MASON CITY, Iowa — Brent Renner has been contemplating the end for a couple of years now.

The Klemme farmer, who with his father, operates two-thirds corn and one-third soybeans on 2,000 acres, says the recent escalation of the trade war with China isn’t the only thing that has caused him to lose money.

But it could very well be the final thing.

RECORD-BREAKING HARVESTS

Turn back the clock a few years and you’ll find Iowa farmers enjoying record-breaking soybean harvests. In 2014, 3.93 billion bushels of soybeans were harvested, up nearly 20 percent from the previous year. In 2016, the harvest climbed to 4.3 billion. Not even the floods of 2018 could stop a record-breaking 4.54 billion-bushel harvest.

Iowa’s 40,000 soybean farmers were responsible for 13 percent of that harvest.

And five years ago this month, soybeans were paying $15.16/bushel. But true to the rules of economics, greater supply means lower prices, and that May 2014 peak was the best price farmers were going to see for a while.

In the summer of 2016, soybean prices would peak for the year at $11.78/bushel, as stockpiles grew. By 2018, as the Chinese tariffs began to take effect and President Trump’s trade war was heating up, anyone putting soybeans into the ground knew they were planting at a loss, according to Aaron Putzke, director of communications and external relations for the Iowa Soybean Association.

“Right now, soybeans are running about $2.50 below cost per bushel,” Putzke said. “So say you’re a North Central Iowa farmer and you’re growing 60 bushels an acre. That’s a $150 loss per acre. Say you’re planting 400 acres. The crop you’re getting ready to plant is already in the red $60,000.”

AFRICAN SWINE FEVER STRIKES

As Klemme farmer Renner puts it, “dead pigs don’t eat much grain.”

An outbreak of African swine fever was first discovered in China last August. Since then the highly contagious disease has decimated China’s herds — the number one pork producer in the world.

And it continues to spread rapidly to surrounding countries, places where most of the farmers run small operations that are difficult to reach to stop the disease’s advance.

Still other countries are feeling the ripple effects by halting any imports of Chinese pork, which in turn depresses demand.

Soybeans make up a significant part of pig feed, and the USDA is already predicting soybean markets will be impacted by the swine fever in Asia for the next couple of years.

“Getting rid of the disease and rebuilding the herd in a nation that consumes half the world’s pork will take three to five years, curbing demand for soybeans used in feed, according to analysts,” Bloomberg reported this week.

AND THEN THE ESCALATION

Soybean prices plunged early this week to a 10-year low after Trump’s decision late last week to impose punitive duties on $200 billion of imports from China and China’s retaliatory tariff hikes Monday on $60 billion of American goods. U.S. officials then listed $300 billion more of Chinese goods for possible tariff hikes, and China on Tuesday vowed to “fight to the finish.”

Iowa Soybean Association’s Putze says any optimism farmers felt after last winter’s apparent truce with China went out the window last week. China is increasingly turning to Brazil to import soybeans, and that country is plowing under rain forests at a record rate to meet its new trade partner’s demands.

Meanwhile, 1 in 3 rows of Iowa soybeans that had been earmarked for China now don’t have a destination beyond the bin.

“Iowa farmers are the tip of the spear on this,” he said. “If this situation is not resolved, and quickly, we could lose a generation of farmers. There will be farmers who will plant their last crop this spring.”

That sentiment was echoed this week in a statement by the American Soybean Association.

“Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting,” said John Heisdorffer, a soybean farmer in Keota, Iowa, who is chairman of the ASA.

The personal income of farmers declined by $11.8 billion through the first three months of 2019, according to the U.S. Commerce Department. A similar pace of decline is expected in the coming months, according to the Federal Reserve Bank of Kansas City.

“The domestic stress caused by the administration’s trade policy is nowhere more evident than in the agricultural sector,” said Joseph Brusuelas, chief economist at the consultant RSM. “Should the current policy pathway not be changed, the farm sector is going to experience the greatest downturn since the late 1980s, driven by widespread bankruptcies and consolidation.”

During the farm credit crisis of the 1980s, high interest rates and falling land prices led to widespread farm foreclosures. One positive difference now is that land and farm asset values have been holding their own, and “overall, farm balance sheets look pretty good,” said Kent Thiesse, senior vice president and farm management analyst at MinnStar Bank in Lake Crystal, Minnesota.

Most farmers were able to get financing to plant a crop this spring, thanks in part to the federal relief payments, but “if there’s no government assistance this year we’re going to be looking at some serious losses by fall,” Thiesse said.

Trump said last week that more aid is planned. U.S. Sen. John Hoeven, a North Dakota Republican who heads the Senate Agriculture Appropriations Committee, put the estimated amount at $15 billion.

That kind of handout leaves a bad taste in farmer Renner’s mouth. He’d rather see the market right itself. He can’t really identify when — or if — a potential tipping point might come on the calendar. He’s already calculating his costs for next year.

But for two years now, he has wondered, “How much equity are we going to burn into?

“My Dad worked for 40-50 years to build something … and have assets,” Renner said. “Yes, we’re thinking about those things. And it’s excruciating.”

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