“It’s hard to know which way to jump right now.”
Iowa soybean farmer Ron Heck, a member of the White House's agricultural advisory committee, is about as plugged into his business as anyone can be. However, with trade tensions simmering between the United States and China, even Heck doesn’t know what to expect. That makes farming, an already unpredictable business, even more so.
China purchased $12.4 billion worth of soybeans from the United States last year. To put it another way, one of every three rows of soybeans grown in this country ends up in theirs. China has threatened to impose a 25% tariﬀ on soybeans and other products imported from the U.S., which would be an increase from the 16% tax that’s already in place. The actual tariff stands at 3%, but as of 2017, China also charged a 13% value added tax on imported agricultural goods.
Last month, industry sources told FOX Business that Chinese orders of soybeans for the fall harvest had all but stopped. However, this is always a slow season in Iowa. The soybeans in harvest come from South America at this time of the year, and China has continued to import from Brazil and Argentina. For farmers like Ron Heck, the worry is that shift becomes a trend.
“So far, so good,” says Heck. “But if they would shift their purchases, that could be a problem for us and that’s when we might feel the price impact.”
For now, it’s watch the news and wait to see if there’s progress in the talks. The uncertainty makes it diﬃcult to plan, so Heck is not making changes to his business plan for the rest of the year.
“No changes are called for yet. Actually nothing has happened so far,” Heck says. “There is a chance, as the result of these negotiations, it will actually be helpful for U.S.-China soybean trade.”
And that’s why he says ... it’s diﬃcult to know which way to jump right now.