A financing drought may crack farmers' loyalty to Donald Trump in 2019. I'm Gina Chon, Washington columnist for Breakingviews. Expert markets for a number of crops have evaporated under the US president's trade war. That's left growers struggling even more than before. Sales of soybeans, the biggest US agricultural export to the Middle Kingdom, have fallen by 98% through mid-November of 2018.
Yet people in rural America have largely stuck by Trump. Farmers believe in his efforts to take on China and believe he'll deliver a good trade deal for Americans. They'll take heart in the US-China detente reached in December at the G20 Summit.>> Something which is great for China and great for the United States.
>> The first major purchase of American soybeans by Chinese buyers since the summer of 2018 occurred in mid-December. Yet Beijing has been silent and its 25% tariffs on the product remains. I also talked to farmers who said that credit has become tight and many have used what liquidity they had.
In early 2019, they'll be looking for financing for their next harvest. That will be hard to come by because low commodity prices have already inflicted pain and tariffs have made things worse. The US Department of Agriculture forecast that farm net income in 2018 will almost halve compared to five years ago to $66 billion.
At the same time, farm debt has risen by 30% to $410 billion. Interest rates and delinquencies on agricultural loans have been steadily increasing. Bankruptcies in the Midwest have more than doubled compared to two years ago. If a quick resolution to trade tensions aren't found soon, farmers' doubt about Trump may start to grow like a weed.