Soy growers cautiously optimistic following trade war truce
Soy growers cautiously optimistic following trade war truce
America’s soybean farmers welcomed early-hour news May 12 announcing that U.S. and Chinese officials had reached an agreement that temporarily reduces tariffs levied by the countries on exported products, including U.S. soy. The pause will be in effect for 90 days while negotiations continue. Farmers across the soy-producing states are hopeful that during this time, a long-term Phase Two pact can be made to address Chinese tariff and non-tariff barriers to trade.
“We see this as an encouraging progression in the trade negotiation process, and we’re pleased to see our advocacy efforts are being heard by the administration,” MSGA President Darin Johnson said. “It’s great for the American soybean farmer to take advantage of what is hopefully a fantastic trade agreement for years to come. This is definitely a step in the right direction toward keeping our biggest export market intact, and hopefully a good trade deal comes out of it.”
A joint statement from the two countries explained the U.S. will reduce reciprocal tariffs on Chinese goods to 10% which, combined with a 20% duty on China regarding fentanyl, places Chinese imports at a minimum rate of 30%. China, in return, reduced its retaliatory tariffs on U.S. goods to 10% and agreed to remove any non-tariff trade barriers and restrictions imposed on U.S. products following “Liberation Day” April 2 when President Trump announced his reciprocal tariff plan.
MSGA President Darin Johnson is hopeful a trade war reprieve between the U.S. and China will bring long-term advantage to Minnesota soybean farmers.
“This is a big development and one we are very pleased to hear, yet the tariff that remains in place for U.S. soy is far from inconsequential: Products purchased from our competitors in Brazil and Argentina are not burdened with this extra cost. That means China will turn to South America first for its purchases and only buy U.S. soybeans when it absolutely must,” Ragland said. “Also important to note, the 90-day pause will end in August — right before our harvest season. We need the administration to continue its negotiations with China to find a long-term, sustainable solution that removes retaliatory tariffs and protects market access for our agricultural products.”
In the most recent marketing year, U.S. exporters shipped 46.1 million metric tons of soybeans to international markets, accounting for over $24 billion in sales. Of those exports, nearly 25 MMT of soybeans went to China. That volume represents 54% of U.S. soybean exports and accounts for $13 billion in value for U.S. soybean farmers. Minnesota is the nation’s fourth largest agricultural exporting state, valued at $10 billion annually. Soybean exports in Minnesota account for over 25% of the state’s total exports, equating to over $2 billion in sales each year. Roughly one in four rows of Minnesota soybeans is sent to China, and the state’s overall agricultural exports have increased by more than 300% in the past 25 years.
“Although we continue to carve our markets for new uses for soy here at home, the fact remains that we depend on trade to sustain our operations,” said Johnson, who farms in Wells.
While the soy industry works incessantly to seek new and develop existing markets for both whole beans like those imported by China and for soy oil and meal use, it is a slow process that can take years. The China market was started in the 1980s and took more than 40 years to fully establish. Those relationships are critical, as is the ability of U.S. soy farmers to supply them with high-quality U.S. soy on a consistent basis.
U.S. soy’s relations with China are still encumbered by damage done in 2018/19. The industry looks to the administration to help repair and retain its relationships with key markets such as China in the weeks ahead through robust negotiations.
