Farmer Ethan Crow in his home in Marshalltown, Iowa.
Jacob Pramuk | CNBC
MARSHALLTOWN, Iowa — Ethan Crow says he has endured a “rough” two years.
The 32-year-old farmer, who grows crops such as corn and soybeans on land his family has held since the 1930s, has navigated a gantlet of wet land and low prices further depressed by President Donald Trump’s trade war with China.
He received a U.S. Department of Agriculture market facilitation payment, part of more than $20 billion in aid the administration doled out to farmers in 2018 and 2019 to mitigate trade war damage. While Crow said the money has proved “pretty instrumental” in helping family farms survive, he added that his community would “so much rather have a good trade package instead of an aid package.”
Crow expresses “cautious optimism” about the president’s “phase one” trade deal with China, which calls for $40 billion in Chinese purchases of U.S. agricultural goods every year. But he wants a quick resolution to an economic conflict that has made an already challenging environment for farmers even more precarious.
“We’re acknowledging the fact that it’s going to take time, and in the meantime, we’ve still got to pay our bills and keep groceries on the table,” Crow said.
Tom Steyer (L-R), Sen. Elizabeth Warren (D-MA), former Vice President Joe Biden, Sen. Bernie Sanders (I-VT), former South Bend, Indiana Mayor Pete Buttigieg, and Sen. Amy Klobuchar (D-MN) await the start of the Democratic presidential primary debate at Drake University on January 14, 2020 in Des Moines, Iowa.
Spencer Platt | Getty Images
Iowa’s agriculture industry shows just one way the tumultuous three years of Trump’s presidency have shaped the state and the country. With Monday’s first-in-the-nation Iowa caucuses, Democrats will start the process of choosing who will take on the president in November in what many White House hopefuls have described as the most consequential U.S. election in recent memory.
Polls suggest four Democratic contenders — Sen. Bernie Sanders, former Vice President Joe Biden, Sen. Elizabeth Warren and former South Bend, Indiana, Mayor Pete Buttigieg — have a good shot to leave Iowa with the most delegates. A strong showing in the Hawkeye State can give candidates a bump in fundraising and legitimacy as they claw through early nominating states in their push to challenge Trump.
Democrats have tried to appeal to potential Iowa caucus attendees who, like large shares of voters in their party nationally, tend to say they care most about health care or climate change. At the same time, they have refined their arguments against Trump, an incumbent buoyed by glowing voter views about the economy despite lackluster marks on most other issues.
The candidates’ arguments in the final days before the caucuses show the weaknesses they see in Trump’s case for reelection. They have contended Trump has not done enough to rein in health-care costs, favored corporations over workers and consumers by cutting taxes and scaling back regulations, and brought the U.S. to the brink of war in the Middle East through reckless foreign policy, among other Democratic arguments.
Joe Biden campaign sign outside of a field office in Fairfield, IA.
Jacob Pramuk | CNBC
In conversations with CNBC last week, Iowa voters mentioned a range of reasons for supporting a Democratic candidate. Bruce Ersland, a 67-year-old who lives outside Marshalltown, said after a Biden event that he leans toward supporting the former vice president. He noted that foreign policy helped Biden’s case, saying “we were a lot closer to war than people thought” following the U.S. killing of Iran’s top general in January.
Solomon Smith, a North Liberty resident whose 17-year-old son convinced him to go to a Buttigieg town hall, said he supports the former mayor partly because he seemed “more middle class” than his rivals.
Warren backers frequently mentioned her plans to root out government corruption. Sanders supporters most often cited his signature “Medicare for All” health-care plan.
“Your farms are going to hell”
While a low jobless rate and steady economic growth have buoyed Trump during his first term, few economic issues have created as much of a threat to those trends as trade.
Iowa has an economy that Iowa State University economics professor David Swenson described as “growing but not necessarily thriving.” Gross domestic product grew 1.3% in the third quarter of 2019 from the second quarter, below the U.S. rate of 2.1%.
The state had an unemployment rate of 2.7% in December. It was lower than the U.S. mark of 3.5% during the same month — itself near a 50-year low.
While Iowa is associated with farming, the state’s economy is a lot more than agriculture. Des Moines and Iowa’s other largest metropolitan areas have enjoyed a boost from the technology and health-care sectors, Swenson said. Apple and Facebook, among others, have opened data centers in Iowa in recent years.
However, the state’s manufacturing base has contracted. Stress in the agricultural economy that started before Trump’s tenure has weighed on Iowa’s economy.
The trade war added to those pressures. In 2018 alone, tariffs lopped at least $1 billion and up to $2 billion off Iowa’s gross state product, according to an Iowa State study.
The farm aid payments show Trump’s awareness of how trade could damage him politically. At a pre-caucus rally in Des Moines on Thursday, the president pointed to the new North American trade deal and the phase one agreement with China as evidence of what he has accomplished for Iowa. He argued Democrats would hurt farmers — a key constituency that Trump hopes to maintain amid trade angst.
“We’re going to win the great state of Iowa and it’s going to be a historic landslide,” Trump predicted. “And if we don’t win, your farms are going to hell.”
While the president carried Iowa by nearly 10 percentage points in 2016, the 2018 midterms showed he can still face backlash in the state. Democrats flipped two of Iowa’s four House seats that year in campaigns fueled by resistance to GOP efforts to repeal the Affordable Care Act, among other issues.
Both of the House members who beat incumbent Republicans — Reps. Cindy Axne and Abby Finkenauer — have endorsed Biden and argued he can help candidates down the ballot. The state’s other Democratic congressman, Rep. Dave Loebsack, who will retire at the end of his current term, has backed Buttigieg.
Pete Buttigieg and his husband Chasten wave following a campaign town hall in North Liberty, Iowa on Jan. 27, 2020.
Jacob Pramuk | CNBC
Axne and Finkenauer, who could both face competitive reelection bids this year, have both spoken frequently about agriculture issues.
“We currently have somebody right now sitting in the White House who has turned his back on Iowa farmers who are quite literally my friends and family,” Finkenauer told the Telegraph Herald newspaper in Dubuque after an event with Biden last month.
While Democratic presidential candidates have not necessarily made trade and agriculture their top priorities in Iowa, they have touched on the issues facing farmers in their proposals to boost rural America. They have broadly called to transition to more sustainable farming and better enforce antitrust laws to fight consolidation in the industry.
Warren and Sanders have gone as far as pushing to break up existing agricultural behemoths.
Politicians locally have kept a keen eye on how trade and antitrust enforcement affect the agriculture industry. J.D. Scholten, a Democrat running for Congress in Iowa’s 4th District, which has the second-most farm producers of any congressional district, criticized Trump last week for trying to unilaterally root out China’s trade abuses.
But he stressed to CNBC that tariffs are not the only factor damaging farmers.
“Even if they went away tomorrow, farmers are not in a good shape. And that doesn’t get talked about enough. … Honestly, a lot of these presidential campaigns, or candidates, at first only talked about the tariffs. Market consolidation, we have to deal with,” Scholten said.
Even so, farmers hope the tariffs will relieve some of the pressure they face. Democratic politicians in the state have concerns about whether China can or will follow through on its commitments to buy $40 billion in U.S. agricultural products annually.
Crow, the Marshalltown farmer, said a fully implemented trade deal would be a “major success” for farmers.
“We just need to know that we’ve got the finances to be able to cover our bills here. … That we can make an honest living with free trade, with the help of free trade,” he said.
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