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Trade dispute impact is spreading, even to West County

By: Jim Erickson

Photo courtesy of the United Soybean Board

More than half of U.S. soybeans produced are sold overseas with nearly one-third of them going to China. Tariff wars between the United States and other nations, including China, are threatening these markets, the farm economy and other businesses.

The Trump Administration is attempting to soften the impact of its tariff policies by promising farmers an aid package to compensate for lost markets and falling commodity prices. But it appears the vast majority of farmers, including those who have supported the president, prefer approaches to help them retain existing markets and build new ones.

The imposition of tariffs on imported products from a number of nations, especially China but also long-time allies and neighbors such as Canada, plus the quid pro quo responses of those targeted countries on goods this nation supplies to them, have farmers nervous.

Such trade war actions have special meaning to the St. Louis area, home to two of the nation’s largest farm commodity organizations – the American Soybean Association [ASA] and the National Corn Growers Association [NCGA]. The two are among a number of farm groups that are, or recently have become, members of Farmers for Free Trade.

FFT is a national organization that has taken on the task of telling the general public the short- and longer-term impact of the fast-developing trade war.

While U.S. farm exports are bearing a major portion of the retaliation burden, the agricultural economy isn’t the only sector being affected, meaning consumers are going to be hit in the pocketbook as well.

Warren Stemme, a Chesterfield farmer who raises more than 1,000 acres of row crops in St. Louis County, acknowledges Trump’s claim that the U.S. is being victimized by other nation’s unfair trading practices due to trade policy actions or inactions in earlier years.

“Farm commodities such as corn, soybeans, wheat and other products are an easy retaliatory target and U.S. farmers were bound to get whacked first,” Stemme observed. “I don’t think the administration fully realized that initially.”

As an example, the Chesterfield farm operator recalled that in May he sold soybeans from last year’s crop for $10.55 per bushel. After the president announced tariffs on a variety of Chinese products and China struck back with levies on soybeans and other farm products, soybean prices dropped as low as $8.43 per bushel.

Crops typical to the Heartland aren’t the only ones caught up in the trade dispute whirlwind. Fruit and nut growers in California have been hit hard, as have apple growers in various states, and dairy farmers and producers of hogs and other meat animals.

Stemme said he’s not sure the $12 billion package the Trump administration has announced to help U.S. producers weather the tariff battle is adequate, “not when you spread it over the number of farmers and the number of commodities involved.” The longer the situation continues, the worse the financial blow to farmers will be, he added.

“Farmers prefer to raise it and trade it rather than receive a government check,” Stemme said. His comments were similar to quoted views from NCGA President Kevin Skunes, a North Dakota farmer.

Through check-offs on income received from selling what they produce, U.S. farmers have invested in programs to expand overseas markets for a number of commodities.

Producers in Brazil and Argentina raise commodities that compete with U.S. farm products in the world marketplace and the nations have been investing heavily in infrastructure improvements to enhance their competitiveness, Stemme explained. “If those South America countries capture even more market share than they already have, it gets scary. I’m just not sure how we get those markets back.”

U.S. soybeans were an obvious target for China in retaliating against Trump’s tariffs on a host of goods imported from that country. Soybeans accounted for more than half the $20 billion in U.S. agricultural products China imported last year. That nation alone purchased nearly a third of all the soybeans U.S. farmers produced in 2017, according to the ASA.

Other nations, especially Argentina and Brazil, are more than willing to fill the gap left by U.S. sources that are not as competitive with China’s retaliatory levies placed on them.

Meanwhile, consumers are finding higher prices on a host of items, ranging from headphones, speakers and other electronic devices to high-tech lighting and canned beverages.

Of interest is the fact the co-chairmen of FFT are two former U.S. senators, Democrat Max Baucus, of Montana, and Republican Richard Lugar, of Indiana. The two are symbols of a time not that long ago when both parties regularly worked across the aisle to reach compromise on major issues, especially those involving agriculture.

Last September, well before the tariff battles began, Baucus and Lugar issued a joint viewpoint emphasizing the value of American agricultural trade to the nation’s economy, noting the millions of jobs directly or indirectly supported by farm production and overseas sales.

Their concerns about the loss of broad support for agricultural trade and the expansion of export markets led to their launching FFT as a bipartisan, not-for-profit organization with the goal of rebuilding that consensus through coalition-building and education.

Less than a year after its creation, FFT finds itself embroiled in a trade war dispute it had hoped could be avoided.

An ASA director and farmer from Richmond, Missouri, Ronnie Russell pointed to the economic fallout the state will suffer if the tariff battle isn’t resolved quickly, an outcome many observers doubt will happen because leaders in the nations involved appear to be well dug in on their views.

Loss of income and jobs means reduced state tax revenues, lower property values and less funding available for schools and other government services, Russell predicted.

“I realize some countries don’t trade fairly, but actions that result in lost markets create questions about survival,” he stated.

Asked if he thought the president’s trade actions would cut his support in areas that strongly backed him in the 2016 election, Russell said he didn’t want to turn a policy matter into a political issue.

“I’ve never ever agreed 100 percent with any president’s policies,” Russell continued. “But I do think there has to be a less impactful way to work through these [trade] issues.”

One locally optimistic view came from Mary Lamie, executive director of the St. Louis Regional Freightway. The battle for markets will put increasing emphasis on finding ways to cut costs and be more competitive, she suggested. Being well positioned with truck, rail, barge and air transportation facilities, the St. Louis area should fare well when it comes to offering efficient movement of many agricultural commodities, she said.

“Transportation is an important factor in the marketing equation and the St. Louis area is well equipped to provide what’s needed and to do so very competitively,” Lamie stated.

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