All governments make decisions and then the policies are rolled out, people elect governments to make decisions. Then people decide if the decision is good for them and that is where unintended consequences happen. In the case of President Trump, he decided the US needs tariffs. For the past 60 plus years the world has said we would all not want very few tariffs, but President Trump decided on a reset. Prices are up because of the tariffs, but in 2 years maybe they will fall. One of the unintended consequence is on the farm belt.

In an article by Nathan Vanderklippe of the Globe and Mail, the reporter interviewed Elliot Uphoff who has a family farm of 2,000 acres with his father in Shelbyville, Illinois for the past century. The last time the Trump administration sent him a check, he bought a mini excavator to fix drainage issues.

The big crop is soybeans and 60% are sold to foreign buyers with the largest China. In the trade war tariff, the US has not yet made a single sale from this year’s soybean crop to China. China has bought soybeans from Brazil and Argentina.

President Trump has said some of the money collected in tariffs, rather than going to pay the debt or about $16 billion trade aid bailout of farmers.

Around Decatur, the central Illinois city which refers itself as Soy City, farmers would rather have the market instead of government check, according to Tim Stock, EVP of the Macon County Farm Bureau.

Across the US, we are going to lose farms this year, guaranteed.

China’s half to soybean prices has not sent prices plummeting. An Illinois farmer can sell a bushel of soybeans today for nearly the exact same price as this time last year.

The reason, US farmers are harvesting less soybeans, the lowest since 2007. They grew more corn.

Michael Langemeier, the director of the Center for Commercial Agriculture at Purdue University where he is a professor of agricultural economics, said if China does start buying, prices would be 10% higher.

Matt Furr, who farms 4,500 acres with his family, has purchased only 10% of the futures contract he would normally buy to lock in an advance price for his crop. He is hoping better prices arise in spring or early summer. Similar to all farmers, they would rather work, but they will take the money if offered.

Linking to dividend paying stocks, most of these companies are large enough that there are plenty of government incentives to help them make decisions. Ideally the decision is made first and the government just adds to the returns, but all companies are dependent on government policies. Hopefully the companies you own investments in expects government money to be part of their analysis.

There are more questions than answers, till the next time – to raising questions.