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Tariffs make soybean farmers tense

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CANNON FALLS — Few occupations require more patience than farming, but a more than yearlong trade dispute between the United States and China has more soybean farmers losing theirs.

"There’s a lot of frustration in rural Minnesota right now from not having that market availability," said Brad Hovel, who grows corn and soybeans and raises hogs and cattle near Cannon Falls. "It’s taken a few dollars off the price of beans, and it’s been a real challenge trying to lock-in any type of profitable margin."

China announced on May 13 that it was imposing higher tariffs on $60 billion of American exports. That was in retaliation to President Trump’s decision to raise tariffs on $200 billion in Chinese imports from 10% to 25%.

American soybean farmers had been hopeful for months that the export market to China would eventually reopen to them, but the latest tariffs caused soybean prices to plunge to a 10-year low.

The Minnesota Soybean Growers Association saw the latest tariffs as another step backwards.

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"MSGA is very disappointed by the breakdown in negotiations with China on a bilateral trade deal," said Joseph Smentek, executive director of MSGA. "Soybean farmers and their checkoff have built the markets in China with their own dollars and sweat."

Smentek is referring to the federally mandated checkoff program that soybean farmers have paid into for more than a decade.

According to MSGA’s website, every time a Minnesota soybean farmer sells soybeans, the farmer contributes one-half of 1 percent of the market price of each bushel.

"We’ve worked on building a good trade relationship with China," said Hovel of the checkoff program. "There’s a lot of guys involved in the (checkoff) program who’ve spent a lot of their lives working on establishing the market in China."

The Minnesota Soybean Research & Promotion Council uses checkoff funds to improve the profitability of the state’s soybean farmers by growing the international market and developing new uses for soybeans.

Before the trade dispute began last year, farmers relied heavily on the revenue they made from exports to China. According to numbers from the USDA, farm exports from the U.S. to China reached $26 billion in 2012 and 2013, and equaled $19.5 billion in 2017.

On the farm, the rule of thumb was that of every 10 rows of soybeans, three of them were going to China.

Smentek said the toll taken on farmers from the trade dispute is "too large to measure." He said low price points have resulted in extra pressure from banks giving loans, which has ramped up the stress level for farmers.

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"This trade war is extremely detrimental to Minnesota’s soybean farmers," said Smentek. "If something is not done — and done soon, to help address these pressures, there will be many farmers that will not be farming next year."

The loss of business to China has resulted in American farmers stockpiling nearly 1 billion bushels of soybeans, a record, according to Todd Hultman, an Omaha-based grain market analyst with agriculture market data provider DTN.

Hovel said time is running out for the farmers storing soybeans, holding out for a better price.

"We need to move the crop and market it, in order to pay the bills," he said.

Trump has said that a program to relieve U.S. farmers’ pain is being devised and predicted that they will be "very happy" with it. The administration gave $11 billion to farmers last year to make up for low profits from trade conflicts.

Hovel said the trade relief funds that farmers received through the $11 billion package were basically flow-through funds.

"They came in and went right back out as either property taxes or health insurance — some of the fixed costs associated with working in agriculture," said Hovel. "Farm families need help with paying for some of those things, and then it flows back into the rural economy."

Despite the tit-for-tat tariffs, Hovel believes there is a chance that the U.S. and China will resolve the issue.

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"We still have the highest quality soybeans in the world," said Hovel.

But time is running out as farmers enter a second growing season with the farm economy falling.

"We need to have workable margins in order for us to feed our families and make a living," said Hovel. "No trade deal is going to be perfect, and there’s always going to be someone that needs to sacrifice a little bit. It just seems like agriculture has been the sacrifice for a while now."

The American Soybean Association released this statement early this week about the continuing tariffs: "The sentiment out in farm country is getting grimmer by the day," said John Heisdorffer, chairman of the ASA and soybean farmer in Keota, Iowa. "Our patience is waning, our finances are suffering and the stress from months of living with the consequences of these tariffs is mounting."

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