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This Week's Financial Focus
There are three main stories we're focusing on this week, but they all have one common focus that will have ripple effects across the nation until it disrupts our very kitchen tables. No, we don't mean the new tariffs on cabinets, although that matters, too. We're talking about the burgeoning crisis within America's farmland and agriculture industry.
Feed the World
BACKGROUND: American farmers provide more than just the food at your grocery store. They are part of a global system of trade and policy that helps to support developing nations. That system in turn supports their livelihood. Crops are planned well in advance, with large seed purchases and land preparation. The knowledge that those reliable markets will continue to purchase their crops year after year is what allows farmers to plan their harvest with confidence.
One of the major purchasers of said crops was USAID, the American federal agency that supplied nutrition to developing nations in need. Founded in 1961 to compete with the Soviet Union during the Cold War, USAID was reorganized as an independent agency in 1998. It operated missions in over 100 countries, offering services such as education, environmental protection, and health care.
With an annual operating budget of $23 billion, it is estimated that USAID has saved at least 92 million lives since 2001; approximately one-third of those being children under the age of 5. Their Food for Peace program is the longest running international in-kind food assistance program. This work is not just humanitarian; it is one of the U.S.'s greatest soft powers.
That power extends to the homeland, with more than 400 U.S. producers relying on the $2 billion worth of food contracts USAID had in the 2023/2024 fiscal year. This includes small grain farmers who sell their harvest to larger grain aggregators, who then sell to food producers.
In that same fiscal year, USAID's Feed the Future program purchased 1.1 million metric tons of corn, sorghum, rice, vegetable oil, and beans for distribution to 45 million people in 35 countries, all of whom were facing food emergencies or otherwise in acute need of nutrition assistance.
American farmers rely on global markets to stay in business as the domestic market alone cannot support the agricultural industry. However, that same industry reinvests in American communities by paying taxes, supplying jobs, and providing food. The benefit always comes back home.
Growing Concerns
WHAT IT IS: As an independent agency, USAID can only legally be dissolved through an act of Congress, but this regime made it one of the first targets in its assault on government. That left hundreds of farmers with a very uncertain future regarding the sale of their crops, but that's not the only challenge they faced.
New tariffs (again by this regime) have been implemented, then delayed, then reimplemented, then revised, making it impossible for producers and purchasers to know exactly what is going on. As a result, American farmers face a double dilemma: reduced sales orders from wary buyers and increased operating costs from new and unexpected tariffs on their own supply purchases.
Even before tariffs exacerbated the issue, operating costs for farmers had been on the rise. In the past 5 years, prices for the 3 most commonly used fertilizers have increased 11%-15%, and diesel is up by 10%. Other expenses like seed, labor, machinery, and building materials are up anywhere from 2%-7%. Want to buy that on credit? Interest rates are 40%+ higher than they were in 2020, making it harder to borrow money and repay loans.
Add to that the challenge of climate change. As global warming and increased demand reduce aquifers, farmers must shift their crop of choice along with it. Some have traded out water-loving corn for the more drought-tolerant sorghum, but that only works if you have a dependable market. China has historically been one of the reliable top purchasers of soybeans, sorghum, corn, wheat, pork, and cotton, but not this year.
Heartache in the Heartland
WHY IT MATTERS: In 2024, China purchased 2.7 million metric tons of soybeans from the U.S., about half of the soybeans grown here. This year, they have bought none. The same goes for corn, wheat, and sorghum. Instead, China is purchasing their supplies from Brazil and Argentina, who recently dropped their grain export tariff under a quota system. The deal will last until the end of October, or until declared exports reach $7 billion, whichever comes first.
As a result, total agricultural exports to China are expected to be $17 billion in 2025, a 50% drop from just 2 years ago. Soybeans are a major source of income for Midwest farms, especially in Illinois, where farmers could face losses of $64 per acre this year. U.S. farmers are looking to expand their reach to other markets like Vietnam, Bangladesh, and Taiwan, but even collectively, they do not have the same buying power as China.
American producers are now stuck storing their harvests in the hope that new buyers will be found, but that may come too late for some growers. Farm debt is expected to increase to around $593 billion this year, endangering the 1.05 million full-time jobs and $362 billion in economic output that agriculture supports. For some, that is too much to bear. Over 160,000 farms have ceased operations since 2017.
A New Argentina
WHO BENEFITS: Despite being one of the top recipients of agricultural sales from China, Argentina is still facing economic instability under the strict austerity budget imposed by their Libertarian, chainsaw-loving president Javier Milei. Add to that the hardship faced by Argentine farmers, who suffered through a La Niña-induced drought that drastically reduced Spring harvests.
To offset these economic woes, Milei has asked the U.S. for a $20 billion bailout, a favor to which The Current Occupant of the White House readily agreed. Securing said bailout from Congress may be a different story, though. In an age of deep political divisions, this seems to be one issue that has united everyone from financial powerhouse Senator Elizabeth Warren (D-MA) to perpetual broken clock who's occasionally right Senator Chuck Grassley (R-Iowa). Agricultural groups like the American Soybean Association and National Sorghum Producers are also speaking out against the proposed bailout, especially as Argentina has a history of defaulting on its debts.
In case you are wondering why we can't also provide a bailout to American farmers, the idea has been floated by the current regime, but there's a catch (there always is.) They have proposed using direct tariff revenue to create a farm aid package, news that was initially welcomed by struggling growers. However, the legality of those tariffs is still in question, which means those funds, which total in the tens of billions of dollars, could potentially need to be repaid.
Snake in the Grass
WHO *REALLY* BENEFITS: If farmers do not find new buyers and do not receive sufficient government support, many may have to make the hard decision to sell their business, and that land has been depreciating in value. The American Farmland Trust estimates that 40% of U.S. farmland could be sold in the next 10 years, but to whom?
That question gets harder to answer as investment firms, holding companies, and large agribusiness ventures purchase increasing amounts of land with decreasing amounts of transparency about who exactly controls those interests. One person enabling the shift of farmland from stable American economic driver to investment portfolio necessity is none other than eyeliner lover and sofa aficionado Vice-President JD Vance.
Vance helped fund AcreTrader, an online real estate investment platform that allows global investors to purchase stakes in farmland. He helped fund its creation through Narya Capital, an investment firm he started with PayPal co-founder and antichrist obsessed broligarch Peter Thiel. It remains unclear whether or not Vance still has holdings in AcreTrader or Narya Capital, but he has also not clearly divested from them. This is the Worst. Timeline. EVER!!!!
The Bottom Line
HOW IT IMPACTS YOU: The more fragile our farm industry becomes, the less control we have over from where our food is sourced, how it is grown, what quantities are available, and how much we pay. If agricultural control continues to shift from small farmer to global investor, our very sustenance will become subject to the changing whims of the highest bidder. Their goals are diversified portfolios and ROIs, not humanity's survival.
With that wealth transfer goes thousands of jobs and billions of dollars in American economic reinvestment. Those economic losses spread farther and farther out into the community, impacting local businesses as the supply of disposable income disappears. Restaurants and other food businesses that once created a mini ecosystem by sourcing from local growers will now have to rely on large food supply distributors.
The government should not be bailing out an agricultural competitor that has already been on the receiving end of export orders expected to go to American farmers. If they have $20 billion to spare, that should support the U.S. agriculture industry that has been directly harmed by U.S. tariff policy. Global trade has tremendous benefits, but this is one time where we need to keep American dollars in American wallets.
What are your thoughts on the matter? Let us know!
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