Trade war with China wears on grain producers
The Maryland Grain Producers Association gathered for a board meeting at the state’s agriculture department in Annapolis last week, days after President Donald Trump announced an escalation of his yearlong trade war with China.
“The consensus was, ‘We’re willing to stick out a little bit longer, but we’re getting nervous, and we’re getting frustrated,” said Chip Bowling, an association board member and a grain farmer in Charles County.
Farmers and agricultural officials across the Delmarva region expressed similar sentiments last week. Though many said they agree in principle with Trump, grain farmers continue to struggle with several years of depressed prices and the aftermath of record rainfall that delayed planting and shrank yields last year.
Some farmers are at a financial precipice and are selling farmland or renegotiating leases, said Chip Councell, another association board member and past chairman of the U.S. Grains Council.
“I think as you look around the community, I think there are situations where there are some financial difficulties,” he said. “When you look at the lower commodity prices, it’s certainly taking its toll.”
Soybean prices plunged early last week to a 10-year low after Trump’s decision on May 5 to impose punitive duties on $200 billion of imports from China and China’s retaliatory tariff hikes May 13 on $60 billion of American goods. U.S. officials then listed $300 billion more of Chinese products for possible tariff hikes, and China on May 14 vowed to “fight to the finish.”
The trade war that began last summer has already hurt farmers, despite $11 billion in relief payments that were doled out last year by the federal government. The personal income of farmers declined by $11.8 billion through the first three months of 2019, according to the U.S. Commerce Department. A similar pace of decline is expected in the coming months, according to the Federal Reserve Bank of Kansas City.
“The domestic stress caused by the administration’s trade policy is nowhere more evident than in the agricultural sector,” said Joseph Brusuelas, chief economist at the consultant RSM. “Should the current policy pathway not be changed, the farm sector is going to experience the greatest downturn since the late 1980s, driven by widespread bankruptcies and consolidation.”
Trump said May 13 that more aid is planned. U.S. Sen. John Hoeven, a North Dakota Republican who heads the Senate Agriculture Appropriations Committee, put the estimated amount at $15 billion.
Delmarva farmers, however, would rather have a trade agreement with China and an open market, Councell said. But even if the United States and China sign a deal, it could be some time before markets are fully restored, said Richard Wilkins, president of the Delaware Farm Bureau.
“It’ll be a long time for us to get back to the same level of sales with China that we had before this trade war began,” he said.
The trade war has “wreaked havoc” on Virginia farmers, said Wilmer Stoneman, vice president of agricultural development and innovation at the Virginia Farm Bureau. The state exported $1.72 billion in agricultural good to China, its second-largest export market, in 2017, the Farm Bureau said. Farmers are moving through spring planting season with uncertainty about grain prices, and grain stores are rising, Stoneman said.
“The rank-and-file folks support the president and what he’s doing generally, but the concern is we’ve got to get a trade deal,” he said. “The farm economy is in a bad way.”
Mike Harrison, a grain farmer in Woodbine, Md., said he has 6,000 bushels of soybeans in storage waiting for an improved market.
“I’d like to see grain go back to where it was,” he said.
But with the trade war in its second year, support for President Trump is also strained. The American Soybean Association said it supports Trump’s overall goals, but that it “cannot support continuing and escalating the use of tariffs to achieve them.”
“The soybean market in China took us more than 40 years to build, and as this confrontation continues, it will become increasingly difficult to recover,” said American Soybean Association President Davie Stevens, who farms soybeans in Kentucky. “With depressed prices and unsold stocks expected to double by the 2019 harvest, soybean farmers are not willing to be collateral damage in an endless tariff war.”
The American Farm Bureau Federation sent a letter to the president last week urging him to make a deal as soon as possible. In the letter, AFBF President Zippy Duvall said the tariffs are “slashing our exports, destroying a once-promising market for agriculture, worsening the farm economy and contributing to high levels of stress and uncertainty for many farm and ranch families.”
The trade war is also reaching into the broader agricultural economy. Equipment sales at Atlantic Tractor’s Salisbury, Md., location are down 30 to 40 percent this year, branch manager Mike Laws said. The branch’s repairs business has also declined similarly.
Harrison said he still supports the president.
“It hurts,” he said. “I guess he’s doing what he’s got to do for the country.”
(Editor’s note: The Associated Press contributed to this story.)
CORRECTION: The print version of this story published in The Delmarva Farmer misstated the length of President Trump’s trade war with China. It has been ongoing for a year. This version of the story has been corrected.
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