Ag Policy Blog

Economist Peter Navarro, a senior counselor to President Donald Trump on trade and manufacturing, is calling for greater domestic soybean crush and processing to stop China from holding U.S. farmers "hostage."

Navarro, in an op-ed on Thursday in The Hill, noted that U.S. farmers are at risk when they rely too heavily on a single foreign buyer.

"No country has exploited that vulnerability more than China, and no crop has been weaponized more than American soybeans."

He advocated boosting domestic soybean crush and using the Renewable Fuel Standard to reduce reliance on the Chinese market.

Pointing to both this past year and the first Trump term in 2018, Navarro noted that when Trump has tried to confront China about its trade practices, Beijing responds "with agricultural coercion" by slashing imports of U.S. soybeans.

"Beijing understands leverage cuts both ways, which is why it is aggressively moving to harden its own agricultural supply chains -- seeking to sever reliance on U.S. soybeans even as it continues to wield soybean purchases as a weapon against American farmers and U.S. trade policy," Navarro stated.

The problem is that farmers produce more than 4 billion bushels (bb) in soybeans, but U.S. businesses only crush about one-fifth of U.S. soybean production, Navarro said. "Instead, we export whole beans -- low-value bulk commodities -- while foreign processors capture the higher-value soybean oil and meal. That leaves U.S. farmers overly dependent on foreign buyers and allows Beijing to push the cancel button."

Navarro's numbers are off. According to USDA, soybean production is projected at 4.26 bb, but domestic crush comes in at 2.57 bb, or 60%. Exports, which are sliding down from recent years, are projected at 1.58 bb, or about 37% of the crop.

Still, Navarro advocated in his column that the country should "anchor demand at home" by redirecting soybeans to domestic biofuel production. Increasing biofuel production with soybeans by 1 bb "would translate into roughly 30 to 40 million barrels of oil-equivalent fuel."

In the past three years, demand has risen for domestic soybean oil use, going from 27.1 million pounds to 29.1 million pounds, driven by growth in biofuel usage.

Navarro advocated keeping the soybean meal at home as well as a driver to boost livestock feed.

Over the last three market years, exports of soybean meal have gone from 16 million short tons to 19.4 million short tons.

Navarro points out that more than $6 billion has been invested in soybean crush capacity since 2023, boosting U.S. soybean processing capacity by 25%.

Policies, however, could help anchor that demand. Here, Navarro highlights the Renewable Fuel Standard and the proposed volumes for 2026 and 2027, which "would set the strongest requirements in the program's history and, for the first time, explicitly put American producers first."

Navarro advocated for tightening rules for imported oils that are blended by refiners and closing "loopholes that have allowed questionable imports to undercut American farmers and distort the market at scale."

One proposal was to only offer a 50% Renewable Identification Number (RIN) for imported blend stocks, but that plan has gotten significant pushback from refiners.

Reuters reported on Thursday that the Trump administration plans to finalize its 2026 blend volumes by early March but is "dropping a plan to penalize imports of renewable fuels and feedstocks, according to two sources familiar with the plans."

Navarro noted the pushback from refiners and argued that domestic feedstocks should be prioritized over foreign feedstocks.

"Predictably, some segments of Big Oil are opposing the measure -- domestic biofuels compete directly with petroleum diesel," Navarro stated in the op-ed. "Yet, President Trump has never viewed energy policy as a zero-sum choice. 'Drill, baby, drill' can work hand in hand with 'Grow, baby, grow,' pairing American oil and gas production with American agriculture and biofuels to deliver unprecedented prosperity, stronger rural economies, and enhanced national security."

Finalizing a stronger RFS rule "transforms soybeans from a vulnerability into an asset -- fueling American energy, strengthening rural manufacturing, and denying Beijing one of its most effective economic weapons," Navarro stated.

For the full op-ed, go to https://thehill.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

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