Chinese Retaliation is No Longer a “What If” for Soybean Farmers
After weeks of speculation, China has announced a proposed 25 percent tariff on U.S. soybeans. China purchases 61 percent of total U.S. soybean exports, and more than 30 percent of overall U.S. soybean production.
Ed Ebert, Senior Director of Grain Production and Utilization for Indiana Soybean Alliance says the announcement paves the way for even more uncertainty and nervousness for farmers.
“We’re going through our fourth year of a downturn in agricultural prices, and commodity prices in general, both on the soybean and corn side. So, we’ve got farmers that have been looking at commodity prices that put them at break-even, or, in some cases, even lower than break-even prices. This is not good news in that environment.”
Arlan Suderman, Chief Commodities Economist at INTL FCStone, told Hoosier Ag Today that farmers should be concerned as this announcement impacts the near-term markets, however, he doesn’t believe that China can afford to follow through on this threat.
“Their economy is too frail. They have too much at stake. They may be able to go on for a few months, but then they have to come back to the United States for supplies. The impact would be very painful for them, as it is for U.S. farmers, but I think the impact on the Chinese economy is much greater than what it is for the U.S. economy.”
Ag Secretary Sonny Perdue said prior to the announcement of a proposed tariff on soybeans, “Action will be taken here. We’re not going to let farmers be sacrificed on trade wars.”
When asked what type of action that might be, Perdue could not provide specifics due to ongoing negotiations.
American Soybean Association President and Iowa farmer John Heisdorffer issued the following statement:
“It should surprise no one that China immediately retaliated against our most important exports, including soybeans. We have been warning the administration and members of Congress that this would happen since the prospect for tariffs was raised. That unfortunately doesn’t lend any comfort to the hundreds of thousands of soybean farmers who will be affected by these tariffs. This is no longer a hypothetical, and a 25 percent tariff on U.S. soybeans into China will have a devastating effect on every soybean farmer in America.
“Soybean futures are already down nearly 40 cents a bushel as of this morning. At a projected 2018 crop of 4.3 billion bushels, soybean farmers lost $1.72 billion in value for our crop this morning alone. That’s real money lost for farmers, and it is entirely preventable.
“We regret that the administration has been unable to counter China’s policies on intellectual property and information technology in a way that does not require the use of tariffs. We still have not heard a response from the administration to our March 12 letter requesting to meet with President Trump and discuss how the administration can work with soybean farmers and others in agriculture to find ways to reduce our trade deficit by increasing competitiveness rather than erecting barriers to foreign markets.
“But there is still time to reverse this damage, and the administration can still deliver for farmers by withdrawing the tariffs that caused this retaliation. China has said that its 25 percent tariff will only go into effect based on the course of action the administration takes. We call on President Trump to engage the Chinese in a constructive manner—not a punitive one—and achieve a positive result for soybean farmers.”
American Farm Bureau Federation President Zippy Duvall said, “Farmers and ranchers are, by necessity, patient and optimistic. We know markets ebb and flow. But China’s threatened retaliation against last night’s U.S. tariff proposal is testing both the patience and optimism of families who are facing the worst agricultural economy in 16 years. This has to stop.
“Growing trade disputes have placed farmers and ranchers in a precarious position. We have bills to pay and debts we must settle, and cannot afford to lose any market, much less one as important as China’s. We urge the United States and China to return to negotiations and produce an agreement that serves the interests of the world’s two largest economies.”