Food Service & Agriculture, Government, and Manufacturing

Michigan farmers feel trade war fallout

Local grower says President Trump’s aid package will be too little, too late.

August 3, 2018
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Soy Bean Farmers
Some soybean farmers still are holding on to last year's harvest, hoping for a better price per bushel. Courtesy Thinkstockphotos

(As seen on WZZM TV 13) Michigan farmers are enduring the effects of the trade war between China and the United States.

As a result, President Donald Trump recently announced a $12 billion aid package to help farmers after he asserted a 25 percent tariff on $34 billion worth of Chinese imports in July.

China imposed tariffs of its own, tagging 25 percent tariffs on U.S. imports, which includes soybeans.

Soybean farmers are feeling the brunt of the tariff battle. Despite the expected financial assistance, Denny Heffron, owner of Heffron Farms, said the short-term aid will not be enough and it will come too late.

“They are talking about after harvest, so they are always a little bit too late,” Heffron said. “I have bills I have to pay now and giving me money next year is good, but it is not solving the problem for right now. The government always uses food as a bargaining chip.”

Heffron grows livestock and crops on his farm in Belding. Some of the crops he grows include corn and soybeans.

He said he has leftover soybeans from last season’s harvest, and he has stopped selling soybeans for the last few months when rumors of tariffs began despite the fact, in October, he will have additional bushels of soybeans to harvest.

“We have backed off from selling because the prices are too low,” Heffron said. “They have come down to prices that we don’t like. So, right now we are not selling any soybeans. They are still in the bin, but sooner or later, we will have to move them because we will soon harvest the new crops. We are just holding off because sooner or later, we will have to sell them.”

According to the Michigan Farm Bureau, soybeans range from $8.49 to $8.79 per bushel, which Heffron said has decreased by $1 to $1.50 per bushel. As a result, the cost is $75 to $100 per acre cut.

While Heffron weighs the risk of not selling his soybeans now, other farmers have left the industry.

“Right now, the situation is intense enough that we are losing farmers as a result of the financial situation in the agricultural industry,” said Kate Thiel, Michigan Farm Bureau field crops specialist. "(Farmers) are now retiring because they are no longer profitable on the return on their investment. They aren't making enough income or they are too leveraged to get additional funding through loans or grant programs. And, unfortunately, the longer this continues, discussions without a solution, the more likely it is for us to continue to lose.”

China has been the United States’ largest trading partner of soybeans, Thiel said. One-third of soybean production was exported to China in 2017, which amounted to $14 billion in sales and nearly 61 percent of total export.

In 2017, Michigan produced 2.27 million acres, or 96.4 million bushels, of soybeans and about 87 percent of soybeans produced left the state to either be exported overseas or sent to different states, according to Thiel.

“China is our largest soybean trading partner, so you can infer that a good number of bushels of soybeans are being exported to China from Michigan, as well,” she said. “From an economic standpoint, soybeans contribute $1.87 billion to Michigan’s economy and aid in more than 14,000 jobs. There are 12,000 soybean farmers in Michigan.”

The tariffs were put in place at an inopportune time, Thiel said, because the crops already are in the ground waiting to be harvested. So, if the tariffs continue into the fall, soybean farmers still will be operating at a loss.

“Traditionally, farmers prefer trade over aid,” she said.

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