soybeanfields

How Much of an Impact Will Soybean Tariffs Have on SWM Marketplace?

soybeanfields

The impact of the tariff battles on an international scale is also being felt on a far more localized level due to the substantial investment in farms, fields and orchards throughout the state of Michigan.

On Friday, the Michigan Farm Bureau issued a statement arguing that the fallout from the ongoing tariff retaliation battle between the U.S. and China is continuing to evolve, and “the news isn’t getting any better for Michigan farmers, especially soybean producers.”

Kate Thiel is a Field Crops Specialist for the Michigan Farm Bureau. She says things are likely to get worse following last week’s announcement of an additional $200-billion in tariffs on Chinese imports by the Trump Administration.

Thiel says, “The latest USDA export sales data released on July 6, covering trade through June 28, reveals that total lost 2017/2018 U.S. soybean sales have now exceeded 5-million metric tons.” She notes, “That’s more than 2-million metric tons higher than cancellations the same point in the 2016/2017 marketing year and more than 1-million metric tons higher than the level of cancellations throughout the entire 2016/2017 marketing year.”

ADVERTISEMENT
Your content continues below

Soybeans in the tri-county region of Berrien, Cass and Van Buren had surpassed 111,500 acres planted in the most recent data available from the Southwest Michigan Planning Commission from 2013. That represented just over 10-percent of the total land cover in the region at that time.

In 1987 Berrien County’s soybean acreage was 26,110, but it had soared to nearly double that in the next five years to top 51,409 acres by 2002. Exact acreage in soybeans at the moment is unknown, but considered to be considerably higher than even those figures.

In fact, the Michigan Farm Bureau says that this year alone the late planting season delayed by excessive rainfall had motivated many Michigan farmers to switch tillable acres from corn production to more soybean acres than originally planned even here in 2018.

Thiel says, as a result, “When you talk about the perfect financial storm, many Michigan farmers are rightly concerned that the $250-billion high stakes poker game of tariff retaliation has to stop and alternative trade negotiation tactics pursued sooner rather than later.”

Even beyond Michigan’s rich farmlands, commodity groups and agriculture-related organizations were warning back in mid April of “serious consequences for farmers if the trade spat between the U.S. and China continues.”

Brian Kuehl is Executive Director of Farmers for Free Trade. He said back then that tariffs enacted or proposed by both countries could have a huge impact, even if the dispute doesn’t last long. Kuehl argued at that time, “A lot of farmers in the Midwest have been counting on soybeans; they saw them as the one bright light,” adding, “They were planting or have planted soybeans, made purchases of seed. Then, lo and behold, we get into a trade war. That’s real consequences.”

One Extension Educator providing deep background says, “These tariffs raise the prices of U.S. grains in China, which buys a lot of corn, wheat and soybeans from us. Wheat for noodles, soybeans for cooking oil and animal feed and corn for animal feed.” That educator says, “American grain producers have a cheap, high quality, product on the world market. If China stops buying from the U.S. because it is suddenly 25-percent more expensive, they will buy elsewhere, then the person who was going to buy that product will probably buy from the U.S. (especially since they do not have to pay that 25-percent tariff).” By way of example, if Brazil sells more soybeans to China, then the folks that were going to buy from Brazil will need to buy from somewhere else, probably the U.S.”

Agricultural authorities recommend grain growers market their crop across the season. By way of example, sell some in the futures market before harvest, sell some at harvest, and sell some later in the season at a favorable price spreading the risk across the season.

In an entirely different light, peach and blueberry growers literally have to sell their product today because it is just no good, or even worthless, tomorrow with a fresh commodity like fruit.

In the meantime, farmers, growers and the rest of the agricultural community continue to hope for rapid resolution of the trade wars so they can just get back to worrying about weather, the workforce, and other issues rather than how much will be artificially tacked on in the form of tariffs in the marketplace. Stay tuned.

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*