Cashless Crops 🌽

“Agriculture is our wisest pursuit,” wrote Thomas Jefferson, “because it will in the end contribute most to real wealth, good morals, and happiness.” For Jefferson and many of America’s Founding Fathers, agriculture wasn’t just an economic activity but a moral and civic ideal, a cornerstone of the republic.

And for much of the 20th century, the U.S. lived up to that vision. From 1960 through 2017, the country ran a consistent agricultural trade surplus. The American farm belt churned out wheat, corn, soybeans, dairy, and meat for global markets, exporting more than it imported year after year. 

But that era has quietly ended.

In 2025, according to USDA’s forecast, the United States’ agricultural exports are projected to reach $170.5 billion. On the other hand, the imports are projected to be $219.5 billion. The result is a staggering $49 billion trade deficit — the largest in U.S. history. A country once defined by agricultural abundance is now importing more food and farm goods than ever before.

In this issue of CrossDock, we look at how a decades-long agricultural surplus quietly gave way to a growing trade deficit and the factors behind this shift. We will also discuss how trade policies and tariffs are shaping the outlook for U.S. farmers. 

Let’s first start with how the US managed to have an agricultural trade surplus and the factors that contributed to it.

Purple Patch

The year was 1945. The Allies had won, fascism had fallen, and peace was finally within reach, but hunger gripped the world. Across Europe, farmland lay in ruins, and countries were not able to grow enough food. In addition, the war shattered global food supply chains, causing food shortages around the world. 

So, the U.S. stepped in to fill the gap. 

In his book Farm Policies and Politics in the Truman Years, Allen J. Matusow states that between July 1945 and June 1946, the United States shipped approximately 16.5 million tons of food, primarily wheat, to Europe and Japan. This amount constituted about one-sixth of the American food supply at the time.

It was a logistical and agricultural feat, one that helped cement America’s postwar identity as the world’s agricultural superpower. What began as emergency relief soon evolved into something more enduring. 

In fact, the transformation of American agriculture was nothing short of revolutionary. The war had accelerated mechanization, and the momentum didn’t slow. Tractors replaced horses, synthetic fertilizers became common, and hybrid seeds introduced a new era of yield efficiency. Between 1948 and 1971, total U.S. farm output surged by nearly 50%.

Soon, the fields got bigger. Production grew more specialized. And with federal policy backing, the American agriculture sector quickly became a symbol of abundance. 

And amongst the federal policies, the 1973 Farm Bill, passed in the wake of a global food price crisis, marked a turning point in U.S. agricultural policy. It introduced target prices and deficiency payments, guaranteeing farmers a minimum income if market prices fell short.

Let’s explain this with an example. In 1977, with the target price for corn set at $2.28 per bushel and the market price at $1.95, farmers received a deficiency payment of $0.33 per bushel—meaning a farmer harvesting 100,000 bushels would earn $33,000 directly from the government to make up the difference. 

This safety net encouraged overproduction, especially of staple crops like corn, wheat, and soybeans, which defined American agriculture for years to come. 

Two decades later, the 1996 Farm Bill, officially known as the Federal Agriculture Improvement and Reform (FAIR) Act, further reinstated the dominance of corn and soybeans. 

The new bill dismantled the longstanding system of deficiency payments. It introduced a new model: production flexibility contract payments. The subsidies were no longer tied to what farmers grew or what prices they received. 

The bill offered greater freedom and market-driven decision-making. Farmers could now plant whatever they wanted without risking their government support.

On paper, it looked like a step toward a more open, competitive agricultural economy. But on the ground, little changed. Most farmers continued planting corn and soybeans. 

But why soybeans and corn? Let’s break it down. 

Why did corn and soybeans become unstoppable?

Firstly, they were easier to produce compared to other crops. Corn and soybeans thrived in the American Midwest, where large-scale, mechanized farms could grow them with unmatched efficiency.

The other major reasons were the global demand for these crops and the versatility they offered. For example, corn was used to feed livestock, power ethanol plants, and fill supermarket shelves through a range of processed foods.

Soybeans served a similar purpose, supplying oil for cooking and meal for feed. As demand for meat and processed food rose in emerging economies, so did global reliance on these two crops.

In short, these crops were highly sought after because they had a solid federal backing, fetched a good return on investment, and finally, they were less risky to produce. 

The end result? 

In 2002, corn and soybeans dominated the American agricultural landscape, both in acreage and in global influence. According to the USDA’s Agricultural Census Report 2002, U.S. farmers harvested 69.3 million acres of corn and 72.7 million acres of soybeans that year. To put that into perspective, these two crops together covered 142 million acres, accounting for 56% of all harvested cropland in the U.S., which totaled approximately 253 million acres.

This wasn’t just a domestic affair. In 2002, the U.S. exported around 49 million metric tons of corn and 28.9 million metric tons of soybeans. Together, corn and soybean exports accounted for over $15 billion in export value.

Zooming out, total U.S. agricultural exports in 2002 stood at about $53 billion, meaning corn and soybean exports made up roughly 28% of the total agri-export value. Among all U.S. agricultural commodities, these two were the crown jewels: corn was the top export by volume, while soybeans ranked at the top by value.

So, where did all these commodities go? All roads pointed to China. 

Chinese diet 

In the late 1990s and early 2000s, China’s economic engine was roaring, and it was hungry, literally. As incomes rose and urban populations expanded, so did the demand for meat. But raising more pigs, chickens, and fish required more feed. And what is the most efficient way to feed livestock at scale? Soybean meal.

The timing couldn’t have been better for U.S. farmers. 

In 2001, China joined the World Trade Organization (WTO), slashing tariffs and opening up to global markets. Practically overnight, it became the world’s largest soybean importer, and the U.S. was its primary supplier. 

That same year, China imported nearly 13 million metric tons of soybeans. By 2003, it had crossed 16 million metric tons, with more than half of that haul coming from American farms.

Over the span of a decade, China went from an emerging buyer to the single largest destination for U.S. agricultural exports. By 2011, it had overtaken Canada to become America’s top farm goods market. 

In 2015 alone, the U.S. exported $25.9 billion worth of agricultural products to China, with soybeans accounting for a staggering $12.7 billion, nearly half the total. 

Despite producing massive volumes of corn domestically, China relied on foreign imports ranging from 3 to 5 million tons annually to keep up with its growing demand. For example, in 2014, U.S. corn exports to China totaled approximately 2.73 million metric tons, valued at $694.3 million. 

But all this changed when the biggest exporter and importer locked horns over trade deficit issues. 

Impact of the US-China trade war

Your biggest strength is your weakness, they say, and it was in the case of the US agriculture trade. In 2018, when Donald Trump set off the US-China trade war, the biggest casualties were American agricultural products.

To eliminate what he called unfair trade practices and to reduce the $419 billion trade deficit with China, President Trump, during his first term, imposed tariffs on $360 billion worth of Chinese goods. China hit back swiftly, with tariffs of its own, zeroing in on a politically sensitive target: American agriculture.

The response was surgical. Beijing slapped retaliatory duties on U.S. soybeans, pork, and other farm exports. 

The ripple effect of this was even more severe. After nearly six decades of surplus, in 2019, the US had an agricultural trade deficit of $1.3 billion. 

However, the US-China trade war isn’t the only reason for the deficit. Over the years, the US has increasingly imported more agricultural products from the rest of the world. 

Rising U.S. imports

​​Over the past 25 years, U.S. agricultural imports have exploded, rising from under $40 billion in 1998 to $195 billion in 2023, with a record $263 billion in 2024. But it’s not just about how much the U.S. is importing, it’s about what’s in those shipments.

The main drivers are consumer-oriented products like fresh fruits, vegetables, alcoholic beverages, nuts, processed foods, and baked goods.

These aren’t the same kinds of goods the U.S. exports. While America ships bulk commodities like soybeans, corn, and wheat, it increasingly imports products it doesn’t produce or can’t produce year-round, such as coffee, cocoa, avocados, and bananas. 

According to the USDA, consumer-oriented goods now make up 54% of all imports by value, compared to just 42% of exports. Also, horticultural goods alone — fruits, vegetables, beverages — account for half of all U.S. agricultural imports. And over 27% of fruit imports come from just three products: avocados, bananas, and blueberries. 

Mexico and Canada are the heavyweights when it comes to feeding America’s appetite for imported food. Together, they supply around 40% of all U.S. agricultural imports. 

Mexico exports $41.6 billion of agricultural products, including beloved fruits and vegetables of Americans.

Take avocados, for instance. According to the USDA, about 90% of the avocados eaten in the U.S. come straight from Mexico. In 2024 alone, that added up to a whopping $2.7 billion worth of imports.

And tomatoes? Same story. Today, roughly 70% of the tomatoes sold in the U.S. are imported from Mexico. The volume of fresh tomatoes crossing the border has shot up 176% since 2000. 

Canada exports processed food, baked goods, meat, vegetable oils, and vegetables worth nearly $35 billion to the US. And the EU exports wine, spirits, essential oils, and other high-value specialty products valued up to $32 billion. 

And now the latest round of proposed tariffs by President Trump can further widen the deficit and hit the agriculture sector hard. 

Tariff tantrum

The trade war between the U.S. and China is again in the spotlight, and American farmers are caught in the crossfire. China, still one of the biggest buyers of U.S. agricultural products, purchased around $25 billion worth of farm goods from the U.S. in 2024. 

But that trade is now under threat. In retaliation for U.S. tariffs, China has slapped a steep 135% tariff on American agricultural exports.

This couldn't come at a worse time. U.S. farm exports were already struggling. Soybean exports dropped to $24.5 billion in 2024 — a sharp fall from their 2022 peak of $34.4 billion. China, which used to be a major buyer, has cut its soybean imports from the U.S. to just $12.8 billion, a 30% drop in two years. 

Corn is faring even worse: U.S. corn exports to China plunged by 80% last year, still reeling from the earlier round of trade tensions.

The new tariffs will only make things more complicated. Higher prices on U.S. exports mean global buyers will shop elsewhere. And they already are. In 2023, Brazil shipped a record $60.24 billion in agricultural goods to China, accounting for nearly a quarter of China’s total farm imports.

Brazil is now a go-to supplier for key crops like soybeans and corn. According to a CNN report, since 2010, Brazil's soybean exports to China have surged by over 280%, while U.S. exports have largely stagnated.

But it’s not just farmers who’ll feel the pinch. The same tariffs that block exports are also raising the price of imports — everything from avocados and coffee to fresh vegetables. Those extra costs will trickle down to grocery bills across the country. And since the U.S. doesn’t have the capacity to replace these imports overnight, higher prices are here to stay.

But it does not stop here. Some of the key commodities are imported, from farm equipment to fertilizers. Let’s take the example of potash. Potash, a key fertilizer ingredient: The U.S. imports 90% of its supply, with 80% of that coming from Canada. Tariffs will make these commodities more expensive and further strain the farmers. 

What’s next

According to recent reports, the administration plans to roll out a bailout similar to the $28 billion he did in his last term to offset the sales lost because of the first US-China trade war.

Interestingly, Trump has long argued that foreign agricultural imports undercut American farmers, and he continues to frame tariffs as a necessary reset. In his March Joint address to Congress, he offered a familiar message:

Trump has also pushed for greater market access for US agricultural products in his trade talks with other countries. For example, the U.S. is negotiating with India to open its agricultural market to major American exports like corn and wheat as part of ongoing trade talks.

Experts have argued that short-term bailouts don’t fix long-term problems. What’s required is a structural shift like federal investment in crop diversification, smarter trade agreements, and better support for accessing alternative markets. Without that, tariffs might end up being a bandage on a much deeper wound. 

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!