regulations on agriculture. The fact that RFK Jr. hasn’t touched energy or pesticide policy is good news for strained consumers and farmers alike.
However, trouble is brewing elsewhere. China has only committed to purchasing 12 million metric tons of soybeans, down from 22.5 million. While bailouts will provide momentary relief for farmers contending with high seed and fertilizer costs, the long-term ramifications of trade partners switching trade routes to South American exporters such as Brazil could mean the ruin of many in the farming business.
There are a number of things the administration can do to prevent the worst, not least because farmers were very supportive of Trump’s reelection, but also because it is consumers who will face holiday season sticker shock at the store if farmers can’t maintain an affordable food supply.
The administration needs to work harder to conclude comprehensive trade agreements with countries it has been particularly hostile toward, such as China and the European Union. Farmers require large volumes of customers, and Europe has a very large consumer base, along with the inputs American farmers need, such as chemical fertilizers and farm equipment.
Trump’s team has oriented domestic farm policy around lowering the cost of doing business in America.
Every business faces compliance costs, ranging from taxes and audits to insurance plans and worker health and safety. Some of those ought to be streamlined and digitalized, but realistically, there’s very little a government can improve in these fields. Compliance with the 2011 Food Safety Modernization Act costs small farmers between 6 and 7% of their annual sales, which does not even account for state and local regulatory burdens, which can be very high in states such as California.
Despite it being a bipartisan bill, the FSMA was opposed by some Republicans on the grounds that it would increase regulatory costs for farms, which it did.
By imposing federal rules on food safety, this legislation created a fixed cost dilemma for small farms, because whether you’re a small farm or a large one, the costs of hiring a food safety consultant are virtually the same. In fact, in everything from mandatory training, record-keeping, and the development of a food safety plan to sending water samples to accredited labs and paying for it, the regulations are a cost of doing business that other jurisdictions do not have.
The European Union is infamous in its affection for rules and regulations. Recognition of the link between compliance costs for farmers and consumer prices is what drove the EU to seal a deal this week on reducing costs for farmers by almost $2 billion. The EU will finally take less of a meddling, helicopter approach to farming, while still maintaining food safety standards.
TRUMP MISSES THE TARGET ON BEEF COLLUSION
Farmers are businesspeople, on top of being multi-faceted workers and engineers. In fact, very few trades are as versatile as that of farmers. Burdening these hard-working people with rules dreamt up in offices by bureaucrats disconnected from the realities of land and soil, while making them compete with other countries that don’t face the same rules, is a misalignment of priorities.
Everyone wants food safety standards to be proactive, not reactive, but we need to understand that being overly cautious comes at a literal cost to farmers and consumers at the grocery store. There are times when we can afford those added costs, and there are times when we need to go back to the drawing board and define what good policy looks like. Pick up a newspaper and read a public opinion poll; this is one of those times.
Bill Wirtz is the senior policy analyst at the Consumer Choice Center, where he covers food and agriculture policy. Follow him on X at @wirtzbill.
