Impact Of China's New Tariffs Could Be 'Huge' On U.S. Soybean Farmers
DAVID GREENE, HOST:
This morning China fired back in the escalating trade conflict with the United States. Beijing announced new tariffs on top U.S. exports. That includes soybeans. And soybeans is a high-stake commodity. A quarter of all soybeans grown in the United States go to China. They make up about a third of China's soybean imports. And I want to bring in Grant Kimberley with the Iowa Soybean Association. He's also a soybean farmer himself and was also just in China on a trade mission. Mr. Kimberley, welcome to the program.
GRANT KIMBERLEY: Thank you for having me.
GREENE: So China's the biggest market for U.S. soybean growers. How big an impact will there be on you personally and on the farmers you represent?
KIMBERLEY: Well, I mean, this has the potential to be huge. I mean, China by far and away is our largest market for soybeans. It's really the largest market for soybeans in the entire world. And, like you said earlier, it actually is closer to 30 percent of the total U.S. soybean production now. So it's even grown as far as a higher percentage goes. And as we've seen evidence by the markets this morning, soybean futures' prices are already off 40 to 45 cents a bushel. So that's a pretty dramatic one-day drop.
GREENE: Do you sell your soybeans to China?
KIMBERLEY: Yeah. As farmers, you know, being in the commodity business, we don't sell our soybeans directly to those markets. We sell it to our local, farmer-owned co-operatives, who then in turn sell it usually to the major exporters, who then transport it and ship it overseas on, you know, large vessels and so forth.
GREENE: So you feel the effects? I mean, if...
KIMBERLEY: Yeah. It has a cumulative effect. No doubt about it.
GREENE: How bad an effect are we talking about? I mean, are you projecting that some farmers could have to go bankrupt? Would it just be sort of tightening their belts? How dramatic could this be?
KIMBERLEY: Well, it depends on how long this lasts. Now, keep in mind, these tariffs that were announced last night are just proposed. They do not go into effect, I don't believe, until the end of May sometime. Depending on what the U.S. does...
GREENE: They're happy to come to the table, maybe, and talk about this before actually implementing.
KIMBERLEY: Exactly. I think this leaves us a little wiggle room. But if they do go into effect and this remains long term, this could be devastating to not only, you know, farmers like myself but also to farmers all over the United States. There's been projections that have said that, you know, if there is a tariff around the range that they're projecting, which would be a 25 percent tariff, our exports would probably drop by around 70 percent in total. And then that would also dramatically reduce our production. Our production will probably go down and it would just, you know, retaliate and spiral downwards to lower prices for all farmers. And some farmers might have to file bankruptcy, you know, if it goes on too long.
GREENE: You actually hosted Chinese President Xi Jinping at your family farm in 2012. And I understand you and he talked about soybeans in your living room. Did he say anything that strikes you as significant today?
KIMBERLEY: Yeah. That's right. We had the privilege to host him when he came back to visit his old friend, former Iowa Governor Terry Branstad, who is now the U.S. ambassador. And he wanted to see a modern U.S. farm. And we were chosen to host him, and we got to sit down in our living room and talk about agriculture. And he's actually pretty knowledgeable. President Xi is pretty knowledgeable about agriculture. We talked about modern production and trade. And certainly what really stood out to me is President Xi understood that important trade relationships is the foundation of a positive government-to-government relationship. So he understands that. I'm hoping that they realize that and they'll negotiate, and both sides will come to the table and work this out before it gets too far.
GREENE: Grant Kimberley is with the Iowa Soybean Association, also a soybean farmer himself in Iowa. Thanks a lot for your time.
KIMBERLEY: Thank you.
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