PUTNAM COUNTY — The potential for trade disputes with China, one of
the world’s largest importers of soybeans, along with continued discord
with Mexico, the largest importer of American corn, brings increased
risk to farmers in Putnam County, and across the United States.
recent discussion with area farmers highlighted the eternal problem for
nearly all growers. Do the job well, bring in a large harvest, and the
increase in stocks will drive down prices. Should mother nature turn
against you, survival becomes more of a concern than price. As much as
everyone wishes for a good harvest, the unfortunate truth is that other
farmers often need to do poorly for our farmers to do well. An increase
in drought in the West, or problems afflicting farmers in places like
Brazil and Argentina, means a better chance for Putnam County farmers to
receive a good price for their efforts.
The other option is to
expand the number of international markets available for our
commodities. This would increase the size of the pie, so to speak, for
all farmers. With the Trump administration declaring the expansive TPP
trade pact a complete non-starter, this option remains near-permanently
out-of-reach for the time being.
Still, planting must commence,
and U.S. farmers seem to be betting more and more on Soybeans. A USDA
report published on March 31 heralded the continued rise of soybeans for
the nation’s farmers. Nationally, it is anticipated that 89.5 million
acres of soybeans and 90 million acres of corn will be planted this
Spring. With only 0.5 million acres separating the two crops, the days
in which ‘corn is king’ seems to be coming to a close.
Ohio, soybeans already dominate. The USDA anticipates that Ohio farmers
will sow around 5 million acres of the crop, a 3 percent rise over 2016.
Corn, on the other hand, is expected to remain flat at 3.5 million
acres. Nationally, corn planting is expected to be down 4 percent, which
reflects a steep loss in value impacted by near-record stocks. There is
also an oversupply of winter wheat, and the USDA expects plantings to
be the lowest recorded since record keeping began in 1919.
2016, soybeans contributed over $2.5 billion dollars to Ohio’s economy,
corn brought in over $1.8 billion, with winter wheat posting a mere $188
million by comparison.
On Thursday, President Xi of China will be
at Mar-a-Lago for two days of intensive meetings with President Trump
and his administration. Recent provocations by North Korea are expected
to top the agenda, along with China’s military build-up in the South
China Sea, and Taiwan’s status. However, Trump promised repeatedly
during his campaign to negotiate better deals for American businesses
and farmers, frequently citing China as an example of an unbalanced
trade partnership. Following TPP’s failure, China is actively courting
signatory nations with potential trade deals of its own, and it remains
to be seen what kind of leverage the U.S. may have to negotiate better
deals for U.S. interests.
There is also the concern that Trump’s
interest may not extend much further than his own private business
interests. China’s near unprecedented approval of 35 trademarks for the
Trump Organization earlier this year was viewed by many as an attempt to
Additionally, this week’s state visit by President
Xi was arranged primarily by Trump’s son-in-law Jared Kushner and
China’s Ambassador to the U.S. Cui Tiankai. A Chinese investment firm,
the Anbang Insurance Group, which is believed to be politically
well-connected to China’s ruling communist party, was recently found to
be pursuing a large investment in Kushner’s flagship property on 666 5th
Avenue in New York City. Since being widely reported, negotiations have
ceased, but since so little is known regarding the complex web of
Trump’s business interests and those of his family, the question of how
China may be attempting to curry favor remains.
The stakes are
certainly high. Since 2005, China’s importing of U.S. soybeans has
tripled. The country currently purchases over 60 percent of the world’s
annual production. This insatiable appetite for soybeans resulted in a
reduction of U.S. stocks in 2016 despite a record harvest for the third
year in a row. A feat that could be repeated in 2017, unless China
become motivated to seek its soybeans elsewhere by a potentially
belligerent administration focused on its own private interests.
our southern border, corn faces similar uncertainty for entirely
different reasons. Mexico is the largest purchaser of exported American
corn, a fact the country seems to be determined to use for leverage of
its own. With the Trump administration repeatedly discussing a 20
percent tariff on all items imported from Mexico, along with other
threatened anti-trade decisions, a bill is currently making its way
through the Mexican legislature to boycott American-grown corn.
when the growing season goes well, other farmer’s must falter for ours
to succeed. The reverse is true for those other farmers as well. Brazil
and Argentina are currently negotiating with Mexico to increase their
corn exports, tax-free, should the the boycott of U.S. corn go through.
The risk this poses to Putnam County corn growers is very real.
must also be stated that, as with every concern that weighs on the mind
of a farmer in the spring, no one really knows what will happen come
fall. What always remains the same is a desire for stability - for rain
to come when needed, sunshine soon after, and a market that acts
more-or-less in a predictable manner as we move closer to harvest. Two
of those three things lay mostly outside of mankind’s control.
third now rests in the hands of a man not well-known for acting in a
reasoned and predictable manner. We will see what fall brings.