Jul 24, 2018
The Administration announced on Tuesday that the Department of Agriculture would be rolling out a relief plan this fall for farmers hit hard by trade tariffs imposed in recent months. Since discussion of a tit-for-tat exchange of tariffs between the U.S. and China became serious in late May, U.S. soy prices have dropped more than $2.00 per bushel.
The President has vowed for weeks that he would “take care” of farmers, but the American Soybean Association (ASA) and other agriculture groups did not know until today what that help would look like. The plan outlined by the Administration includes three components: Direct payments to farmers to mitigate lower prices resulting from retaliatory tariffs, direct commodity purchases by USDA, and funding for a temporary program similar in purpose to the current Market Access Program (MAP) and Foreign Market Development (FMD) programs. The cost of the package is expected to total around $12 billion spread across multiple commodities, including soybeans.
While soybean growers appreciate the Administration’s recognition that tariffs have caused reduced exports and lower prices, the announced plan provides only short-term assistance. ASA continues to call for a longer-term strategy to alleviate mounting soybean surpluses and continued low prices, including a plan to remove the harmful tariffs.
John Heisdorffer, ASA President and soybean grower from Keota, Iowa, stated, “Our best course of action is to expand other markets and develop new ones to buy the soybeans we’re not selling to China. This means finishing the NAFTA negotiations as soon as possible so we can begin talks on new bilateral agreements with other key soybean markets including Japan, Vietnam, Indonesia and the Philippines.”
Soybean farmers are facing an urgent situation this fall, with a near-record harvest expected and exports predicted to be down by 11 percent next year. That situation will worsen without long-term answers to the pinch of tariffs—or seeing the tariffs rescinded.
“The American Soybean Association has consistently advised the Administration that the best way to reduce our Nation’s trade deficit is by increasing exports, including of agricultural products,” Heisdorffer stated. “Since the Administration has decided to use tariffs to address trade concerns with China, and China has retaliated, farmers don’t have time to wait to see how this trade war turns out.”
In 2017, China imported 31% of U.S. production, equal to 60% of total U.S exports and nearly 1 in every 3 rows of harvested beans, making solutions to the tariff war critical for the soybean industry.
Heisdorffer concluded that, “U.S. soybean producers want to see President Trump succeed in meeting his trade campaign goals of achieving better trade deals and greater market access. And, we appreciate that he has recognized our loss in exports and lower prices and provided some immediate relief. However, producers cannot weather sustained trade disruptions.”