Farmers React With Mix Of Relief And Worry To Tentative China Trade Deal
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A tentative deal that eases trade restrictions with China seems like great news for farmers. They've been pummeled by the trade war. But some farmers are concerned about the new agreement. As Frank Morris of member station KCUR reports, they worry that ag exports will suffer for years, and history backs that up.
FRANK MORRIS, BYLINE: The Casey's gas station in Sweet Springs, Mo., has a table unofficially reserved for farmers.
MORRIS: Prices for the corn and soybeans these men grow are rising.
TOM KREISEL: Last couple of days, they'd been up. But they took a nosedive before that, so we need to make that back.
MORRIS: Farmer Tom Kreisel says prices for grain and hogs fell hard when China imposed retaliatory tariffs in the summer of 2018. Many farmers lost money last year.
KREISEL: Well, prices haven't been good. But with the market facilitation alone, it was all right.
MORRIS: Market facilitation payments - that's the official name for the money the Trump administration gave farmers to compensate for trade losses. About $16 billion in trade aid kept many farmers from losing money this year. But farmers like John Vogelsmeier don't like it.
JOHN VOGELSMEIER: I would 10 times rather have a market than to have somebody give me a few dollars cash and then brag about it.
MORRIS: Meantime, Vogelsmeier says grain prices are still much lower than they were before the trade war started. Soybeans, for instance, were trading above $10 a bushel back then. Today they're just over nine.
VOGELSMEIER: It looks good, but, you know, we've been in this roller coaster situation now for quite some time. So as - I don't think you can basically take this news to the bank.
MORRIS: Scott Irwin, an agricultural economist at the University of Illinois, agrees. The details are sketchy.
SCOTT IRWIN: Everyone is just trying to nail down exactly what has been agreed to.
MORRIS: U.S. negotiators say that China's promised to buy at least $40 billion worth of ag products each year. That would be billions more than China has ever purchased. Irwin says the $16 billion jump in sales would be great for farmers if it actually materializes. Meantime, he says this tentative phase-one agreement is at least a step in the right direction.
IRWIN: Things could have gotten worse (laughter). And so we, for the time being, have avoided that.
MORRIS: But Irwin says this de-escalation may come too late to avoid long-term damage to the trading relationship.
IRWIN: From the beginning, that has been the nightmare scenario. History suggests that once you break an important relationship tradewise (ph) like this, it is very difficult to fully recover your market share.
MORRIS: He's talking about the history of the Russian Grain Embargo, when the United States abruptly stopped wheat sales to Russia. The price of wheat tanked and stayed low for years. Like just about every farmer of a certain age, John Vogelsmeier clearly remembers the floor dropping out. In a way, he's still living it four decades on.
VOGELSMEIER: We can't raise wheat to be profitable here because of what happened. And I'm afraid that's exactly what is going to happen with what is going on today.
MORRIS: So farmers welcome the idea of easing hostilities with China. But as to what happens if and when the U.S. and China actually sign off on the deal, well, that gets a whole lot more complicated.
For NPR News, I'm Frank Morris in Kansas City.
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