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Concern Over Ag Tariffs Spreading

Rebecca Green
/
WBOI

  There are two primary things you hear regarding tariffs on agricultural products: low margins and concern. You could hear it in rural Woodburn farmer Roger Hadley II’s voice.

“We're sitting here today with a very thin margin to start with. When you take in the talk of tariff in there you start talking it could lower the price by fifty cents or a dollar a bushel that puts us in the red territory as opposed to positive territory,” Hadley said.

That concern mixed with optimism is also shared by Bob White, Director for national government relations for Indiana Farm Bureau.

“But I'm optimistic that something will get resolved by harvest. If not, what we will see is a concentration that will occur in agriculture again like we saw in the 1980’s,” White said.

The tariffs imposed by the Chinese as retaliation for President Donald Trump’s tariffs are the focus of the angst.

As is typical of how the market works, the talk of the retaliatory threats has caused the price of soybeans to drop a dollar fifty a bushel since March; a drop of close to 13 percent.
 

The irony, according to White, is that agriculture doesn't hurt trade with China.

 

“Basically, overall when you look at agriculture we have a trade surplus so we help the balance of trade as opposed to hurt it,” White said.

However, intellectual property rights are a different matter, according to White.

“I've talked to my friends at Dow and Landco and other large companies basically that in order to get into the market into China they have to jump through a lot of hoops,” White said. “They have to give up their intellectual property rights and turn them over to the Chinese and that's not a good thing.”

The balancing act, according to Hadley,  is to negotiate without upsetting our trade partners.

“If the negotiation that this president and the team can put together finally comes to fruition, probably in the long run we'll end up selling more.

“But we don't dare to upset those trading partners because if we get those partners China gets mad at us and they turn around buy more from Brazil,” Hadley said.

“OK, we've got a world market, so that means whoever Brazil’s been selling to is going to have to buy from us. But if we don't have a stable trading partner we've been able to trade with there will be some hiccups getting that whole circle filled back in.”

So, while this global drama plays out, Hadley, an Allen County farmer, is frustrated that it's always agriculture that takes a hit.

“I know we need to negotiate with these countries,” Hadley said. “It frustrates me that the other countries always want to stick it on Ag. … Everything they want to stick on is their food side.

“All perishable items so these are all items that we can’t just say, ‘well good we'll stick in the bin and hold it for a year when you're ready for it will sell it to you.’ So that's the frustrating part, that these tariffs tend to come back and hit this small part of the economy, the 1 ½  percent that's trying to feed the world, trying to help them all out,” Hadley said.

Across Indiana, there is a growing sense of frustration, according to White.

“They're starting to get frustrated some of them are they're playing the wait and see attitude until harvest and now it could be a totally different story when they get into their combine cabs and they see red ink into their cash flows as opposed to black ink.

“That will be the tipping point, I believe,” he said.

While the initial impact of the tariffs is known, how helpful or damaging will take time to determine.