Trade dispute has done ‘irreparable harm” to farmers

Aaron Putze of the Iowa Soybean Association

The U.S. and China are scheduled to resume trade talks later this week in Washington, DC, but according to Iowa soybean producers, regardless of the eventual outcome of the trade dispute with China, the damage done since the trade dispute began 16 months ago will take decades to repair.

That’s the message Aaron Putze, director of communications and external relations for the Iowa Soybean Association, gave the Rotary Club of Jefferson at its meeting Monday. Putze provided the program for the meeting.

There are more than 41,000 soybean farmers in Iowa, most of whom also grow corn, Putze said. In 2018 Iowa farmers produced 565 million bushels of soybeans, accounting for 13 percent of all U.S.-grown soybeans and placing Iowa second in the nation in soybean production behind Illinois. The value of Iowa soybeans at current market prices is about $5.5 billion.

Putze went on to say that only about 5 percent of the earth’s land surface is suitable for growing food; most of it’s in the United States. Ninety-six percent of the customers for U.S. ag products live somewhere other than the U.S. “Trade matters for the United States, particularly for the farmers,” Putze said.

The Chinese soybean market is big. The 1.4 billion population of China is increasing in numbers and in affluence. With more income, they’re consuming more meat. China raises 80 percent of the hogs in the world, but it doesn’t produce a lot of soybeans.

“U.S. soybean farmers recognized the importance of the Chinese market three or four decades ago, when China had 740 million people and was a net exporter of soybeans. Fast forward 40 years and China is the world’s largest importer of soybeans,” he said.
In 2018 China imported 85 million metric tons of soybeans. That’s about seven times Iowa’s total soybean production.

When China enacted tariffs on U.S. agricultural products in July 2018, “soybean farmers knew it would be very problematic because China is by far and away our largest market destination for soybeans. One of every three rows of soybeans grown in Iowa goes to China. When suddenly you lose one-third of your market, that’s a problem that’s going to hit you in the chops,” Putze said.

The shrinking Chinese market cost a farmer with 400 acres of soybeans $55,000, according to Putze.

The Chinese have continued to import some U.S. soybeans because the rest of the world producers can’t meet market demand, but U.S. imports are off 72 percent. Argentina has increased its exports to China to such an extent that Argentina is now importing U.S. soybeans for domestic use.

China is making long term deals with Argentina and other countries, and the U.S. has become a residual supplier of soybeans, not a primary supplier.

“We think in agriculture that irreparable harm has likely been done (by the tariffs),” Putze said. “This will have profound impact for years to come… When you lose trust in a relationship, think about how long it takes to rebuild that trust. That’s where we’re at with China. It will take decades to rebuild what we’ve lost in 16 months.”

Putze said the new trade agreement announced with Japan recently “bodes well for Iowa and it bodes well for the ag sector.” The Japanese will import more pork and beef, which is good for soybean and corn farmers, he said.

The US-Mexico-Canada (USMC) agreement would be helpful to Iowa farmers, too, he said. Mexico is a top importer of soybeans and also is a strong market for pork.

About the trade dispute with China, he said, “I’m not going to make light of some of the challenges, the reverse engineering of products, the lack of R & D, the outright theft of intellectual property. There are Iowa manufacturers dealing with this each and every day. There are some real issues at the heart of this that we need to get past…. At the end of the day no one wins in a trade war involving food.”

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