Trade tops list of priorities during ISA’s visit to Capitol Hill03/21/2019 | Soybean Exports, Policy, Soybean News
By Bethany Baratta, ISA senior writer
Iowa soybean farmers took to the nation’s capitol this week to engage with their elected officials and chief negotiators and encourage a swift resolution to pending trade deals.
The U.S. imposed 25-percent tariffs under Section 301 on $34 billion in Chinese products on July 6, and China retaliated the same day with a 25 percent tariff on U.S. soybeans.
Iowa soybean farmers are feeling the direct hit of those tariffs, they said.
“A year ago, in January and later in May, I pre-sold half of my soybeans for $10.24 cash and $10.04 cash. But when the trade tariffs hit, boom, it dropped $2 per bushel. Now I can sell them for $8.30, $8.40 per bushel,” April Hemmes, a Hampton farmer, told her representatives in Washington, D.C.
That 20 percent fall in price hurts, said Lindsay Greiner, ISA president from Keota.
“At 60 bushel-per-acre beans, $2 less in price, that’s $120 less per acre,” he said. “That means a 500-acre soybean farmer just lost $60,000 of their money. That’s a lot of profit.”
On top of the tariffs, there’s a glut of soybeans on the world market, Hemmes said.
“I’m used to supply and demand and the markets going up and down, but these tariffs came at a terrible time. We have a lot of beans in the world, so to add those tariffs on top of bad crop prices, that’s real money out of our pockets,” Hemmes said.
It’s hard for soybean farmers to pencil out a profit in the face of the tariffs, Greiner said.
“We’re growing soybeans for about 50 to 75 cents a bushel less than it costs us to produce it. We’ve gone from maybe making $40,000 to losing it. It affects the bottom line,” he said.
While the trade mitigation payments helped soybean farmers squeak by, ISA farmer-members said they would rather have trade over aid.
“That [trade mitigation] payment we got really helped, it really made a difference, but we would really much rather have free and fair trade than payments from the government,” Hemmes said.
China trade is complex
Trade negotiations with China are complex, said Gregg Doud, chief agricultural negotiator in the Office of the United States Trade Representative (USTR). The discussions between the two countries aren’t just about agriculture, but also about intellectual property, forced technology transfer, currencies, digital trade and others.
“We have to fit this together at the same time,” Doud said. “You don’t sit down and have a conversation about $500 billion in trade in an afternoon. It takes time.”
Doud said these negotiations with China aren’t meant to be a short-term, quick fix.
“This is not a situation where we’re going to do a trade deal with China and move on. That’s not what we’re doing here. We are setting the stage for a template to move forward,” Doud said.
Tim Bardole, ISA president-elect from Rippey, recognizes the work that Doud and his counterparts are doing to finalize trade deals.
“My son started farming with me two years ago and I truly believe the work you’re doing is vital not only to his ability to stay on the farm and prosper, but also for his son when he grows up,” Bardole told Doud. “I appreciate the work you’re doing.”
The United States, Mexico, Canada agreement (USMCA) is important for Iowa soybean farmers, the delegation told D.C. staffers last week.
The USMCA was signed by the three countries in November 2018 but has yet to be ratified by Congress using the Trade Promotion Authority (TPA) timeline and process.
U.S. soy exports to Canada and Mexico were almost $3 billion in 2017, Iowa farmers noted. U.S. soy exports to Mexico alone have grown four-fold since the enactment of the North American Free Trade Agreement (NAFTA), of which USMCA is its replacement. Mexico is the second largest export market for U.S. soybeans and soybean meal. Both Canada and Mexico are hugely important markets for U.S. agriculture, representing a total of $43 billion in U.S. ag exports annually.
Doud said the USTR has also been working to resolve the Section 232 tariffs on autos, noting that was a separate issue outside of the USMCA.
“There isn’t a day that goes by that we’re not trying to fix this,” Doud said. “Mexico and Canada conversations are constant. I think we’re going to get there. I think we’re going to get this done.”
While it’s difficult to be patient in waiting for trade deals, the visits on Capitol Hill gave some assurance that progress was being made, Greiner said.
“We’re running out of patience, but they’re working on it every day. It just takes time,” he said. “The good news is we’ve got a little bit of time. We’ve got a few months yet that we can live without a deal. But when we get toward harvest time, we’ve got to have a deal done or it’s not going to be good for farmers.”
Contact Bethany Baratta at firstname.lastname@example.org.
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