Soybean farmers brace for China tariffs in retaliation for U.S. moves

Soybean rows on Duane Ommodt's farm
Soybean rows on a farm in rural St. James, Minn.
Jackson Forderer for MPR News 2015

Minnesota farmers on Wednesday pushed back against President Trump's proposed trade tariffs, after China targeted Minnesota's largest farm export: soybeans.

China is the state's largest agricultural export market. The Chinese buy more than $2 billion worth of Minnesota soybeans a year. So when China announced a proposed 25 percent tariff on U.S. soybeans, it shook up farmers who grow the crop.

"It's a huge impact," said southern Minnnesota farmer Darin Johnson.

Johnson, who farms along with his father and uncle, says if the China tariffs take effect, they will hurt farmers. The fear is that the added tax will reduce U.S. soybean sales to China, weakening overall soybean demand and price.

That's happening already. After China announced its trade sanction plans, soybean prices dropped about 2 percent. That's roughly a $75 million reduction in the value of the state's 2017 soybean harvest. And Johnson says prices are already so low that most farmers have seen little economic return on their beans.

"There was a few people that could have been profitable, but for the most part I would say break even or even lost a little bit," said Johnson.

Before you keep reading ...

MPR News is made by Members. Gifts from individuals fuel the programs that you and your neighbors rely on. Donate today to power news, analysis, and community conversations for all.

Johnson serves on the board of the Minnesota Soybean Growers Association. He says the organization hopes that the two sides will negotiate their differences, and pull back from what appears to be a slippery slope downhill into a full-scale trade war.

In a news release the soybean group called on Trump to reconsider the proposed U.S. tariffs that led to the Chinese retaliation on soybeans and other American products. Agricultural banker Kent Thiesse said it's a troubling, but predictable situation.

"If there's going to be retaliation by the other country, the odds are pretty high that it's going to impact agricultural products," said Thiesse.

Thiesse said that's because the U.S. has a trade surplus with China for agricultural goods overall. So it's not surprising China would target that sector for reprisals. But China's demand for U.S. farm commodities also gives him hope that the two sides can reach a deal.

Thiesse, who works for MinnStar Bank in Lake Crystal, said since American farmers help feed the Asian nation, any reduction in that supply could be a problem for China.

"Are they going to be able to find enough soybeans in the next twelve months in the rest of the world to fulfill their needs if they aren't buying as many from the U.S.," said Thiesse.

Soybean producers are hoping that's what will happen.

Most farm areas strongly supported Trump in 2016. And when the President thanked them for that support at the American Farm Bureau Federation annual convention in January he was for the most part warmly received.

"Our nation's farmers are just the most incredible people," said Trump. "And we are doing a job for you."

And based on mainly positive reviews from the nation's major farm organizations, there's support for Trump's agricultural initiatives, like reducing government farm regulation, or expanding broadband internet service in rural regions. But the trade area gets mixed reviews.

There's the trouble with China, and possibly, ending the NAFTA deal with Canada and Mexico. With all that going on, some farmers are beginning to wonder out loud if the president is as strong a farm supporter as they hoped.