The little soybean made big news in 2018 and will continue to do so into the new year.
Long an export success story, soybeans — and of course their farmers and by extension equipment dealers, seed suppliers and banks — became pawns in an international trade war that started in earnest after President Donald Trump imposed steel and aluminum import tariffs.
Many of the countries affected imposed their own tariffs on U.S. products in retaliation, but China struck back particularly hard where it would hurt those who widely have supported Trump: farmers.
The 25 percent retaliatory tariff it imposed on soybeans in July brought to a virtual halt its imports of the U.S. commodity and sent prices plummeting to the lowest levels in at least a decade — well below what farmers need to break even.
China, with a voracious need to feed its vast hog herds, is the world’s largest importer of soybeans. Iowa is the nation’s No. 2 exporter of soybeans, most — until now — going to China.
Add to that uncertainty that persisted through most of 2018 about the future of the North American Free Trade Agreement — which included agriculture exports to Canada and Mexico.
Iowa’s economy was forecast by an Iowa State University study this fall to take up to a $2 billion hit over 12 months as the trade wars continued, causing farmers to watch expenditures, lenders to ask for more assurances and supply companies to worry about equipment sales and seed and fertilizer inputs for 2019 crops.
“American farmers are always on the front lines of trade wars,” said John Crespi, interim director of the Center for Agricultural and Rural Development at ISU.
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The Trump administration authorized a bailout plan that would provide direct payments to farmers hurt by the trade wars, purchases of ag products for food banks and efforts to open new foreign markets.
But the aid to corn farmers was only a tiny fraction per bushel of that for soybean farmers, baffling even Agriculture Secretary Sonny Perdue.
“We have got $1.65 on beans and a penny on corn? That doesn’t make any sense,” he told Midwest corn growers.
The Trump administration since has authorized a second round of federal aid. And Chinese state-owned companies, in what appears to be a symbolic move of good faith, in December bought nearly $500 million worth of U.S. soybeans — a move welcomed by farmers, but still a far cry from the $12 billion a year in U.S. soybeans it usually buys.
However, it kept the 25 percent soybean tariff in place and has announced no new purchases. Soybean futures continue to be below the widely accepted break-even point of $10 a bushel. And the new version of NAFTA — called the United States-Mexico-Canada Agreement — has yet to be approved by Congress and largely won’t take effect until 2020 once it is.
In the meantime, many Iowa farmers are storing their soybeans rather than selling now.
“They’re hanging onto them because the price declined so bad,” Ron Woeste, operations manager for Linn Co-op, told The Gazette in October.