In the farming business, there is always something to worry about, much of it beyond the farmer’s control.
So when the Chinese government threatened Tuesday to levy a 25-percent tariff of American products — including soybeans and corn — in retaliation to President Trump’s call for a tariff on Chinese steel, local farmers responded with predictable stoicism.
“Right now, it seems to be mostly talk,” said Dale Weaver, who farms 1,400 acres of soybeans, cotton and corn in Noxubee County. “It hasn’t done much real damage yet, but if it turns out to be more than just talk, it could be a different story. I guess we’ll have to wait and see.”
Hours after the Chinese announcement, May soybean futures dropped 40 cents and rebounded 16 cents on Wednesday. Thursday, Trump hinted at further tariffs on Chinese products and many worry that the talk may soon escalate into a full-blown trade war — a trade war that could be particularly harmful to U.S. agriculture.
Of particular concern, said Brian Williams, an agricultural economist and professor at the Mississippi State University Extension Service, is the tariff’s effect on soybeans.
“Roughly 50 percent of soybeans grown in the U.S. is exported and 60 percent of those exports go to China,” Williams said. “China is, by far, our biggest customer for soybeans.”
By contrast, just 15 percent of US corn is exported, Williams said, so the effect of a possible tariff on corn would not have as great an impact as a soybean tariff.
The tariff has certainly caught the attention of Mississippi farmers, and for good reason: Soybeans are the No. 1 row crop produced in Mississippi. The Extension Service estimated that farmers in the state will plant 2.2 million acres in soybeans this spring. Soybeans rank only behind forest products and poultry in the state’s agricultural production.
Weaver said the recent drop in prices is mitigated by previous increases in soybean prices.
“The last couple of months before all this, the price was up about 50 cents,” Weaver said. “After the drop, it came back some Wednesday. So right now, we’re mostly OK. But if it goes on, it could get pretty rough.”
Williams said the volatility in the market prices put farmers in a tough position.
“When you look at the numbers, the margins are pretty tight for soybean farmers, and, really any row crop,” Williams said. “A few cents either way can be the difference from making a profit to operating at a loss. If these tariffs go into effect and the prices go down, it stands to really hurt a lot of production.”
Soybeans are usually planted in mid-to-late April, typically after farmers get their corn in and before they plant cotton in May.
Even so, farmers may not be able to shift acreage from soybeans to cotton or corn at this point, Williams said.
“There may be some minor shifts in acreage, but we’re bumping up to the point where a lot of guys are in the fields already, planting corn,” Williams said. “A lot of them have already purchased their seed. If they wanted to switch, they’d have to go back in and adjust their fertilizer. Also, a lot of farmers want to keep their rotation. Farming is a lot about crop management.
“So even though no one is planting soybeans right now, the logistics of trying to make a major change to something else would be pretty hard,” he said.
In addition to those factors, many farmers have already booked contracts for their soybean crops. As the week closed, soybean prices stabilized as many sought to lock in the current price rather than wait until a tariff, if it materializes, knocks the floor out of the market.
Weaver said he’s hopeful that the tariff talk turns out to be just that.
“It’s all smoke right now,” he said. “But it’s happened before. Back in the 1980s it happened and it was terrible.”
Weaver is more watchful than worried right now.
“If you’re a farmer, you are an optimist,” Weaver said. “You have to be. You would never do this if you weren’t.
“So we’ll see what happens,” he said.
Slim Smith is a columnist and feature writer for The Dispatch. His email address is firstname.lastname@example.org.