The world map that hangs on the office wall of South Dakota farmer Bob Metz is covered with colorful pins. Each designates a destination to which he has traveled not only as a tourist but as president of the American Soybean Association, a board member of the U.S. Soybean Export Council and a director of the United Soybean Board. Multiple pins cover sites across Europe and Asia, most notably China.
The ongoing trade war between the U.S. and China is personal for Metz. As a farmer, he's watched soybean prices plummet as China slapped tariffs on America's soybean exports in retaliation to President Donald Trump's tariffs on a host of Chinese products. Representing the soybean industry, he's witnessed firsthand the years of hard work required to build trusted relationships that eventually blossomed into robust markets for U.S. soybeans and other agricultural goods.
Metz fears the escalating trade tensions between the two countries will forever damage U.S. ag exports. "We have always been known as the world's most reliable supplier [of agricultural goods]. I'm afraid that reputation is gone."
Damage to that stellar status will likely add to the financial stress many farmers are experiencing in ag's current down cycle. Exports are the economic engine that drive U.S. agriculture and rural America. China has been our top customer. In 2017, before the tariff dispute began, soybeans were China's No. 1 ag import from the U.S. with a 52% market share; No. 2 in hay; No. 3 in dairy and poultry; No. 4 in processed food, pork and beef; No. 5 in wheat. The American Farm Bureau calculates U.S. agricultural exports to China have fallen from $19.7 billion in 2017 to $9.1 billion last year and were down another $1.3 billion in the first half of 2019.
Meanwhile, tariffs have added to farmers' financial pain because of lower income, lost exports, uncertainty and market volatility. In Nebraska alone, recent analysis by the state's Farm Bureau estimates farmers and ranchers will lose roughly $1 billion in revenues this year for crops and livestock.
Metz agrees something needed to be done to address long-standing issues on trade, technology and intellectual property with China. His concern is that any eventual outcome of the trade dispute will have long-term implications for future U.S. ag exports not only to China but to other countries, as well. Chinese officials are already looking to lessen the country's dependence on U.S. agricultural products. Other countries--South America in particular--will likely step up to fill some of the gap once supplied by U.S. ag goods. That will make it nearly impossible to rebuild market share to pre-tariff levels.
Others are already warning that the trade dispute will reshape global grain flows. Archer Daniels Midland Co. vice president and chief financial officer Ray Young said recently that "for the longer term, U.S. agriculture will have to be less reliant on China as a destination for soybeans and other agricultural products."
For farmers like Metz, that's a journey he would prefer not to travel.
A True Classic
If not for an 11th-hour phone call from another company, John Harvey likely would have joined the staff of Progressive Farmer. Instead, he accepted a position in marketing communications with DuPont's agrochemicals division. While there, Harvey conceived the idea of a calendar highlighting antique tractors and their owners to promote a new soybean herbicide. It was called the Classic Tractor Calendar. When he left DuPont in the early 1980s, Harvey started his own company, Classic Tractor Fever, using the calendar, as well as a mountain of other merchandise, to celebrate antique tractors and collectors.
A giant in the agriculture community, Harvey was my uncle and the person who encouraged me to study ag journalism. He passed away recently after a brief illness. I will forever be grateful for his guidance throughout my career and the fatherly love he showed me after my own father died.
Write Editor in Chief Gregg Hillyer, 2204 Lakeshore Dr., Suite 415, Birmingham, AL 35209, or email email@example.com.
Copyright 2019 DTN/The Progressive Farmer. All rights reserved.