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September 5, 2018

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US soybean farmers worry over tariffs war

As the harvest season in the US midwestern state of Ohio is approaching, soybean farmers are sitting on pins and needles due to the ongoing tariff battle between the United States and its major trading partners.

“We hope that the tariffs are not in place when the current crop is harvested, as we said, starting in a month. Longer-term tariffs would be very harmful to the profitability of Ohio soybean farmers,” said Kirk Merritt, executive director of the Ohio Soybean Association.

US President Donald Trump has levied tariffs on a host of products from around the world, and countries like China, India, Mexico and Canada have responded by slapping their own taxes on imports from the US, especially on its breadbasket.

“I think if the tariffs continue longer-term, it would be very harmful to Ohio soybean farmers and American soybean farmers,” Merritt said at the OSA’s headquarters in Worthington, 17km south of Columbus, the state capital of Ohio.

Independent research shows “significant reductions in long-term profitability” for soybean farmers if the tariffs are “in place for several years,” Merritt said.

The estimated annual economic impact of the Ohio soybean industry on the Ohio economy exceeds US$5.25 billion, according to the OSA.

Ohio was the seventh-largest soybean-producing state in 2017. The state’s soybean farmers planted 2.02 million hectares of soybeans last year and exported US$1.8 billion worth of the crop. China bought more than US$691 million worth of soybeans from Ohio in 2017.

“China has been for many years our largest export market, for Ohio, and for the United States,” Merritt said. “So our farmers understand the importance (of the international markets).”

The farmers are already feeling the squeeze. The soybean price fell by around US$2 per bushel, which is about 20 percent, since China imposed retaliatory tariffs on US soybeans in July.

“We have heard estimates of potential financial harm for crops that they are holding but not yet sold based on the drop in the price, of anywhere from US$25,000 or US$200,000 for an individual farmer. It is a significant amount for farmers,” said Merritt.

The numbers are devastating for farmers who operate with high overhead and slim profit margins in the best of times.

The break even on soybeans right now is around US$9.50 per bushel though it would vary very widely from one farm to the other, according to an analysis by researchers at Ohio State University.

“Prices currently are below break even. Most farmers are selling at US$8.20 or US$8.50 range on those specific beans. They would not make much,” Merritt said.

“If it is not resolved in the next year, two years, three years, (it) will have a very adverse effect on their bottom line, will make them less profitable,” he added.

Fred Yoder is a fourth-generation farmer from Plain City, 24km away from Worthington. Yoder and his family farm 607 hectares of corn and soybeans. He also owns and operates his own retail farm seed business.

Farmers come to him for help because he served as president of the National Corn Growers Association and has become an advocate not only for Ohio’s agriculture industry, but the United States’ as well.

The tariffs have already given farmers in Ohio and the Midwest a “very tough time,” said the farmer, who has been involved in the agri-business for over 40 years.

“I’ve lost US$100,000 just from what I haven’t got sold (in the futures market),” Yoder said.

As the harvest season is approaching, the situation is becoming “very worrisome” because most farmers have to borrow funds to put the crop out by buying seeds, fertilizers and crop protection products, he said.


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