Farmers explain how the US-China trade tensions destroy profits, talk possible bailout

The Dire State of American Agriculture Due to Trade Policies [00:00]

• Reports indicate the White House is considering $10 to $14 billion in funds to bail out U.S. farmers impacted by an ongoing trade war.
• The trade war has increased costs and negatively affected U.S. exports, particularly soybeans.
• Farmers are experiencing one of the worst times in history since the 1980s, with record numbers of farm foreclosures, bankruptcies, and suicides.
• The administration is perceived as slow to react to the chaos and havoc affecting American farmers within nine months of tariffs being announced on China, Mexico, and other countries.
• China has begun purchasing soybeans from Argentina, while U.S. farmers have not received sufficient relief, unlike the $20 billion bailout provided to Argentine farmers.
• For the first time in a long time, the speaker was unable to secure a farm operating loan because bankers stated the cost per acre was not viable.
• Farmers are now having to farm using vendor financing, indicating a severe financial strain.
• The beef industry is at an all-time low, and the U.S. is now importing beef from places like Brazil and eggs for the first time.
• There is a call to invest in American farmers and small farmers in the country, especially in light of administration talks about "homegrown industry."

This is probably one of the worst times in history since the 80s that farmers are losing their farms at record numbers. Farm foreclosures are up, farm bankruptcies are up, farm suicides are up, and the administration is uh slow to react.

The current situation for American farmers is described as one of the worst in decades, marked by high foreclosure and bankruptcy rates, alongside an increase in farmer suicides. The perceived slow response from the administration to the impacts of trade policies, particularly the tariffs on China and Mexico, has exacerbated these issues. The inability to secure operating loans and the reliance on vendor financing highlight the severe financial distress within the agricultural sector.

Impact of Tariffs on Soybean Prices and Input Costs [02:37]

• When the President first took office and announced tariffs on China, soybeans were selling for $16.80 a bushel in the U.S.
• The price plummeted to about $7 a bushel after the tariffs.
• With the current tariff war, prices have again plummeted, hovering around $9 a bushel, a price at which farmers cannot profitably produce soybeans.
• Input costs such as fertilizer, lime, and seed have increased.
• There is a labor crisis in the country, partly attributed to the administration's crackdown on immigration, leading to a departure of workers crucial for farming.
• These combined factors are described as a "recipe for disaster in American agriculture."
• The speaker questions why this issue is not a top-tier news story, despite daily pronouncements from the President.
• Despite the President's claims that tariffs are great and farmers will receive money from them, farmers are not seeing this financial benefit, as many issues are tied up in federal court.
• The speaker criticizes the administration for stating love for farmers while allowing them to lose their farms at auction.

The price plummeted all the way down to about seven bucks a bushel. And now the president's in office again and he's uh uh with his tariff war and the price have plummeted right now again hovering around $9 and some change a bushel and farmers can't produce uh soybeans for that kind of price.

The introduction of tariffs by the administration has had a devastating impact on soybean prices, causing them to drop dramatically from nearly $17 to around $7, and subsequently to approximately $9 a bushel. This price point is unsustainable for farmers, especially with rising input costs for fertilizer, lime, and seed. The labor crisis, exacerbated by immigration policies, further compounds these challenges, creating a critical situation for American agriculture.

Lack of Representation and Disparities in Aid [04:11]

• Farmers have not been included at the table for discussions regarding these issues.
• The National Black Farmers Association has 160,000 members, yet has not received any invitations from the administration, the Secretary of Agriculture, or the White House for a meeting to discuss farmers' hardships.
• Black farmers have historically received little from the federal government.
• In the first presidential bailout for farmers, which was around $25 billion, black farmers were virtually absent from the distribution numbers.
• There is a need to ensure that all farmers, regardless of race, receive available taxpayer funds.
• The speaker emphasizes that all farmers require the same resources, as their operational costs (e.g., feed for cows, fuel for tractors) are the same.

We have 160,000 members. And I haven't had one invitation from the administration, from the a secretary or the White House to sit down and have a real FaceTime meeting about the hardships of uh our farmers.

A significant concern is the lack of representation for farmers, particularly Black farmers, in policy discussions and aid distribution. Despite a large membership base, the National Black Farmers Association has not been included in high-level meetings. Historical disparities in federal aid have left Black farmers underserved, and there's a push for equitable distribution of future taxpayer funds to ensure all farmers, regardless of their background, receive the necessary resources to operate.

Bailout Funds as a "Band-Aid" and the Loss of Farming Skills [05:24]

• The bailout funds are described as putting a "band-aid" on a situation that requires "major surgery," implying they are a partial fix.
• The U.S. is heading down the wrong path in American agriculture.
• Skilled farmers who are losing their farms are leaving the profession, taking with them valuable knowledge that is not being passed down to the next generation.
• Farming is a skill set that must be taught, with the speaker drawing on his own experience of being taught by his father, grandfather, and others over 42 years.
• Allowing farmers to leave the occupation means losing their skill set, which is a significant mistake by the administration.
• Farming operations require months of advance planning and are not like a regular job; it is described as the hardest occupation known to man with unending work.
• Currently, there are low crop prices for corn, wheat, and soybeans, despite the U.S. excelling in producing these commodities.
• The President is seen as gambling with the future of America's farmers by using these key crops in trade negotiations.

Well, it's like putting a band-aid when you need major surgery. It's a it's a partial fix, people. And I'm telling you that uh the United States is heading down the wrong path in America's agriculture.

The proposed bailout funds are viewed as a temporary measure, a "band-aid" for a much larger problem that requires fundamental changes in agricultural policy. The speaker highlights the critical issue of losing experienced farmers and their accumulated knowledge, which poses a threat to the continuity of the profession. This loss of expertise, coupled with historically low crop prices for essential commodities like corn, wheat, and soybeans, suggests a detrimental impact on the future of American agriculture.

Soybean Market Dynamics and the Impact of China's Demand [07:08]

• Soybeans are ready for customers, but China, historically a large purchaser, has not bought any U.S. soybeans since May and has no future purchases scheduled.
• China is the largest export customer for U.S. soybeans, buying about 25% of the whole U.S. crop in recent years.
• China purchases more soybeans than all other current export customers combined.
• China consumes 61% of all soybeans consumed worldwide, making it a vital market that cannot be easily replaced.
• The U.S. exports about half of all soybeans produced, and China's absence from the market is a "five-alarm fire" for the industry.
• The administration needs to actively work to regain the Chinese market, which is politically complicated but vital for U.S. agriculture.
• Soybeans are the largest export for the U.S. as a country, and China is the biggest customer, significantly contributing to the rural American economy.

China purchases uh more soybeans than all of our other current export customers combined and with them not entering the market, it is very concerning uh for the future of our industry.

The U.S. soybean market is heavily reliant on China as its largest export customer, purchasing approximately 25% of the U.S. crop historically. The current cessation of soybean purchases by China since May, with no future orders, poses a severe threat to the industry, as China's demand constitutes more than all other export markets combined and represents a significant portion of global soybean consumption. Regaining this vital market is crucial for the economic stability of U.S. agriculture and rural economies.

Cash Flow Needs and the Inadequacy of Aid Packages [09:04]

• Soybeans can be stored for several months if kept dry, but the immediate issue for farmers is the need for cash flow and income.
• Harvesting is a payday for farmers who have invested in the expenses of growing the crop and need income to pay bills, feed families, and meet financial obligations.
• The issue is more about the need for cash flow than the shelf life of soybeans.
• The aid package being discussed is not what American soybean farmers are "rallying for" and is seen as a last-ditch effort to plug a shortfall.
• What farmers need long-term is strong markets and competition for their products to make a profit.
• The current aid package is a short-term stop-gap measure, merely "putting a band-aid on an open wound."
• Farmers are experiencing significant economic losses, with economists estimating a loss of $19 per acre on every acre of soybeans produced this year, totaling a substantial amount over 83.4 million acres.
• The need is for competition and a level playing field, achieved by removing tariffs and retaliatory tariffs.
• Brazil is the largest competitor, with a 20% price advantage in the Chinese market due to the absence of U.S. tariffs.
• Argentina experienced a surge in Chinese purchases during a tax holiday, demonstrating that competitive pricing is key.
• The U.S. faces a 20% retaliatory tariff levied by China.

The biggest issue is the American farmers need cash flow. They need income. This is the payday that they have is they've invested in all the expenses of uh growing the crop and getting it ready for market.

The primary concern for American soybean farmers is immediate cash flow, as harvesting represents their crucial payday after significant investment in crop production. While soybeans have a reasonable storage life, the lack of market demand, particularly from China, prevents farmers from generating the income needed to cover expenses, feed their families, and meet financial obligations. The proposed aid package is viewed as insufficient, a mere temporary fix that fails to address the fundamental need for strong markets, competition, and a level playing field.

Long-Term Soybean Market Prospects and Competitive Pricing [12:33]

• Even if the trade war ends, concerns remain about whether China will return as a U.S. customer if they have secured supply elsewhere.
• Long-term, China will still need U.S. soybeans, as Brazilian production is not sufficient to meet all of China's consumption needs (61% of global consumption).
• China prioritizes purchasing soybeans at the best price point.
• If the U.S. can offer competitive pricing, China will want U.S. soybeans due to their good quality and economic value when tariffs are absent.
• Failure to be price competitive will lead China to look elsewhere.
• The U.S. has a history of providing good quality and value to the Chinese market, but tariffs impede their ability to be price competitive.
• Before the current trade war, the U.S. was doing "okay" selling into China, which has a high demand for soy protein to feed its large pig and poultry populations.
• The U.S. and Brazil are the largest providers of soy protein to China, and the U.S. needs to compete in this market.
• U.S. soy has been established in the Chinese market for nearly 50 years, building a reputation for excellent quality and consistency.
• Tariffs and the trade war are preventing the U.S. from competing effectively in this crucial market.

Ultimately, they want to buy the soybeans where they can get them at the best price point. And if we have a competitive price, we know that they want our product because it is a good quality soybean.

Despite concerns about China securing supply from other nations, there's confidence that China will continue to need U.S. soybeans due to their significant global consumption. The key to regaining this market lies in competitive pricing; when tariffs are removed and prices are favorable, China has historically favored U.S. soybeans for their quality. The U.S. has a long-standing reputation in the Chinese market, but current trade barriers prevent it from offering competitive prices, which is essential for maintaining its share of this vital export market.

Farm Economy Divided: Livestock Prospering, Crops Struggling [15:38]

• The Trump administration is reportedly considering "substantial support" for American farmers impacted by trade policy.
• Overall farm income is slightly down, but this masks a divided economy.
• Livestock, particularly cattle, are performing very well.
• Crop farmers, like the speaker's farm, are operating at a loss.
• Prices for corn have dropped from $7 three years ago to $4 today.
• Soybean prices have also seen a similar or worse percentage drop, severely impacting profitability.

Overall farm income is down slightly. Uh but that's a tale of two different economies. Uh livestock, particularly cattle are doing very well. Uh crop farmers like our farm are uh operating at a loss.

The overall farm economy presents a bifurcated picture: while the livestock sector, specifically cattle farming, is experiencing strong performance, crop farmers are facing significant financial losses. This disparity is driven by a sharp decline in crop prices, with corn and soybeans seeing substantial drops over the past three years, while production costs remain largely unchanged, leading to reduced profitability.

Soybean Farmers' Plight and the Impact of Tariffs on China [16:45]

• Soybean farmers are experiencing a particularly challenging time.
• In previous years, China purchased 25% of U.S. soybeans.
• In the current marketing year, China has contracted for zero U.S. soybeans.
• Typically, 10% of the crop would have been marketed to Chinese buyers by this point, but this year, zero has been sold.
• This lack of sales is weighing heavily on prices and creating concern about how to accommodate this year's soybean crop.
• The Midwest had a favorable summer, resulting in a good crop, but farmers are faced with low prices this fall.
• Current soybean prices are around $10 a bushel, which is barely breaking even.
• Two to three years ago, prices were $13 to $14 a bushel.
• While farming is cyclical, the trade war with China has significantly worsened the situation.
• If a deal could be reached with China to buy U.S. soybeans, it would be a "tremendous boost" to the industry.
• However, the speaker notes that if tariffs hadn't been imposed in the first place, a deal wouldn't have been necessary, and farmers would have been operating in a normal market economy. Farmers are paying the price for the chosen trade route.

Uh over the past few years, China has purchased 25% of US soybeans. Uh this year, this marketing year, which starts in the fall, October 1st, uh they have contracted for zero.

Soybean farmers are in a particularly precarious position, with China, a historical major buyer, having contracted for zero soybeans in the current marketing year, a stark contrast to the 25% of U.S. exports it previously purchased. This drastic shift has suppressed prices to a near break-even point, making it difficult for farmers to recoup their costs and contributing to a dire economic outlook for the sector.

Critiquing Trade Policies and the Ineffectiveness of New Deals [19:04]

• The first round of tariffs on China was imposed in 2018, and the subsequent administration kept them in place.
• After seven years, this "experiment" is described as a "complete bust."
• While new trade deals have been announced, such as one with Taiwan for $10 billion in agricultural goods over four years, previous sales to Taiwan exceeded $12 billion in the last four years, indicating the new deal is no better than the status quo.
• There has been no improvement in the U.S. position as exporters.
• The potential $10 billion or more in aid to farmers is acknowledged, but the speaker questions the logic of imposing tariffs, collecting money, and then using that money to compensate the industry hurt by those same tariffs.
• It is suggested that it would be more sensible to eliminate tariffs and resume normal trade relations.

Uh we have seen the administration announce a couple trade deals. Uh the most recent one with Taiwan and they said by golly we're going to sell Taiwan $10 billion of agricultural goods in the next four years. The problem is in the last four years they bought over 12 billion. So they're the deal that they're uh that they're trumpeting is no better than the status quo.

The effectiveness of ongoing trade policies and newly negotiated trade deals is being questioned. After several years of tariffs, the "experiment" is deemed a failure, with new agreements offering no tangible improvement over the existing situation. The proposed aid package, funded by tariff revenue, is seen as an illogical approach, suggesting that removing tariffs altogether would be a more straightforward solution to restore normal trade relations and support the affected industries.

Farmer Support for the President Amidst Financial Challenges and Labor Policies [20:38]

• Despite financial challenges, a recent poll indicates that 70% of farmers support the President.
• This support is attributed to farmers being conservative and liking other aspects of the President's actions.
• There is a willingness among some farmers to "give him a chance," but time is running out, and it is not on the side of the current trade policy.
• Regarding deportation policies, the impact varies by farming type.
• Farms relying heavily on machinery, like the speaker's combine operation, do not depend on migrant or temporary labor.
• Farms with greenhouse businesses that use H2A labor (legal foreign workers) and those with labor-intensive crops like apples, strawberries, or hand-picked produce are significantly concerned about deportations.

Uh the most recent polling I saw said uh 70% of farmers uh support our president trade. Why Why is that, Blake? Why is that, Blake?

Despite the significant financial hardships caused by trade policies, a considerable majority of farmers continue to support the President, with 70% of farmers polled expressing their support. This loyalty is attributed to conservative values and approval of other presidential actions, with a willingness to grant the administration more time. However, the impact of immigration and deportation policies is creating tangible concerns, particularly for farmers who rely on migrant or temporary labor for their operations.