New Tariffs Increasing the Squeeze on Texas Agriculture

posted by 1200 WOAI -

The tariffs that President Trump is imposing on trading partners from Mexico to China has Texas farmers worried, News Radio 1200 WOAI reports.

Regan Beck, Director of Government Affairs  with the Texas Farm Bureau says Texas agriculture is very international, and he points out that China, Mexico, and Canada are among Texas' biggest agriculture markets.

One problem Texas farmers will face if the trade wars escalate, Beck warns, is lower profits, and that will lead to the same problem Texas farmers have historically faced during bad economic times---an inability to get credit.

"Banks don't like a lot of risk, and if they see a lot of risk, I would assume they will make it more difficult to even get that loan," he told News Radio 1200 WOAI's Michael Board.

Since unlike computers, oil, refined products, and other items Texas exports, agriculture products can't easily be stored, and as a result of the tariffs, both milk stores and the number of hogs on Texas farms are way up, and that is driving down market prices and leading to additional problems for farmers.

"There is still hope, depending on their economic situation," Beck said.  "I know some who are seriously considering what they are going to do, and some may not have much light at the end of the tunnel."

The tariffs come at a time when Texas agriculture is already facing systemic changes.  A change in the milk market, for example, has prompted thousands of dairy and cattle ranchers to sell their ranches.  On top of this is a new generation of Millennials for whom the farming life doesn't carry the cultural allure that it has carried in past generations, meaning some farmers will have to sell their farms due to a lack of a family member to take over the business.

And then there are the repeated droughts which sap the ability of farmers to plan for the future.

That will feed into an already major increase in the number of 'corporate' or 'factory farms' in Texas, depriving small towns and rural areas of the leaders which have always come from the agricultural sector.

"This could possibly mean some farmers going out of business," Beck said of the new tariffs.

The problem for farmers is the nation's Texas farmers sell their products to find Texas imports are more expensive due to retaliatory tariffs imposed by their own governments.  

Much like the high price of oil in the late 2000s led to the rise of the fracking industry in the U.S., higher prices for imported agricultural products are spurring development of competing agricultural enterprises in other countries.  New innovations have enabled products to be grown and raised in what previously were, for example, the inhospitably cold climate of Canada.  That has raised the risk of permanently depriving Texas farmers of their key markets, leading to a long term drag on the state's agricultural economy.

PHOTO: Getty Images

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