Countries Don’t Trade, Corn Growers Trade
It makes an impression when you can cite a “most” or “best in the world” kind of statistic, so here’s one: American corn growers produce more and export more corn than any other farmers in the world. They export around 40 percent of all the corn traded in the world.
I was asked to speak to a large group of corn growers in the Midwest recently. Farmers know their business inside and out, but now they want to know about global steel and aluminum production, automotive rules of origin, and intellectual property protections for high-tech innovations. They know that the prices they will begin to face in their best markets have less to do with their yields or quality than with retaliatory tariffs.
Farmers are price takers. And for years, the export opportunities created by market opening policies have been positively reflected the price they get for their corn. But as we sat and spoke about current trade policy with its frequent tariff announcements, one bigger and more punitive than the next, the farmers were checking the current price of corn. “We’re down to 3.6!” a farmer from Michigan interjects as we talk about China. The U.S. price per bushel of corn was $4.06 on May 21, $3.63 on June 14 at our meeting, and was $3.54 on June 20.
Businesses chafe at uncertainty. The only thing these farmers seemed sure of was that the current tariff war and a lack of clear endpoints in negotiations with China, Mexico and Canada are causing volatility in their short run prices, and it’s beyond their control.
At the beginning of the meeting, our facilitator from the U.S. Grains Council asked each farmer to introduce themselves and say which state corn grower association they belong to: Iowa, Ohio, Nebraska, or another. She also asked them to say one word they associate with trade policy. Most said something like “anxious,” “worried,” “concerned.” A handful chose to remain “cautiously optimistic” and others were just plain “confused.” The most unexpected word choice was “respect.”
That farmer approached me on a break and said, “Do you want to know why I chose the word respect?” Indeed, I did. “Because I think trade policy should respect the decisions I choose to make in my own business.”
Soon after we launched TradeVistas, we reprinted an article by economist Don Boudreaux and renamed it, “Countries Don’t Trade,” as a reminder that people trade. It’s our corn growers who do the trading, not the United States. Tariff wars might be fought by governments in capitals, but it’s individual businesses and farmers in our fields who end up the foot soldiers.