There’s no beating around the bush from Lola Raska, the executive vice president of the Montana Grain Growers Association, as she contemplates how farmers have been hurt by policies enacted in Washington, D.C.
When asked if Montana’s share of the Trump administration’s roughly $25 billion worth of farm bailouts nationwide, paid for by American taxpayers, will be enough to cover the losses Montana farmers have felt due to Trump’s trade war, she answered without hesitation.
“No,” Raska said. “It doesn’t come close. We want to raise a good product and we want to get a fair price. Trade manipulations are not just emotionally discouraging, but definitely financially discouraging.”
Generally, the agriculture industry in Montana is hurting. Wheat and cattle prices are down, bankruptcies are up, and industry leaders worry the uncertainty will lead the next generation to turn away from family farms and ranches.
Raska said the effect of President Donald Trump’s administration’s decision to pull out of the Obama-era Trans-Pacific Partnership has had a negative effect on Montana farmers. That's because countries like Japan and Canada now have trade agreements that cut out American wheat growers. Also, Trump’s tariffs on imported goods from countries like China have caused them to look elsewhere for grain rather than buying high-quality Montana wheat and/or put retaliatory tariffs on U.S. agricultural products.
“(The tariffs) have had a terribly depressing effect on prices,” she said. “Japan wants to buy Montana wheat, but it comes down to a price issue. Japan is a very stable, reliable customer for the high-quality wheat we grow here in Montana. And since the president pulled the U.S. out of the TPP, our major competitors, especially Canada who grows a similar quality, can sell to Japan at a price advantage.”
Three or four years ago, Raska said Montana wheat was going anywhere from $6 to $7 for a bushel.
“Recently we’re in the $4-$5 range,” she said.
The break-even point varies, she added, but most farmers think they break even when the price hits about $6 a bushel.
“The price changes every day, sometimes in large amounts,” she said. “Tuesday, it was down almost 30 cents a bushel. Farmers have to really be on top of the markets and seeing what’s happening in the trade realm and production in the world. There’s a lot they have to pay attention to.”
Good wheat production in Russia, China and elsewhere has also caused a flood of supply on the global market, she added.
Raska also is worried younger farmers who came back to Montana to take over the family farms when prices were good might be rethinking that decision.
“There was a surge here about four years ago where prices were very good and there was a lot of kids coming back,” she said. “We’ve seen quite a resurgence. Right now, the last three or four years, prices have been low so that’s something we’re concerned about. We’re wondering if those young people who came back when prices were good will make different choices. We’re in a down cycle right now.”
According to the American Farm Bureau Federation, there were nine Chapter 12 farm bankruptcies in Montana from July 2018 to June 2019. That may not seem like a big number, but the Federation says that’s eight more than occurred the previous year, putting Montana on the nationwide map as one of the states with the highest increase in farm bankruptcies.
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Alan Merrill, the president of the Montana Farmers Union, said low commodity prices are “very discouraging” for Montana.
“Montana Farmers Union supports young people coming to the farm,” he said. “With cattle (prices) down and wheat doesn’t look like it’s going back up, you might have kids saying ‘listen Dad and Mom, I’m going to go off to get an engineering degree because farming and ranching doesn’t look promising to me’. They’ll go to Missoula and Bozeman for college, there’s a good chance, unless commodities turn around and there’s a good change."
Then, he added, a bigger farm operation might step in and buy a farm that could have been in the same family for four generations. Merrill said that means the parents might move away, and the kids won’t return, so they won’t buy houses in small, rural Montana communities and increase the tax base and build the economy.
Montana shipped $565 million worth of wheat in 2017, according to the Office of the United States Trade Representative, the third highest of any state. Montana also shipped $161 million worth of veal and beef that year, ranking 13th nationally.
Cattle prices are down significantly from where they were the past few years, according to Jack McGuinness, an auctioneer and field man for the Missoula Livestock Exchange.
“It’s been on kind of a gradual downward trend the last couple years,” he said. “It’s kind of got on an even keel for the summer until the day before yesterday when we had a huge downturn in the market that was precipitated by one of those Tyson packing houses in the Midwest. They had a huge fire that drove (prices) down. We haven’t seen a move like that since Mad Cow disease. That had everybody scratching their heads about it.”
For example, slaughter cows have been selling for about 60 to 70 cents per pound for the last six months, he said.
“Four or five years, ago slaughter cows were over $1 a pound,” he said.
One bright side, he noted, was that the cost of grain feed prices are down.
“The fundamentals of the industry are sound,” he said. “Carcass weights are down and consumer demand is up, and grains haven’t got as high as everybody thought. It just seems like we’re moving a lot of product. There’s not backlog of product.”
Earlier this week, Trump told a Pennsylvania crowd that Japan only bought U.S. wheat to make America feel good, and many representatives of Montana’s wheat industry took issue with that and spoke to the Billings Gazette.
“A bilateral agreement with Japan is critical, and we’re working on that,” Raska said. “China has in the past been about our number five customer. They do like the high-protein, high-quality wheat we grow here.”
The dryness of north-central and eastern Montana makes the wheat here produce more protein, she said, and cold temperatures allow farmers to store it longer and hedge against price drops.
The Billings Gazette reported recently that Republican U.S. Sen. Steve Daines told the Senate Finance Committee that Montana will lose $150 million in wheat sales to Japan in 2019 because of business lost to Canada and Australia.