Midwest Farmers Fret About Tariff Talks, Especially Over Soybeans
ST. PAUL, Minn. — Midwest soybean farmers have come to rely on the agricultural system built up around international trade, and are closely watching what proposed tariffs might do to commodities such as soybeans.
University of Minnesota agronomist Seth Naeve tracks trade issues and said soybeans are as dependent - or more so - on international trade than any other crop grown in the U.S.
"Well, the soybean industry in the U.S. is entirely dependent on trade,” Naeve said. “So around 60 percent of our soybeans go out of the country."
China warned Sunday that all trade talks between Beijing and Washington would be void if the U.S. sets up trade sanctions. Last month China threatened to impose 25 percent tariffs on soybeans if proposed tariffs of $50 billion on Chinese goods were enacted.
Naeve said it's taken decades for Midwest farmers to secure soybean markets overseas and export products there. It's now estimated that one in three rows of U.S. soybeans is exported to China, for a market value of $12 billion annually.
Naeve said a trade war is especially concerning to farmers, who have already suffered lower farm incomes during the past four years.
"With the farmers, their margins are very, very, very thin,” he said. “They've been banking on increased yields and continued prices. And if they have either a crop failure or prices decline, there's going to be a real farm crisis."
Some agricultural traders have already confirmed reports that uncertainy in the market has caused China to increase soybean purchases from Canada and Brazil. Neave noted that price comes first for soybean buyers - meaning they will seek out other countries such as Argentina or Brazil if the price is better than what the U.S. can offer.
"Brazil has a large capacity to increase production,” he said; “and so they're going to be more competitive the longer this goes on."
Minnesota is the nation's third-largest producer of soybeans, behind Illinois and Iowa.