As trade dispute escalates, Midwestern farmers brace for another miserable year

Adam Belz, Star Tribune (Minneapolis) on

Published in Business News

Late spring planting, as is happening this year in Minnesota, tends to weaken the fall harvest and lift prices on crops.

But not when there's a trade war.

Farmers now face the prospect of both a smaller crop and lower prices -- particularly for soybeans -- thanks to the latest round of tit-for-tat tariff fighting between the United States and China.

"Normally, these markets would be much higher because of the weather, and this trade dispute basically has mellowed that out," said Bill Gordon, a farmer near Worthington, Minn.

Citing displeasure with the pace of trade negotiations with China, President Donald Trump said early this month that he would raise tariffs on $200?billion in Chinese imports from the 10% level to 25%. Late last week, he followed through on the threat. China responded with new tariffs on $60?billion worth of American exports. Those specifics are less important than the broader signal that the two nations are moving farther apart in the trade dispute, which, in farm country, has most visibly played out by reducing the flow of U.S. soybeans to China to a trickle.

"This escalation of the trade war is just going to prolong this trade battle," Gordon said. "It's going to take longer for them to get a deal. Both sides are digging in."


Farmers in Minnesota have been harder hit than most, since a sizable portion of the state's soybeans are grown for export to China. Farmers all over the country are muddling through a four-year down cycle in corn and soybean prices. Soybeans still haven't recovered from their initial drop when the trade war started last summer. Soybean farmers were bailed out by the Trump administration with direct payments of $1.65?per bushel for their 2018 harvest.

Soybean prices fell again last week as the latest trade developments unfolded, but Trump didn't talk about new aid for farmers until late in the week. The process seemed slapdash and farmers seemed to be an afterthought, said Jamie Beyer, whose family raises corn, soybeans and wheat near Wheaton, Minn.

"The federal policymakers were like 'Well maybe we should talk about what we're going to do for the American farmers.' That's when I lost it. I got mad, because, how do we let our government cause these huge swings in trade that impact our bottom line with no thought to what we could be doing for American farmers?" Beyer said. "This has certainly been a possibility in their mind. Why haven't they planned for it?"

Beyer said she checked with her local grain elevator last week and the price for soybeans was $2.50 per bushel lower than it was a year ago at this time. Her family raises around 100,000 bushels of soybeans a year. Typically they lock in prices at time of planting for a portion of their crop, but not this year.


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