In a sign that their patience is waning, soybean leaders called for talks, not tariffs, in the Sino-U.S. trade war. “With depressed prices and unsold stocks expected to double by the 2019 harvest, soybean farmers are not willing to be collateral damage in an endless tariff war,” said Davie Stephens, a Kentucky farmer and president of the American Soybean Association.
The National Farmers Union, the second-largest U.S. farm group, also said on Monday that the financially beleaguered agricultural sector needs long-term economic solutions, rather than spur of the moment bailouts from the White House.
Building on Twitter posts over the weekend, President Trump told reporters the administration would provide $15 billion in assistance “so our farmers can do well.” He gave no details. A 2018 package sent $8.3 billion in cash to producers of nine commodities.
Senate Agriculture chairman Pat Roberts urged a speedy resolution of the trade war. “It is essential to focus on what can be done now,” said Roberts. “These negotiations must find a successful conclusion soon so our producers can realize open and reliable markets in China and around the world.”
The administration is quick to promise and slow on details, said economists Brent Gloy and David Widmar, when “farmers and ranchers deserve better” than short-term thinking. “We contend it is exceedingly difficult for U.S. producers to make business and financial plans when the promises are a combination of mixed messages and light on details. However, a strategic plan with long-term, multiple-year payments mechanisms built in – should the trade war continue – would significantly help farm managers and the farm economy.”
In some of the strongest language yet by a U.S. farm group, the American Soybean Association said the trade war threatens farmers’ ability to stay in business. The ASA urged the administration to remove its unilateral tariffs and work with other nations to reform China’s trade policies. Before tit-for-tat tariffs, China bought a third of U.S.-grown soybeans. Exports have plunged and the U.S. stockpile is headed for a record 1 billion bushels, a three-month supply.
“Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting,” said ASA chairman John Heisdorffer, of Iowa.
The escalating trade war is a burden for farmers on top of low commodity prices and natural disasters such as flooding in the northern Plains and the western Corn Belt, said president Roger Johnson of the National Farmers Union. “Although we are glad that the administration is considering additional assistance, such temporary solutions are not sufficient to address the permanent damage the trade war has inflicted on agricultural export markets.”
“In addition to short-term relief, we ask that Congress adopt meaningful, long-term solutions that will ensure the economic viability of family farm agriculture,” said Johnson.
Speaking to reporters in the Oval Office, Trump said, “We’re going to take the highest year, the biggest purchase that China has ever made with our farmers, which is about $15 billion, and do something reciprocal to our farmers so our farmers can do well.” In fact, the peak for U.S. exports to China was $25.7 billion in fiscal 2014.
Agriculture Secretary Sonny Perdue, on a trip to Asia, said he was working on an aid plan. China is “trying to harm U.S. producers and harm President Trump politically and he is sending a sincere message that he will not allow that to happen,” Perdue told USDA’s radio news service.
Meanwhile, Trump’s idea over the weekend of buying and giving away billions of dollars of U.S. farm goods is unlikely to become reality, said economist Scott Irwin of the University of Illinois on social media, adding, “the only real option is to send checks like the MFP (Market Facilitation Program) last year.”
“If the trade war with China intensifies and becomes entrenched, then how does this end for our major crops (corn, soybeans, and wheat)? Will they effectively become wards of the state like they were in the 50s, 60s, and 80s?” asked Irwin.
Beginning in the Depression and continuing for decades afterward, U.S. farmers were locked in a cycle of commodity surpluses, low market prices, farm subsidies and loose-fitting federal control of production. Conditions improved late in the 20th Century during a period of free-market reforms in U.S. farm policy and a rise in food demand worldwide.
On Monday, China increased tariffs on $60 billion of U.S. products in response to Trump’s decision to raise tariffs to 25 percent, from the previous 10 percent, on $200 billion of Chinese goods. The Finance Ministry said the U.S. actions “led to an escalation of Sino-U.S. economic and trade frictions, contrary to the consensus between China and the United States on resolving trade differences through consultations…”
“We’re going to be meeting, as you know, at the G20 in Japan,” said Trump at the White House, referring to Chinese President Xi Jinping. “And that’ll be, I think, probably a very fruitful meeting.” The G20 summit runs June 28-29 in Osaka, Japan.