Next 60 days may decide farmers’ financial fate
Planting season, always a critical time for farmers, just became more nerve-wracking for U.S. growers of soybeans and corn.
In a move that caught many in U.S. agriculture by surprise, China last week announced planned tariffs on American shipments of the two crops. The measures are set to take effect in 60 days. That gives some farmers the opportunity of making a last-gasp switch to another crop. But for others — perhaps most — it’s too late to make a change.
“It puts it into flux,” said Dave Walton, a farmer in Wilton, Iowa, who intends to watch prices closely in the next few weeks amid expectations that China and the U.S. will negotiate to avoid an outright trade war. “We can switch acres from beans to corn if necessary.”
North Americans farmers have until around the end of June to put soybean seeds in the ground, while corn planting typically ends a month earlier. The U.S. Department of Agriculture said last week there will be 88 million acres of corn and 89 million acres of soybeans, covering a combined area larger than California.
The stakes are especially high this year given the parlous state of the agricultural economy. A succession of bumper harvests has led to gluts and depressed crop prices. The USDA projects net farm income will fall to a 12-year low of $59.5 billion, less than half the record level seen in 2013.
The specter of trade disruption has been hanging over the U.S. farm economy ever since Donald Trump was elected on a platform that included promises to challenge China and renegotiate the North American Free Trade Agreement.
There’s still uncertainty over whether the tariffs will be enacted, how high they will ultimately be, and how long they might last, said Chris Hurt, a professor of agricultural economics at Purdue University in West Lafayette, Ind.
North Dakota farmer Monte Peterson had planned to plant more soybeans than corn this year. He says that’s now up in the air, as the soy market may take a while to adjust to the tariffs.
The predicament of Illinois soybean and corn farmer Chris Gould is probably more typical. Gould said he plans to get out his spreadsheets to calculate profitability and see if a change is needed, but it may be too late to alter course.
Most North American farmers have by now purchased seed, fertilizer and other inputs based on what they intend to plant in the spring. Even though they can tweak their plans, those big costs largely lock them in.