Trade War Impact on Soybean Farmers
SIOUX FALLS, S.D.-It’s been a tough year for farmers as they were hit with bad weather and tariffs. A trade war between China and the US started back in July of last year and is still ongoing.
Farmers are used to uncertainty as they deal with different weather conditions each year. This year wasn’t as good of a year.
“In our area it’s been an extremely wet year. We’ve had an abundance of rain, so our yields were a little below average in this area,” said Dave Poppens, a Lennox Farmer.
However, this year has been especially difficult as they’ve also had to deal with tariffs. China is normally the number one buyer of soybeans for US farmers, but Chinese tariffs severely reduced the market.
Since the demand decreased, soybean prices dropped $2 a bushel, meaning farmers did not have as profitable of a summer.
“It’s been a tough year for us in this area. The cash flow just hasn’t been there like it’s been in the past,” said Poppens.
Poppens usually exports his beans, but this season he’s sold them domestically to local processors. Now he has about a third of his soybeans left to sell. Like many farmers, he’s holding on to most of what’s left, hoping the trade war ends soon.
“Well hopefully they can get a resolution resolved here and get China’s market back,” said Poppens.
Even though it’s been a tough year, Poppens says what’s helped is marketing assistance from the government. Farmers can receive an additional $1.65 per bushel from the USDA.
“It’s helped offset some of that loss, but yeah it’s still a loss we haven’t gotten back since last summer,” said Poppens.
Farmers are also always looking for other markets to sell their beans to, such as Mexico and Japan.
“Sometimes we have to spread our risk out a little bit and then look for other customers and so there’s potential. The beans have to be used somewhere, it’s just where they’re going to go,” said Poppens.
For now it’s a waiting game for farmers, but they hope to get the Chinese market back soon.
“They’re going to need the beans from somewhere and Brazil, I don’t think they’ll be able to provide enough beans to supply China,” said Poppens.
The United States and China are working to reach an agreement by a March 2nd deadline. That’s when President Trump has threatened to raise tariffs on $200 billion dollars worth of Chinese goods from 10 percent to 25 percent.