Farmers concerned about trade war, prefer markets to support payments

Rick Edwards looks over soybeans Friday, July 27, 2018, in a field near Fall Creek. Edwards said local farmers are concerned about falling commodity rices, a lack of rain and a possible trade war. | H-W Photo/Phil Carlson
Phil Carlson 1|
By Herald-Whig
Posted: Jul. 30, 2018 7:40 am

QUINCY -- When asked about the $12 billion in aid offered to U.S. farmers last week, Adams County Farm Bureau President Rick Edwards didn't hesitate.

"Farmers want trade, not aid," he said.

"Farmers would prefer not to be subsidized. They would rather the market provide them an opportunity to sell and make a little bit of profit."

The aid program was announced by President Donald Trump to counter the plunge in commodity prices after China retaliated against U.S. tariffs imposed in an effort to settle trade disputes.

Soybean prices had been trading at $10.40 per bushel in May, but fell to about $8.20 a bushel in mid-July before rebounding slightly to $8.50. Prices paid at regional elevators are slightly lower.

The University of Missouri's Commercial Agriculture Program did an analysis this month showing that for every 10 cent drop in the price of soybeans, it will cost the state's farmers about $24.7 million in cash receipts. The $2 decrease in soybeans amounts to nearly a half billion dollars in lost revenue, the study concluded.

C. Brooks Hurst, a farmer and president of the Missouri Soybean Association, said U.S. farmers have worked for many years to establish trade deals with other countries.

"Our farmers are counting on having access to those markets and the demand they create for U.S. soy. What we're seeing now is a direct hit to not only farmers, but to our rural communities and all of Missouri," Hurst said.

The Trump administration has imposed tariffs on $34 billion in Chinese goods in a dispute over Beijing's high-tech industrial policies. China has struck back with duties on soybeans and pork, affecting Midwest farmers in a region of the country that supported the president in his 2016 campaign.

Trump has threatened to place penalty taxes on up to $500 billion in products imported from China, a move that would dramatically ratchet up the stakes in the trade dispute involving the globe's two largest economies.

The moves have been unsettling to lawmakers with districts dependent upon manufacturers and farmers affected by the retaliatory tariffs.

"This is a self-inflicted wound that borrowing $12 billion won't solve," U.S. Sen., Claire McCaskill, D-Mo., said last week.

The Agriculture Department said it would tap an existing program to provide $12 billion in direct payments to farmers and ranchers hurt by foreign retaliation to Trump's tariffs and other assistance, such as the purchase of excess crops.

With congressional elections coming soon, the government action underscored administration concern about damage to U.S. farmers from Trump's trade tariffs and the potential for losing House and Senate seats in the Midwest and elsewhere.

The administration said the program was temporary.

"This is a short-term solution that will give President Trump and his administration the time to work on long-term trade deals," said Agriculture Secretary Sonny Perdue as administration officials argued that the plan was not a "bailout" of the nation's farmers.

There was one bright spot on trade last week when European Commission President Jean-Claude Juncker met with Trump and discussed trade issues. Although no specifics were provided, the talks were considered positive and European purchases of soybeans were held out as a way to ease pressure from the tariff war.

The Farm Bureau's Edwards said soybeans to meet market demands will come from somewhere. He thinks China will buy more soybeans from Brazil to meet its demands. If that happens, and Europe buys more soybeans from the United States, it might balance out some of the lost exports to China.

"Those beans are going to come from somewhere. World consumption probably won't decrease," Edwards said.

Agriculture officials said they would not need congressional approval and the money would come through the Commodity Credit Corp., a wing of the department that addresses agricultural prices.

The officials said payments couldn't be calculated until after harvests. Brad Karmen, the USDA's assistant deputy administrator for farm programs, noted that the wheat harvest is already in, so wheat farmers could get payments sooner than other growers.

Soybeans are likely to be the largest sector affected by the programs. Soybean prices have plunged 18 percent in the past two months.

The Agriculture Department predicted before the trade fights that U.S. farm income would drop this year to $60 billion, or half the $120 billion of five years ago.

Mark Martinson, who raises crops and cattle in north-central North Dakota and is president of the U.S. Durum Growers Association, said the $12 billion figure "sounds huge," but there are many farmers in need. "I don't think this will cover us for a very long time -- and it might not even buy me a tank of diesel. I think it will only put out the fire a little bit."

The Associated Press contributed to this report.

Sign up for Email Alerts