Minnesota farmers see welcome relief in China's suspension of farm tariffs

Washington – Minnesota farmers expressed relief Friday after China suspended soybean tariffs but made plans to quickly survey selling opportunities in case trade talks break down yet again, as they have so often in the past year.

The Chinese market is critical to the state's agricultural sector as it battles weak commodity prices and bad weather. In 2016, Minnesota farmers exported $2.1 billion in soybeans with China as the top market. After President Donald Trump laid tariffs on Chinese imports in 2018 and the Chinese retaliated with tariffs on American soybeans, Minnesota soybean sales dropped by more than 90% almost overnight.

"We'll see how many deals can be struck in the next few weeks," said Carol Anderson, who helps her husband operate a small dairy farm and grows corn and soybeans on 440 acres in Morrison County. She also serves as economic development director of the county.

"Certainly this is a good thing for soybeans," she said of the Chinese announcement. "I think it could be a sign that things are progressing" in the trade war with China.

Storage bins in the western part of the state remain filled with last year's harvest because the trade war led China to stop buying U.S. soybeans. Trains that carried soybeans from Minnesota to Pacific ports for shipment to China have all but stopped running.

Window of opportunity

The current suspension of soybean tariffs could end if Trump chooses to begin collection of new protective tariffs on Oct. 15. But the Chinese announcement Friday opened a window of opportunity and a reason for hope.

On Wednesday, Trump announced a delay in imposing new tariffs on Chinese imports from Oct. 1 to Oct. 15. The delay and the corresponding Chinese tariff suspensions mark a much more conciliatory tone in negotiations, which Anderson took as a positive sign.

On Friday, the Xinhua News Agency, citing the Chinese Cabinet planning agency and Commerce Ministry, reported the pullback on China's end. Beijing "supports domestic companies in purchasing a certain amount of U.S. farm produce," it said, but it gave no details.

Beijing's decision to restore access to low-cost U.S. soybeans would help Chinese pig farmers who use soy as animal feed. They are reeling from an epidemic of African swine fever that has caused pork prices to soar.

Phone calls to the commerce and finance ministries weren't answered on Friday, which was a national holiday in China.

"China has a huge market, and the prospects for importing high-quality U.S. farm produce are broad," Xinhua said. "China hopes the United States will be true to its word, make progress on its commitments and create favorable conditions for bilateral agricultural cooperation."

Beijing imposed 25% tariffs on American farm goods last year in response to Trump's tariff hikes on Chinese goods. Importers were ordered to stop buying soybeans, the biggest U.S. export to China.

Anytime one party gives a little and the other party gives a little, it is a move toward settling a dispute that has rattled the global economy for several months, said Anderson, the Minnesota farmer.

"I'm hopeful they will continue on with negotiations to get rid of the tariffs," Anderson said.

In the short term, the tariff suspension can give some soybean farmers a place to put crops that they must soon harvest. Before the announcement of the suspension, many farmers in western Minnesota had no idea what they were going to do, said Anne Schwagerl, a Minnesota organic grain farmer.

Now, farmers may be able to write new contracts to sell the 2019 harvest to grain elevators, Schwagerl said.

She hopes the compromise signals both sides are ready to begin trade negotiations in earnest. However, the history of the tariff battle tempers her optimism.

"I don't put a huge amount of faith in these things," she said. "They seem to change daily. But I'll take any good news at this point."

Flying to D.C. to lobby

Anderson and Schwagerl were among 44 Minnesota farmers who flew into Washington this week at the behest of the National Farmers Union. They came to drive home the destructiveness of the trade war on their businesses and to criticize the Trump administration's use of waivers to reduce ethanol quotas by billions of gallons, a move that they say crippled an already oversupplied corn market.

Time for fixing these problems is running out, said Eunie Biel, a 66-year-old dairy and soybean farmer and beef producer in Harmony.

The trade war with China has cost her soybean sales. The Poet ethanol plant, where Biel owns shares, has laid off five people because of cuts in production, adding to her concerns.

Biel thinks a truce in the trade war will come, although she is not sure when. Soybean prices are still so low that she would lose money selling her 2019 crop. If the tariff suspension makes her crop profitable, she will consider selling. But she is not sure how long farmers' financial problems will linger.

"Prices are going to be very low for a long time," Biel predicted.

Assurances deflected

Assurances that the president has the trade war under control, offered by the staff of Republican Rep. Jim Hagedorn, who represents Biel's district in Congress, did not comfort her. Nor did Hagedorn's staff pointing out that she and other farmers are getting $28 billion in government subsidies to cover their losses.

Biel said she wants a consistent market for her soybeans, not a handout.

The National Farmers Union and its Minnesota chapter are a generally progressive group. But Republican farmers in the American heartland are struggling, too.

The White House has said the president's trade policies will eventually create jobs and boost U.S. manufacturing. The administration also thinks tariffs are the best way to curb unfair Chinese trade practices and intellectual property theft.

Democratic Rep. Collin Peterson, who represents Minnesota's Seventh Congressional District and chairs the House Agriculture Committee, told farmers he met with last week that he has started getting calls from people who want him to fix problems caused by the president they voted for.

Grim forecast

Young farmers may be most at risk because they tend to be the most highly leveraged with outstanding agricultural loans. Whatever their political affiliation or age, farmers worry about banks refusing to renew loans this winter if their farms are losing money because of weak commodity prices, bad weather and tariffs.

Around Kerkhoven, 100 miles west of the Twin Cities, Josh VanDerPol, 48, a hog and cattle producer, says he has seen what he considers a grim forecast.

"A couple in our area had what they called a 'retirement auction,' " he said. "But they weren't of retirement age. I think we'll see more of that over this winter."

No one can say how many votes the financial pressure might change. Still, people living in farm country say that if tariffs destroying the soybean market and ethanol waivers wounding the corn market go unresolved, loyalties will stretch thin.

"I live in Big Stone County," said Schwagerl, who is 34. "It's pretty conservative. I'm hearing from people who are traditionally Republican saying, 'I've just about had it.' "

Without a resolution in the trade war and changes in ethanol policy by year's end, Anderson believes a political transformation among farmers could occur.

Nobody, she explained, thinks it's funny when you can do nothing with your crops but store them on the ground and hope they don't rot.

The Associated Press contributed to this report. Jim Spencer • 202-662-7432