BLOOMINGTON — Central Illinois farmers braced Friday for the fallout from the U.S.-China trade dispute and retaliatory tariffs that were placed on U.S. soybeans and other products after the United States imposed higher tariffs on Chinese imports.
“I was hopeful it wouldn't get to this point,” said Gerald Thompson, a soybean and corn producer near Colfax. “Ultimately, this is not a good situation.” He is concerned not only about short-term impacts, but longer-term impacts if the dispute drags on.
“You look at the amount of soybeans we export to China. It's just a big market for us,” said Thompson.
About 60 percent of U.S. soybean exports go to China.
He is concerned that, as China seeks other suppliers, it could develop new relationships and not buy as much from the United States even after the dispute is resolved.
Robert Shaffer agrees.
“Once you lose a market, it's hard to get it back,” said Shaffer, who farms in McLean and Woodford counties near El Paso.
Shaffer is on the executive committee of the American Soybean Association. He will be in Washington, D.C., next week with 46 directors representing 23 states to seek an end to the trade war.
“We'd rather be a solution than the problem,” said Shaffer. “We would like a win-win trade solution. We need them and they need us.”
Adam Nielsen, national legislative director for the Bloomington-based Illinois Farm Bureau, said the trade dispute also comes at a bad time, with farmers already struggling with falling prices in recent years.
“We would strongly encourage the administration to get to the table as soon as possible,” he said, adding that with all the “trade skirmishes” the U.S. is involved in around the world, it's difficult to focus on all of them at one time.
Austin Rincker, who produces corn and soybeans near Moweaqua, south of Decatur, thinks, because of the high demand for soybeans in China to provide feed for hogs, “they'll have to buy at least some U.S. soybeans.”
“There's a little bit of seasonality at work. … Typically this time of year, China is buying a lot of Brazilian soybeans,” he said.
Once harvest season arrives in the United States, Rincker expects China to buy more.
Soybean market prices dropped about $2 a bushel in the month leading to Friday's imposition of the tariffs, but soybean prices rose 37 ½ cents the day the tariffs took effect.
“That's not the reaction we expected,” said Rincker. “A bit of speculation is going on.”
Shaffer attributed the rise, in part, to the certainty the official action brought.
“The Chicago Board of Trade hates uncertainty,” he said, adding U.S. soybean farmers have advantages over other countries in dealing with China.
“We have a quality product. We can get it there timely and we can get it there efficiently,” he said.
But Brazil had a bumper crop this year and is working to build up its infrastructure, with a lot of the money coming from China, noted Shaffer.
Rincker said demand for soybean protein is growing around the world and “we're going to have to go out and meet that demand.”
While this year's crops already are in the ground, Thompson said an extended dispute “may impact what we plant next year.”
However, if farmers plant more corn because the dispute with China lowers demand — and prices — for soybeans, the increased supply of corn could lower corn prices, too, said Thompson.
“We hope they get something worked out,” he said. “We'll keep our fingers crossed.”