The economic outlook for soybean farmers is dire. Trade is the lifeblood of the U.S. soybean industry, and right now it is ebbing away as soybean growers are unduly caught in the crossfire of the U.S.-China trade war. Many of us are wondering whether we will be able to remain in business past this year.
We have already endured ten months of tariffs, and as this planting season begins, we fear that the latest rise in tensions could indefinitely delay an agreement that removes China’s 25 percent retaliatory tariff on U.S. soybeans. The effects of the prolonged trade war have already caused soybean prices to fall to levels at which any sale only locks in a loss.
Two generations of American farmers
The tariff war has destabilized the economic outlook for soybean growers and the rural communities that depend on them.
As we plant our 2019 crop, unsold soybean supplies are expected to double before harvest begins in September, further depressing prices and forcing older farmers to consider retiring early to protect their equity and younger ones to look for other careers. We could be seeing the loss of two generations of American farmers over the next year or two.
Before the tariffs, soybeans were one of the brightest lights among U.S. exports— being the number one agricultural export. China, our largest trading partner, purchased about $14 billion (nearly 60 percent of exports) worth of soybeans annually.
The China market did not appear overnight. Soybean farmers have worked with the Department of Agriculture for 60 years to develop foreign markets for soybeans and have seen the value of annual U.S. soybean exports to China grow from $414 million in 1996 to more than $14 billion in 2017.
As a result of China’s prolonged tariff on soybeans, we have seen only 13.3 million metric tons of soybeans shipped to China since last September, less than half of what was shipped by this time last year.
It’s simple: The longer this trade war continues, the more farmers and economies of rural communities will suffer. The outlook for rural America is bleak unless the Trump administration can reach a deal that immediately lifts China’s 25 percent retaliatory tariffs on U.S. soybeans.
Davie Stephens is a Kentucky soy grower and president of the American Soybean Association.