Season 1 Episode 7
Ben Binversie:
When you think of Iowa, one of the first things that come to mind, I bet, is corn. But how much of the Iowa economy is actually invested in corn? And with corn and soy fields all over, is there any room for more sustainable, local agriculture?
[00:00:30] This is All Things 51²è¹Ýapp. I'm your host, Ben Binversie. On this week's show we'll talk with Jordan Scheibel from the class of 2010, who, after getting involved with local agriculture as a student, decided to plant himself here after graduation, and now runs an organic farm on the outskirts of 51²è¹Ýapp.
Then we'll talk with Jack Mutti, emeritus professor of economics about the impact of tariffs on the Iowa economy.
This week's show is coming up next after a word from 51²è¹Ýapp College.
[00:01:00] The information and opinions expressed in this podcast are solely those of the individuals involved and do not represent the views of 51²è¹Ýapp College.
The small size of 51²è¹Ýapp is an adjustment for many students who come from big cities. For Jordan Scheibel though, it was the opposite. He came from the little town or Morris, Connecticut, about a quarter the size of 51²è¹Ýapp. What struck him the most, though, wasn't the hustle and bustle of 51²è¹Ýapp's vibrant downtown, [00:01:30] but the vast agricultural landscape.
He took to walking, following the railroad tracks and venturing far from campus. He developed an interest in agriculture and got involved with the student garden on campus and the community garden at Miller Park in 51²è¹Ýapp. But Jordan didn't always care so much about local food.
Jordan Scheibel:
I grew up with a very limited diet. Like I was a very picky eater. So I had no interest in vegetables from like an eating standpoint. But then my diet started to expand a little bit and then I got more interested in vegetables from an eating standpoint. [00:02:00] And then that kind of leads back to gardening a little bit.
Ben Binversie:
Can you take me back to getting involved with the garden and how that actually happened and what it was like when you were a student here?
Jordan Scheibel:
Yeah. So it used to be on Park Street where the three language houses are now. So it was between faculty house and the reading lab. So it was just like two ... I guess there used to be buildings there and they had put the garden on it. So it's kind of like two empty lots and the garden was on one of those lots.
And I just walked by and there [00:02:30] was a sign out front saying, "Student garden," and it had an email address on it. I think it was like a defunct student group as it turned out. So I was just like, "Oh, cool, garden." And I emailed the address and they were like, "We don't manage the garden anymore, but this is who we think does." I think it was Tom Christianson, I think was his name.
And I emailed him and he was like, "Oh, do you want to do a work day? Yeah, let's do a work day." This was like April or May. So it was like spring had started and nothing was going on in the garden.
So we went in and dug one of the raised beds out of weeds and planted [00:03:00] some arugula and some other stuff, and then I left for the summer. And then I came back in the fall, and I think we kind of organized some fall work days, that fall and then in the spring. So I kind of got increasingly more involved and then Tom had graduated, so it basically fell to me to run the garden. It was all pretty informal.
And I think around that time we started a student garden group, you know, and got a garden email and stuff, because up to that point it had been managed by one of the environmental groups, which is now long defunct. So [00:03:30] there was like kind of this transition where it actually became its own student group.
And this was also around the time that we were pushing for an eco house, so my second year was the group that got together to do eco house. So it was kind of like that group of people was also involved in the garden.
Yeah, so a lot of stuff happened that second year of us trying to like kind of like reclaim the garden from weeds and like pull up old landscape fabric. And I think that summer, the summer before my second year there had [00:04:00] been a group project. It was project for peace. Yeah, and so that group got a grant to do ... basically to put more local food into the schools and so on. And they acquired a greenhouse around that time and that was the greenhouse that was there that they installed there.
So yeah, those things started happening then. And I sort of ... I went to 51²è¹Ýapp in London in the fall of 2008, and when I got back it was like my garden. I started pretty much running it from then on. And that summer after my junior year, [00:04:30] we did the Sarah Boyer Community Service Award. So there was a group of us that got together and did that. We started the community garden at Miller Park, Lake [inaudible 00:04:39], which is still there.
Ben Binversie:
Okay.
Jordan Scheibel:
And we also managed the student garden. So I was there from ... I got back to 51²è¹Ýapp in January and I stayed all the way through my final semester my senior year. So I got to see the garden through the entire growing season. That was the first time that I had managed a garden through its entire ... Because like before I would plant something and then leave or ...
Ben Binversie:
Come back in the summer and see what happened?
Jordan Scheibel:
I'd come back. Yeah. And then [00:05:00] I basically didn't leave 51²è¹Ýapp for an extended period after that except for holidays, because I had moved into a house in June of 2009, which is right before my last semester at 51²è¹Ýapp. So I had moved into the house that I still live in now.
Ben Binversie:
Oh, really?
Jordan Scheibel:
Yeah. So I pretty much settled in 51²è¹Ýapp at that point. So when I graduated I was still kind of taking care of the student garden, and I was trying to get other people to like take over. And that is when I got involved with the GALFA interns, [00:05:30] which they still are. I don't think they're called GALFA anymore. GALFA just stood for 51²è¹Ýapp Area Local Foods Alliance. And it was just kind of a name that John [Ellison 00:05:38] used to do his work.
And at one time it had a paid staff person. They actually had like a one or two-year grant and they had a paid staff person. But after that all they did was they funded one or two summer apprentices, and their job was to take care of the student garden mainly and then do some other things. And so I got involved in like helping to select people for that, along with Ann Brow. And so I did that for [00:06:00] like three or four years after I graduated.
And then I was kind of in this supervisory role where I was like helping get people up to speed about how to manage the garden. So I can think of at least three sets of apprentices that I worked with, possibly four that I worked with over the years. And the were working for the summer, but then the expectation was, "Yeah, but once school starts you'll kind of like also help manage the garden too," and that didn't always happen, because they had their own activities and stuff.
Ben Binversie:
Right.
Jordan Scheibel:
So the garden was usually well kept during [00:06:30] the summer, and then like fell off during the school year. And that was kind of the pattern for the years leading up to the new garden starting.
Ben Binversie:
Take me through the decisions to stick around 51²è¹Ýapp after you graduated and plant your roots here.
Jordan Scheibel:
Yeah. So my wife, Emily, we got together in 2007, so when I was a second year and she was senior at 51²è¹Ýapp. So she graduated, but she had been running the what is now called the Liberal Arts and Prison Program [00:07:00] as a student. And she wanted to do it full-time. And she had a dean, Kathleen [Scaret 00:07:06] who now has since moved to ... I forget where she went. Like to Vanderbilt or something. But she was very supportive and she basically got her a job, to run the prison program full-time and to start a credit program, which is what she really wanted to do.
And so she was staying in 51²è¹Ýapp and then I was finishing school. When I finished school she had a job and we had moved into a house together with our housemate Kirsten and her daughter, Lydia, and we still live there. So if that hadn't have happened, [00:07:30] we probably wouldn't have stayed here. I wouldn't have stayed in 51²è¹Ýapp. It's like, "Okay. We're here."
And so I would run the student garden. We also had funding to pay for like our food over the summer, and so we bought CSA shares. So I had a CSA share from 51²è¹Ýapp Heritage Farm. And that summer I ate from the garden and the CSA share and it was like my first summer of eating locally and understanding the seasons and I got introduced to tons of vegetables, Kohlrabi, rhubarb, turnips, things I'd never eaten growing up. And like cooking and like [00:08:00] being in my own house and cooking.
So that was a real introduction to eating locally and seasonally and gardening. And that fall there was couple of 51²è¹Ýapp students, Thomas [Agrin 00:08:12] and Allie [Ginadin 00:08:13] who now live in Iowa City. And Allie works for New Pioneer Co-op. And Thomas is a painter and a muralist, and he's painted a ton of murals for New Pioneer and in Iowa City. They worked for 51²è¹Ýapp Heritage after they graduated. And I knew them. And Allie approached me and said, "Hey, [00:08:30] 51²è¹Ýapp Heritage is starting their fall share and they need workers in the fall to harvest carrots and beets and storage crops and stuff," because that was the first share they really like had a huge amount of storage crops.
And so I got hired to work like 10, 12 hours a week that fall at the farm. And so that's when I started working at 51²è¹Ýapp Heritage while still doing gardening stuff and finishing my last semester in college. But I knew that Thomas and Allie were leaving to go to Iowa City after the end of the growing season. So I knew that 51²è¹Ýapp Heritage was going to be looking for employees. [00:09:00] And I was graduating mid-year and I needed a job. And this was like the depth of the recession too. There were really no jobs at all. Like even like ... There was just nothing.
And so I said, "Hey, I'm available if you need a full-time worker." They're like, "Yeah, sure." So I started working full-time there in April, 2010. So that was right after I graduated. And I stayed working there for three more years. And that's really how I got introduced to organic agriculture. And through 51²è¹Ýapp Heritage I met ... I got hooked up with PFI, Practical Farmers of [00:09:30] Iowa, started meeting other young farmers who are in that network. I got hooked up with Midwest Organic ... The Midwest Organic Conference in LaCrosse, Wisconsin, which is the biggest organic farming conference in the world. Well, not the world, in the U.S.
And I went there on a scholarship and I met people who are similar to me in that they had no farm background and they didn't own any land and they were still farming. And they're just like doing it. They're just like, "Yeah, I'm leasing like a half acre here and a half acre here and like running the CSA." And I was like ... You know, I was really [00:10:00] blown away by people's gumption to do that. And so that really got me thinking, because I came from a nonfarm background. I didn't own land. I wasn't from here.
There was kind of like barrier where I just felt like I couldn't farm. You know, it wasn't possible. Like it would be very ...
Ben Binversie:
Right. Even if you wanted to.
Jordan Scheibel:
Yeah. And it was like I didn't know if I wanted to. It felt like very presumptuous, like I'd be like a really poser if I thought I could farm. I don't have any of the things that you're supposed to have. But there were people who were doing it. So that really started to break the psychological barrier for me. But that was [00:10:30] basically how we ended up in 51²è¹Ýapp, yeah.
Ben Binversie:
Can you tell us a little bit more about Middle Way Farm and how that's going for you?
Jordan Scheibel:
Yeah. So Middle Way Farm is, I lease land from the Lacina family. So they're the fourth ... I guess Joe is the fourth generation to live on the farm. And they have ... Yeah, so pretty deep roots in this area in Tama, Tama area. So it's just north of 51²è¹Ýapp. I originally got hooked up with them because Molly [Wrightout 00:11:00] who was [00:11:00] my year, got hired to run an artists residency on their farm, Grin City Collective. So Joe and Laurel live on the farm now and Tom and Alisha are Joe's parents, and they moved off of the farm.
So Joe went to Micah, the art school, and he used to invite his friends back to the farm for the summer just to like do art. And so they had this kind of informal artists residency going, and then they kind of formalized it. They kind of kept making it more and more [00:11:30] professional and like an actual thing. And then they hired Molly to like run it and actually make it more than just a summer residency, actually have like a spring and fall residency and expand it beyond college students, which originally it was just ... originally it was just like for Iowa college students, and then they would do like Illinois college students. And a bunch of 51²è¹Ýapp people went through that iteration, and then they went through this later iteration of Grin City too.
But at this point they were in this real like expansion phase. "Oh, we've got this whole farm property. What are we going to do?" [00:12:00] And Molly knew me. She knew I worked for a farm and so she invited me and Emily over for dinner because she wanted to talk to Emily about doing work in the prisons and she wanted to talk to me about doing a garden. And I'm like, "We should just start a garden." I mean, "Why haven't you started a garden already?" And then the next week we were out plowing up a space for a garden with Tom. Tom was like, "Do you know how to drive a tractor?" I'm like, "Sort of." So I get on and he's teaching me how to use a plow.
So we plowed up a pretty good area, like a 2 or 3,000 square foot area. And that next year I managed the garden there, pretty much on a volunteer basis. [00:12:30] I was still working at 51²è¹Ýapp Heritage and doing other stuff. But that was around the time I was starting to think about did I actually want to farm? And I kind of had to make a choice. I was doing some nonprofit work for Imagine 51²è¹Ýapp. I was still working on a farm, and I kind of thought ... saw that there were these two parallel tracks where I could kind of do nonprofit work or I could farm. And I decided that I like farming because the results are far more tangible.
And it was like the consequences ... Everything was kind of more real and the consequences were more immediate rather than like I would do things when I was doing the nonprofit work, and it just [00:13:00] wasn't clear if I was having any impact or not. So I chose farming and I went to Tom and Molly and I said, "I want to like start an actual like farm, like a commercial farm." And we talked about, "Well, should it be part of Grin City or not?" And we decided that it should be an independent business and I would just work in partnership with Grin City. And so that was Middle Way Farm when I started it.
And my first full growing season was 2013. So I quit 51²è¹Ýapp Heritage and started running the farm part-time. I had another job for awhile. [00:13:30] So, I started really small, like just a third of an acre, made a ton of mistakes. I had like 10 CSA members the first year, and I did the Farmer's Market. And so each year I've kind of grown a little bit, expanded my land base and my CSA membership. And in 2016 I started farming full-time. So I quit my other job. So for the last three years I've been faring full-time.
And at this time I have about two acres of produce and about ... It depends on the season, but about 60 to 80 CSA members, [00:14:00] and then I do the Farmer's Market and a few other outlets. And it's diverse, highly diverse produce, like 30 to 40 different varieties of things because I'm trying to supply CSA and market from like May through November.
Ben Binversie:
Being here in 51²è¹Ýapp as a farmer, how have you come to understand and appreciate the value of local foods and your connection to the land?
Jordan Scheibel:
There is a quote I really like, which is, "There is no more intimate way to relate to your environment than to eat from it." And I think part [00:14:30] of the ways that people feel alienated from ecology and the places around us is because we no longer look to the area around us to actually feed us. It's just sort of this backdrop and then we think food comes from somewhere else.
Ben Binversie:
A magical place.
Jordan Scheibel:
Yeah, it just kind of shows up. It's just there. We don't think of the land around us a providing for us. And like pretty much for all of human history, up until, you know, mid-century people had this real sense of connection to land, that it was something that you depended on. And I think [00:15:00] we don't think of depending on anything except maybe electricity and, you know, things like that. We just don't think of the land ...
Ben Binversie:
Our Smart phones.
Jordan Scheibel:
Yeah. We don't think the land is providing something for us. So that's one aspect I think that local food is that it re-integrates us back into our environment. I mean, like for me, local food, when I cooked with it, it's a different product. Like it tastes entirely different to me and it makes ... I get so much more pleasure out of eating locally produced food than I do out of eating mass produced food, [00:15:30] even organic mass produced food, which I buy.
And I think someone like Kamal, who is a chef at Relish, he was buying local food well before it was trendy, because he just wanted the best ingredients. And I think that that's really revealing is that a chef who didn't ... You know, he didn't really care, like you'll buy stuff from wherever. But it was like if you wanted to get the stuff that tasted the best so that you could make the best food, it had to be local.
So, I think, yeah, local food reconnects us to our environment and it reconnects [00:16:00] us to food as an actual like life sustaining activity rather than something that we just kind of like have to get through so we can get to more interesting stuff.
Ben Binversie:
Right.
Jordan Scheibel:
You know. I think as food as being really central to my life rather than kind of, "Oh, well I've got to like cook dinner quick so I can go do the stuff that I really want to do."
Ben Binversie:
Right.
Jordan Scheibel:
Like for me, like food is an organizing ... it's the way that I give love back to people. It's the way that I take care of myself, take care of the people around me. Yeah.
Ben Binversie:
Yeah. [00:16:30] It's a more wholesome way of living, I think. So thanks, Jordan, for talking to me. I really appreciate it. And I'll see you at the Farmer's Market.
Jordan Scheibel:
Yeah, you're welcome.
Ben Binversie:
Jordan Scheibel graduated from 51²è¹Ýapp in 2010 with a history major and a green thumb. He now runs Middle Way Farm, an organic farm just east of 51²è¹Ýapp. Learn more about Jordan and his farm on our website, 51²è¹Ýapp.edu/podcast, or check out his farm at Middlewayorganics.com.
And if you're feeling inspired after listening to Jordan talk about the value of local food in [00:17:00] his life, share your own stories about what food means to you. Write me or send me an audio clip at Podcast@51²è¹Ýapp.edu.
Last week in 51²è¹Ýapp there was something in the air. Snow and wind, yes. But also kindness. And not just your typical Midwest nice kind of vibe. It was something more. It was The Ten Day Of Kindness, organized by Laurie Myren Manbeck, class of 1986. [00:17:30] The Ten Days Of Kindness featured over 45 events with loads of music, movie screenings, a potluck and tons of art.
The Polar Vortex managed to derail a few of the events, but kindness won the day, or most of the days, anyway.
Cornelia Clarke grew up in 51²è¹Ýapp and graduated from the college in 1909. As an only child, Clarke spent much of her childhood in nature. She learned photography from her father, experimenting on her [00:18:00] pet cats. And then turning her lens to the natural world. Becoming a well-known nature photographer. More than 1200 of her photos were published in newspapers, journals and magazines throughout the country. Upon her death in 1936, she bequeathed more than 3,000 negatives to her friend and 51²è¹Ýapp college professor, Henry [Conard 00:18:18]. When [Conard 00:18:20] left 51²è¹Ýapp for the University of Iowa, he took Clark's photography with him, using them in his botany classes.
But when he retired to Florida, he left the bulky negatives behind [00:18:30] stacked up in boxes to be forgotten. At the turn of the century when the University of Iowa ended its botany department, the glass plate negatives were discovered and rescued by the State Historical Society. Archivist assumed the negatives belonged to [Conard 00:18:44], but in 2017 volunteers at the 51²è¹Ýapp Historical Museum discovered that the negatives actually belonged to Clarke.
The museum scanned 100 of those negatives and put some on display at the Stewart Gallery in the 51²è¹Ýapp Art Center. The negatives, [00:19:00] now almost 100 years old, show signs of their age and poor storage conditions, but Clarke's keen eye and attention to detail are still visible. At a time when nature photography was a tad bit more cumbersome than using a selfie stick or a digital camera, Clarke impressively wielded her camera to reveal the life stages of the plants she caught on film.
The images remind viewers of nature's cycles and the tenuous life of the images themselves, once forgotten, now discovered.
[00:19:30] In other museum news, if you're in 51²è¹Ýapp, head over to the Drake Community Library to check out a new Smithsonian traveling exhibition. Hometown Teams: How Sports Shape America, opens Friday, February 15th and runs until April 20th. There are also two powerful new exhibitions at the Faulconer Gallery. Reckoning With The Incident: John Wilson's Studies For A Lynching Mural, and Dread And Delight: Fairytales In An Anxious World.
If you're not in 51²è¹Ýapp, fear not. We'll have a story about these [00:20:00] exhibitions on the podcast in a few weeks. But if you can make it over to check them out, it's well worth the visit.
Although Jordan's Middle Way Farm isn't shipping his crops across the world, many farmers in Iowa do just that, so they've been directly affected by the ongoing trade disputes. Around 90% of Iowa's land is devoted to farming. In driving down I-80, you could be forgiven for thinking that Iowa is just one giant cornfield. It's easy to get lost in [00:20:30] the maze, but you might be surprised that only 3.5% of the state's GDP is directly related to agriculture.
When you throw in supporting industries, that figure rises to about 16%. So how big a part of the Iowa economy is agriculture, really? Jack Mutti, Emeritus professor of economics at 51²è¹Ýapp joined me to sort through all the noise about trade wars and understand how tariffs are effecting the economy here in Iowa and across the country.
Jack Mutti:
Agriculture isn't the only [00:21:00] thing going on in Iowa. In fact, if you go to the web page for the Iowa Economic Development Authority, they'll be telling you we're actually a pretty well diversified economy here because we've got other sorts of activities going on where we're national leaders as well.
So, for example, the insurance industry. We've got 51²è¹Ýapp Mutual here, Principle Financial in De Moines among others. We like to brag that we have the lowest tax on insurance premiums of any state in the nation. So we [00:21:30] attract a lot of insurance activity here.
There's clearly been a lot of action getting companies like IBM and Google and Amazon, the electronic data storage elements that we can see, the big units that are sitting out there on I-80, that would be another place that's created a lot of what we could even refer to as high tech sort of activity.
Then there's renewable energy. We're number one in ethanol, we're number two in biodiesel, we're number three [00:22:00] in wind power. So those are all potentially items of the future. I'm not sure how we would want to characterize all that.
But we also have manufacturing. When we look at actually what gets manufactured, though, if you look at food processing or heavy equipment or chemicals, herbicides and fertilizers being made, a lot of them link to agriculture. So it's not as if agriculture is this real tiny element that [00:22:30] doesn't have other tie-ins to the rest of what's going on in Iowa.
So from that standpoint I think that we could still say agriculture is very important, especially in terms of what does Iowa sell to other states or other countries that let us buy things from other states and other countries? So agriculture would be one of the important exports there.
Ben Binversie:
Speaking of exports, who are our international trading partners in the agricultural sector?
Jack Mutti:
Yeah, so if we look at agriculture like sports, [00:23:00] our number one customer in 2017 was China buying about 22 billion dollars worth from the U.S. Then number two customer was Canada buying a little over 20 billion, and the number three customer was Mexico buying almost 19 billion. So those three countries are an important slice of the market.
Ben Binversie:
Then I guess it makes sense that the primary targets of tariffs have been China, Mexico and Canada. Can you take us through these tariffs and what those [00:23:30] countries have done in response?
Jack Mutti:
Well, let's just walk through sort of three different disputes that are going on right now, because I think it's sort of instructive to say, "Well, how have other countries responded in these disputes?" So one of those that we want to look at is something that occurred in April of 2018 that the United States said on national security grounds we're going to impose restrictions on imports of steel and aluminum. So we put on a 25% [00:24:00] tariff on steel and a 10% tariff on aluminum.
One of the countries affected was China. We provided a delay while we negotiated further with Canada and Mexico and the EU, but by June 1st they also were affected by those tariffs on steel and aluminum. So we clearly have got a fair number of people riled up over this issue.
So if we look at what did they choose to do in response. So China responded [00:24:30] immediately with a sort of tit for tat strategy saying, "If you're affecting this much of our trade we'll affect that much of your trade." And the products they targeted right off the bat were pork. So they put an additional 25% tariff on pork. The original tariff was about 12% on frozen pork, which is most of what we send them. And they also put a 15% tariff on ethanol, an additional 15% on top [00:25:00] of the 30% from the previous year.
So those clearly were going to affect the agricultural sector. They also addressed fruit and nuts, things that aren't so big in the Iowa agricultural story, but for California and other places that would be an important element to look at. And they hit steel products coming from the United States as well.
So then on June 1st when we affected our NAFTA partners, Mexico [00:25:30] and Canada, Mexico responded with a 10% tariff on pork from the United States and they raised it to 20% by the end of July. Now in one sense it's sort of interesting that Mexico did not immediately put a tariff on soybeans or corn, things that they could use to make feed to raise their own pork. And so they're basically saying, "Well, if we can bring the feed in, we can create employment for Mexicans and we'll just keep the U.S. pork out [00:26:00] so it's not competing with the Mexican farmers who are feeding out the pork instead."
So interesting strategy that looks like it had an economic rationale if you're trying to protect jobs in Mexico, that probably was a good way to respond.
Canada responded a little bit differently. They imposed a 25% tariff on steel coming in from the United States, so that looks sort of like tit for tat. But then they picked a lot of other [00:26:30] products that we might wonder, "Well, this looks like a real grab bag of items that they choose to pick." But if you look at the Canadian commentary, they basically said, "Well, we're going to pick items that we think will be most important politically. So if Paul Ryan as Speaker of the House, produced pickles in his district, we're going after pickles. And if we have Mitch McConnell from Kentucky producing bourbon, we're going to go after bourbon. And if there are [00:27:00] swing states like Pennsylvania and Florida that we know the Republicans want to hold on to, we're going to go after orange juice and we're going to go after Hershey's Chocolate and things like that."
So it looked like a strange collection of items, but probably it was intended to racket up the political pressure to say, "We should get this resolved, that this is an outstanding irritant here,"
If we look at that case, though, we would find that the United States [00:27:30] eventually did sign an agreement with Mexico and Canada that's essentially replaced or changed NAFTA around, but they didn't deal with U.S. national security restrictions on steel and aluminum and they didn't deal with Mexican retaliation on pork. That's still there. That still would be a disadvantage in trying to get access to the Mexican pork market.
So that's about 40% [00:28:00] of U.S. pork exports are now under restriction, either by Mexico or by China. Iowa state made some calculations and said that has resulted in the drop in the value of a hog by about $18 per hog and if this lasts a whole year we would be losing over two billion dollars from that sort of restriction.
So that's a significant story that says you might hope there are going to be future negotiations to resolve [00:28:30] that, but sort of the leverage to try to get a bigger agreement seems to have disappeared a little bit if this Mexico, Canada agreement has been signed and this is not part of it. They sort of ignored that or swept it under the rug.
Ben Binversie:
So that's the first issue. Then we also have the issue of tariffs levied against China because of inadequate protection of U.S. intellectual property. When China allows American firms to do business in their country, they often require that they share their technology.
Jack Mutti:
This [00:29:00] was part of a Chinese development strategy. They had a very flashy idea of, "Made in China 2025," whereby 2025 they wanted to be the number one producer in the world of eight high tech areas that are potentially areas where the United States also might be number one or toward the top right now. And it looks like they would be targeting the U.S. position directly.
So, probably the U.S. [00:29:30] looked on firmer rounds on that particular argument. If we said, "Well, what are the industries of the future we should be preparing for versus sunset industries that are past their prime?" So, the United States said, "We are going to impose restrictions on 50 billion dollars worth of Chinese trade."
And of course, this is a process where you release a list that says, "Here are the goods we are considering. We hold hearings and other groups can come in and testify why that's a good target or a [00:30:00] bad target and whether they need a waiver and those sorts of issues."
Ben Binversie:
So it started with the U.S. putting restrictions on imports from China and China retaliated. And importantly for Iowa, they targeted U.S. pork imports with an additional 25% tariff, which brings the overall tariff on pork above 60%. At the same time they added 25% tariff on U.S. soybean imports. So, a big impact on Iowa's economy, potentially. What other industries in Iowa might be [00:30:30] affected by these tariffs?
Jack Mutti:
I think that it would be somewhat less direct, I mean, if we said, "Well, what's going to be the effect on insurance companies in 51²è¹Ýapp or what's going to be the effect on McDonald's selling hamburgers in 51²è¹Ýapp," or something like that.
I think there it would be more a matter of are we going to have a downturn in worldwide economic activity and are we more likely to have a recession? And that [00:31:00] could cut across the board to lots of other industries. But that's looking out much further into the future.
Ben Binversie:
On a related note, what is the impact of that uncertainty on the agriculture sector?
Jack Mutti:
It's clearly a big element of uncertainty not knowing what's going to come next. I mean, the ag sector was clearly warning the president about wading into an issue that has long term consequences. And they were reminding [00:31:30] him, "You've got remember what happened when the United States imposed an embargo on sales of grain to the Soviet Union back in 1980. How long did it take us to re-establish a reputation as a reputable supplier of commodities to world markets?" Or we embargoed sales of soybeans to Japan in 1974.
So all of the times the United States has said to other countries, "Well, you ought to have freer trade. You ought to rely on the market to acquire these goods on a reliable basis [00:32:00] and a cheaper basis than if you try to produce them in a protected home market," we undercut our story a lot when we say, "But actually, we're not going to sell to you." Or, "Actually we are essentially going to give people an incentive to look elsewhere for their products." So I think that's one of the issues that is going to be relevant over the long run.
So in the short run there's a [00:32:30] lot of uncertainty, but even in the long run there's an uncertainty of how easily can you re-establish markets that you had in the past?
Ben Binversie:
So in the fall the administration announced a compensation package that would provide relief to farmers who have been affected by these tariffs. It seems the first round of relief will be around five to six billion dollars in aid. How will this work and will it be enough to make a difference for farmers?
Jack Mutti:
So some form of compensation at least makes people feel a little better, [00:33:00] that they might not have volunteered, be the soldiers in this trade war going on. So what can you do to try and cover some of those losses? And so this program that has been made available, The Market Facilitation Program, does allow for compensation to be paid to American producers.
Now it's not quite clear to me how they establish the rates [00:33:30] at which the compensation was going to be paid. For example. For soybeans they've established a rate that says that you can qualify for a dollar sixty five a bushel for half a year crop. So people have to wait until they finish their 2018 harvest, indicate, "Okay. Here's what I produced if I were receiving a dollar sixty five, over half of that amount."
And that same program said that hog producers were eligible for $8 [00:34:00] per head for half of their sales. So, we can see that that's some element of compensation. I mean, if the Iowa State calculation was that they'd lost $18 a head, so they may get $4 a head back. So a little bit, but it's probably not going to make them entirely whole.
Although, I think when people have looked at what's happened most recently with [00:34:30] crop yields, at least in other states. So I've been looking at the Illinois reports, and Illinois has had a very good year on soybeans, so people, if they're trying to figure out, "Well, what's my income this year compared to last year?" Prices may be down a little, but if the quantity is up ...
Ben Binversie:
Then it makes up for it.
Jack Mutti:
Yeah. It makes up for it to some extent. I guess the other thing to mention is corn was only going to qualify for a penny a bushel. [00:35:00] So some people were saying, "Now what is the logic of a much bigger payment for soybeans, a much smaller payment for corn, even though corn prices have gone down a fair amount, just as soybean prices have gone down a fair amount?"
And there were payments available for wheat and cotton, even though wheat and cotton have gone up in price. So exactly, was this a political story as to how these got set? [00:35:30] Just very nontransparent at this point here.
But if we just looked at this from a standpoint of Poweshiek County, so Poweshiek County, last year produced about 6.2 million bushels of soybeans. So, if they had essentially lost a dollar a bushel, that would be like six million dollars that they would have less income within Poweshiek County. So if we start wondering, "Well, what [00:36:00] might not be done?" They might not buy as many new tractors and combines. They might change what they're spending on things in the local economy. So we expect that to probably trickle through the rest of the economy when there's a big drop in income like that.
Ben Binversie:
So it seems like agriculture is due to suffer some collateral damage as a result of all these tariffs.
Jack Mutti:
Yeah. So collateral damage is a good way to characterize what's happening to Iowa agriculture I'd say. [00:36:30] The University of Illinois has done some other studies where they've looked at, if you had pre-sold your crop, the 2018 harvest, way back in February, you would have got a price that was about two dollars higher than what the cash price is right now.
Ben Binversie:
Wow.
Jack Mutti:
So, of course, Illinois Ag Extension would not recommend you pre-sell the whole thing. They say you ought to be selling throughout the year, sort of diversify [00:37:00] whatever your ...
Ben Binversie:
Your agricultural portfolio.
Jack Mutti:
Yeah, exactly. The same reason they tell us don't buy all of this stock or sell all that stock on a single day. Spread it out over time and you'll get the highs and the lows and you'll get an average sort of return.
So the average wouldn't be as bad as the two dollar difference that you could observe between the February futures price and the actual delivery price in September. But if you said, "Well, maybe if they did continue [00:37:30] to sell throughout the year, you could get a loss of about a dollar." So, it does say that there are some instruments to deal with uncertainty, but it would take somebody with a ... they're a perfect crystal ball to say that, "Yes, I would have sold everything back in February."
Ben Binversie:
Yeah, and I, unfortunately, don't have one of those crystal balls. But instead, we get you and that will have to do for now. So [00:38:00] thanks, Jack, for taking us through how these tariffs are impacting the economy here in Iowa and across the country.
Jack Mutti:
You're welcome.
Ben Binversie:
Jack Mutti is an Emeritus professor of economics here at 51²è¹Ýapp College. He's an expert on international trade and finance and has published numerous books on the subject. Links to some of the studies and data he mentioned are available on our website. 51²è¹Ýapp.edu/podcast.
And with that we'll wrap up this week's episode.
On the next show we'll talk with Ralph Savarese professor of English here at 51²è¹Ýapp, [00:38:30] about literature and autism. His new book, "See It Feelingly," presents his experience of reading novels with autistic readers, including his son, DJ. With this book Savarese is at the forefront of an emerging field called neuro humanities, which invites a dialogue between neuroscience and the humanities and is challenging the way we think about learning.
Ralph's book is eye opening and essential, especially for people with autistic children who are trying to navigate the education system.
I'm excited to share [00:39:00] our conversation and I hope you'll tune in.
Music for today's show comes from Brett Newski, Audio Blocks and Podington Bear. If you'd like to contact the show, email us at podcast@51²è¹Ýapp.edu, or check out our website, 51²è¹Ýapp.edu/podcast for more information about the guests from today's show. And don't forget to subscribe to the podcast wherever you listen.
I'm your host, Ben Binversie. Stay weird, 51²è¹Ýappians.