Harvest starts to look like it will be bitter
The losses associated with the mushrooming trade dispute with China are staggering — Iowa soybean producers could drop more than $600 million annually. The estimated loss comes following President Donald Trump’s announcement that the United States will impose 25 percent tariffs on $50 billion in Chinese goods. The loss is not, of course, restricted to Iowa. One in every three rows of U.S. bean production is exported to China.
Soybean growers and farmers in general have been treading a fine line between profit and loss as evidenced by a 75 percent decline in net U.S. farm profit since 2011.
Minnesota soybean producers have seen market prices drop like a rock in recent weeks — dropping from the mid-$9 range to a profit-busting mid- to low $8.
Right now, it looks like only weather problems in the Midwest could create rallies in corn and bean prices.
Soybean growers aren’t the only ones suffering from the conflict with China. Iowa and Minnesota hog producers have seen market prices nosedive in the last month to below profitable levels. Markets are expected to be unprofitable for all of 2018. Iowa Extension economist Lee Schulz says that June hog futures hit a record low. Before the tit-for-tat tariff fight, economists estimated that producers would have a $8.49 per head profit for 2018; now the per-head loss is estimated at $4.34.
U.S. ag secretary Sonny Purdue should be a strong voice for farmers’ interests, but the Georgian has become invisible and mute. Purdue’s appointment as ag secretary was praised because of his knowledge regarding trade matters, but evidence of his expertise in that area is impossible to find.
The Trump administration has promised help for farmers who are suffering financially in the budding trade war. When President Trump promised help — the plan was no more specific than that — he said farmers are great patriots and understand that sacrifices will have to be made to bring fairness back into the international trading system.
It is not encouraging that the White House missed an opportunity to show support for farmers when the opportunity arose to make a greater commitment to ethanol, biodiesel and other renewable fuels through the Renewable Fuels Standard. EPA administrator Scott Pruitt used a ruse when he issued mandatory RFS requirements for 2019 and 2020 to make it appear that the White House fully supports renewables.
Pruitt’s EPA asks for a total renewable fuel standard volume of 19.88 billion gallons, with 4.88 billion gallons in advanced biofuel. The request upset Iowa Sen. Charles Grassley and North Dakota Sen. Heidi Heitkamp, who say that Pruitt gives growers that boost with one hand while the other hand grants oil refineries exemptions from using ethanol, effectively reducing the amount of corn to be made into ethanol.
Unless the heated tariff movement cools, 2018 fall harvest may well be bitter for farmers and those who support them.