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In the Trade War, Listening to the Complaints of American Farmers

Source:Iris Liang Time:2019-5-15 9:45:15

When China and the United States are still negotiating on economic and trade issues, the US has announced that it will raise tariffs on the US$200 billion from China’s exports to the United States from the 10th. This “extreme pressure” approach has not only caused global turmoil, but has also caused controversy in the United States. In the past few days, the United States has continuously expressed dissatisfaction with economic circles and industry organizations, and opposed tariffs as a negotiation strategy. In fact, even the White House economic adviser Kudlow admitted that the United States itself will be affected by the increase in tariffs. On the 13th, former US Vice President Joe Biden publicly criticized the current president for escalating Sino-US economic and trade frictions. He believed that the only thing that would pay for it was the American peasants and working people. As one of the most successful export industries in the United States, agriculture is highly vulnerable to US trade policy. In the past year, because the United States has provoked a trade war, American farmers have been miserable, and a new round of US-China tariff confrontation has made them fearful. A new round of trade war between China and the United States will definitely have a certain impact on the customer's procurement plan. However, SEKO Machinery firmly believes that mastering core technologies and excellent product design will help companies survive in a harsh market environment. Our laser line high-speed intelligent insulation bright solid solution furnace has been widely marketed and booked.
103 farms in five states went bankrupt - "This trend is still not end"

"Nothing is worse than this. Iowa farmers have been sinned for the escalation of the US-China trade war." After the United States announced the imposition of tariffs, the US "Des Moines Chronicle" used "hurricane and cold rain". "The precarious" describes the US trade negotiations with China, while the bulk product market is "slow." A farmer in the northern town of the state is pessimistic about the prospects of corn and soybeans he grows. "This is a physical and mental torture," he said.

There are many similar stories. In Texas, for the sorghum growers, the new round of tariffs is not what they want to hear. The United States is a sorghum-growing country, of which Texas has about one-third of the country's acreage, and China is a leading market. On March 7 this year, the National Association of High-Tech Producers announced a blissful sale of 2.6 million bushels of sorghum to China – the first large-scale purchase of US sorghum since February 2018.

In Kansas, grain farmers have said that their families have had to give up their farms after nearly 100 years of operation; in Iowa, pig farmers are losing money. "We have patience, but we don't have unlimited patience," some say. In Virginia, some soybean, corn, and wheat farmers can't afford the equipment they need; in Maine, blueberry growers worry about the future. .

The Global Times reporter recently interviewed a farmer in Kansas, Lovi Nezl, whose farm has been in a difficult situation since last year because of the trade war. He knew that he and other farmers were victims of trade disputes. Although he received the agricultural subsidies provided by the government, he bluntly said that the subsidy was much worse than the lost market and the income of previous years.

A person in charge of the local corn association told the Global Times that tariffs affected sales, equipment costs were rising, and most of the farmer’s income was invested in agricultural machinery. To make matters worse, the weather is not good this year, and serious floods such as Nebraska and Wisconsin have caused great problems for agricultural products transportation.

American agriculture is feeling more painful. According to data from the Federal Reserve Bank of Minneapolis, from January to June 2018, 84 farms in Wisconsin, Minnesota, North Dakota, South Dakota and Montana filed for bankruptcy protection. This figure is more than twice that of 2014. In 2018, the number of bankrupt farms in these five states surged to 103, the highest since 2010. "This trend is still no end," the bank said.

In the past year, the bank informally collected feedback from farmers, agricultural lending institutions, suppliers and other interest groups, and found that the pressure on agricultural balance sheets is growing. “Lower commodity prices have brought annoying economic pressure to farmers, and with recent tariffs, the problem is not only profitability, but also simple survivability.” Some agricultural bankers said they are seeing more The farm "conceived".

"The trade war is plunging the American farm economy into a catastrophe." The Los Angeles Times wrote that the price of agricultural products has fallen, the bankruptcy rate has risen, and the price of agricultural equipment (which has been imposed by the United States on tariffs on steel and aluminum) has risen, and the export market is disappearing. “The agricultural area in the central United States is Trump’s ticket warehouse. This is not a secret, but it is precisely the region that has suffered from its policy losses.”

Soybean exports "completely collapsed" - "we are all treated as chess pieces"

Among the American farmers affected by the trade war, bean farmers are particularly prominent. The Global Times reporter interviewed Robert Shaver, a board member of Illinois soybean farmers and the National Soybean Association. He said that when he became a director of the Illinois Soybean Association in 2010, he knew that China was the largest market for US soybean farmers. After the outbreak of the trade war, he was worried about the situation in the 23 soybean producing states in the United States. “Not only me, but the other 46 directors are very worried. The soybean industry in Iowa, Indiana, Ohio, South Dakota, North Dakota, Nebraska and other states is as worried as we are.”

Craig Retajek, CEO of the Illinois Soybean Association, told the Global Times reporter that the intermediaries between the US soybean farmers and Chinese consumers will not bear the cost of increased tariffs, and the farmers will bear This brings problems to the overall economy of the farmers and Illinois. Just look at the importance of soybeans in the Illinois economy, it is not difficult to imagine this.

At the end of last year, the Global Times reporter made a special trip to Iowa, a “agricultural town”, which is second only to Illinois. In his capital, Des Moines, an agricultural reporter told the Global Times that local farmers were very worried about the Sino-US trade war. “Because of the surplus soybean production in the state, the income of farmers has continued to decline over the past four or five years.”

The reporter also saw a Trump supporter who runs 4,000 acres of land. In order to express his support for Trump, he chose not to receive official agricultural subsidies. But even he is worried about the impact of the Sino-US trade war, because the soybeans and corn produced on his farm are facing sales problems, and household income has dropped significantly.

A recent report by Forbes magazine concluded that US exports of soybeans to China in 2018 can be described as "complete collapse." Kirk Leeds, CEO of the Iowa Soybean Association, said, “I am not sure how much they can afford” and the ever-increasing tariffs “reduce any remaining optimism”.

Joe Cohens of Ames Agricultural Risk Management in the United States estimates that corn and soybean prices may continue to fall in the next three years, and then supply and demand will be more balanced. "We will face a tougher period, a very difficult period," he said.

Recently, the price of soybeans delivered in May at the Chicago Mercantile Exchange was $8 per bushel. Corn and soybean prices have fallen by about 10% since April. In 2018, US agricultural net income fell 12%, and this year's agricultural income is expected to be 69.4 billion US dollars, about 45% lower than the 2013 high. Iowa Republican Senator Jose Ninst said that many people feel that in the entire industry, "we are all used as chess pieces."

Former US Secretary of Agriculture: It is a mistake to single out China with trade disputes

According to an article by the United Press International, originally, with the progress of the US-China trade consultation and the agreement is soon to be reached, the American farmers will not be too sad this year and the situation is improving. However, all this changed on the Sunday night when the President of the United States threatened to impose tariffs. Since then, soybean futures prices have fallen to their lowest level since December 2008. “This brings us back to the beginning of trade negotiations,” said Kimberly, director of market development at the Iowa Soybean Association. The US soybean industry is actively looking for new trading partners, but demand from other places is not as big as the Chinese market. “This means Our soybean stocks this year will increase significantly."

After provoked a trade war last year, the United States turned its attention to another big market in Europe. According to data released by the European Commission in April, from July 2018 to April this year, the EU imported soybeans from the United States increased by 121% to 8.24 million tons. For the United States, Europe absorbed 22% of its soybean exports, followed by China (18%) and Mexico (9%). Despite the “Great Leap Forward” in the EU, the problem remains unresolved, as the total US soybean exports are about 56.2 million tons a year (2017). The US Department of Agriculture expects that exports will continue to fall this year, and US soybean stocks have increased by 29% compared with the same period last year.

Europe cannot help the United States solve the problem of agricultural exports. At present, the trade negotiations between Europe and the United States are highly divided on the agricultural issue. The two sides are not satisfied with each other's large subsidies to the agricultural sector, and Europe is generally worried about US food safety issues, such as genetic modification and pesticide abuse. The entry of US agricultural products into Europe is an economic issue and a political and social issue.

According to statistics, in 2017, China purchased nearly $24 billion of US agricultural products, including $14 billion in soybeans, but the total amount of US agricultural products purchased by China in 2018 plummeted to about $9.2 billion. American leaders are well aware of the losses suffered by farmers. On the 9th, US Vice President Burns assured farmers in Minnesota that they would find ways to provide additional assistance to affected farmers. On the 10th, Trump said on Twitter that he would use the tariffs he received to buy the farmer’s agricultural products and provide humanitarian assistance to the poor countries.

However, many media quoted agricultural economists as saying that similar plans have been tried before and the results are not as good as expected. Some experts said that US-exported commodities such as corn and soybeans are not directly used for human consumption, and most of them are processed into animal feed, oil and ethanol. “Buying large quantities of bulk commodities and transporting them to other places is not like people thinking. It's that easy."

“I think the president is discussing buying a lot of soybeans.” The former Minister of Agriculture and Iowa Governor Vilsack told the Consumer News and Business Channel (CNBC) that the government’s new plan to assist farmers is facing many obstacles. The source of funding cannot be determined and the options of the Ministry of Agriculture are limited. “Even if you can determine the funds used to buy crops and products, transporting them (food) to other countries requires the US Agency for International Development and the State Department to take the next step.” Vilsack believes that foreign countries are reluctant to accept bulk commodities. The domestic agricultural economy is disrupted and they want cash. In addition, these commodities will force the government to increase storage expenses. Therefore, in his view, it is obviously a mistake to use China’s trade disputes to single out China.

Germany's "Agriculture Today" website said that since 2013, US agricultural income has dropped by about 50%. According to a study by the US Centers for Disease Control, the suicide rate of farmers is at least twice the US average. Nowadays, due to trade wars, American agriculture has almost suffered a farm crisis as in the 1980s. Many farmers feel that the current situation is like the scene of Noah's Ark and needs "hope" to support it.

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Iris Liang
SEKO Machinery & Technology Co., Ltd
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