#8 — Trade war highlights 2018 ag issues
New farm bill approved
In early July 2018, the United States imposed tariffs on billions of dollars of Chinese good being imported into the country. China retaliated with tariffs on imported good from the U.S. The trade war between the world’s two largest economies was underway.
For North Dakota farmers the effect was particularly felt by soybean farmers. China’s annual purchase of soybeans from U.S. markets totaled more than $12 billion in 2017, accounting for about 60 percent of U.S. soybean exports. Sales came to a halt when the two counties announced additional tariffs on imported goods.
U.S. stocks of soybeans grew and the price per bushel of soybeans fell as the two countries continued to clash about an unequal balance of trade tipped heavily in favor of China. It wasn’t until early December that a resolution, however temporary, was agreed upon.
President Donald Trump and Chinese leader Xi Jinping agreed to 90-day truce in the trade war for the purpose of allowing trade to continue while the two sides could work out an agreement on new trading practices.
Almost immediately China agreed to purchase about 1.5-million metric tons of soybeans from the U.S. It was good news for North Dakota soybean growers who had watched the price of their product drop to about $8.50 a bushel from about $10 a bushel a year and a half ago. The trade war truce sent the price of soybeans over the $9 mark.
Soybean farmers were aided during the time the two counties discontinued trade by a trade assistance subsidy approved by Congress in the amount of 40 cents per bushel. Sen. John Hoeven, R-ND, continued to push in mid-December for enactment of an additional 40 cents per bushel for soybean producers.
“I am encouraged that China is starting to buy soybeans from U.S. producers,” said Hoeven. “At the same time, I called Office of Management and Budget Director Mick Mulvaney and emphasized that it is very important that the USDA continue with the trade assistance payment for our farmers. We want to see both that assistance, as well as China coming back in into the market to buy our agricultural products.”
North Dakota soybeans sold to China must first move from storage in this state to ports in the Pacific Northwest and then overseas to China. While the initial purchase of soybeans from the U.S. is not on par with past purchases, it represents an excellent start to the possible resumption of trade
New Farm Bill
Both the Senate and the U.S. House of Representatives voted in favor of a new farm bill in mid-December. The bill was forwarded to the desk of President Donald Trump for his signature.
2018 was not a particularly good year for farmers. The United States Department of Agriculture says their statistics show announced farm income is projected to drop 12 percent for 2018.
Highlights of the 2018 Agriculture Improvement Act, or Farm Bill, include the retention of crop insurance programs, which allow farmers to purchase policies to protect against loss due to disease, drought or other catastrophic events. The bill also includes legislation to expand access to rural broadband. Included in the bill is the creation of an Office of Urban Agriculture and Innovative Production. The office will oversee non-traditional farming operations.