Trade war fears rattle American soybean farmers
SOYBEAN farmers in Iowa are concerned about a possible trade war between the United States and China, which will see no winner, according to an Iowa Soybean Association official.
Last Thursday, US President Donald Trump signed a memorandum that could impose tariffs on imports of up to US$60 billion from China, the latest unilateral move that is likely to cause trade retaliation.
“We were disappointed to see that these actions have been taken. Of course we did not want to see any kind of trade disruptions,” Grant Kimberly, marketing director of ISA said.
Global soybean imports are likely to reach 151 million tons this year, of which China will import 97 million, or 64 percent, according to Peter Meyer, senior director of agricultural analytics at S&P Global Platts.
The US provides close to 60 percent of the global soybean production and Iowa supplies approximately 39 percent of China’s soybean needs.
“China is our No. 1 and most important market. It’s a market that the US soybean industry has been working in and been involved with for over 35 years when ... (it) first established an office in China back in the 1980s,” Kimberly said.
China is also the second-largest purchaser of US pork.
A retaliatory tariff on US agricultural products would hurt American farmers at a time they are already struggling financially. Earnings are expected to fall 6.7 percent this year to US$59.5 billion, the Department of Agriculture projects. It would be about half of the nation’s 2013 record high earnings.
“US farmers would be very concerned that a trade war would be a negative. It would reduce prices (for) farmers. We’re already in a downturn in the US agriculture economy. So that would make things worse,” Kimberly said.
The ISA official thinks the import tariffs announced by the Trump administration would dent the US agricultural market, and domestic soybean prices could suffer the most.
“It already has a negative impact. We’ve already noticed that soybean prices have dropped from where they were about a month ago, that’s partially due to trade war fears,” he said.
The official said farmers will soon go to the field as the spring planting season starts. If prices remain weak, that might influence the types of crops they would grow. “They may choose to not grow as many soybean acres if the prices are not looking as positive long term,” he pointed out
Iowa and US agricultural officials have long warned the White House about the negative implications for the soybean industry if sanctions and tariffs are imposed. In just five years, US farm income has declined 50 percent while crop prices have dropped 40 percent.
The Chinese embassy in the US said “any disputes and differences between the two countries should be solved through dialogue and consultation.”
The Chinese ambassador to the US, Cui Tiankai, said that there is great potential for China-US cooperation “but the key is that both sides have to take a cooperative and constructive approach; a confrontational one will not help anybody.”