China is a massive customer of American agricultural products, and soybeans in particular are a key lever in the ongoing trade war.
Beijing basically stopped importing U.S. soybeans in 2018 and promised to ramp purchases in 2019 as negotiations moved forward in early 2019. But China has now reportedly put a hold on buying U.S. soybeans as talks sour, and the pain is being felt once again in the U.S. heartland.
“We’re pretty helpless out here,” Glenn Brunkow, a Kansas-based farmer who grows corn and soybeans, told Yahoo Finance. “We just hope that this will resolve in the near future and it will benefit the U.S. and some of the trade imbalances. We’re cautiously optimistic but … our patience is running thin.”
Brunkow, who described the hold as “not good” but also “not unexpected,” added that he “assumed there would be retaliation. I was just waiting for the other shoe to drop.”
‘Farm income is at the lowest level it’s been in years’
After trade talks had resumed between the U.S. and China in March, the relationship between the two countries showed significant signs of improvement in April. China imported 1.75 million tons of U.S. soybeans, which was a 15.9% increase from March. But breakdowns in talks in May brought another stalemate.
“I just feel like it’s another piece of the puzzle they have to work through,” Lorenda Overman, a North Carolina-based farmer who grows soybeans, corn, and wheat, told Yahoo Finance. “I feel like China’s posturing. Eventually, they’re going to have to have some soybeans and I think they’ll come around.”
Brunkow noted that this is something “we have no control over.”
“In a normal year, you might position yourself to protect yourself price-wise,” he said. “But with this trade war that’s been ongoing for a couple of years now, there really isn’t anything we can do. We just have to watch it out and remain optimistic.”
He noted the effect that the trade war has had on profits for him and his fellow farmers.
“Farm income is at the lowest level it’s been in years,” Brunkow said. “It’s had a tremendous impact on us.”
Last month, Bloomberg reported that “personal income for farmers fell by the most in three years in the first quarter.” This is largely due to the agricultural losses from the trade war.
“All of my neighbors have been impacted — anyone who grows soybeans,” Brunkow said. “You can even take that down Main Street in our towns — implement dealerships, car dealerships. We’ve cut back on purchasing and repairing things. And so, it’s had an impact all the way down the line in rural America.”
And although the USDA announced last week that it will be providing $16 billion to help American farmers affected by tariffs in the U.S.-China trade war — after previous aid totaling $7.7 billion — that might not be enough.
“It’s hard to say” whether or not the aid will hold them over, Brunkow said. “I think I speak for all the other farmers I know that we appreciate the aid and it will help, but we would much rather rely on free trade in the market.”
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