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‘These are troubling times’

By Staff | May 20, 2019



Last week, the Trump administration revealed its plans to release a trade relief package to help ease the damage done by the U.S. trade dispute with China. However, producers say it’s not enough.

Kirk Leeds, chief executive officer of the Iowa Soybean Association said the association and its producer-members are “extremely concerned” about the rumors circulating that trade talks with China are crumbling. They’re also quite upset about the damage that’s already been done because of the tariffs.

“The U.S. recently announced another $60 billion in retaliatory tariffs that includes agriculture and ag products. Any retaliation from China because of this won’t impact us that much more because we’ve been already shut out of the markets,” Leeds said. “The troubling thing is that there was some optimism that we were getting close to reaching an agreement and that optimism had been built into the marketplace, which was reflected in the Dow. But now it’s not resolved and the U.S. and China are digging in deeper.”

After the additional tariffs to be imposed on China were announced, Leeds said the Dow dropped and the decline likely will continue. Farmers are going to have to tap into other world markets and find additional revenue streams the longer the trade dispute drags on, he said.

“The longer this goes on, the less likely we are to ever get a significant portion of this market back. These actions have essentially encouraged Chinese buyers to purchase from anyone but the U.S. and it’s clear that they can do that. They’ve figured out a way, at a premium, to source all the beans they need with few coming from the U.S.,” Leeds said. “These are troubling times and whatever optimism people had is quickly dwindling.”

Leeds said that, given the way things have gone recently, the simple answer is not that simple, but must be done – end the tariff battle and return to “doing business” like before.

“You can debate whether the tariffs have ever been effective, but from a soybean producer’s perspective, there’s no way these tariffs on China have been helpful. We have to eliminate them and return to trade based on market signals. U.S. soybeans were competing in China on a price basis and we have to get back to that,” he said.

Producers expected 2018 to be tough, but so far, 2019 has been even worse, Leeds said.

“President Trump says he loves farmers and wants to support farmers, but prior to 2018, we at least sold beans. Earlier in 2019, we sold virtually no soybeans,” Leeds said. “2019 has become a bigger concern and more of a hardship for farmers. This whole situation has been extremely damaging and there will be farmers not farming next year if this isn’t resolved soon.”

National Pork Producers Council president David Herring, who farms in North Carolina, echoed Leeds’ sentiment. Herring commented in a statement that U.S. pork has suffered from a “disproportionate share of retaliation” due to trade disputes with both China and Mexico and has led to extreme unprofitability for pork producers, too.

“The financial pain continues; the 20 percent punitive tariff on pork exported to Mexico alone amounts to a whopping $12 loss per animal,” he said.

Davie Stephens, a producer from Kentucky and president of the American Soybean Association, noted in a statement that something must be done to subdue the “escalation of tensions.”

“After so many threats and missed deadlines for concluding negotiations, this ongoing uncertainty is unacceptable to U.S. farmers,” Stephens stated. “With depressed prices and unsold stocks forecast to double before the 2019 harvest begins in September, we need the China market reopened to U.S. soybean exports within weeks, not months or longer.”

Ag commodity groups had been expecting a deal by March 1 before farmers returned to the fields. National Corn Growers Association president Lynn Chrisp said the “ripple effects” from “holding China accountable” for its “objectionable behavior” is harming farmers.

“Farmers have been patient and willing to let negotiations play out, but with each passing day, patience is wearing thin. Agriculture needs certainty, not more tariffs,” Chrisp said.

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