Possible China trade repercussions feared in Upper Midwest
VALLEY CITY, N.D. — A market is easier lost than gained, Valley City farmer Monte Peterson said. And that's got him worried.
As the Trump administration moves forward on tariffs on Chinese products, Peterson and others in agriculture in North Dakota are worried about potential retaliation and the effect that could have on the prices local farmers receive for their crops and livestock.
"If we see retaliation, oftentimes we see it within the ag sector," Peterson said.
"I think everyone out in the country has a little bit of anxiety," said Oakes, N.D., farmer Scott German.
A huge market for soybeans
Peterson serves on the North Dakota Soybean Growers Association board of directors, is one of North Dakota's representatives to the American Soybean Association board of directors and is the vice president of the U.S. Soybean Export Council.
According to the North Dakota Soybean Growers Association, about seven of every 10 soybean rows in North Dakota will end up bound for China, with a value of $1.5 billion annually. Soybeans and soy products are America's leading agricultural export, with an export value of more than $21 billion last year.
The Trump administration has announced tariffs, so far on steel and aluminum imports as well as a number of other products, over China's trade practices. That makes soybean growers and advocates worry about potentially losing their biggest market. Though Peterson remained optimistic, he said there is a "legitimate concern" that soy will be targeted. And if it is, the market impacts on local farmers could be immediate.
"We've had tremendous good fortune in developing and building other markets other than China," Peterson said. "But everyone should understand that we export more ... soybeans to China than all other countries combined."
And while those other markets are developing, sales don't develop overnight.
"It takes an extreme amount of effort to build up those relationships and develop that trade. I think it would be naive to think that we could just flip a switch and be back to where we were if we start disrupting that trade," Peterson said.
It also would be naive to think China couldn't start buying their soybeans, or at least a large percentage of them, from sources other than the U.S. South American countries also are big players in the world soybean market.
A growing appetite for protein
China already has identified pork as a U.S. product that they would consider slapping a 25 percent retaliatory tariff on over the announced U.S. tariffs.
German and his father raise 4,500 acres of corn and soybeans and finish 15,000 pigs without antibiotics every year. Though the swine industry would feel the brunt of any tariffs on pork, the corn and soybean sides would feel it, too, if such an action were long-lasting, he said.
German has some anxieties over the future of trade, not just with China but also in regard to the future of the North American Free Trade Agreement, but he reminds that tariffs aren't embargoes and wouldn't mean the end of pork going to China.
"I don't want (tariffs) and neither does anybody else," he said. "But is it the end of the world if there's a 25 percent tariff? No. It just makes our product that much less price competitive in the world market."
U.S. slaughter capacity has ramped up considerably in the past few years due to the ever-increasing demand for pork in China. China already has more sows than many other pork-producing countries combined, but the country continues to look for more sources for proteins, including pork, beef and poultry, German pointed out.
"They just have an astronomical amount of pork in their country to begin with, but the appetite for meat protein just seems to keep growing and growing and growing over there," he said.
Though Peterson remains optimistic that soybean trade could be spared any repercussions, he said farmers need to be aware of the situation. They should continue to talk to their congressional delegation and urge them to weigh in about potential market disruption.
"I would hope to think that calmer heads will prevail once we get some issues worked out between our two countries," German said.
Any market impact would be "not something, as a farmer, I'm looking forward to," Peterson said. "We've had five years that incomes have been down."
German wanted farmers to keep in mind that there are many challenges in agriculture, from weather to depressed prices to trade. But it doesn't help to focus on those things all the time.
"Worry about the things you can fix, and the things you can't fix don't worry about," he advised.
President Donald Trump was elected with broad support from rural areas, and Peterson doesn't know if the trade rhetoric and potential problems have eroded support for the president in farming communities.
"I fully believe in standing behind our president," he said. "But the outcome of all of this is bound to weigh on people's choice for the next election."