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Home » Assistance appreciated, long-term solutions better
POLICY ... Comments

Assistance appreciated, long-term solutions better

Farm groups emphasize need for a quick resolution to China tariff standoff

PUBLISHED ON July 27, 2018

soybeans
soybeans
The Indiana Soybean Alliance Membership & Policy Committee (ISA M&P) and the Indiana Corn Growers Association (ICGA) joined farm groups across the country in both expressing appreciation to the administration for short-term relief plan and also emphasizing the need for a quick resolution to the China tariff standoff in order to regain this important market. (United Soybean Board via Flickr)

INDIANAPOLIS, Ind. — The Indiana Soybean Alliance Membership & Policy Committee (ISA M&P) and the Indiana Corn Growers Association (ICGA) joined farm groups across the country in both expressing appreciation to the administration for short-term relief plan and also emphasizing the need for a quick resolution to the China tariff standoff in order to regain this important market.

The USDA relief plan, estimated at $12 billion, includes:

  • The Market Facilitation Program, which will provide payments incrementally to producers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs.]
  • The Food Purchase and Distribution Program, which instructs the Agricultural Marketing Service to buy any unexpected surplus of affected commodities such as fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and other nutrition programs.
  • The Trade Promotion Program, which will be administered by the Foreign Agriculture Service to assist in developing new export markets for U.S. farm products.

Sarah Delbecq, President of the Indiana Corn Growers Association, said Hoosier farmers would rather have key markets such as China reopened instead of accepting government payments.

“Farmers are fiercely independent, hard workers. We prefer to sell a quality product in a fair, open trade environment,” Delbecq explained. “Hoosier farmers appreciate that the Trump Administration recognizes the harm caused by tariffs and trade uncertainty, but what we really need is a quick resolution to the tariff dispute with China.”

Seven weeks ago, the Chinese government imposed a 25 percent tariff on U.S. soybeans as the United States ramped up tariffs on many Chinese products including steel and aluminum. On May 10, November soybean futures were $10.31 per bushel. By July 12, the price had dropped by 20 percent to $8.34 per bushel.

This 20 percent drop comes on the heels of a 40 percent decline in soybean prices since 2013 and 50 percent fall in farm income during the past five years.

“Farmers were struggling already, and this tariff situation makes it much worse,” said Phil Ramsey, chairman of the Indiana Soybean Alliance Membership & Policy Committee. “We have faced a depressed farm economy for the past several years with many struggling to break even. While farmers are patriots and willing to do our part, a 20 percent price impact is unsustainable.”

In order to operate, explained Ramsey, farmers obtain credit each year to purchase the inputs needed for their crops – things like seed, fertilizer and equipment. “We do this, taking risks with uncontrollable adversaries like weather, disease and insects, with the hope that we’ll produce a successful crop so we can repay the bank. But many farmers aren’t going to be able to do that this fall. And while we appreciate the promised assistance, it can’t make up for the losses we’re already feeling.”

Jane Ade Stevens, CEO for the ISA, ICGA and the Indiana Corn Marketing Council, said farmers in Indiana and across the country have invested millions of their own dollars, and decades of time, to develop the market in China. It cannot be easily replaced. China had become a fast-growing export market for ethanol, a real demand builder for U.S. grown corn. But since the tariffs, ethanol exports have dropped significantly. China is also the No. 1 importer of U.S. soybeans accounting for 30 percent of all U.S. soybeans grown. Overall, China is the No. 2 U.S. agricultural export market.

“Farmers have worked hard for decades to cultivate relationships with China and develop a preference for quality U.S. soybeans,” said Ade Stevens, who added that the program is only a short-term fix. “Farmers will grow increasingly impatient as we get nearer to taking a crop to town this fall that is worth less than we paid to plant. A support program won’t rectify the damage done to our markets or stabilize cash flows to secure credit to that many farmers need to plant next year’s crop.”

The Trump Administration can help by completing the following actions:

  • Conclude NAFTA negotiations, re-establishing the two leading exports markets of Canada and Mexico.
  • Re-engage in the Trans Pacific Partnership (TPP) negotiations and finish a deal soon.
  • Fulfill President Trump’s promise of year-round sales of ethanol blends such as E15.
  • Implement the Renewable Fuels Standard as intended.
  • Upgrade the crumbling inland waterways infrastructure so U.S. farm products can be shipped around the globe.

— Indiana Corn Growers Association and Indiana Soybean Alliance

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