Deere In Headlights: ‘People Are Getting Nervous About The Farmers’

On Thursday, Walmart CFO Brett Biggs broke the hearts of Trump’s base, when he told the ugly truth about what tariffs will ultimately mean for the “low price leader”.

“We will do everything we can to keep prices low, but increased tariffs lead to increased prices”, Biggs said, following the company’s Q1 results.

At the risk of coming across as condescending, it’s probably a safe bet that Trump voters are disproportionately represented among Walmart customers. Maybe when prices start rising there, the base will begin to realize that tariffs are not, in fact, just free money “pouring into the US Treasury” (as Trump is fond of saying).

Fast forward less than 24 hours from Walmart’s warning, and Deere was out with fiscal Q2 earnings which missed estimates on the bottom line. But it was the full-year outlook that really hurt.

“Net sales and revenues are projected to increase about 5% for fiscal 2019”, Deere said Friday, adding that “net income attributable to Deere & Company is forecast to be about $3.3 billion.” The company had previously projected 7% sales growth and net income of $3.6 billion.

If you’re wondering what the problem is, you can blame Donald Trump’s “greatest” tariffs – at least in part.

“Although the long-term fundamentals for our businesses remain favorable, softening conditions in the agricultural sector have led Deere to adopt a more cautious financial outlook for the year”, CEO Sam Allen said. In case that’s not specific enough for you, he added the following:

Ongoing concerns about export-market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases. 

Yes, “ongoing concerns about export-market access and near-term demand for commodities such as soybeans”, which fell to a decade low this week amid incessant trade banter.

This is yet another indication that America’s farmers are whatever the opposite of “great again” is. Deere shares dove 5% in pre-market trading following the results.

The shares are on pace for their second worst month since August of 2015, the month of the yuan devaluation.

The idea that US agriculture is running out of patience with the trade war is clearly something the administration is concerned about. Trump has tweeted multiple times over the past two weeks about the country’s “Great Patriot Farmers” (a proper noun, apparently). He’s also attempted to suggest the government will buy whatever crops China doesn’t and distribute them to “starving nations”. To say everyone is skeptical about that “plan” would be an understatement.

“People are getting nervous about the farmers”, a former West Wing official told Vanity Fair’s Gabriel Sherman for a characteristically amusing piece published Thursday.

“Farmers are planting right now and [they] need to make sure customers are there when this is all over”, the official added.

Read the history of Trump’s farmer bailouts