U.S. ranchers feel jitters amid trade tensions

2018-09-14 02:57:53 GMT2018-09-14 10:57:53(Beijing Time) Xinhua English

The uncertainty caused by the tensions in trade relations between the United States and other economies can be easily felt among ranchers in the southern state of New Mexico, even though the direct impact so far does not seem to be substantial.

Bill Sauble, who operates a cattle ranch in Maxwell, New Mexico, said he has not seen much effect on his calf sales from the tariff measures related to the recent trade frictions, but he is worried that the weakness in overseas demand will eventually trickle down to impact his sales.

"Currently I see minimal impact, but where I do have concerns as it goes forward, the tariffs will shut down imports to China and other countries and the backup of meat will have an adverse impact on prices here," he said.

Tariffs levied on U.S. imports from Canada, Mexico, China and the European Union have prompted retaliations, which have already had a substantial impact on some businesses in the agricultural sector in New Mexico. Dairy products and pecans have experienced declines in orders, as have several manufacturing industries.

Beef cattle ranchers in New Mexico are still unsure how the trade frictions will affect their businesses.

"Over time there's great fear at the national level that ranchers will be impacted with tariffs at the commodity level," Caren Cowen, executive director of the New Mexico Cattle Growers Association, told Xinhua.

Most of the cattle from New Mexico do not go directly to beef processors, known as feed lot markets. Rather, the ranchers there raise calves and sell them to ranches in other states where they mature for a period of time. The effect on this first stage of the beef industry chain is as yet unclear, but ranchers believe that if the tensions go on they will eventually be impacted.

The ranchers are also worried that the trade tensions may prompt international buyers to find permanent replacements for U.S. exports. It is believed that some countries do have the will and ability to replace U.S. presence in certain export markets, including China.

The Trump administration proposed a 12-billion-dollar bailout with subsidies for agriculture in August. The plan of the Department of Agriculture indicated that the package would include programs for market facilitation, food purchase and distribution and trade promotion.

While the details are still to be clearly defined, it is most likely to be in the form of a one-time payout. The move is seen by many as more political than economic. Farmers overwhelmingly voted for Donald Trump in the 2016 presidential election.

The idea, however, is not well-received by many ranchers who find the idea of subsidies contrary to the independent nature of their cattle ranching tradition and would rather keep their existing markets.

"It seems like it would be really tough to take subsidies and I know a lot of farmers are giving up their subsidies," said Tom Spindle, a rancher in Stanley, New Mexico. "It's kind of a hand-out and, generally, we are not the kind of people that take hand-outs."

In addition to the economic consequences of tariffs, there is a threat to a life-style that has existed for generations.

Most of the cattle ranches in New Mexico are family- rather than corporate-owned. Cowboys making a living in the dry and dusty high desert have come to be an icon, though life is not easy for them.

Maintaining an economically-viable ranch business is difficult in the best of circumstances. The high altitudes make the winters very cold, and the summers blazing hot. There is not much rain here. The cattle herds sometimes have to be fed with bales of grain, leading to higher costs. With the declines in market demand, this way of life could be further jeopardized.

Sauble doesn't see the subsidies as a remedy for the long-term impact of the trade frictions. "I do not believe that subsidies are a viable option. I think they ultimately cannot substitute for an open free market," he said.

 

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