Recession threat in the Midwest (USA): unstable weather and rising costs threaten production

24 Jan 2025
22

Traverse City is known as “the cherry capital of the world,” and the Wunsch family has been cultivating the small stone fruit for six generations. Their farm spans about 1,000 acres on the Old Mission Peninsula, a strip of land jutting into a bay at the northern tip of Lake Michigan. This region has long been considered a paradise for cherries, where long rows of trees thrive with bright red fruit. But with global warming, things are starting to change.

As he walked through rows of dormant trees last month, pointing out sweet varieties like black pearls, skeenas, and sweethearts, Raul Gomez, the operations manager of Wunsch Farms, said that the erratic weather in recent years has taken a toll. 

This season was particularly harsh. An unusually mild winter followed by a warm, wet spring, characterized by torrential rains, caused many fruits to rot on the trees. This led to a surge in fungi and pests. Diseases like brown rot reduced the quality of various varieties and the harvest volume.

“It’s becoming increasingly expensive to farm,” Gomez said. “You spend a lot more money just to make it to the finish line.”

Anyone working the land knows they are at the mercy of the weather, but even so, this has been a tough year for Michigan cherry growers. Farmers across the state, which produces one-fifth of the country’s sweet cherries and about 75% of its tart cherries, have struggled with mounting losses.

By the end of the season in the summer, 75% of the state’s sweet cherry crop was lost. Although sweet cherry production in northwestern Michigan increased by nearly 40% over the previous year, fruit quality declined.

Many growers are adapting to market difficulties and climate change by planting different varieties or adopting high-density orchards with closely planted trees, an approach that facilitates harvesting, reduces costs, and improves quality. For Isaiah Wunsch, CEO of the farm bearing his family name, the key to survival is “not putting all your eggs in one basket.”

This approach is not a perfect solution to some of the financial challenges that have pushed some farms to the brink of bankruptcy, prompting intervention by state officials and the federal government. In early fall, the Department of Agriculture approved Governor Gretchen Whitmer’s request for emergency assistance to cover crop losses through a federal disaster declaration.

But while federal aid may help in the short term, Gomez said, “none of us want to get to the point of being considered a disaster, and now we are.”

Image 1: Raul Gomez, operations manager of Wunsch Farms.

Similar struggles are occurring on farms across the country, and some regions, like the Midwest, are facing the onset of an agricultural recession, said Ernie Goss, an economist at Creighton University. The recession stems largely from extreme weather conditions, rising production and labor costs, global supply-and-demand imbalances, and declining farmer revenues and disaster aid.

This year, many farmers sold a range of commodities, including wheat, soybeans, and corn, at prices below break-even. Their finances were further strained by increased price volatility. According to the latest federal forecasts, farm income will drop by 4% compared to last year, in what some consider the sector’s worst financial year since 2007.

This is one of the main reasons why consumers are paying more at the supermarket, a point President-elect Donald Trump highlighted during his re-election campaign. At a rally in northern Michigan in September, Vice President-elect JD Vance invited cherry grower Ben LaCross to describe the sector’s financial struggles and to praise Trump’s approach to regulations and trade.

Vance denounced the cost of cherries as a “losing proposition” for both growers and consumers. The argument resonated: On average, voters in the country’s most agriculture-dependent counties supported Trump by over 77%, a significant increase from 2020.

However, nowhere in the incoming administration’s message on the challenging economic landscape for the nation’s small farmers was there mention of human-caused climate change shaping this terrain. Instead, Trump, who called the crisis a “hoax,” has threatened to dismantle the Inflation Reduction Act, pledged to cut emission regulations, and promised to boost fossil fuel production.

Sara McTarnaghan, a resilience planning and disaster recovery researcher at the Urban Institute, stated that increasingly severe weather and other climate impacts will further strain an “already stretched and underperforming safety net” as global warming drives demand for government assistance. Yet, the expert sees “major threats” to many of these programs under Trump’s presidency.

Many of these threats are embedded in Project 2025, a sweeping conservative policy agenda written by several veterans of Trump’s first term, which proposes cutting crop insurance subsidies, eliminating conservation land incentives, and other agricultural programs. 

Still, according to McTarnaghan, it remains unclear how Trump’s agenda and climate views will affect agricultural relief. This is because small-government politicians are not hesitant to request money from Washington when their voters need help. “Even in red states, we see governors requesting presidential declarations, asking for federal assistance to recover from disasters, even in places where the talking point on a non-disaster day might be cutting public spending,” McTarnaghan said.

Image 2.


Ultimately, any regression in climate action will end up requiring more funding to bail out growers. “Farmers are often on the frontlines of the climate challenge,” said Billy Hackett of the National Sustainable Agriculture Coalition. “You can’t stop the flood, fire, or hurricane that used to occur once a generation and is now happening more frequently.”

When disaster strikes, farmers look to the U.S. Department of Agriculture for help. The agency is, among other things, a critical provider of safety programs for farms, such as federal crop insurance and emergency crop subsidies or disaster aid. 

Looking ahead to the next four years, Hackett is concerned about how the incoming presidential administration will prioritize assistance for small farmers, historically overlooked. The 2022 Emergency Relief Program, which provided financial aid to producers affected by wildfires, hurricanes, and other disasters through the USDA, had a “streamlined” option for aid applications based on revenues, Hackett noted, implemented by the Biden administration to “reach those uninsured farmers who have historically been left behind.”

Small farmers, in particular, have long struggled to access and afford the expensive crop insurance premiums and have faced similar challenges regarding eligibility and coverage when applying for federal disaster aid. In 2022, only 13% of the nation’s roughly 1.9 million farms were enrolled in a crop insurance plan.

Other supplemental disaster relief programs, such as the Wildfire, Hurricane, and Indemnity Program, enacted in 2017 during Trump’s administration, have been criticized for how “demanding and complicated” the application process was for uninsured, small, and historically excluded farmers while reaching and benefiting only larger, industrial farms, Hackett said.

Although government bailouts for farmers hit record highs during his first term due to losses from trade wars and the pandemic, Trump has already tried to cut crop insurance funding and may have more success this time, given a Republican majority in both chambers, and Project 2025 specifically calls for reducing crop insurance subsidies and eliminating commodity payments, among other farmer safety nets. 

This would harm growers like Leisa Eckerle Hankins, a fifth-generation Michigan cherry farmer whose family has relied on crop insurance to offset devastating losses. Her family farm lost 97% of its sweet cherry crop due to a brown rot fungal infection caused by last summer’s rains. “It was a net loss,” she said. “We couldn’t go in and shake the cherries off the tree.”

On top of all this, their crop yields have been unreliable, and they’ve faced growing competition from other countries dominating the market. “Every industry has its struggles, and this is our time of struggle,” Eckerle Hankins said. “And so, we’re coming together to try to figure out how to turn things around.” 

Source: Bridge Michigan
Images: Michigan Farm; Grist


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