The Enterprise-Toscin, Indianola
 
Trade war hits home
 
China’s counterpunch could land right in county’s breadbasket
 
By Bryan Davis, publisher
 
Not much of what happens in Sunflower County has anything to do with the price of tea in China.
 
But a lot of what happens here, as well as in other Delta counties, does have an impact on the price of soybeans in China.
 
What began with President Donald Trump keeping a campaign promise to be tougher on trade with countries like China, has evolved into a trade war that experts say could have an economic downside right here in Sunflower County.
 
Trump recently renewed a plan to place $50 billion in tariffs on hundreds of Chinese-made goods coming into the U.S.
 
In response, China announced last week $34 billion in tariffs on 545 American goods that will likely include a lengthy list of agricultural crops.
 
The most concerning for local producers is a potential 25 percent tariff on soybeans.
 
This is set to go into effect July 2.
 
Roughly 77 percent (228,216) of the nearly 300,000 acres of crops currently planted in Sunflower County is soybeans.
 
About one-third of the national crop goes to China on average each year, Mississippi State Extension Officer Alex Deason said.
 
“They’re going to cut back on importing some of our crop,” Deason said, noting that some economists estimate the tariffs could eliminate $2 billion from the market nationwide if the dispute is not resolved.
 
The Enterprise-Tocsin reached out to U.S. Senator Cindy Hyde-Smith, who is the former Secretary of Agriculture for the state, for comment.
 
Hyde-Smith was appointed in April by Gov. Phil Bryant to fill the senate seat held by Thad Cochran for several decades.
 
Hyde-Smith currently serves on the Agriculture subcommittee, among others.
 
“I think it’s a mistake for the Chinese government to put American soybeans in its crosshairs to retaliate against President Trump’s demand for a level playing field,” Hyde-Smith told The E-T in a statement. “I’m following this situation closely because these global trade decisions affect Mississippi agricultural producers. I hope this dispute is resolved quickly and fairly. It is also important for Congress to enact a new farm bill that can help farmers weather market disruptions. The Senate Agriculture Committee’s farm bill includes a strong safety net to protect producers against market volatility and price declines, and authorizes programs to develop overseas markets and promote U.S. farm exports.”
 
Meanwhile, Sunflower County is enjoying one of its healthiest crops in years, due mostly to opportune rainfall, Deason said.
 
With a high yield expected at harvest this fall, the loss of demand from China could result in diminished prices for the unsold crop.
 
“It’s all bad,” Deason said, noting that even China will hurt from the situation. “They have a huge population. They require lots of food, fiber and oil to sustain.”
 
Justin Ferguson, with the Mississippi Farm Bureau Federation said that his organization “fully supports Trump’s efforts to bring about fairness and balance in many aspects of our international trade portfolio… However, we do have to pause and acknowledge the very delicate trade balance that the U.S. has with many of our trading partners across the globe and its impact on U.S. farm products and the overall U.S. farm economy.”
 
According to Ferguson, of Mississippi’s $7.5 billion agriculture industry, soybean production is ranked third behind poultry and forestry.
 
“Additionally, soybean is our largest crop planted in the state (at more than 2 million acres), bolstering an estimate of $1.1 billion farm gate value at a production level of over 115 million bushels. It is estimated that more than 80 percent of the Mississippi soybean crop is exported to China,” he said.
 
Ferguson said that temporary help from the U.S. government could help to stabilize the industry until the trade dispute is resolved.
 
“President Trump has acknowledged the impact these trade actions are having on the U.S. farm economy,” Ferguson said. “He has directed Agriculture Secretary Sonny Perdue to begin preparing ‘to use his broad authority to implement a plan to protect our farmers and agricultural interests.’ Secretary Perdue said that the prospect of a prolonged trade war could require that Congress take ‘some extraordinary measures’ in the next farm bill. The USDA also can utilize funds from a lesser-known agency, the Commodity Credit Corporation, to stabilize and support farm income and prices.”
 
Nationally, soybeans represent the No.1 exported crop to China, Ferguson said, with around $14 billion of U.S. soybeans exported to China each year.
 
Cotton is the No. 2 export to the Asian country.
 
“China is the world’s biggest pork producer and consumer,” Ferguson said. “Its industry is a heavy user of soybean meal, a product of soybean crushing to feed its pigs.”
 
Ferguson noted a recent study released by Ohio State University that suggested Ohio famers alone would lose 59 percent of their income if China were to levy a 25 percent tariff on the U.S. crop.
 
That number could be affected, Ferguson said, by how much China looks to other countries for its soybeans.
 
Notably, South American countries like Brazil and Argentina are also heavy producers of soybeans, but Argentina’s farmers are currently dealing with drought conditions that have already benefited the U.S. On top of soybeans, China is also set to impose tariffs on cotton and corn, two other staple crops of the Delta, leaving producers with few places to turn to yield a marketable product to China.
 
The origins of the trade dispute are largely tied to technology and alleged intellectual property theft on the part of China, and tensions pre-date the Trump presidency, as the Asian country has been accused of dumping steel into America and driving down prices.
 
Due to the volume of machinery used in agriculture production, Deason said the tariffs could impact farmers when it comes to their heavy metal equipment.
 
“The implements are going to get hit twice,” Deason said. “Some of the cost of machinery is likely to go up as well.”
 
There is a chance the two countries might return to the negotiating table this summer, but Trump has indicated that he is prepared to outlast China in this trade war.
 
In response to China’s retaliation, Trump ordered the U.S. Trade Representative on Monday to identify another $200 billion in Chinese goods to tax.
 
On Tuesday, soybean futures for July had dipped 7 percent, according to CNBC, at $8.415 per bushel, the lowest mark since 2009 the news organization said.
 
As it stands, the green ocean of soybean fields that stretch the 60-mile long Sunflower County might be the healthiest crop in years, but its cultivators could face challenges in moving the product this fall.