High tariff talk has Barry County farmers bracing
Threats of higher tariffs between the United States and China are of intense interest to Barry County farmers. That's because soybean, pork and beef producers here are likely to take a hit if tariff hikes take effect June 1, local agriculture experts say. The U.S. has already raised tariffs from 10 percent to 25 percent on $200 billion in imports from China.
On Monday, China announced a plan to raise its tariffs from 5 percent to 25 percent on $60 billion of American goods. “The tariffs will very likely effect Barry County farmers,” said Barry County Farm Bureau President Mick Kokx. “I don't know how much, but they could have some effect on it because there are a lot of soybeans produced in Barry County.”
According to the National Agriculture Statistics Service, Barry County produced nearly 1.6 million bushels of soybeans in 2018. “I think it will effect the soybean sales with China,” Kokx said. “Now, hopefully, we can move those soybeans somewhere else.”
The American Soybean Association’s SoyStats indicates that the U.S. exports nearly $12.4 billion in soybeans to China. The next closest is Mexico, with about $1.6 billion in soybeans.
Soybeans aren't the only concern for farmers here. According to the National Agricultural Statistics Service Census in 2017, Barry County had 254 beef cattle farms, the highest number for a county in Michigan, as well as the highest number of beef cows, 3,147.
“All producers are being effected by the trade discussions that are currently going on, and the tactics being used are affecting all of our producers,” said Executive Director of the Michigan Corn Growers Association Jim Zook. “The biggest impact is the uncertainty in the market.”
“Once you lose a customer, it is very hard to get them back,” Zook said.
A higher tariff would cause the price of goods to increase, he pointed out. Then, if the parties that are selling the product don't reduce their costs to importers, it could reduce consumption of that product.
In the past, Zook said, when a tariff or embargo is placed on them, countries have sought to develop trade with other countries. And, when situations like this arise, it forces countries to make contingency plans to get the goods and resources that they need.
That's one of the hoped-for outcomes of this high-tariff talk: Development of other trading partners who consume a lot more of what is produced here.
“I understand that President Trump has a good reason for doing this,” Barry County farmer Tom Wing said. “I understand the trade imbalance that he is trying to correct, and I realize it hurts us, but I just hope he knows what he is doing.”
Wing sees China as a huge asset for the agriculture market here, pointing out that China buys more from the U.S. than the U.S. buys from China. But deals with China have hurt farmers in the past – and are likely to hurt farmers here in the future, he said. “There was a $2 drop in dairy in August of 2018 because China backed out of a dairy contract,” said Wing, who has a dairy farm. “(It was) one of the bigger drops in the history of the futures market in such a short period of time.”
Trump announced plans this week to take the highest year, the biggest purchase that China has ever made with our farmers, which is about $15 billion, and provide something reciprocal for farmers to ensure that they do well amid tariff volatility. Kokx said he hopes Trump gives money from the tariffs to farmers who would be harmed by a decrease in consumption from China. The tariffs are not yet in place yet, but are expected to take effect June 1. Until then, negotiations on a trade deal between the U.S. and China could still occur.