Trade War Brings Struggles to Farmers
By Tristan Bennett
Delta Digital News Service
JONESBORO – Arkansas farmers continue a fight with a competitor halfway across the world. The trade war with China drags on with steady impact.
For the second harvest season, Arkansas farmers experienced lower prices for their crops as a result of a tariff war with China. Joe Christian, owner and operator of JOC Farms Partnership, sees first-hand the negative impact of the trade war.
“This summer, prices were down to $8.50 a bushel for soybeans and even less. That’s $2 below production costs,” he said.
The low prices stem from a decrease in demand for exporting agricultural commodities. Farmers across the nation struggle to make ends meet in the wake of harsh tariffs imposed by China to specifically hurt American agriculture.
Scott Stiles, an economist with the Cooperative Extension Service, said this all began when the Trump administration added tariffs to aluminum and steel imports in April 2018. In response, China imposed a 25% import tariff on U.S. soybeans, grain sorghum, cotton and several more agricultural commodities as well as several other industries.
“They chose to go after a segment of the U.S. population that would really get the president’s attention,” he said. “Hitting the ag (agriculture) sector could be something that could really be detrimental to the president’s political future,” Stiles reiterated.
As the top U.S. export market, China bought one-third of all U.S. soybeans before the trade war began. Arkansas grows around 3.4 million acres of soybeans each year and 610,000 acres of cotton, most specifically to be exported. Now, China buys hardly purchases any Arkansan crops.
“We can’t sell them commodities, but they want to sell us everything, and they don’t want tariffs,” Christian said. “So, in other words, they can put tariffs coming into our country but we can’t on ours.”
Because agriculture makes up a large part of the Arkansas economy, the effects can be felt in several more industries. Patrick Lenderman, Paragould Farm Credit Midsouth branch manager and vice president, works directly with Arkansas Delta farmers to finance their farms.
“This is kind of a trickle effect. When a farmer spends a dollar, it affects a lot of different people, whether it’s going to retail sales at the local Walmart or buying a new tractor or truck,” Lenderman said.
Stiles said the government cannot quantify the effects of the trade war beyond the growers because too many industries intertwine with the agriculture industry.
The federal government began providing trade aid to farmers in 2018 to help compensate for the low prices. According to the Congressional Research Service, the Market Facilitation Program offers farmers payments for “trade damaged” commodities. Arkansas farmers received $281 million in trade aid in 2018.
The U.S. Department of Agriculture increased funding to $14.5 billion and added many more crops to the list of those eligible for aid in 2019. Farmers may continue to sign up for these payments through Dec. 6.
“I think if every grower participated in that, then the amount of aid out of this 2019 round would be about $435 million,” Stiles said. “The payment rates are structured a little bit differently in 2019, and it covers more commodities, so there’s more aid available.”
Currently engaged in trade talks, the Trump administration and Chinese leaders began thawing their relationship, but export numbers remain lower than before the trade war.
Christian said other countries buy soybeans from the United States and then sell them to China to avoid the tariffs, so they still get the products. This could make it difficult to strike a deal between the countries.
He also said farmers in the area appreciate the actions of the Trump administration so far.
“We’ve been 20 plus years in the WTO (World Trade Organization) agreement, and we get rulings that are not far and against the United States all the time, and it’s time to do something different,” Christian said. “If we got to hurt a little bit to hopefully do some good, we’re willing to do it.”
Because many factors must be agreed upon by all countries involved for trade to resume, a solution to the trade war isn’t likely come soon.
“The solution will take time. There is no overnight solution to this,” Lenderman said.
The countries find themselves in a stalemate because the Trump administration interposed issues such as intellectual property disputes along with many others between the two countries over the past many years.
Negotiation talks were broken down into phases to address each issue, with agriculture as phase one.
Stiles said, “Ag is wrapped up in issues that are not ag-related, and it could be a casualty if we don’t ultimately get a complete, comprehensive trade deal.”
In the meantime, farmers continue the struggle to make ends meet. Arkansas growers, no matter how small the operation, cannot escape happenings halfway across the world and must fight through the current economic challenges.
Editor’s Note/Feature Photo: Joe Christian, owner/operator of JOC Farms Partnership, is one of many local farmers affected by the U.S.-China trade war. Photo by Tristan Bennett.