Farmers Hope For China Trade Deal, But For Now They Worry About Tariffs' Impact
Chris Johnson knows all too well how a promising crop can suddenly be ruined — by poor weather, an economic downturn or bad luck.
This year, he and other soybean farmers in North Dakota are contending with something less common but potentially just as destructive: a trade war between the United States and China that has already driven down the price of soybeans sharply.
"Oh, it's a devastating loss. Soybeans are my largest acreage crop," says Johnson, who farms 3,300 acres in Great Bend, in the southern part of the state.
He's seen soybean prices fall by more than 20 percent. "On my farm, that's close to $150,000 that we have to make up," he says.
Johnson was among thousands who attended this year's Big Iron Farm Show in a fairground in West Fargo, an annual gathering for farmers to hear about developments in agriculture and check out the latest in threshers, combines and other equipment.
This year, much of the discussion centered on the Trump administration's decision to slap tariffs on Chinese imports and the subsequent retaliation by Beijing, which has essentially ceased buying soybeans and other products just as the harvest is coming in.
Prices for soybeans, the state's leading crop, quickly tumbled and haven't recovered.
"We are now on the brink of a crisis in farm country that is completely policy-driven," said Democratic Sen. Heidi Heitkamp, who spoke to farmers Tuesday.
"It's not being driven by weather. It's not being driven by bad farmers. ... We're struggling because we're getting bad policies," said Heitkamp, who's locked in a tough re-election battle against Republican Rep. Kevin Cramer.
The loss of the Chinese market has been especially painful because North Dakota has staked so much of its future on Asia, where a growing middle class has developed a taste for grain-fed livestock.
Soybeans and other crops are typically loaded on trains and shipped to the Pacific Northwest, where they're put on Chinese-bound freighters. Shifting to other markets isn't easy.
"The challenge that we have is we have infrastructure built to go west. If you're a farmer east of the Mississippi, you have a lot better chance of finding a new market than you do if you're us," Heitkamp said.
The drop in prices has placed many farmers in an uncomfortable dilemma: They can either sell their crops now at a loss, or store them and hope to sell them later if prices go up.
"I can't afford to sell my soybeans at what would be $6.50 [a bushel]," says Dan Younggren, who farms 6,500 acres in far northern Minnesota. "So I've got to put them in the bin. How long do I have to leave them in the bin? I don't know. One year? We're even talking about maybe putting up another bin to keep beans for a second year. That's unprecedented."
Like other farmers, Younggren hopes Trump will manage to achieve a trade deal with China, salvaging this year's harvest. But Younggren also worries that a trade relationship that was carefully cultivated over the years is damaged beyond repair.
"It took decades to get these markets in place with China and whatnot. And the marketplace is not going to come back overnight. It's just not," he says.
Younggren also says he understands the tough stance Trump is taking on trade.
"Did something have to happen? Yes, it did. We want fair trade, along with free trade. China has not been dealing fairly with us, and it had to be taken care of. Perhaps it should have been started four administrations ago," he says.
In a state that voted overwhelmingly for Trump, that's a view voiced by other farmers.
"Our farmers want markets. So they want better trade deals and they recognize that the administration is trying to get these better deals," says John Hoeven, North Dakota's Republican senator.
"In the short term that puts a lot of pressure on our producers, because they have to market a crop every year," Hoeven says. "So the challenge is getting these trade agreements done as soon as possible."