World

US farmers struggle to compete with Aust

By AAP Newswire

In 1983, Christopher and Deborah Gibbs had a pick-up truck, $US2500 and a dream to build a family farm to hand down to their children and grandchildren.

"We built our now 560 acres (227 hectares) from scratch with our own four hands," Mr Gibbs told AAP.

The family farm, stretching across Shelby and Logan counties in western Ohio, raises corn, soybeans, alfalfa and seedstock cattle. On the political map, it sits in what Mr Gibbs describes as "cherry red Republican" territory.

The 61-year-old is the former chair of his local Republican Party.

American farmers have been among Donald Trump's staunchest supporters but Gibbs is not a fan of the US president.

He says the president walking away from the Trans-Pacific Partnership free trade agreement with Australia, Japan, Canada, New Zealand and seven other nations has placed American farmers at a significant disadvantage.

"It's horrifying," Mr Gibbs told AAP.

"How do I compete with Australia?

"I don't.

"I can't because we are out of the TPP."

The TPP was championed by former US president Barack Obama as a way to bring Pacific rim nations together in the face of China's rise.

With Mr Trump walking away from the TPP and vowing to strike one-on-one trade deals instead, the remaining 11 nations moved ahead without the US and formed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, also known as TPP-11.

American beef producers pay a 38.5 per cent tariff on imports into the key market of Japan.

Under TPP-11, Australian beef sold to Japan faces a recently lowered 26.6 per cent tariff which will be reduced to 25.8 per cent next year and to nine per cent over 16 years.

Respite might be coming with senior US and Japanese trade officials meeting in Washington DC on Wednesday.

More dark clouds are forming for US farmers with China trumpeting the rival Regional Comprehensive Economic Partnership with 15 other countries, including Australia and India. The US is not part of it.

And, of course, there is Mr Trump's tariff war with China that has rocked American trade with the Asian power, particularly in soybeans, and rattled global financial markets.

The president says the US and farmers will come out on top in the trade war with China.

"The farmers of this country really understand it," the president told reporters last week.

"They know we had to do something about China, and we're doing something about China."

The uncertainty facing the US farming community was reflected in iconic American agricultural equipment manufacturer John Deere's announcement last week that it suffered a three per cent decline in third-quarter sales to $US8.97 billion ($A13 billion).

"Concerns about export-market access, near-term demand for commodities such as soybeans, and overall crop conditions, have caused many farmers to postpone major equipment purchases," John Deere's chairman Samuel R. Allen told investors.

Mr Gibbs is not willing to make capital purchases, "only emergency capital purchases".

"I'm in survival mode financially because we can't project ahead because of the market uncertainty," Mr Gibbs said.

The Trump administration has handed out $US12 billion in aid to help farmers and announced another $US16 billion is on the way.

Mr Gibbs, who describes the payments as "hush money to keep farmers sedated", says he received $US20,000 in the first tranche and has an appointment at the end of the month for the second.

The transmission went out in his "big tractor" so he used the first payment for the $US14,000 bill and donated $US1000 to help put air-conditioning in the music room at his local high school and another $US1000 to an arts council.

"The balance of it went for taxes because when you get this money, you have to pay taxes on it," Mr Gibbs said.

"I didn't go buy a boat with it."

Mr Gibbs said in 1985 he, along with other American farmers, got on "planes, trains and automobiles" to develop new markets around the world, with Asia their hot spot.

He fears the blood, sweat and tears it took to build the international markets and his plan to hand over the family farm to his future generations is in jeopardy.

"I look at my grandson and son and think, 'I did that so they would have a place to sell these crops and today that market is gone'," Mr Gibbs said.

"Is it coming back?

"I don't know, but today it is gone."