* The AP yesterday…
American farmers welcomed China’s promise to buy some of their soybeans, but they cautioned this won’t solve all their problems as they continue to deal with soaring prices for fertilizer, tractors, repair parts and seeds.
The Chinese promise to buy at least 25 million metric tons of soybeans annually for next three years will bring their purchases back in line with where they were before President Donald Trump launched his trade war with China in the spring. But the 12 million metric tons that China plans to buy between now and January is only about half the typical annual volume.
Agriculture Secretary Brooke Rollins said China also agreed to remove all its retaliatory tariffs on American ag products, which should open the door for sales of other crops and beef. Plus, China promised to resume buying U.S. sorghum, which is another crop largely used for animal feed that depends on that market. More than half the sorghum and soybean crops are exported every year with much of that going to China. […]
Trump had promised to offer farmers a significant aid package this fall to help them survive the trade war with China, but it’s been put on hold because of the ongoing government shutdown. Rollins said that aid package is still in the works, but she promised the administration is ready to “step in the gap” and address any sort of harm the trade war has caused farmers.
“We’ll see what the market does and we will be ready to continue to step in if in fact, we believe it’s necessary,” Rollins said.
* I reached out to Illinois Department of Agriculture Director Jerry Costello, who’s been critical of the trade war, to get his take. From Costello…
Today US Treasury Secretary Scott Bessent reported that the agreement reached will have China purchasing 12 million metric tons of soybeans by January with 25 million tons purchased annually the next three years at minimum. That might be more reassuring if China had followed through on the purchases they were supposed to make under the 2020 trade deal, which the United States Trade Representative Office is currently investigating.
To put in perspective how the first Trump administration tariffs worked, below are the numbers directly from the USDA. The Trump 1 tariffs were instituted in 2017 and drastically impacted 2018 sales.
[From Isabel: 2023 should be million not billion!]
Currently, the Trump 2 tariffs (taxes) have caused input prices to skyrocket.
- Tariffs on nitrogen are up 10%.
- Tariffs on herbicides, insecticides, and pesticides are up 20%.
- Tariffs on ag equipment are up 13%.
- Tariffs on new tractors are up 16%.
All of this in roughly 9 months.
If you drive down the interstate and see white bags by grain bins, that’s temporary storage - which cost farmers even more money. This is visible evidence that commodity prices are too low to be sustainable. Prices on commodities have been way below costs with Illinois inputs averaging $11.60 - $11.65/bushel for soybeans and $4.50 - $4.65/bushel for corn.
Many farm equipment dealers are down 70% to 80% from year over year sales, and John Deere has laid off or dissolved thousands of jobs, even closing a plant in large part due to the economic chaos caused by the Trump administration.
Farms have been lost, lives ruined, and prior to this chaos, farmers were already 3.5 times more likely to commit suicide than other occupations. The bank won’t cash promised agreements. We are almost at the end of harvest. Bills are due.
It also takes 30 to 40 days for a cargo ship to reach China after departing from the Gulf of Mexico.
Let’s not forget that feeder cattle prices are down close to 15% in less than a week after the President announced quadrupling beef purchases from Argentina. This drove down prices for domestic beef producers after the President also announced investing tens of billions of US tax dollars into Argentina. Cattle production was the one bright profitable spot for a diversified farm.
This is no different than an arsonist setting fire to your house and then returning with your hose to connect to your water expecting a “thank you” for extinguishing the flames. You’re still left with damages and cleanup you never should’ve endured in the first place.
The facts are that experts are already warning that “Commercial purchases would also require China to roll back tariffs on US soybeans imposed earlier this year, a move that is widely expected by the market but which Beijing did not make explicit,” and that “China has switched to taking more Brazilian soybeans and recently purchased record volumes from Argentina, part of its strategy to diversify supply.”
So anyone who wants to be part of this masochistic victory lap, which at its very best only aspires to pre-(second)trade war sales levels, be my guest. As we all know, Albert Einstein is famous for saying, “The definition of insanity is doing the same thing over and over again and expecting different results.”
Thoughts?
* Related…
* Reuters | China to buy 12 million metric tons of US soybeans this season, Bessent says: U.S. Treasury Secretary Scott Bessent said on Thursday that China has agreed to buy 12 million metric tons of American soybeans during the current season through January, down from 22.5 million tons in the prior season after a months-long tariff battle halted all purchases of the current U.S. harvest. China also committed to buying 25 million tons annually for the next three years as part of a larger trade agreement with Beijing, Bessent said, following a meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea.
* WJRT | Mixed reactions from Michigan farmers on new soybean deal: “The idea that there has been a significant gain here is woefully misstated,” Thompson said. Thompson, whose organization represents more than 500 farmers across Michigan, expressed being ‘cautiously optimistic’ but emphasized the importance of follow-through. “I think that it’s well known that statements are made and then sometimes the follow through isn’t as strong as we would like,” Thompson said.
* Des Moines Register | China pledge of soybean purchases ‘great news’ for Iowa farmers, state ag secretary says: “This is great news for Iowa farmers and our ag economy,” Iowa Agriculture Secretary Mike Naig said in a statement. “Expanded soybean purchases by China will make a meaningful impact at a time when many farmers are feeling the pain of a tough farm economy. The announcement “addresses many of the concerns around market access to China following months of stalled purchases and uncertainty,” said Tom Adam, an east-central Iowa farmer and president of the Iowa Soybean Association.
* KWCH | 5th-generation Kansas farmer shares thoughts on soybean deal with China: “Until we can get some agreement signed and get some teeth into it, I don’t really know that we have anything solid that we can plan on,” Winter said. With all the recent changes between China and the U.S., many farmers are wondering if soybeans are still a safe crop to plant next year. “It really makes a person stop and think and scratch their head a little bit about, ‘Do I really want to pant these crops?’” Winter said. “However, I revert back to, ‘All these crops are part of my crop mix, they’re part of my program.”
- H-W - Friday, Oct 31, 25 @ 10:07 am:
If a political party creates a farm crisis, and then nine months later, says we have solved the farm crisis and things will return to normal for the next three years, who gets credit for the original losses? Illinois Republicans will support the President who created the crisis for ending the crisis he created.
- Notorious JMB - Friday, Oct 31, 25 @ 10:21 am:
A lot of the old guys are saying that what’s going on now is what happened in the 80s and caused a lot of farms to go bankrupt. It was to agriculture what 2008-2010 was for housing. There were high interest rates (credit card level, not today level), high input costs, low crop prices, and we were importing beef from Argentina. So far we are not seeing the bankruptcies.
Cost of inputs have been high since the Ukraine invasion, but crop prices also spiked which made up for the difference. Now though, inputs are still high and prices are down.
I disagree though about the baggers. I know several farmers who bag grain when they’re harvesting because they think it’s faster than waiting on a truck to dump at the elevator or a grain bin. Once harvest is over they either put it in a bin or sell at the elevator. Bags aren’t good for longer term storage, they trap moisture causing wet grain to rot. Wildlife and corn stalks will also poke holes in the bag exposing the grain to moisture creating spoilage too. Then sometimes there’s a defect in the bag and they will split open on their own.
Some people also use the bags to store silage in for livestock instead of a pit or upright silo.
- Excitable Boy - Friday, Oct 31, 25 @ 10:31 am:
- for ending the crisis he created. -
Who knows if that’s even going to be the case? Trump could upend this entire deal with a social media post.
- Blitz - Friday, Oct 31, 25 @ 10:31 am:
I’m assuming that 2023 number is supposed to be million?
Anyway, extremely interesting for a guy like me with no knowledge in agriculture whatsoever. The numbers on that chart definitely speaks volumes and I still don’t understand the strategy with these tariffs as I just don’t see the benefit in the long run.
- Flyin' Elvis'-Utah Chapter - Friday, Oct 31, 25 @ 11:11 am:
Financial pain, and the potential loss of your land, just to get back to where you were before, maybe.
…and the majority of farmers would vote for him again.
A Republican would rather suffer under a Republican than prosper under a Democrat.
- Siualum - Friday, Oct 31, 25 @ 11:23 am:
Maybe the big picture plan is to force smaller family farms out of business, so the 1 per centers can scoop up their land at bargain prices.
- TinyDancer(FKASue) - Friday, Oct 31, 25 @ 11:27 am:
=Albert Einstein is famous for saying, “The definition of insanity is doing the same thing over and over again and expecting different results.”=
Nice quote, but supposedly, Einstein never said it.
- Been There - Friday, Oct 31, 25 @ 11:35 am:
If the 2016 amount had stayed stable for the 9 years this shows, that would have totaled $14.4 Billion. This chart shows a total of $6.4 Billion over those 9 years. So we are still $8 Billion short over those years.
- Downstate - Friday, Oct 31, 25 @ 11:45 am:
The productivity from Illinois fields this year is astounding. In our region, rainfall was inadequate, at best.
Despite that farmers were reporting near record results. Fields that used to average 150 bu. of corn per acre are easily hitting 250+. It’s credited to genetics and science that we are seeing those numbers.
It would have been interesting to see what those same fields would have done with more normalized growing conditions.
- Just a Random Guy - Friday, Oct 31, 25 @ 12:59 pm:
=Einstein never said it.=
Correct and what’s funny is it’s preceded by “As we all know”. Yeah, we all know Einstein never said that lol.
- Corn is the tall stuff beans are the short stuff - Friday, Oct 31, 25 @ 1:29 pm:
Corn and Beans have been stored on the ground for ever when bins are full. The Ag director knows that he just ignores it.
- Stephanie Kollmann - Friday, Oct 31, 25 @ 1:44 pm:
Costello isn’t saying anything that the Republican farmers in the Soybean Association aren’t saying about the market being destroyed and the deal not restoring them. They just (still) refuse to put blame where it belongs in public. Too bad.
- Give Us Barrabbas - Friday, Oct 31, 25 @ 1:48 pm:
A majority of farmers voted for the leopards eating faces party. They should have known better especially after his first term when he did the same thing to soybeans and absolutely cratered the pork market. But hey, they sure owned us libs, didn’t they? I feel for the farmers will lose their farms, some of them, centennial owners , but at some point you must let karma do its thing because some people refuse to learn from their past mistakes.
- Stephanie Kollmann - Friday, Oct 31, 25 @ 1:49 pm:
They openly say they never recovered their marketshare from Trump v China I and then backed Trump v China II
okay, then
- Demoralized - Friday, Oct 31, 25 @ 1:49 pm:
==Corn and Beans have been stored on the ground for ever when bins are full. The Ag director knows that he just ignores it.==
Yeah. He knows. He said it. He said it’s temporary storage that has to be paid for.
The point of what he said just flew right over your head didn’t it?
- WK - Friday, Oct 31, 25 @ 1:58 pm:
Lots of hyperbole here. Despite the misleading chart, prices were rising rapidly before Biden was elected, and they bottomed out well before the current president was re-elected. I’m not trying to say the trade war has been good for farmers, but there are a lot more things happening. Soybean prices today are well above where they were before the 24 election, on the news coming out of DC.
In terms of the tariffs, most of those items bought in Illinois are produced domestically. NH3 fertilizer is the one source of N that is largely imported (from Canada), and its pricing is a racket that has no connection to real market conditions.
All that said, it’s still a bad environment for the trade war to continue, and a lot of farmers are on the brink.
- Grandson of Man - Friday, Oct 31, 25 @ 2:59 pm:
Any word from the ILGOP and Illinois doomers, to decry the president’s economic policies on the state? Any of them want to preach to MAGA farmers from their Gospel of Personal Responsibility, that they brought it on themselves and should get no taxpayer bailouts? Loudest silence ever.
- ArchPundit - Friday, Oct 31, 25 @ 4:16 pm:
-Maybe the big picture plan is to force smaller family farms out of business, so the 1 per centers can scoop up their land at bargain prices.
Land prices are very high and likely will remain so as private equity, large operations and foreign buyers are buying it up as investment. They can handle bad years, but will invest for the future