WAPAKONETA — Auglaize County Farmer Nick Heitz is a gambler. He gambles on the weather and he also gambles on whether international trade decisions might adversely affect commodity prices.
Heitz has been in farming his whole life.
“I grew up on a farm, so I probably got 47 years in,” said Heitz.
He’s 52 now and was anticipating a pretty decent crop this year.
“My corn is the best looking that I’ve ever had, and my soybeans, some of them are good, some of them are starting to struggle with all of this rain we’re getting,” he said.
Driving up onto his property on Buckland-Holden Road, one can hear the whir of the fans, drying some of the 225 acres of wheat he’s starting to harvest. He plans to plant soybeans after the wheat comes off in an effort to add to what he planted earlier in the spring. All totaled, he’s got 1,264 acres of beans either in the ground or nearly ready to be planted.
He’s already watching his 1,290 acres of corn grow spectacularly.
That’s the good news. Now the bad.
On July 6, China is expected to enforce a 25 percent tariff on many goods exported from the U.S. to China, including soybeans. That move is in retaliation for the Trump administrations tariffs on goods made in China and shipped to the U.S.
Just the threat of tariffs on soybeans has already caused prices to drop dramatically.
“We’re already seeing a decline in soybean prices, which is not what we really needed to get at this point in crop production and preparation for selling of the crop. If they haven’t already contracted it forward, the threat of tariffs is having a depressing action on the price of soybeans, and soybean was going to be the main cash crop for this year for many people,” said Curtis Young with the Van Wert County OSU Extension office.
Heitz hasn’t been watching the situation very closely, but sooner rather than later, it will affect what he can earn this year.
“I’m not surprised. The market goes up and down, and some organizations of farmers have always wanted the trade globally with China and everybody because they think that’s all great. It is, but it’s all proportional. If prices go up, then everything goes up with it. In the past, China has come to the table and bought grain. The price goes up for soybeans, then they cancel the order and it goes down quite a bit. Then they buy it back real cheap, a lot cheaper, and as a farmer, I don’t like that, and that’s why I could care less about wasting time trading with these countries that do that,” said Heitz. “If they go to Brazil and buy [soybeans], Brazil might not be able to physically sell all of the soybeans and either they come around in the dark of the night and get them from the United States and resell them or something, so I guess the market’s going to do what the market does. I’m not happy the prices are down, but it doesn’t surprise me.”
Ohio farmers stand to lose if tariffs go into effect
According to a news release from the Ohio State Extension Service, an Ohio farmer could lose more than half of his or her annual net income if the threatened 25 percent tariff is imposed on U.S. soybeans and corn in China.
Researchers with the OSU College of Food, Agricultural, and Environmental Sciences (CFAES) have projected a 59 percent loss in annual net farm income based on historical trends in yields on corn and soybeans and projections for price drops in both commodities.
Across Ohio, the loss of soybean exports to China would be an estimated $241 million loss annually.
The study is the first to show the financial impact a 25 percent tariff on China’s imports of U.S. soybeans and corn could have on an Ohio farmer and on the entire state.
“There are farmers who are struggling across the state,” said Ben Brown, manager of CFAES’s farm management program. “If the proposed tariffs go into effect, we’re going to have farmers who will have to exit the industry.”
The financial losses stem from an expected drop in Chinese demand for U.S. soybeans and corn and in the world price for both crops.
“The biggest impact will be on profits from soybeans. However, corn is affected too,” Brown said.
Soybeans are Ohio’s largest crop and the state’s top agricultural export.
The losses from soybean sales are projected to be far greater than for corn. Every year, 31 percent of the soybeans and 2 percent of the corn Ohio produces are exported to China.
China is the largest buyer of soybeans in the world, and Brazil is its top supplier, with the United States being second. If China imposes the threatened 25 percent tariff on U.S. soybeans that will drive up the price that Chinese companies have to pay for U.S. soybeans and encourage them to buy even more soybeans from Brazil, Brown said.
Reach Sam Shriver at 567-242-0409.