As trade dispute escalates, Minnesota farmers brace for another miserable year

Late spring planting, as is happening this year in Minnesota, tends to weaken the fall harvest and lift prices on crops.

But not when there's a trade war.

Farmers now face the prospect of both a smaller crop and lower prices — particularly for soybeans — thanks to the latest round of tit-for-tat tariff fighting between the United States and China.

"Normally, these markets would be much higher because of the weather, and this trade dispute basically has mellowed that out," said Bill Gordon, a farmer near Worthington, Minn.

Citing displeasure with the pace of trade negotiations with China, President Donald Trump said early this month that he would raise tariffs on $200 billion in Chinese imports from the 10% level to 25%. Late last week, he followed through on the threat. China responded with new tariffs on $60 billion worth of American exports. Those specifics are less important than the broader signal that the two nations are moving farther apart in the trade dispute, which, in farm country, has most visibly played out by reducing the flow of U.S. soybeans to China to a trickle.

"This escalation of the trade war is just going to prolong this trade battle," Gordon said. "It's going to take longer for them to get a deal. Both sides are digging in."

Farmers in Minnesota have been harder hit than most, since a sizable portion of the state's soybeans are grown for export to China. Farmers all over the country are muddling through a four-year down cycle in corn and soybean prices. Soybeans still haven't recovered from their initial drop when the trade war started last summer. Soybean farmers were bailed out by the Trump administration with direct payments of $1.65 per bushel for their 2018 harvest.

Soybean prices fell again last week as the latest trade developments unfolded, but Trump didn't talk about new aid for farmers until late in the week. The process seemed slapdash and farmers seemed to be an afterthought, said Jamie Beyer, whose family raises corn, soybeans and wheat near Wheaton, Minn.

"The federal policymakers were like 'Well maybe we should talk about what we're going to do for the American farmers.' That's when I lost it. I got mad, because, how do we let our government cause these huge swings in trade that impact our bottom line with no thought to what we could be doing for American farmers?" Beyer said. "This has certainly been a possibility in their mind. Why haven't they planned for it?"

Beyer said she checked with her local grain elevator last week and the price for soybeans was $2.50 per bushel lower than it was a year ago at this time. Her family raises around 100,000 bushels of soybeans a year. Typically they lock in prices at time of planting for a portion of their crop, but not this year.

"We're gambling this year. We don't want to lock in a loss," Beyer said. "We decided to build more bins, so that we can hold on to that grain longer."

U.S. Secretary of Agriculture Sonny Perdue, speaking in South Korea Wednesday, said the administration may offer farmers $20 billion in aid to offset trade losses, even more aid than the $15 billion Trump proposed over the weekend. Last year's aid program to farmers was $12 billion.

Darin Johnson, a corn and soybean farmer near Wells, Minn., said he was "hammering beans in these last couple days" to make up for lost time. He'd lose $100 per acre on them if he locked in today's prices. He admits that government help is needed to help soybean farmers make it through the dispute with China, but more than anything, he said, he wants free trade restored.

"I'm kind of melancholy a little bit about that. We're losing money hand over fist right now. We have to have something to keep us going," Johnson said. "But what bugs me about that is we do have countries that want to buy our products."

Though soybean farmers have found new trade partners since China slapped tariffs on soybeans, the new markets "pale in comparison" to China, Johnson said. "We need to have a resolution," he said. "Ultimately, as a farmer we have to have trade, and if we don't, we will not be successful."

Not all farmers are losing patience with the president. Mark Nowak, who also raises corn and soybeans near Wells, was upbeat on Thursday. He said most of his crop was in the ground. He was glad Trump is playing hardball with China. "It's classic Chinese, that they make deals and then they pull back from them," Nowak said. "I still think this is a fake-out to see if Trump is going to blink, and I'm just thankful that he's not going to."

Soybean prices are still soft, he said, but a recent rally in corn prices is encouraging. Corn futures for December delivery, the price that matters for locking in sales of the upcoming crop, are near $4 a bushel. Farmers can make money on corn at that price, Nowak said.

"From my perspective, and from the network of people that I talk to, we're still hopeful that there's going to be a trade deal," Nowak said.

Gordon, the farmer near Worthington heading out to plant his corn on Thursday, said support for Trump among farmers is running thin but he wouldn't go so far as to say farmers are turning their backs on the president.

"The hurt's becoming too real. Before, you could manage the risk, you could take a loss, you could support the decision," Gordon said. "Now people are losing their farms, they're not able to put crops in the ground. The crops they're putting in the ground, they're going to guarantee themselves a loss. That patience for, 'Hey, we'll get this done,' is starting to run out."