XIAOWUSILI, China – For all its economic might, China hasn’t been able to solve a critical problem.
Soybeans. It just can’t grow enough of them.
That could blunt the impact of one of the biggest weapons the country wields in a trade fight with the United States.
Beijing placed a 25 percent tariff on U.S. soybeans last week in retaliation for the Trump administration’s levies on Chinese-made goods. Last year, soy growers in the United States sold nearly one-third of their harvest to China. In dollar terms, only airplanes are a more significant U.S. export to China, the world’s second-largest economy.
Still, soy-producing states like Iowa, Illinois and Minnesota might not feel the tariffs’ impact right away. China buys so much soy from the United States — $14 billion last year — that it can hardly switch to new suppliers overnight. Foreign-grown soybeans are a key source both of low-cost protein for feeding livestock and of cooking oil for Chinese kitchens.
Still, the 25 percent tariff on soybeans has Minnesota soybean farmers worried. Minnetonka-based Cargill said it has seen a “significant slowdown” in sales by farmers of soybeans, a reaction to the 18 percent decline in soybean prices since May.
China is pressing its own farmers to grow more. But the math is daunting and the obstacles formidable.
Just ask Cao Xiumin. For the past 16 years, she has been growing corn and soybeans on a couple acres near Xiaowusili, a village of about 600 people on China’s northeastern rim.
Overall, she is not producing much more today than she was a decade ago. Her fields are small and not irrigated. The new, supposedly higher-yielding seeds promoted by the government are not much better than the older varieties, she says.
“There isn’t any difference at all,” Cao said on a sweltering afternoon last week.
Farm goods could be a big weakness for China should the trade conflict with the U.S. turn into an all-out brawl.
China’s increasingly wealthy people want more and better food on their plates. But the country’s farms are generally too small and underdeveloped to keep up.
Nearly 90 percent of the soybeans China consumed last year came from overseas — more than 100 million tons in total. (Mexico, the world’s No. 2 importer, bought just 5 million tons.)
Replacing even a chunk of those with homegrown beans may prove as herculean a task for China as weaning itself from U.S. microchips.
This spring, after the Chinese government first proposed retaliatory tariffs on U.S. soybeans, it got busy trying to dampen the potential blow to 1.4 billion stomachs.
To increase the availability of other types of animal feed, China’s customs authority removed inspection requirements on a variety of agricultural byproducts, including peanut meal, cottonseed meal and rapeseed meal.
Farmers here in Heilongjiang, China’s top soybean-producing province, also caught wind of an order from authorities: Grow more soybeans. Immediately.
As an incentive, the provincial government offered generous subsidies to farmers both for growing soybeans and for switching their fields to soy from corn.
Word of the new subsidies spread quickly on the social media app WeChat. And soon, many farmers were returning corn seeds and fertilizer they had already bought and planting soy instead.
With all the government support, Guo Qiang, a 35-year-old farmer in the village of Dawusili, said he would love to grow only soybeans, and no corn, on his family’s 50 acres. But his farm cooperative requires that members rotate their crops to keep the soil healthy.
“If it weren’t for these policies, I would obviously grow more soybeans,” Guo said. “Especially with these big things happening between China and America — this trade war and whatever — I think the prospects are much better for soy than for corn.”
Even so, China would need to dedicate a huge fraction of the entire nation’s farmland — between a quarter and a third, by various estimates — to soy if it wanted to be self-sufficient.