Soy­bean farm­ers caught in mid­dle of Trump’s trade war

The Washington Times Daily - - FRONT PAGE - BY JAMES VAR­NEY

The Wag­ner fam­ily farm has 300 acres of soy­beans stuck in the North Dakota earth, and whether they will ever be worth a dime re­mains an open ques­tion.

“It’s just been a per­fect storm against us,” said Val Wag­ner, 41. “It’s not just one thing. Trade is an im­por­tant is­sue, but a lot of things are be­yond any­one’s control.”

The Wag­n­ers and other soy­bean grow­ers across the fruited plain are in a pre­car­i­ous po­si­tion partly be­cause of the U.S. trade war with China. The un­cer­tainty over that huge ex­port mar­ket and the rip­ple ef­fect it has had on crops from har­vest to ta­ble have left farm­ers in a bind.

The soy­bean har­vest nor­mally would have been com­pleted in Oc­to­ber, but the beans re­main in the dirt or in al­ready swollen-to-ca­pac­ity si­los and grain el­e­va­tors, a vic­tim of the trade war.

In July, the Trump ad­min­is­tra­tion im­posed 10 per­cent tar­iffs on more than $200 bil­lion of Chi­nese im­ports, cit­ing un­fair trade prac­tices by China, in­clud­ing dump­ing prod­ucts and in­tel­lec­tual copy­right theft. In re­tal­i­a­tion, China slapped tar­iffs on some $60 bil­lion in goods it im­ports from the U.S., in­clud­ing soy­beans.

“Be­tween mother na­ture, the tar­iffs and stor­age is­sues, we’re not done yet, un­for­tu­nately,” said John Buck, a farmer and cus­tom har­vester in New Bloom­ing­ton, Ohio. “Right now, we still have some soy­beans sit­ting in the ground, and the qual­ity will go down while the loss po­ten­tial on that crop goes up ev­ery day.”

Mr. Buck and Ms. Wag­ner say they be­lieve the sit­u­a­tion for farm­ers will be bet­ter in the end, but the end needs to come sooner rather than later. Ms. Wag­ner said fi­nal de­ci­sions must be made by the end of the year.

The farm­ers wel­come the 90-day “cease-fire” that Pres­i­dent Trump and his Chi­nese coun­ter­part, Xi Jin­ping, agreed to in Ar­gentina last week­end, but it does lit­tle to change the sit­u­a­tion in the ground. Farm­ers are scram­bling for time and space, with nei­ther com­po­nent show­ing signs of growth.

For the farmer, the trans­ac­tion ends when the soy­bean is sold to who­ever stores it. While some of this year’s har­vest is tied to con­tracts signed be­fore the trade war erupted, those hop­ing to sell their crop on the spot mar­ket or to ma­jor ex­porters face a daunt­ing chal­lenge.

From Septem­ber 2017 to Au­gust, 1 bil­lion bushels of soy­beans left Amer­ica via the Great Lakes, down the Mis­sis­sippi River to New Or­leans or out of Pa­cific North­west ports head­ing to China, ac­cord­ing to economists with the Depart­ment of Agri­cul­ture. That marked the first 12-month de­cline in soy­bean ex­ports in a decade. Since Au­gust, ex­ports to China have plunged 97 per­cent.

“We’re down to al­most noth­ing,” an Agri­cul­ture Depart­ment of­fi­cial said.

China buys one-third of all soy­beans planted around the world, and the U.S. and Brazil ac­count for two-thirds of all soy­beans grown, said John New­ton, chief economist with the Amer­i­can Farm Bureau Fed­er­a­tion. Some an­a­lysts are fret­ting that the mar­ket losses could prove dif­fi­cult to re­gain.

“Once China walks away from a mar­ket, there’s re­ally no one else that can step up and fill those shoes,” Mr. New­ton said.

At this point in the cal­en­dar, the U.S. typ­i­cally would have 600 mil­lion or more bushels of soy­beans shipped or en route to China. This year, the amount stands at 12 mil­lion, ac­cord­ing to the Farm Bureau.

Mr. New­ton said he hopes the 90-day re­prieve Mr. Trump and Mr. Xi agree to will pro­vide the nec­es­sary win­dow for this year’s har­vest.

“Soy­bean ex­ports are fore­cast to fall $800 mil­lion to $21.0 bil­lion as both vol­umes and unit val­ues de­cline, in large part due to weak­en­ing de­mand from China,” the USDA pre­dicted in its most re­cent quar­terly re­port.

Con­se­quently, peo­ple such as Mr. Buck, who farms 700 to 800 acres of soy­beans him­self while har­vest­ing up to an­other 1,500 acres, are hav­ing to travel greater dis­tances and take much more time to store the har­vest. That cuts into prof­its, slows the process dra­mat­i­cally and means the soy­beans in the ground are ab­sorb­ing more mois­ture, which re­duces their qual­ity, he said.

Some farm­ers have been granted tem­po­rary stor­age per­mits, which al­low them to keep the soy­beans un­der gi­ant tarps, but that ex­poses the crop to wind, rain and rats, ac­cord­ing to the Farm Bureau.

In some in­stances, farm­ers have cleared out their barns and con­verted the space to stor­age, rea­son­ing that their ma­chin­ery can with­stand the el­e­ments bet­ter than the beans, but that op­tion is some­times elim­i­nated by fac­tors even the most of­fi­cious gov­ern­ment bu­reau­crats can’t control.

In North Dakota, the first snow dust­ing came in early Oc­to­ber, and one storm brought 8 inches, Ms. Wag­ner said. The snow mixes with the dust kicked up by har­vest­ing and cre­ates a sub­stance like ce­ment in the ma­chin­ery, which means the big, ex­pen­sive com­bines have to be driven back to base ev­ery night to be hosed down and dried out, no mat­ter how far away, and then get back to the field the next morn­ing.

“It just keeps adding more and more ex­penses, and at some point it’s not worth it,” said Ms. Wag­ner, who with her hus­band, Mark, ro­tates crops on roughly 3,000 acres in Mo­nango, a town with a pop­u­la­tion of 39 in North Dakota’s south­east­ern cor­ner.

In July, the Trump ad­min­is­tra­tion an­nounced $12 bil­lion for a “short-term tar­iff re­lief” pack­age, money that is sup­posed to be ap­por­tioned ac­cord­ing to the hit farm­ers have taken. That would mean more for soy­bean grow­ers, al­though other farm­ers are also feel­ing the pinch.

For ex­am­ple, half of all U.S. wheat is ex­ported, but China hasn’t bought any since March, said Jim­mie Mu­sick, pres­i­dent of the Na­tional As­so­ci­a­tion of Wheat Grow­ers.

“NAWG ap­pre­ci­ates the ad­min­is­tra­tion’s steps to hold China ac­count­able for un­fair trade prac­tices, but tar­iffs and the sub­se­quent self-in­flicted need to pro­vide aid aren’t the an­swer,” Mr. Mu­sick said this year. “Farm­ers across the coun­try want ‘trade, not aid,’ es­pe­cially wheat grow­ers.”

A con­sor­tium of non­profit groups such as Tar­iffs Hurt the Heart­land has sprung up to ap­ply pres­sure on the Trump ad­min­is­tra­tion to lift or ease tar­iffs. The trade tac­tic also has drawn crit­i­cism from free trade sup­port­ers, al­though some of them, such as Larry Kud­low, Mr. Trump’s top eco­nomic ad­viser, ar­gued last week that China’s ac­tions have al­ready warped any “free” trade.

The ad­min­is­tra­tion’s tar­iff mit­i­ga­tion funds are paid based on har­vest, not what was planted. That means with­out the “set­tle­ment sheets” — the stamped chits farm­ers re­ceive when they de­liver their prod­ucts — the bailout won’t be avail­able.

“I’d say it’s just a very de­pressed mood right now,” Mr. Buck said. “We know that the end game here will be a bet­ter price for our goods, but the un­cer­tainty of when that’s go­ing to be is weigh­ing heav­ily on all of us.”

AS­SO­CI­ATED PRESS

WAIT­ING: Amer­i­can farm­ers are short on time and space in a trade war with China. Soy­beans that nor­mally would have been har­vested in Oc­to­ber re­main in the ground be­cause si­los and grain el­e­va­tors are swollen to ca­pac­ity.

AS­SO­CI­ATED PRESS

Farm­ers work­ing to get out their re­main­ing corn and soy­beans af­ter a weather-plagued har­vest sea­son are also strug­gling to fig­ure out what to do with the record soy­bean crop. They have fewer cus­tomers will­ing to buy be­cause of the on­go­ing tar­iff dis­pute.

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