South Dakota Soybean Farmers Eyeing Trade Talks With China

May 9, 2019

Credit Kealey Bultena / SDPB

Trade talks between the U.S. and China are underway – and there’s a Friday deadline for a possible increase in tariffs on Chinese goods.
 
President Donald Trump has recommended a 25 percent tariff on some $200 billion worth of products.
 
One thing in the crosshairs? South Dakota soybeans and that has farmers worried.  

Kevin Scott and his son are just now getting into their wet fields to plant. But they’re also feeling stuck.
 
“That is going to be a common theme,” Scott says. “We were able to get out, but it’s a struggle. It’s never been easy. If it was easy everybody would be doing it. It would be nice if we had some markets that would come along and make us feel better, but that’s not happening much either.”
 
Scott is a fourth-generation farmer who operates east of Sioux Falls near the South Dakota, Minnesota and Iowa borders. He’s served on the South Dakota Soybean Association, and is the national director for the American Soybean Association.
 
This spring, Scott sees stresses on all fronts. His equipment is getting stuck in the mud while he watches a shrinking range of market options for his crops.  To top it off, he’s planting soybeans where he’d rather be planting corn.
 
“We don’t have any ground that’s fit yet, so I’m going to plant some soybeans,” Scott says. “It’s giving me a little… giving me some fits, I guess, with the technology. But I’ll get it going.”
 
Last year, China placed a 25 percent tariff on soybeans and other American made goods to retaliate for U.S. tariffs on Chinese steel and aluminum. The price of soybeans has steadily dropped every since.
 
Now, President Trump wants additional tariffs on Chinese goods. The president’s recent announcement caused a sell off of soybean futures. While they’ve recovered slightly, they are still down from a week ago.
 
Trade talks are ongoing and officials say they hope there’s a deal.
 
South Dakota U.S. Representative Dusty Johnson says he spoke with the president last week about these trade disputes.
 
“And he understands we’re in the fifth year of declining farm income and I’ve talked with he and his team and they know that here in farm country we think that tariffs for tariffs sake are a bad idea,” Johnson says. “Now, tariffs used as a hammer to drive the Chinese to a final agreement could be welcome news. But we’re not in a position where we want a prolonged escalation. We need to make sure we got open markets for South Dakota producers.”
 
Johnson says the president’s threat is an attempt to put pressure on the Chinese. He says the president wants to get a final deal done in a week or two.
 
Other members of the state’s congressional delegation hope for a quick end to the trade disputes. Senator John Thune says he looks forward to seeing what happens. Thune says now is the time to finish negotiations and open markets to U.S. exports.
 
Senator Mike Rounds supports the president’s desire to negotiate better trade deals and thinks tariffs can be strategic and targeted. Rounds suggests the president is using the threat of additional tariffs to pressure China into finalizing a trade deal.
 
But not all South Dakota farmers are buying it. Doug Sombke is the president of South Dakota Farmers Union. He says the president puts farmers in jeopardy every time tariffs go up.
 
Sombke says U.S. farmers were promised that trade tensions with China would be temporary.
 
“Everyone thought this would be over in a short period of time—this is a long period of time,” Sombke says. “This is going to take a long time to get out of. As long as it took us to create the markets overseas, no one ever foresaw something like this. This will take just as long to get out of—what we’ve created here.”
 
Sombke says when tariffs are used as a tool in trade talks, they can keep South Dakota producers in limbo.

He says fall out from trade disputes hits not only commodity farmers who grow corn and soybeans, but the industries that supply them.
 
“It’s affecting implement dealers, they’re the first ones that are going to feel it,” Sombke says. “It’s going to affect all of our rural communities and even communities like Sioux Falls because agriculture is the number one industry in the state. It touches everybody in one way shape or form and a lot of people live off of just supplying things for farmers.”
 
President Trump says tariff payments from China are partially responsible for economic growth in the U.S. Others say the global economic equation is far more complex.
 
Professor Joseph Santos is with the Department of Economics at South Dakota State University. He says the U.S. economy is expanding in spite of renegotiated trade deals.
 
“And that were we to eliminate the trade tensions that—again with this idea of trade as a production technology—that would actually spur economic growth,” Santos says. “So, again, not to sound to crass about this, but I think what we are achieving in spite of the trade tensions, not because of the trade tensions.”
 
The deadline for an increase in tariffs on Chinese goods looms Friday. Initially, the president proposed a 25 percent tariff on certain goods  but pulled back on that hoping the Chinese would renegotiate.  Farmer Kevin Scott says that was a good move, but the Chinese changed their mind.
 
“The Chinese have a lot more to lose than we do,” Scott says. “However, when you’re a farmer it hits your bottom line pretty hard.”
 
Scott says the administration has taken care of farmers with subsidy payments for impacts on the trade war. Still, he says, it’s a tough pill to swallow – and an uncertain way to make a living.