Tense time for farmers and ranchers
China is proposing penalties that would punch America square in its breadbasket after U.S. threats of tariffs on $50 billion of its goods. And that posturing has put Colorado’s farmers and ranchers on edge.
“I can tell you it makes the U.S. farmer and rancher nervous when we have our president talking about limiting our access to world markets,” said Marc Arnusch, owner and operator of Marc Arnusch Farms, which raises corn, wheat and other crops in Prospect Valley.
China has threatened a 25 percent tariff on pork. Soybeans, the top crop the U.S. sends to China, also is vulnerable, as is sorghum, a grain raised for export that is well-suited to Colorado’s drier climate.
Even if Colorado producers don’t export their crops, reduced access will only further depress prices in a market struggling with excess supply, Arnusch said.
Defenders of the administration’s tougher stance on trade argue it will result in greater access for U.S. goods and create a more level playing field. Treasury Secretary Steven Mnuchin reassured markets Monday, saying he was confident that the two countries could reach an agreement that would avoid the U.S. tariffs. But if things go wrong, and trade becomes more difficult and expensive, the nation’s farmers and ranchers argue they will be among the hardest hit.
James Henderson, owner of the 7-11 Ranch near La Jara in the San Luis Valley, said the verbal exchanges about trade penalties hurt his prospects by driving down cattle futures 10 percent last week.
“There is a ripple effect if we close trade markets. I want to see my cattle end up in the Chinese food system. We have to be careful about how we approach China,” Henderson said.
Colorado’s farmers and ranchers exported $2 billion worth of goods last year, representing about 20 percent of their total output, according to the Colorado Department of Agriculture. About 6 percent of those exports, or $128.4 million, went to China.
China is a major buyer of more-difficultto-sell animal parts, primarily hides, which accounted for $110.9 million in sales. Henderson said the sale of those less desirable parts adds $141 to the price received per cattle, which is about the profit margin per each animal.
The U.S. only recently gained access to sell its beef to China, and the hope was that Chinese consumers would over time buy more expensive cuts.
The China flare up comes on top of concerns over the North American Free Trade Agreement, which is being renegotiated. Mexico and Canada account for 55 percent of Colorado’s agricultural exports, and losing access in those two countries would represent an even bigger blow than China.
“We are the pawns in a trade war. We are the ones taking it on the chin,” Henderson said.