Why Many Organic Farmers ‘Didn’t Notice the Trade War’

This article originally appeared on Stateline.

Michigan farmer Joel Layman hesitates before he just comes out with it. “I feel a little bad saying this: My farm didn’t notice the trade war.” 

Layman grows certified organic vegetables, dry edible beans and grain crops on the organic portion of his 2,100-acre farm in Berrien Center, a township in southwest Michigan. 

“We have a little more autonomy,” Layman said of organic farmers. “I’m not reliant upon the world market. I’m relying on my neighbor who’s my customer.” 

Layman’s peers in one of the fastest-growing sectors of American agriculture generally agree: While President Donald Trump’s trade war with China has dominated conversation among conventional farmers, organic farmers have had the luxury of focusing on other things. 

“In terms of what you hear about from the broader community, this hasn’t been it,” said Patty Lovera, policy director for the Organic Farmers Association. 

Only about 8% of U.S. fruit and vegetable exports are organic, and their primary foreign markets are Canada, Mexico and Japan rather than China, which levied retaliatory tariffs on nearly all U.S. agricultural products beginning in 2017.

However, the trade war reduced demand for all agricultural products, which depressed prices for both conventional and organic farmers.

And organic farmers received some of the federal payments the Trump administration doled out to compensate for the trade war.

Laurie Isley, president of the Michigan Soybean Promotion Committee, said that’s fine with her, because the trade war had far-reaching effects across U.S. agriculture.

Organic products are in high demand, but they too are affected when conventional markets are down. While organic farmers typically earn more for their products, they also have higher costs than conventional farmers.

"I don't have a concern with those payments going to both conventional and organic farmers," said Isley, who farms in Palmyra, Michigan. "We’re not trying to distinguish between, 'Are you organic?’ or 'Are you conventional?'"

No Apologies

Organic farmers such as Layman who grow eligible crops such as corn and soybeans were entitled to participate in the Market Facilitation Program (MFP), intended to compensate farmers whose exports to China plunged because of the trade war.

The U.S. Department of Agriculture announced this week that it is making a third, and final, payment to farmers, bringing the total for tariff payments to farmers on 2019 production to $14.5 billion.

Between the Market Facilitation Program and two additional programs, the Trump administration authorized roughly $28 billion in 2018 and 2019 to compensate farmers and ranchers for losses related to the trade war.

The Agriculture Department did not respond to repeated requests for information on how much organic farmers received in MFP payments.

“I have no imminent plans of repaying my MFP out of conscience, I’ll tell you that,” Layman said. “That’s how the program was written and as a businessperson, I should be able to take advantage of it.”

In any case, Layman said, organic farmers received only a tiny percentage of the MFP money. “My guess is it’s a rounding error,” he said.

Historically, organic farmers have been excluded from many forms of support, said Carolyn Dimitri, associate professor of nutrition and food studies at New York University.

For example, in the past, organic farmers were ineligible for certain farm programs, and were unable to get crop insurance, in part because the USDA collected little data on organic agriculture. The challenges limited the industry’s growth, Dimitri said.

But farm policy is for all farmers. If organic farmers are being affected by the tariffs, they should be entitled to payments, Dimitri said.

“It’s just the same payments as everyone else,” Dimitri said. “The question is how the payments are calculated because ideally, you should be compensated for the harm that was caused to you as a producer and because organic farmers sell for higher prices, the harm, on a per unit basis, probably was greater.”

Growth Industry

Organic farming has become a $50 billion industry in the United States, which boasts the largest market for organic products in the world. Sales of organic products have grown by between 7% and 9% in recent years, compared with a roughly 1% annual growth rate for conventional products, according to the Organic Trade Association.

But organic agriculture still represents less than 1% of U.S. farmland. Most organic consumption is on the coasts, but the top five states for organic cropland acres are California, Montana, New York, Wisconsin and Oregon.

The "phase one" trade agreement the U.S. and China signed in January eases some tariffs on Chinese goods. In return, China has promised to buy more U.S. goods and services.

But China restricted U.S. organic produce even before the trade war.

“China is already one of the most difficult markets for organic exports,” said Alexis Carey, international trade manager for the Organic Trade Association. She noted strict import restrictions and a limited number of acceptable organic products. “There’s a really large amount of government oversight in China that isn’t present in a lot of other countries.”

The Chinese government, for example, has an extensive and costly process for imports to meet its organic standards. Even after the certification process, there’s no guarantee that the Chinese government will accept the product, according to the Organic Trade Association.

“That’s more important to these farmers — being able to get their products into a market in the first place,” Carey said. 

U.S. organic farmers also worry about competing with imports that may be labeled “organic” but aren’t.

It’s unclear what impact the recent deal between the U.S. and China will have on organic farming, but the Organic Trade Association says the reduction in tariffs is a “welcome change.”

The deal may result in an increase in organic exports to China, said Iryna Demko, a research associate at the Center for Economic Development in the Levin College of Urban Affairs at Cleveland State University. The share of organic exports relative to total exports has been increasing in fruits and vegetables, a trend Demko expects to continue.

“Over the next two years,” Demko said, “we should expect only good things coming under the assumption that everything will go smoothly.”