\n<\/p>\n
It was time for Beau Hanson to lay down his bets.<\/p>\n
Like other farmers in western Iowa, in early April Mr. Hanson was preparing for spring planting. The decisions he made then could determine whether he would be in the red or the black come fall harvest.<\/p>\n
In farming, there are always uncertainties, and all around Monona County, where Mr. Hanson lives, farmers are weighing them. It has been a tough few years. A wet spring in 2024 meant some farmers had to replant three times. This year, it\u2019s too dry. The price of soybeans has been going down, while the cost of seed and fertilizer has remained high, as have the interest rates on the loans that farmers take out to buy those things. Rates have reached 9 percent, more than double what they were three years ago.<\/p>\n
And now, there is an extra variable: a trade war.<\/p>\n
The 145 percent tariff that President Trump imposed on Chinese imports in April was met with a retaliatory 125 percent tax on U.S. goods going into China. In practice, that means a hefty tax on Midwestern crops. China is the largest importer of U.S. soybeans, buying some $12.8 billion worth<\/a> last year. The new tariffs, along with various taxes, bring the effective tariff for the crop to 155 percent, according to the American Soybean Association.<\/p>\n Even before Mr. Trump set off the current tariff war, some farmers in Iowa were looking at the possibility of a third consecutive year of losses. Everything is slowing down. Lenders are becoming more cautious. Machinery and heavy equipment sellers feel the mood shift, too, as farmers eke out another year from aging tractors, planters and other big machinery, rather than buy new ones.<\/p>\n<\/div>\n<\/div>\n \u201cEvery year is uncertain,\u201d Mr. Hanson said. \u201cBut this year, it\u2019s especially tough.\u201d<\/p>\n<\/div>\n<\/div>\n Mr. Hanson grew up in Castana, Iowa, and played football at the local high school. After attending Iowa Central Community College, where he was an offensive lineman, Mr. Hanson, 35, returned home and bought the farm next to the house he grew up in. Unlike many of his peers who left farm life for jobs in bigger cities, he is trying to build his future on the fertile soil tilled by four generations of his family.<\/p>\n He farms 700 acres with some combination of soy and corn, and he hedges his bets with 400 head of cattle. His three children, involved in 4-H, care for a few newborn British White Park calves in the barn.<\/p>\n Like many rural Iowa communities, Monona County voted heavily for Mr. Trump, 72 percent, in the election. Mr. Hanson won\u2019t discuss his vote and notes that he sits on the county fair board and sells seed to customers all around the area.<\/p>\n<\/div>\n<\/div>\n \u201cI don\u2019t want to be political,\u201d Mr. Hanson said, kicking the dirt with his tan work boots and choosing his words carefully. \u201cBut a trade war is not likely to help grain prices here.\u201d<\/p>\n<\/div>\n<\/div>\n Over five days in early April, I crisscrossed rural communities in western Iowa, talking to farmers. The roads were familiar to me. I grew up driving tractors and working the fields on my family\u2019s small corn and soybean farm in Blencoe, about 20 miles southwest of Mr. Hanson\u2019s house.<\/p>\n In my teens in the 1980s, I poured coffee for farmers who sat at long tables at Helen\u2019s Cafe in Onawa. I eavesdropped as they compared rain amounts, crop yields and the size of the fish they caught. I knew we had a good year when Dad bought a new pickup. During a particularly bad year, my birthday present was a clock radio, purchased from the local farm supply store, most likely so my parents could claim it as a farm expense.<\/p>\n The concerns that farmers voice these days are reminiscent of my teenage years. \u201cThe \u201980s, the \u201980s, the \u201980s,\u201d said Gary Jensen, who farms land in the Loess Hills, a rugged terrain that juts up abruptly from the Iowa plains. \u201cIt comes up all the time.\u201d<\/p>\n The 1980s were a dark time for American farmers. A trade embargo against the Soviet Union led to plummeting grain prices just as the Federal Reserve boosted interest rates to as much as 20 percent in an effort to rein in inflation. Land prices plunged, decreasing the value of the collateral that farmers had used to obtain loans. By some estimates<\/a>, 300,000 farmers defaulted on loans, resulting in the largest number of bank failures since the Great Depression. The Farm Crisis crushed many a small town.<\/p>\n<\/div>\n<\/div>\n At 33, Mr. Jensen is too young to have experienced that time, but he has heard enough to know that things can go south fast, and he needs to be careful. When we met, he was preparing his red Case tractor for planting season. When I asked how old the tractor was, he laughed. It was manufactured in 1989, three years before he was born. He\u2019s not planning to replace it. \u201cThere\u2019s not going to be any new equipment anytime soon,\u201d he said.<\/p>\n<\/div>\n<\/div>\n Farmers are tightening their belts, said Barry Benson, a senior vice president of agribusiness banking at FNBO, the First National Bank of Omaha. \u201cThey\u2019re going to run the combine one more year or run the tractor another year,\u201d he said.<\/p>\n In the months before spring planting, Mr. Benson and other lenders typically meet with farmers to talk about the size of operating loans they will need for the coming season. Someone with a relatively small farm, around 400 acres, may take out a $250,000 loan to pay for seed, fertilizer and leasing the land, and repay the loan after harvest.<\/p>\n But Mr. Benson estimated that a third of last year\u2019s loans couldn\u2019t be repaid and had to be restructured, which, for some farmers, meant taking out another loan. Others had to sell equipment or land.<\/p>\n<\/div>\n<\/div>\n Dan Dotzler, the president and chief executive of the United Bank of Iowa in Ida Grove, said his bank had had \u201csome hard and long\u201d conversations with farmers.<\/p>\n \u201cWe really try to work things out, do everything we can, because these are longstanding relationships,\u201d he said. \u201cBut we also recommend farmers look for ways to get additional income to supplement living costs. You\u2019ve got to go to town and get a job to support yourself and your family. It\u2019s a different environment now than it was a few years ago.\u201d<\/p>\n Mr. Dotzler remains optimistic, believing that if farmers keep expenses down, they will, for the most part, be fine. But he is also worried about high interest rates, costly machinery repairs and the lack of a Farm Bill in Congress. And, of course, tariffs.<\/p>\n \u201cThere\u2019s so much unknown about what\u2019s going to happen with the tariffs and how it\u2019s going to affect everything,\u201d Mr. Dotzler said. \u201cThere is just a lot of wait and see on that front, which leads to anxiousness.\u201d<\/p>\n One way the farm economy recovered from the 1980s was through exports, particularly with an emerging market: China.<\/p>\n<\/div>\n<\/div>\n China was booming and in need of soy and other feed for its own livestock industries. From a starting point of zero in the 1990s, China became a critical market for U.S. agricultural goods, hitting a peak in 2022<\/a>, when it imported $36.4 billion worth of products, including soybeans, corn, sorghum, poultry and pork, according to the U.S. Department of Agriculture.<\/p>\n Export markets like China are essential because American farmers produce way more than U.S. customers can buy. The industrialized farms that cover the Midwestern landscape use modern planters that practically drive themselves using GPS technology and drop seeds at the perfect depth and width, all in a small fraction of the time it takes farmers using older equipment. In addition, the seed itself not only generates more crop per acre, but is better at protecting the young plants against pests and diseases.<\/p>\n The result is ever-increasing yields. Corn, which is used in animal feed and ethanol production, has a larger domestic market, with exports accounting for about 15 percent<\/a> of the harvest.<\/p>\n Soybeans, however, are much more sensitive to trade wars. Roughly 40 percent of the soybean crop is exported.<\/p>\n \u201cExports, exports, exports \u2014 that\u2019s where the market is,\u201d said Milo Ruffcorn, 66, a farmer from Mondamin, Iowa. \u201cWe have to have someone to sell our corn and soybeans to.\u201d<\/p>\n<\/div>\n<\/div>\n Concerned that a drawn-out trade war between the United States and a major agricultural buyer like China could stifle soybean prices, Mr. Hanson and many other farmers are betting big on corn this year.<\/p>\n Prices for both crops have fallen around 40 percent since May 2022. For farmers, eyeing prices at dismal, potentially money-losing levels, the math is simple: Go for yield. That means corn, which produces more per acre.<\/p>\n Mr. Hanson decided to plant corn on 90 percent of his acres. This year, farmers are expected to plant 95 million acres of corn, the highest amount in five years, according to the U.S.D.A.<\/p>\n On paper, Mr. Hanson calculates that after paying rent on his 700 acres, buying crop insurance, seed and various chemicals and paying back his operating loan, he can make a profit of $60,000, or about $85 an acre, on corn. With soybeans, his calculations come out to a loss.<\/p>\n<\/div>\n<\/div>\nAn Echo of the 1980s<\/h2>\n
\u2018Exports, Exports, Exports\u2019<\/h2>\n