Mark McHargue: Well, I think we already know what would happen to Nebraska agriculture, because Trump did introduce tariffs last time around and with China, it was devastating. I think we can safely bet that given a substantial tariff, the retaliatory part is what affects agriculture.
Dale Johnson: Retaliation, tit for tat tariffs. How would that play out?
McHargue: We put a tariff on them, and they'll turn around and say, Well, if you're going to charge us a tax/tariffs on the products that we are sending to you, we're going to put a tariff on the products that you're sending to us. So ultimately, that raises the cost of products.
Johnson: As the leader of an ag group, how does that make you feel taking the hit, because farmers can't walk up and say, we're going to raise the price of a bushel of corn or a bushel of beans, not being able to do what Walmart, Autozone and Home Depot can do.
McHargue: Well, and I think that's the reason we will have significant conversations with the administration, and so we are trying to be careful not to overreact to just statements that the president throws out there, because we have traditionally had a good working relationship with President Trump relative to the ag sector when he was when he was in office. Zippy Duvall, our American Farm Bureau President, was in the White House pretty regularly. I'm the chairman of our trade committee at the national level, and we will continue to have those kind of conversations. You know, I think if we have to do a significant tariff with a country, a retaliatory that knows that potentially will affect agriculture, last time President Trump did come in with some significant payments because he knew that it was going to affect agriculture, and he knew that he needed to protect our farmers or ranchers. Will that happen again? That's probably one of the questions, if he does something that's significant, we don't know for sure. We don't know if the money is in the coffers to actually do that. Quite frankly, though, we would rather have our dollars come from the market and not from the government.
Johnson: Are there alternative countries for Nebraska exports of agricultural products, other than Canada, Mexico and China?
McHargue: Yeah, oh, absolutely 100%. I had a chance to go to Indonesia this summer. Indonesia has 300 million people. They are desperately in need of increasing their protein. For their country, their new president has stated that he wants to spend $4.5 billion increasing protein in their school food program. Because they need protein. We can sublime that protein through soybean meal, through milk products. But right now they don't have a real great trade environment. So we were over there working on, how would we establish, potentially, a free trade agreement with Indonesia. We have trade agreements with a lot of different countries, but when you look at Mexico and Canada, they're our primary trading partners, and so we have a trade agreement with them. And so when you have President Trump talking about putting additional tariffs on our neighbors that we have free trade agreements with that we kind of work out that, right? I mean, that's the reason you have a trade agreement, is to work out the semantics and the details of how you're going to do trade. Well, I would say more than likely that probably violates some of our trade agreements that we would have with our closest neighbors if we immediately put additional tariffs on Mexico and China.
Johnson: And Brazil is out there licking its chops. It would be the biggest benefactor of Trump tariffs. In calendar year 2022 less than 3% of Brazil's corn shipments went to China last year. That surged to 29%
McHargue: So you look at our trade imbalance now that we have in agriculture in the last two years, which we have not had a trade imbalance in agriculture for a number of years. That is largely because China has decided to really invest in Brazil and bring grain from Brazil instead of the U.S. And so that's just a byproduct of tensions in trade with a particular country. Brazil is a country that has the ability to grow a tremendous amount of soybeans and corn, and actually livestock as well. And so they are definitely, definitely a competitor to the U.S.
Johnson: Peel back the curtain. What's the shape of farmers right now as we speak?
McHargue: Right now as we speak, I think all you have to do is look at your major equipment manufacturers that have laid off significant employees because we're not buying equipment right now. Why are we not buying equipment right now? We're short cash. I mean, there just has not been significant profitability in the ag sector this year. It doesn't look like it's going to get any better next year. So what do we do? We pulled into things that we can control, and so you'll spend less money on equipment, probably a little less money on inputs where we can. But again, you start talking about tariffs, if there's a retaliatory tariff, we buy a lot of our fertilizer from overseas, and so tariffs can potentially increase the price of fertilizer as well. So not only the products we sell, but the products we buy could be affected in a tariff conversation,
Johnson: Nebraska Farm Bureau President, Mark McHargue joining me for the conversation. I'm Dale Johnson.