Trade tiff may hurt U.S. farmers

 By Diana McFarland

Managing editor

Isle of Wight County’s largest cash crops are in the crosshairs of ongoing trade negotiations between the United States and China. 

Last month, China announced it plans to impose a tariff on soybeans, uncombed cotton, cotton linters, corn and wheat, which represented 45,024 acres of crops in Isle of Wight in 2017, or 75 percent of all reported crops last year, according to the Farm Service Agency. 

The proposed 25 percent tariff is in response to sanctions threatened by President Donald Trump — a tit-for-tat trade tiff that has escalated and remained in a holding pattern over the last month, and has already resulted in 25 percent tariffs on pork — another hometown commodity via Smithfield Foods. {mprestriction ids=”1,2,3,4,5,6″}

Despite the uncertainty and ongoing negotiations, it’s now planting season, said farmer Rex Alphin.

“Farmers are full speed ahead,” he said, adding that corn is in the ground, to be followed by cotton and peanuts. 

Soybeans are usually planted in May, unless they are double-cropped with wheat, and then they go in in June, Alphin said.

Isle of Wight County Extension Agent Livvy Preisser doesn’t think most farmers have made any changes in response to the threatened tariffs. 

Alphin said the tariff threat just adds another layer of uncertainty on an already changeable business.  

Alphin is not planting soybeans or cotton this year — a decision based on field rotation rather than a threat of tariffs. 

Last year, Isle of Wight County farmers planted more than 17,000 acres of soybeans, which was followed by 13,297 acres of cotton and 10,963 of corn.

Wheat, which has also been targeted for tariffs, represents a smaller share of the county’s total farm acreage, at 3,707 last year, according to the Farm Service Agency. 

Farmer Brian Carroll said he plans to plant soybeans this year. 

He noticed the market’s reaction after news of the proposed tariffs broke last month, but believes there is still time for a correction.

Farmers are not obligated to price the market immediately, so they can wait this out a bit, Carroll said, but added it’s an “understatement” to say he’s nervous about it.

Soybean futures plummeted on April 4 after news of the possible tariffs broke, along with falling corn and cotton futures, according to the report posted on the Commonwealth Gin website. 

In addition to the tariff threat, “There are plenty of other things going on that will shape our markets over the next 12 months including rainfall, world demand, storms, acres that get planted, the list goes on,” according to Johnny’s Blog on the Commonwealth site. 

U.S. Senators Mark Warner and Tim Kaine condemned Trump’s actions as “reckless” in a joint press release last month, and noted that many of 106 threatened items include agricultural products grown in Virginia. 

In addition to soybeans, cotton, corn and wheat, the list includes sorghum, tobacco, beef and beef products, 

China’s tariff on pork went into effect in March, and after initially declining to comment, Smithfield Foods President and CEO Ken Sullivan told Bloomberg in late March that any tariff would make trade more difficult, but other hand, the conversation so far has been “hysterical.” 

Kiera Lombardo, senior vice president of corporate affairs at Foods, said Foods’ projects will continue to be exported, and despite the tariff, many will continue to go to China. 

“Or they will be shipped to one of more than 40 other export markets,” she said in a email last week. 

Meanwhile, market fundamentals, such as pork availability and consumption remain the same, and therefore, remain steady, she said. 

Sullivan said soybeans are the bigger issue, although if exports slowed and production backed up in the U.S., it would benefit the pork producing industry.

“Soybeans are the 800-pound gorilla here,” said Sullivan during an interview with Bloomberg. 

Sullivan told Bloomberg that packaged meats are the meat and potatoes of the company’s profits and those are not exported to China. 

Lombardo said the tariff applies to a “negligible portion” of Foods’ overall sales volume and an even smaller percentage of WH Group’s consolidated revenues. 

WH Group purchased Smithfield Foods in 2013. 

However, the news still isn’t good for U.S. hog farmers, Sullivan told Bloomberg. 

Smithfield farmer Jerry Dashiell finishes off hogs for Foods, but agrees with Sullivan that the real issue is soybeans.

In addition to the hogs, Dashiell also plans to plant soybeans this year. 

Dashiell said the problem is that if the U.S. loses the Chinese market, it will need to find another to pick up the slack. Meanwhile, the Chinese will look to other countries for those commodities.

“We’re the ones that suffer,” said Dashiell, adding that the impact will spread to farm equipment sales and beyond as farmers pull back. 

Elaine Lindholm of the Virginia Department of Agriculture and Consumer Services reported in March that Virginia farmers had planned to plant 30,000 more acres of soybeans this year over 2017. 

Lindholm said if farmers had already planted their soybeans, then “that boat has sailed.”

If not, they may retain some options, such as switching to another crop, she said. 

Preisser said farmers purchase seed months in advance and it likely cannot be returned. 

Cotton and corn are typically planted in April or May, while soybeans are planted in May and June. 

Carroll said the markets were already in a low pattern and don’t need to go any lower.

“It’s got to equalize at some point,” he said. 

Dashiell has been farming for 40 years and has seen this before.  

“This is the tip of the iceberg. If it hurts one of us, it hurts all of us,” he said. 

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