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Trade war hits home

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Illinois

Back before the U.S. and Europe started slapping tariffs on each other, Paul Hletko was benefiting from the Old World’s growing passion for bourbon, pulling in six figures’ worth of orders at his small-batch distillery in the first half of the year.

Those days are over. Bourbon exports for Hletko’s Few Spirits, based in Evanston, “dropped to zero” from 15 percent of revenue last year, he said. The European Union’s 25 percent tariff on bourbon, implemented in June, wiped out demand for his product, which retails for $51 a bottle in the U.S.

“Every U.K. buyer backed off,” Hletko said. “They may want to buy it, but if they can’t sell it at the right price, that’s not doing us any favors.”

Small distillers cite the drought as proof their fears of a global trade war are coming to fruition. Europe had been blossoming as a source of new revenue — but this market has been effectively cut off for producers that lack the clout or brand recognition of titans like Brown-Forman Corp., Diageo Plc and Chicago’s Beam Suntory. Now they’ve been sent back to square one.

The tariffs, which target U.S. goods such as Levi Strauss & Co. blue jeans and Harley Davidson Inc. motorcycles, are the EU’s retaliation to President Trump’s duties on foreign steel and aluminum.

* On to soybeans…

“I can tell you that the day they announced the tariff, we lost $20 an acre on our farm, and that was not the full impact of the tariff,” said Doug Schroeder, vice chairman of the Illinois Soybean Association and owner of a 4,000-acre soybean and corn farm near Mahomet, Illinois.

“It is really tough. Twenty-five percent of Illinois soybeans used to go to China, and now virtually none of them do,” he said.

Farmers are scrambling to find storage space for the soybeans they can’t sell, which is creating more challenges and raising costs.

“It’s really been devastating,” said Schroeder. “There hasn’t been a demand for the beans to go anywhere, so they just pile up.”

While Illinois soybean farmers are still selling their harvest to Indonesia, Taiwan and Mexico, the demand just isn’t there for what is expected to be a record soybean crop this year.

* Reuters…

US net farm income will fall to $65.7 billion this year, down 47% from just five years ago, the US Department of Agriculture (USDA) forecasts.

* New York Times…

America’s farmers have been shut out of foreign markets, hit with retaliatory tariffs and lost lucrative contracts in the face of President Trump’s trade war. But a $12 billion bailout program Mr. Trump created to “make it up” to farmers has done little to cushion the blow, with red tape and long waiting periods resulting in few payouts so far.

According to the Department of Agriculture, just $838 million has been paid out to farmers since the first $6 billion pot of money was made available in September. Another pool of up to $6 billion is expected to become available next month. The government is unlikely to offer additional money beyond the $12 billion, according to Sonny Perdue, the agriculture secretary.

* Related…

* Trump’s steel tariffs create big profits but few new jobs: At Nucor’s plant in Sedalia, by contrast, 225 people will make steel with a high-tech furnace that shoots electricity through scrap metal to melt it into new products. That technology is now used to produce nearly 70 percent of U.S. steel — with a third less labor and energy, according to Charles Bradford, president of Bradford Research Inc.

posted by Rich Miller
Tuesday, Nov 27, 18 @ 12:14 pm

Comments

No one could have predicted that the Chinese would respond by finding other soy and pork producers.

Except for everyone who did.

So much winning!

Comment by 47th Ward Tuesday, Nov 27, 18 @ 12:26 pm
Just sayin. Every acre of our 600 acre family farm was planted in soybeans this year. Every bean was sold to Gavilon. I believe a Japanese owned agricultural giant export company. We didn’t get the price per bushel that we wanted. But then again. We never do.

Comment by Blue Dog Dem Tuesday, Nov 27, 18 @ 12:35 pm
Canada is buying US soybeans for little and reselling them to China.

China also legalized cannabis before we did.

Canada is making out great, thanks to the Republicans.

Comment by 33rd Ward Tuesday, Nov 27, 18 @ 12:36 pm
The steel plants were major, direct consumers of coal, but now only indirectly, if the electric power plants that feed them are still running on coal. Cratering Illinois markets in all sectors is what this administration will be known for. I gotta wonder, will the ag community remember this two years from now?

The ones still left in business, I mean.

Comment by Anonymous Tuesday, Nov 27, 18 @ 12:37 pm
==red tape and long waiting periods resulting in few payouts so far.==

A promised Trump initiative with poor follow through? That’s a first (exclamation point)/s

Comment by Jocko Tuesday, Nov 27, 18 @ 12:42 pm
I was driving around and heard a show on NPR interviewing farmers. Anyone else hear that show? One lady said her farm lost $90K and she got some of the tariff emergency aid for farmers: $10K. I don’t know why people are still farming.

Comment by Da Big Bad Wolf Tuesday, Nov 27, 18 @ 12:43 pm
There was recent news story about Dakota farmers who in years past sold their beans to China and now have taken a hit from the tariffs. It wasn’t just the farmers taking the hit, but the rail companies used to ship to west coast ports.

Comment by Huh? Tuesday, Nov 27, 18 @ 12:46 pm
Thanks Trump. We can’t take much more of all this winning. But $51 bucks for bourbon? Yeesh.

Comment by PublicServant Tuesday, Nov 27, 18 @ 12:47 pm
To add physical hurt to the economic injury on the soybean story, count all the off-target herbicide damage caused by spraying dicamba on Monsanto’s dicamba tolerant soybeans. Farmers are paying greatly for the great yields while Monsanto rakes in the seed and herbicide profits while refusing any accountability for their volatile chemistry that knows no property borders and makes fools of those who conscientiously attempt to abide by the product labels.

Comment by Vole Tuesday, Nov 27, 18 @ 12:49 pm
On Dec 1,2017 we sold beans at $9.46/bu. We do have beans in the bin with January 2019 contacts at $10.10/ bu. Just sayin.

Comment by Blue Dog Dem Tuesday, Nov 27, 18 @ 12:52 pm
Blue Dog Dem - Serious question. What do you think accounts for the difference between what you are experiencing - relatively stable prices and demand - and what is stated in the article in the post?

Comment by Montrose Tuesday, Nov 27, 18 @ 12:56 pm
Just sayin: I’m happy for you dude. Too bad those other loser farmers weren’t so lucky.

Comment by Anonymous Tuesday, Nov 27, 18 @ 12:58 pm
The past few years we’ve started seeing the field grain bag storage solution used-

“Another storage alternative is to invest in a grain bagging system. A 10-foot-diameter bag, for example, can store about 60 bushels per foot. If grain is put in a bag, it should be dry and cool, advises Ken Hellevang, of North Dakota State University.

The cost of a single-use storage bag is around 5¢ to 7¢ per bushel plus loading and unloading equipment, which can cost between $50,000 and $165,000.” https://tinyurl.com/ycj8ehyk

https://www.albertafarmexpress.ca/2015/03/26/do-the-math-on-bins-versus-baggers/

Comment by Anon221 Tuesday, Nov 27, 18 @ 12:59 pm
Blue Dog Dem, no snark, I’m glad you were able to find a buyer for your crop. I’ve been very worried about how this is effecting Southern Illinois. Have you heard of other farmers having problems?

Comment by Honeybear Tuesday, Nov 27, 18 @ 1:27 pm
My folks have a farm in Knox County and over the weekend my dad said they can’t get rid of their beans and even if they could, they wouldn’t get enough money for them to make it worth their while.

Comment by SWIL Voter Tuesday, Nov 27, 18 @ 1:31 pm
–Just sayin. Every acre of our 600 acre family farm was planted in soybeans this year. Every bean was sold to Gavilon. I believe a Japanese owned agricultural giant export company.–

You believe?

You don’t know who you claim you sold your alleged entire crop to?

When did you become a farmer, anyway? I though you had a steel plant.

Comment by wordslinger Tuesday, Nov 27, 18 @ 1:34 pm
Republican Farmers reap what the sow.

Comment by DeseDemDose Tuesday, Nov 27, 18 @ 1:34 pm
Republican Farmers reap what they sow.

Comment by DeseDemDose Tuesday, Nov 27, 18 @ 1:35 pm
@Blue Dog Dem, your experience isn’t everyone’s, so your anecdotal evidence is little more than a red herring.

Comment by Perrid Tuesday, Nov 27, 18 @ 1:51 pm
According to Perdue University, the break even price for soybeans is estimated to be $10.05. The current market price for soybeans is around $8.62. So farmers do have a reason to be concerned.

Comment by A Jack Tuesday, Nov 27, 18 @ 2:07 pm
Everyone just calm down. Trump went to Wharton School of Business and he alone understands the great mystery of tariffs.

Any talk to the contrary is just losers losing bigly.

Comment by don the legend Tuesday, Nov 27, 18 @ 2:18 pm
According to the University of Missouri, the average soybean yield per acre is 40. So 600 acres gives you 24,000 bushels. If the break even price is 10.05 and beans are sold for 10.10, then the profit is five cents a bushel or a whopping $1,200.

Comment by A Jack Tuesday, Nov 27, 18 @ 2:32 pm
So $1,200 a year isn’t much to live on. But fortunately for BlueDog’s family, he can get them all jobs at his steel mill. Unfortunately for farmers in central and southern Illinois, there aren’t a lot of steel mills around.

Comment by A Jack Tuesday, Nov 27, 18 @ 2:52 pm
Honey. Generally prices are a bit lower at this current time. Mid $8’s. This isnt very good admittedly. Maybe because of tariffs. Maybe supply and demand. Co.modotties are strange animals. Figure them out and your a billionaire.

Word
Thanks for asking. Momma dog,95 years old ans still kicking. Has had farming in her family for generations. Mrs. BLUE is a CPA by education and does the books since the widget factory has been sold. So, no. Not a farmer. Just around it. The son in law does the actual dirt work.

Comment by Blue Dog Dem Tuesday, Nov 27, 18 @ 3:05 pm
A jack. Its all about input costs. And that includes the price one pays to cash rent. If you over pay your input costs are higher than maybe the next guy. If your an equipment elitist, snd have much debt. Your input costs are higher.like most businesses, management is the key. But i can tell you, mamma dog and son in law are just fine.

Comment by Blue Dog Dem Tuesday, Nov 27, 18 @ 3:11 pm
https://www.macrotrends.net/2531/soybean-prices-historical-chart-data

A better idea of how soybean prices have trended the last few years. They always fluctuate. The tariffs did have some impact, but not as drastic as some would want you to believe.

Comment by SOIL M Tuesday, Nov 27, 18 @ 3:11 pm
BlueDog—I was at the new Gavilon up at Rockwood a couple years ago for one of the first barges loaded there. Its an impressive state of the art facility.

Comment by SOIL M Tuesday, Nov 27, 18 @ 3:17 pm
Perrid. Red herring. Maybe. But john Deere didnt just post some hellas earnings because of impoverished farmers.

Comment by Blue Dog Dem Tuesday, Nov 27, 18 @ 3:17 pm
- I don’t know why people are still farming.-

Growing up in Southern Illinois I heard the story about two brothers that spit a lottery win. When asked what they would do with their winnings the first said he was going to travel the world, party, party, and have a great life. The second said he thought he would just keep on farming till it was gone.

Comment by Bigtwich Tuesday, Nov 27, 18 @ 3:18 pm
Yes it is.

Comment by Blue Dog Dem Tuesday, Nov 27, 18 @ 3:18 pm
===If your an equipment elitist, snd have much debt.===

Ain’t that the truth. I know guys that trade in for new every two years and eat hot bologna sandwiches because of it. The most profitable farmers around are still using their 1980s Deere that they bought in ‘03.

Comment by Ducky LaMoore Tuesday, Nov 27, 18 @ 3:30 pm
- I don’t know why people are still farming.-

If you got into farming when land prices were cheap, it is a great 2nd career. We have land that has been in the family for generations. So we can survive. That, and we’re pretty nostalgic about our grandparents and their way of life. You could offer us $20000 an acre and we wouldn’t leave. You can’t put a price on a heritage that you are proud of. The money would only make us miserable. Because we would have to sell who we are to get it.

Comment by Ducky LaMoore Tuesday, Nov 27, 18 @ 3:37 pm
Don the Legend- Trump was a transfer student into an undergraduate degree at Wharton. It’s totally not the same. I can’t stand this perfidy. He says it like he got his MBA from Wharton which would be praiseworthy. (It’s not Booth, but hey) But he only got an undergrad and not all 4 years at that.
He got clouted in.

Comment by Honeybear Tuesday, Nov 27, 18 @ 3:38 pm
Ducky. I agree, but ya still see farmers paying big $ for acreage. Some borrowed. Some not.

Comment by Blue Dog Dem Tuesday, Nov 27, 18 @ 3:58 pm
A trade war being initiated by a man child who doesn’t know the difference between tariffs and interest rates, what could possibly go wrong?

Comment by Pundent Tuesday, Nov 27, 18 @ 7:11 pm
10 bucks a bushel for soybeans is nothing to celebrate.

Comment by btowntruthfromforgottonia Tuesday, Nov 27, 18 @ 7:36 pm
“Maybe because of tariffs.”
Snort….gigggle….teehee.
China decreased imports of U.S soybeans by 98% or so…..

Comment by btowntruthfromforgottonia Tuesday, Nov 27, 18 @ 7:41 pm
==The second said he thought he would just keep on farming till it was gone.==

==You can’t put a price on a heritage that you are proud of.==

That’s awesome. It must be nice to have so much money you can spend it on fun instead of having to hustle to make a living.

Comment by Da Big Bad Wolf Wednesday, Nov 28, 18 @ 4:50 am