Iowa farmers suffer another blow as tariffs rise

Brent Renner, a farmer from northern Iowa, said it was hard to be optimistic about the corn and soybean crops he was growing.

"It is a physical and mental challenge," said Renner, 43, who works near Klemme, a town of about 500 people in the west of Clear Lake.

"Many of us think that it can not be worse, that it can only go back from here, but it is probably not a safe bet," he said. declared.

Experts say prospects for price improvement are abating, with record stocks, disease invading Chinese pig herds and declining demand for soybeans, and hopes for a new trade deal between China and China. China that disappears.

Early on Friday, President Donald Trump raised tariffs from 25% to 25%, compared with $ 200 billion worth of Chinese goods.

And the president threatens to impose additional tariffs on Chinese imports of $ 325 billion, covering everything China sells in the United States.

"Farmers, especially soybean producers, have been spearheading China's retaliation, and I'm not sure they can take much more," said Kirk Leeds. CEO of the Iowa Soybean Association.

The increase in tariffs "undermined the vestiges of optimism," said Leeds. "It's the most devastating thing about it."

"Some marketers think we could produce $ 6 soybeans," he said, adding that he hoped prices would not drop as far.

The soybeans delivered in May were trading around $ 8 a bushel on Friday at the Chicago Mercantile Exchange.

Negotiations are continuing with China, but the country says it will retaliate, aligning US tariffs.

President Donald Trump tweeted Friday morning that US farmers would be in a better situation, with the government possibly buying $ 15 billion worth of goods to provide humanitarian aid to needy countries.

US Secretary of Agriculture, Sonny Perdue, tweeted Friday that the president had asked the agency to "work quickly on a plan".

In Iowa last month, Lost said that the government did not intend to provide another round of help to farmers.

China bought nearly $ 24 billion worth of US agricultural products in 2017, including $ 14 billion in soybean purchases. Last year, China's total agricultural purchases dropped to about $ 9.2 billion.

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The federal government already provides up to $ 10 billion in direct assistance to soy, corn, pork, dairy and other dairy producers to offset the damage caused by trade disputes between states United States, China, Mexico, Canada and other countries.

It spends about $ 1.2 billion to buy food for schools, larders and other programs.

Tim Bardole, a Rippey farmer, said he understands that the United States needs a stronger trade deal with China, particularly to protect intellectual property.

"A fair deal for both countries is really the light at the end of the tunnel that I hope," said Bardole, elected chairman of the board of the Iowa Soybean Association.

"But there is no doubt that agriculture is suffering from the current situation," he said.

President Trump's tweet on Sunday, saying that US tariffs on China would rise, cost Bardole about US $ 25,000 on stored grain as prices plummeted.

Corn and soybean prices have dropped about 10% since April. US farm income is expected to reach $ 69.4 billion this year, about 45% below the 2013 peak.

"Many producers are in serious financial trouble, I do not know how long we can survive and get by," Bardole said.

"It's at one point, everyone is stuck and is trying to cut down on their spending and is trying to do it," he said.

In addition to tough trade negotiations with China, farmers are waiting for Congress to ratify a new deal with Canada and Mexico, the second and third largest trading partners of the United States. China is the main trading partner of the country.

Dermot Hayes, an agricultural economist at Iowa State University, said that tariffs have made US agricultural products more expensive than those of its competitors.

"It is difficult to hurt American agriculture more than it has already done because existing tariffs are already prohibitive," Hayes said.

Joe Kerns of Kerns and Associates, an agricultural risk management company from Ames, said trade agreements are important, but highly contagious African swine fever in China is the main factor weighing on prices. soy.

The disease is fatal for pigs, but poses no known risk to human health or food safety.

"Dead pigs do not eat much," Kerns said, noting that China accounted for about half of the world's pig population.

Maize and soybean prices could go down another three years before supply and demand become more balanced, Kerns said.

"We do not have light at the end of the tunnel for corn and soybean prices," Kerns said. "We have more difficult moments in front of us, more difficult moments ahead of us."

He sees US producers of pork, chicken, beef and eggs benefit from China's efforts to replace lost protein production.

Hayes said that pork prices in the United States had risen since March, while Canada and other countries were looking to replenish their stocks from China.

"That's probably the only bright spot" in American agriculture, he said. "We get some benefits from filling our supplies – it's probably not 100%, but it's good."

But it will take time to absorb the large amount of grain provided by the United States, which will increase, according to government forecasts released Friday.

"We are about to make a huge adjustment," Kerns said, adding that the new trade agreements are unlikely to significantly solve the problem of oversupply.

And this means that farmers, landowners and manufacturers of seeds, machinery and chemicals will have to adapt to lower prices for maize, soybeans and other products. he declares.

The cost of producing a crop – from renting land to buying seeds, fertilizer and other inputs – has slowly decreased, even though incomes have fallen.

Kerns said the news of an agreement could give a short-term boost that could soften farmers' bottom line.

But the rise will not last long, he said. "It does not change the fundamentals in the long run."

Renner and other farmers are considering converting soybean acreage to corn, which offers greater profit potential.

But the rain-soaked fields in Iowa this spring could give reason for this idea, pushing them toward soybeans, which can be planted later in the spring without yield loss.

And as his crop grew, Renner hoped that trade agreements or adverse weather conditions would help raise prices.

"I hope things turn out pretty fast," he said. "It could break a lot of people … There is no other way to look at that, it's ugly."

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