Their Soybeans Piling Up, Farmers Hope Trade War Ends Before Beans Rot

ARTHUR, N.D. — This is harvest season in the rich farmlands of the eastern Dakotas, the time of year Kevin Karel checks his computer first thing in the morning to see how many of his soybeans Chinese companies have purchased while he was sleeping.

Farmers here in Cass County have prospered over the last two decades by growing more soybeans than any other county in the United States, and by shipping most of those beans across the Pacific Ocean to feed Chinese pigs and chickens.

But this year, the Chinese have all but stopped buying. The largest market for one of America’s largest exports has shut its doors. The Chinese government imposed a tariff on American soybeans in response to the Trump administration’s tariffs on Chinese goods. The latest federal data, through mid-October, shows American soybean sales to China have declined by 94 percent from last year’s harvest.

Kevin Karel, the general manager of the Arthur Companies, which has long sold soybeans to China. With that market now largely shut off, Mr. Karel said his firm has started to stockpile soybeans.CreditDan Koeck for The New York Times

Mr. Karel, the general manager of the Arthur Companies, which operates six grain elevators in eastern North Dakota, has started to pile one million bushels of soybeans on a clear patch of ground behind some of his grain silos. The big mound of yellowish-white beans, already one of the taller hills in this flat part of the world, will then be covered with tarps.

China and other trading partners hit with the tariffs, including the European Union, have sought to maximize the political impact of their reprisals. The European Union imposed tariffs on bourbon, produced in Kentucky, the home state of the Senate majority leader, Mitch McConnell, and on Harley-Davidson motorcycles, from Wisconsin, the home state of House Speaker Paul Ryan. China’s decision to impose tariffs on soybeans squeezes some of Mr. Trump’s staunchest supporters across the Midwestern farm belt.

Like most successful American exports, soybeans are produced at high efficiency by a small number of workers using cutting-edge technologies, like tractors connected to satellites so the optimal mix of fertilizers can be spread on each square foot of farmland. The United States exported $26 billion in soybeans last year, and more than half went to China.

Some farmers in North Dakota say they trust Mr. Trump to negotiate in the nation’s interest. Mr. Karel said many of his customers wear red “Make America Great Again” caps and insist that the pain of lost business and lower profits is worthwhile. They say they’ll suffer now so their children benefit later — echoing the argument Mr. Trump has made.

Others are less enthused. Greg Gebeke, who farms 5,000 acres outside Arthur with two of his brothers, said he struggled to understand the administration’s goals.

“I’m trying to follow and figure out who the winners are in this tariff war,” Mr. Gebeke said. “I know who one of the losers are and that’s us. And that’s painful.”

North Dakota’s soybean industry was created by Chinese demand for the beans, which are crushed to make feed for animals and oil for human consumption.

In the mid-1990s, there were 450,000 acres of soybeans in the state. Last year, there were 6.4 million. As the state’s production of soybeans increased, companies spent millions of dollars on larger grain elevators, on the 110-car trains that carry the soybeans west to the Pacific Coast, on bigger terminals at the ports. A few years ago, Mr. Gebeke traded his grain drill, used to plant wheat, for a second machine to plant soybeans.

The Arthur Companies in 2016 opened a shiny drying, storage and loading facility that can hold 2.7 million bushels of beans waiting for the next train.

“I’ve been to China 25 times in the last decade talking about the dependability of U.S. soybeans,” said Kirk Leeds, the chief executive of the Iowa Soybean Association. By undermining that reputation, he said, “We have done long-term damage to the industry.”

Brandon Hokana, whose family farms 3,500 acres near Ellendale, N.D., estimates that they need a price of $8.75 per bushel of soybeans to break even. Last year at this time, soybeans could be sold for almost $10 per bushel. Now, local elevators are offering prices below $7.

Farmers typically begin to purchase seeds and fertilizer before the end of the year, so the low prices are shaping next year’s crop. The Hokanas divided their land evenly between soybeans and corn this year; next, they plan to plant half as many acres of soybeans. Instead they will devote more land to corn, and also to some wheat for the first time in two decades, and perhaps specialty crops like peas and black beans.

Mr. Hokana knows that other farmers are likely to make similar decisions, and that the corn market next fall may be glutted. Specialty crops like peas and edible beans command higher prices, but also require more work and specialized equipment. Also, unlike the big cash crops, specialty crops can’t be hedged. That means the farmer carries all the risk of a bad year.

“The goal for next year,” Mr. Hokana said, “is just to break even.”

Source link

Get more stuff like this

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Leave a Reply

Your email address will not be published. Required fields are marked *

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.