President Trump’s tariff threats may be viewed as theater intended to shake up an international agriculture economy already stressed by global conflict. But big change is coming to American agriculture, and ag-energy profits of the past are not guaranteed.
A panel of experts assembled by River Valley Cooperative offered detailed analysis for more than 600 farm family members filling the Rhythm City Casino ballroom Dec. 5. Tim Burress, CEO of the Scott County-based coop welcomed members.
River Valley’s nine-member board includes Neal Keppy, of Eldridge, and Brent Daufeldt, of West Liberty.
About 20 service and product vendors handed out gifts, and door prize raffles included tool chests and pressure washers.
The heart of the event was a two-hour discussion with analysts who offered a bit of gloom, a threat of doom, and some positively bright spots, especially for cattle producers, and those with grain to sell in the next three months.
“They’re buying corn ahead of tariffs,” said RFD-TV ag journalist Mike Pearson. “The coming months will see our trade partners front-running the tariffs.”
After that, the panelists said the world will learn if Trump makes good on threats to disrupt ag trade with the top U.S. partners, Canada and Mexico.
The experts can’t imagine he will. But all expect some kind of an uproar.
“I call it the whimsy of the orange man. But it’s coming,” said Joe Kerns, leader of Partners for Production Agriculture group. He called the 2024 election a victory of Twitter over the New York Times.
Kerns also is livestock division president for Ever.Ag, a farm advising, financial service and software provider. He offered the most detailed political analysis, and anticipates Democrats will regroup after Trump’s final term.
Fertilizer trading expert Chris Short sees nutrient prices dropping in two years, regardless of tariffs, because of global production expansion.
StoneX commodity risk manager Matt Campbell said Canada and Mexico are integral trade partners, and doubted post-election rhetoric would become policy. If so, he warned that farmers will face the brunt of tariff collateral damage.
‘On the verge of real changes ahead’
Pearson opened the two-hour program with a forecast of upheaval he attributes as much to global conflict as the Trump trade threats.
“Now until March you’ll see lots of headlines that will impact agriculture as trade breaks down around the world, which I see no matter who was in Washington D.C.,” he said.
“We’re on the verge of seeing real changes ahead. It’s here. The down time is upon us. How are we going to manage?”
Pearson said the biggest U.S. exports are aircraft, weapons, Wall Street financing products and farm commodities.
He doubted those other industries would face the brunt that agriculture has seen.
“Ninety percent of the time it is ag products, and specifically corn and soybeans. We’re the segment that’s going to be hit the hardest.”
A worst-case scenario is retaliatory commodity tariffs by Mexican and Canadian trading partners.
“We’ll need something to soak up these bushels that won’t be sent overseas. The only thing I see is bio fuels. And we have the return of the worst president for ethanol since the founding of the RFS,” or renewable fuel standard, Pearson said.
That standard created Iowa’s energy corn wealth, Pearson said. He fears it is at risk in this Congress. “Most Republicans are not in agriculture. They don’t understand the impact of our industry,” Pearson said.
End of U.S. soybean dominance
He said decisions in the last Trump presidency ended America’s domination of the soybean market.
“I’ll say it. American soybean exports have peaked in my lifetime,” said Pearson.
Trump’s 2018 tariffs prompted global investment in South American production.
“In 2018, we kick-started the Brazil crop.”
Pearson said $50 billion in Congressional assistance filled farm bank accounts, while overseas trading partners found new soybean supplies.
“When we did a trade war in 2018, Congress gave us $50 billion in payments. We were selling our future soybean production for $50 billion. That’s what it was worth to us,” Pearson said.
“I think we made a choice in November to hand that permanently to Brazil. But I think we were going to lose our preeminence in agriculture anyway.”
He said U.S. soybean production in 2023 was 4.6 billion bushels. Brazil anticipates 6.1 billion bushels this season, Pearson said.
He also suspects little support for renewable fuels in Congress.
“I’m fairly confident saying today that the phrase, ‘climate-smart agriculture,’ is gone. Secretary Vilsack said it all the time. Come Jan. 20, we’ll be done hearing that phrase.”
He and other speakers forecast an obituary for soybean based bio diesel, and sustainable aviation fuel. The U.S. Treasury Department under Biden has not yet renewed tax credits for those biofuels, and Trump has touted fossil, not renewable fuel development.
Energy era is over
Government policy drove higher commodity prices that fueled land values and created great wealth, Pearson said. Now, he forecasts an end to big energy subsidies fortifying Iowa agriculture.
“This era is over,” he said, displaced by Trump’s protectionism. “The era of protectionism is never good for agriculture. A lot of millionaires in this room tonight wouldn’t have been millionaires in the 1970s.
That’s also why he believes, “we’ll see the inflation train come back.” Rising electric rates will drive that train, he said.
Pearson said energy prices typically start inflation spirals.
He said the U.S. already is flush with oil production. “We produce 40 percent more oil than Saudi Arabia. Oil will not drive the next inflation spiral.”
Data centers drawn to Iowa with taxpayer incentives draw huge amounts of electricity that will push prices up, he said. Artificial intelligence initiatives are driving more data centers.
“Chat GP consumes a staggering amount of electricity. Now, 6.7 percent of American capacity,” goes to AI. “It will go to 12 percent,” Pearson said. “As AI use spreads, I think electricity could be the energy spiral that kicks inflation into high gear.”
Immigration
Trump’s insistence on mass deportations, “could be the fly in the ointment for meat production,” Pearson said.
Kerns said the rhetoric may be enough. “Day 1, all you have to do is start to threaten it, and they’ll leave by themselves,” he said.
Kerns said he favors, “a path toward citizenship for more H2A,” or seasonal farm workers. “The alternative is to bump up wages until we get the jobs filled.”
That seems unlikely. Tyson just closed its Perry, Iowa plant, which Kerns said was paying $27 an hour. “They couldn’t get the warm bodies,” he said.
“Immigration policy will exacerbate the situation that has been ongoing. If you own a plant, you’re going to have to write a big check. We’re going to be in undeniable wage inflation,” Kerns said.
Farm bill
Congress’ failure to produce a farm bill this year, “is the biggest favor we could have. Punting the ball down the road is a win,” Kerns said.
“We won by losing,” Pearson said.
‘Volatility is going to be bananas’
Ever.Ag livestock division president Joe Kerns offered more political analysis. He expects President Trump to move quickly to remove regulations. “Any agency with an acronym, like EPA, will become powerless,” Kerns said. “The volatility is going to be bananas.”
“Pay attention to rhetoric. Now he’s including Mexico and Canada. Immigration? That’s the easy one. It’s a compelling story. But Canada? Why are we picking on them?”
He noted that Trump jokingly disparaged Canada as becoming the 51st state. “It’s all a negotiating tactic. Everything has been thoroughly vetted, but they don’t believe a quarter of what they put up.”
Kerns expects volatility because he believes Trump interprets the election results as a mandate.
Kerns disagreed.
“The only reason Trump is in is because the Democrats ran an incredibly weak candidate… and six million voters stayed home. The way the Democratic party went about the nomination has not found favor with voting people.
“Who held their nose and voted for Trump?” he asked the audience. About two dozen hands went up in the room of more than 600. “I did the same thing,” Kerns said.
“I live in a house with eight women. Makes it hard to support Trump,” Kern said with a laugh.
Later in a Q&A period, he predicted a short life to Trump policies.
“The Democrats will regroup, get rid of DEI, and the whole gender policy, and get back in power.”
Kerns joined Pearson in touting an end to a farm economy fueled by energy policy and federal subsidies.
“We knew we were wealthy. A large portion is attributable to the biofuels movement after 9/11,” he said. “We are wealthy guys and the key component is biofuels policy has made us rich.”
“Bio diesel had its heyday,” he said, posting a slide that condemned some popular Iowa alternative fuel strategies.
“The ethanol ship has already sailed. As a fuel, neutral (at best) relative to petroleum when comparing BTUs.
Sustainable aviation fuel, “is a terrible idea from a physics standpoint. Forty percent of energy is required to break the oxygen from the molecule. Bio-diesel is dead, was a bad idea from the start. Renewable diesel is a societal plague that our grandchildren will never forgive us for implementing.”
He also agreed that American soybean dominance will end.
He blamed contracts with Chinese and other foreign-owned packers.
“Animal agriculture has become a serf to the packing community as we largely have squandered the ownership of our future,” Kerns said.
“We, the animal production industry in the United States, have not developed an economically sustainable model in a standalone fashion. We have leaned against the appreciation of land assets in the agronomic realm while our animal assets have largely returned nothing.
“Our wealth has come from bio fuels policy and appreciation of land.”
He too said the last Trump tariffs pushed old U.S. soybean customers to South America.
“The clock is ticking on beans. Two more months before we know,” he said. “After the Brazil harvest, it’s game over,” for beans.
‘Carbon sequestration is going nowhere’
Kerns also condemned the carbon waste pipeline plans across Iowa and the Midwest.
“Who invested in carbon sequestration?” he asked. “I did. I think I just wasted all my money. I wish I had my money back on that one… Carbon sequestration is going nowhere.”
He ended with a slide summarizing conclusions.
“The world is about to change. Dramatically. The tenets were already present. The Trump presidency turns up the volume…
“The easy money in agronomic agriculture is gone… The Donald will complicate all of this, probably more detrimental than not.
Bright spots
Promising outlook for cattle
Agriculture journalist Mike Pearson was giddy about cattle prospects because of a flourishing economy and an insatiable taste for beef.
“We are seeing the American consumer write whatever check we want them to write. They’re flush with money and it’s not going away anytime soon,” he said. “It’s been up for a year. We’ve never seen cattle that high for so long. There is still tremendous opportunity in the cattle market.
Despite data showing the smallest herd in 20 years, Pearson reports a record amount of November cattle feed. “How do we have the smallest number of mama cows, and record feed?” he asked. Rising beef prices are encouraging producers to fatten up stock.
“We’re putting everything on four hooves into the feed lot,” he said. “Those old mamas going to Applebee’s. I don’t think I see anything knocking this cattle market off its run.”
Pearson said excess cash is fueling, “all of the other scammy crypto currencies that are at record highs. There is a cash in this economy and people want to spend it on themselves.”
He advised raising red heifers. “They haven’t gone as high as they’re going to be.”
Kerns agreed on the rosy cattle future.
“We’re seemingly able to pay whatever price necessary to put a ribeye on the plate for our family.”
He called it the “easy money,” in agriculture.
“Market an animal to a suburban Chicago woman who fears she can’t give anything but organic food to her kids. Exploit the hell out of her,” Kerns said.
Fertilizer prices
Expect it to be $75 to $100 cheaper by 2026, said fertilizer trading expert Chris Short. “We just have too much production added. These guys have been cutting some pretty fat hogs for years.”
He noted the Koch Inc., purchase of the Weaver, Iowa fertilizer plant in August for $3.6 billion. That was built by an Egyptian firm that considered Scott County land, before accepting state incentives to build in southeast Iowa.
“They made so much damn money,” Short said.
He also doubted Trump would aggravate Canada with tariffs.
“We import 10 million tons of Canadian potash,” an essential fertilizer ingredient. “So I don’t think there’s a chance in hell that will happen.”
He said a bigger possibility is phosphate tariff hikes. The U.S. just increased tariffs on Moroccan phosphate.
“But the amount of excess (fertilizer) production we have in the world trumps any tariffs. Lots of places are willing to expand nitrogen production.
“We had a 2016 Trump presidency and we didn’t see tariffs in Canada,” Short said, adding he’d like to see all U.S. tariffs removed.
Short also noted the U.S. wound up buying Russian potash discounted Russia’s invasion of Ukraine.
“We bought more Russian fertilizer. When the Europeans said we won’t buy your potash because you’re at war with Ukraine, we took it all.
Short speculated it’s likely the U.S.-made fertilizer with Russian potash was sold to those same European nations.
“We’ve gotten four million tons of potash from Russia,” which is, “throwing potash out trying to get their hands on dollars.” That helped raise Russian potash exports to prewar levels, according to an October report, further constraining fertilizer costs.
“Long term looks good for fertilizer. Can it help you this spring? No,” Short said.
Tax policy
All the analysts cheered Trump tax cuts, particularly his pledge to end estate and gift taxes. “That might be the best part of the Trump presidency for those of us who work for a living.
For those of us in this room, it’s probably the biggest thing… “It also denies the corporate tax hike the Democrats promised.
“I think it’s going to be a glorious four years,” he said.
And to Democrats? “We survived the Biden administration. If you’re a Democrat, you’ll survive this.”
“Life doesn’t move at right angles. We’re going to continue to bend.”