Tariffs, uncertainty 'paralyzing' for farmers

UPI

6 days ago

July 22 (UPI) -- President Donald Trump's tariff negotiations have the agriculture industry facing uncertainty and soybean farmers are among those most affected.
The price of soybeans continues to decline while the cost of growing rises. The United States has lost its footing in the global soybean market, due in part to Trump's tariff policies during his first term. Current trade negotiations have some in the industry asking for assurances.
"When there's uncertainty in the market it's paralyzing," Caleb Ragland, president of the American Soybean Association and ninth-generation farmer, told UPI. "It tends to make people, when in doubt, do nothing. Don't buy, don't invest."
Soybeans are the largest single agriculture commodity exported by the United States.
China is the biggest buyer of U.S. soybeans but the share of the crop it purchases has declined significantly since Trump placed tariffs on the country in 2018, according to the University of Illinois' Department of Agricultural and Consumer Economics. Prior to that, about a third of its soybeans were imported from the United States.
Tariffs caused China to look elsewhere for soybean imports, dragging down the price of U.S. soybeans. Brazil has been the beneficiary of this change, upping its share of the Chinese soybean market from about 45% to about 70% and raising its prices. The United States accounts for about a 20%-25% share of Chinese soybean imports.
One reason that China is crucial to the soybean market is that it raises more pigs than any other country. The soybean is a key source of protein in livestock feed.
The largest soybean producing states are Iowa, Illinois, Indiana and Minnesota, according to the United States Department of Agriculture.
China has routinely had about a 3% tariff on U.S. soybean imports. The effective tariff is now 23% in response to tariffs imposed by Trump earlier this year.
"We lost our number one market for ag exports overnight," Joseph Glauber, senior research fellow at the International Food Policy Research Institute, told UPI.
Glauber is the former chief economist for the USDA. He served in the role for 22 of his 30 years with the USDA. Among his responsibilities was operating as the chief ag negotiator.
"When I was the chief negotiator, that was in the context of WTO negotiations, which are really textual -- arguing over wording in documents," Glauber said. "What the Trump administration has been talking about are these framework documents with no details. It's a very different thing to think about. These things aren't very longterm, unlike the [North American Free Trade Agreement]. Those are long-running agreements."
Tariffs have always been a negotiating tool, Glauber said, but for decades the United States has worked to reduce tariffs.
Multilateral and bilateral trade agreements, such as the General Agreement on Tariffs and Trade and the World Trade Organization, created mechanisms for trade partners to resolve disputes and maintain relationships. At times, tariffs would be increased, but within the guardrails of long-standing and long-term agreements.
"The Trump administration destroyed that," Glauber said of the World Trade Organization.
In 2019, Trump blocked the appointment of members to the World Trade Organization's appellate body, rendering it unable to settle trade disputes.
The United States' proactive approach to fostering trade has largely hit a standstill since Trump first entered office in 2017, Glauber said. Former President Joe Biden did not raise tariffs but he also did not eliminate tariffs on China that were implemented by the Trump administration.
As U.S. exports like soybeans lose demand, the prices farmers can sell them for also decreases.
Soybeans hit record prices during the former President Barack Obama's second term before hitting a lull throughout Trump's first term. Prices rose again under former President Joe Biden, peaking at $16.88 per bushel in June 2022. The price has steadily declined since, falling to around $10 per bushel in July, down about 40%.
The Chicago Board of Trade is a key marker that farmers across the United States monitor to evaluate their risks and offer a benchmark for crop prices. Farmers will measure the prices offered above or below those futures prices reported by the Chicago Board of Trade at their local elevators to determine when to sell.
If a crop is sold to a grain elevator at a certain price, the seller locks that price in. For example, if a crop is sold in July at the October future price, they will receive that price in October. If prices are higher, they will have missed out on potential profit. If it is lower, they will be protected from that lower price.
Ragland farms soybeans, corn and wheat on his family farm in Magnolia, Ky. Farming is the sole source of income for him, his wife Leanne and their three sons. This year's crop marks his 21st grown on his own farm.
Soybeans are planted in the spring and harvested in the fall, beginning in the end of August through September. The next two months will be critical for farmers like Ragland, as there will be more clarity about the true economic impact of Trump's trade policies on the ag industry.
"It's been speculation up to this point and anticipation by the market but we have not truly been in the middle of actively sending the lion's share of our crop since all this tariff announcement has been made and all the back and forth that has happened with it," Ragland said. "If we don't have some surety in our markets here in the next 30, 45 days, it is going to lead to more significant price drops, we believe. There is very, very weak demand right now from what we hear for exports due to all the uncertainty in the market."
The agriculture community is experiencing economic hardships across the board and tariffs are a part of that. Chapter 12 bankruptcy filings, used to reorganize a farm operation in order to repay debts, were up sharply in the first quarter of 2025.
In the first quarter of the year there were nearly twice as many Chapter 12 bankruptcy filings than in the first quarter of 2024, the University of Arkansas Division of Agriculture reported last week.
Farmers may be the first to feel the sting of a downturn in grain prices but they are not alone. Implement dealers, equipment manufacturers and businesses in rural communities are also affected.
"They say $1 made in agriculture usually floats around six to eight times in the local community," Ragland said. "That means small businesses and stores and everything else in rural communities are hurting as well. All of this has a very detrimental effect on rural America."
"I would also note a lot of these areas we're talking about are the ones that were very large supporters of President Trump," Ragland continued. "We want to respectfully appeal to the administration that we need surety, we need certainty, we need trade deals to be made now and not potentially in the future because the farm economy is in a very difficult spot."
According to Ragland, commodity prices are not meeting the cost of production as they are currently. Inflation has aggravated the financial position of farmers like him as fertilizer prices, insurance premiums and equipment costs have risen.
The effects Ragland and other producers are dealing with not only disrupt their current crop. It also makes planning for the future more difficult.
"The plans I have for this crop here in 2025, a lot of those plans started taking place a year or two ago," Ragland said. "We rotate crops. Sometimes there's fertilizer applied that would be utilized a year or two in the future by the crops. The wheat that we just harvested in June was planted in October of 2024. The seed I planted to grow that crop had to be planned ahead for in the fall of 2023. It's a long-term process, the decisions we have to make."