Tuesday, July 10, 2018

In South Dakota, We're All Soybean Farmers

     The South Dakota Farm Bureau doesn't have much in the way of moxie these days.  Its president, Scott VanderWal was on KELO-radio last Friday acknowledging the devastating potential of President Trump's tariffs on our state's corn and soybean farmers.  He sounded the appropriate call for alarm by noting that "if we disrupt trade like we are now with the farm economy in poor shape . . . it's going to be economically devastating."  The prospect of farmers selling this year's crop at prices a good fifteen to twenty percent lower than what markets were expecting last Spring, just before Trump's trade war-fixation turned into policy has walloped South Dakota's farmers.
     "Devastating" was certainly the right word to describe the situation, but that's where the
SD Farmers Talk Soybeans To China
August, 2017
strong language ended. 
The logical follow-up to VanderWal's alarming prognosis would seem to have been a call to action but what we got instead was a call to timidity.  He said South Dakota's farmers need to make their voices heard in Washington, "but we have to be careful how we do that because he (Trump) doesn't respond to attacks very well, or perceived attacks." That squeamishness is probably the reason our politically wimpish congressional delegation hasn't been more forceful in criticizing, if not altogether condemning, Trump's tariff gambit.   Maybe it's just me, but it seems like a much more muscular response to the president's threat of financial devastation to South Dakota's farmers is in order.  With Trump, vapidity won't get it.  If the Farm Bureau's approach to the financial armageddon predicted by VanderWal were limited to its members, there wouldn't be much reason for the rest of us South Dakotans to stick our noses into their business.  But as we've heard relentlessly for the past few years, persistent softness in farm income has hurt the state's overall economy.  To a real extent, all of us in South Dakota are farmers, dependent as we are on the condition of our crops and the money they bring in to the state.
     South Dakota's current soybean crop has experienced a $500 million paper loss since last Spring's market peak.  That's a lot of pain for a small state like ours to absorb.  We all have a stake in this.  What's more, the need for getting through to Trump about the "devastating" potential of his trade policies isn't just a short-term thing. There are long-term urgencies to contend with.  Agricultural media have been bursting with news about how China, the world's largest soybean importer, is making it a national policy to build domestic supplies by subsidizing its farmers heavily and seeking new suppliers, including Russia, to replace an American source that has suddenly turned toxic in a geo-political sense.  Considering that about half of the U.S.A.'s annual soybean harvest of 4 billion bushels is exported and that two-thirds of those exports go to China, we're talking about a serious game-changer here.  Even if China's rapacious demand for soybeans forces the country to take a while before it weans itself away from American supplies altogether, we run the risk of this game of tariff-chicken becoming a catalyst for changes in Chinese buying behavior that in turn creates a new network of suppliers for Americans to compete against. In that scenario, the downward pressure on prices will be persistent and painful.

8 comments:

  1. He does respond to your vote and your got what you voted for. Welcome to the new republican party boys and girls.

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  2. For all sins Galatians 6:7 comes to mind.

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  3. Good post. I won't claim to be an international trade expert, but I refuse to believe other soybean exporting countries won't try to fill the gap as quickly as they can. Once the market is gone, it will be difficult if not impossible to get it back.

    Hosea 8:7 may be more applicable in this situation

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  4. From another location, reader John Wrede comments: I don't believe we've even begun to see the damage done to our Ag economy by this isolationist trade policy. If we think our former trade partners are going to forget the insults, the ill will and false accusation that started all this I think we're kidding ourselves. Time is not on our side. We have two more years of this unconscious dysfunction and that is long enough for China, Russia, and even Canada and Mexico to forge new, long term trade deals that will not only allow them to save money but also attract supporting enterprises and jobs..... If our farmers can't make enough money to replace capital equipment, machinery companies are going to take their business to developing countries with potential to produce commodities in larger volume at cheaper prices. What is to prevent them from doing the same thing as Harley Davidson and a couple of others... Will Ag land values decline? There are side effects to this stupidity that will last for decades and yet we have spineless representation that won't stand on their two hind legs and make a stand. Maybe, what we'll see, is a complete change in the farm bill to pour more tax money into land set aside, crop deficiency payments, crop insurance and a few other safety nets that only help corporate agriculture...... These people fall all over themselves with protect the family farm rhetoric when the camera is rolling but patronize corporate welfare in every other venue.

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    1. That covers all the bases. Thanks, John.

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  5. This blog doesn't even touch on the other part of the tariff equation. South Dakota has spent a lot money encouraging corporate farming in the form of dairy and particularly hogs. The number of CAFOs which have replaced the family farms in the past 16 years in South Dakota is huge.

    Remember the (what I considered a fiasco) when then Governor Rounds sent 31 highway patrolmen to protect the baby pig factory operators coming from Hull Iowa, against the South Dakota Native Americans west of Wagner and just above their tribal headquarters at Marty.

    While South Dakota only ranks 11th in state hog production, its production numbers have increased every year over the last several years.

    The China embargo on pork which went into effect this week, has the potential to also cause problems for John Morrell Smithfield plant in Sioux Falls, which was purchased by the Chinese last year. I asked this question of Dakota Rural Action, "Is there the possibility that the Chinese would stop buying the pork from their own plants, which I understand to be all of those under the Smithfield umbrella, including Farmland.

    DRA staff Director, Frank James said that he didn't think that should be a problem. But in my opinion we don't know. It will certainly affect the amount of pork that China purchases from us, however.

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  6. Oh, and by the way, Iowa is number one in pork production at more than triple the amount produced by number 2 North Carolina. Here is what Charles Grassley, senior Senator from Iowa had to say today.

    Sen. Charles Grassley (R-Iowa) on Wednesday blasted President Trump's escalation of trade actions against China, saying that the president's policy has been "very detrimental" to his home state.

    The chairman of the Senate Judiciary Committee appeared on CNN's "New Day" and said that recent Chinese tariffs targeting U.S. exports of soybeans and corn have had a profound effect on Iowa farmers.

    China implemented the tariffs in retaliation for a previous package of U.S. tariffs by the Trump administration to combat alleged intellectual property theft and other unfair trade practices.

    "[The effects have been] very, very detrimental," Grassley said. "I'm very, very nervous about it."


    "First of all, I'm a free trader," he said. "If we can get a level playing field ... who wouldn't want the president to accomplish that?"

    "But he's negotiating I think as a businessman, and if he takes his competitor to the brink and doesn't go over the brink, we're going to get a better deal. But if he goes over the brink it's going to be catastrophic. And right now with the soybeans and corn in my state it is catastrophic, with the drop in prices that we've had."


    The White House on Tuesday released a list of additional tariffs targeting $200 billion in Chinese goods, which a senior U.S. administration official told reporters was roughly equal to all Chinese exports to the United States.

    Chinese officials, meanwhile, have accused President Trump of starting “the biggest trade war in economic history” with his administration's original round of tariffs.

    "China is forced to strike back to safeguard core national interests and the interests of its people," the country's Commerce Ministry told CNN last week.

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