How bad off will soybean farmers be this year?
Sen. Claire McCaskill doesn’t care for the president’s trade fight with China. She made that clear in her second debate against Republican Attorney General Josh Hawley on Oct. 18.
McCaskill, the Democratic incumbent, framed Trump’s tariffs as the main reason for the struggles of Missouri’s soybean farmers.
"Our economy is so dependent on the exporting of agricultural goods. These tariffs have killed commodity prices. There's not a bean farmer in Missouri that's going to come out even this year," McCaskill said.
Soybeans are indeed a big deal in Missouri. In 2016, soybeans were the state’s biggest agricultural export, according to the Missouri Department of Agriculture. In 2012, more acres were dedicated to soybean farming in Missouri than any other crop, according to the most recent U.S. Census of Agriculture data from that year.
One of the stiffest retaliatory measures China has taken in response to U.S. tariffs is a 25 percent tax on American soybeans. It is typical for roughly one in every three rows of soybean produced in Missouri to be exported to China annually, according to Missouri Soybean Farmer magazine.
Our ears perked up at the sweeping nature of McCaskill’s statement — is it true that, thanks to Trump's tariffs, no soybean farmer will end up in the black this year?
Since the statement is a prediction and we won’t know for sure until the year is up, we decided to not apply a rating to this statement — hence the lack of a Truth-o-Meter rating at the end of this article.
Still, with tariffs, agriculture and the economy dominating a fair chunk of campaign rhetoric ahead of Missouri’s election, we decided it was worth taking a closer look.
Since the tariffs were announced in June, the going rate for U.S. soybeans has fallen from roughly $10.50 to $8.46 a bushel as of Oct. 21, according to Markets Insider.
Across the country, production of soybeans is up 6.9 percent over 2017, according to the University of Missouri Food and Agricultural Policy Research Center. But the total value of America’s 2018 soybean crop is actually $700 million less than last year due to the drop in price per bushel, according to the same data.
Patrick Westhoff, director of the Food and Agricultural Policy Research Institute, said that while it is difficult to attribute economic trends to any one factor, the tariffs certainly deserve blame for these dropping soybean prices, and that has been reflected in farmers’ bottom lines.
"Yes, it has affected U.S. prices. Certainly, the lower prices have reduced income levels for every producer," Westhoff said, adding that a Food and Agricultural Policy Research Institute report from August projected the market year average price at $8.73 per soybean bushel, the lowest since 2006.
"Prices are down roughly 20 percent over the last six months," said Christine Tew, director of communications for the Missouri Soybean Association.
Compounding the tariff pinch in Missouri is the state’s below-average yearly yield for soybeans, Westhoff said.
Taken together, the tariff-induced price drop and a 2018 Missouri soybean yield that’s 7 percent smaller than 2017 have combined for a loss of $319 million in crop value, according to the Food and Agricultural Policy Research Institute.
An MU Extension simulation from July 2018 calculated the "ripple effect" a 10-cent drop in soybean bushel price would have on Missouri’s economy. Missouri Soybean Farmer magazine extrapolated the study to a $2 drop — roughly equivalent to the actual decline since June — and found an expected effect of "more than $212 million in lost earnings for workers and business owners, and 3,000 fewer jobs."
McCaskill’s campaign Communications Director Meira Bernstein referenced this simulation as well as multiple articles as evidence for the Senator’s claim.
One was a St. Louis Public Radio story from early July of this year in which Missouri Soybean Association President C. Brooks Hurst is quoted as saying, "When you’ve lost 15 percent off your price, you gotta understand, that’s like, all of our profit. So all of us have gone from maybe a small profit in that field of soybeans we planted to now just basically hoping to break even."
Bernstein also pointed to a St. Louis roundtable McCaskill held in August with Missouri farmers and businesses affected by the tariffs. In a transcript of the meeting, former president and current Missouri Soybean Association board member Mike McCrate said: "So I looked on the way up here, Lansing Grain was at 7.70 for November delivery. Break even in the Bootheel, 45 bushel average, is $10.50, so we're literally going to be manufacturing below cost."
OK, so lower prices and yields are affecting soybean farmers in Missouri and across the country. But will they all lose money on the year? Turns out, it may not be all doom and gloom.
One of the relief programs announced by the USDA in late August is the Market Facilitation Program. This program offers a payout of $1.65 per bushel of soybeans on 50 percent of a farmer's crop, up to a maximum payout of $125,000.
According to a Food and Agricultural Policy Research projection, the initial Market Facilitation Program payments will add back roughly 9 percent to both the Missouri soybean crop value and the nation’s total crop value, with the possibility of a second round of payments to be announced in December.
After factoring in these government payments, Missouri’s soybean crop value for 2018 is only 7 percent less than in 2017 — a year featuring a larger state yield and no Chinese tariffs. Nationwide, factoring the payments in actually pushes the 2018 soybean crop value above that of 2017, even with the tariffs in place.
Additionally, the USDA has allocated $200 million for its Agricultural Trade Promotion Program, designed to help American farmers find new markets abroad and "mitigate the adverse effects of other countries’ restrictions," like China.
Clearly, the situation is quite bleak for Missouri soybean farmers, and the tariffs deserve much of the blame.
Attributing this hardship entirely to the president’s trade policies, though, is difficult.
For one, fewer soybeans were produced in the state this year than in 2017. With fewer beans to take to market, farmers have less product to sell and thus less money to make.
Government programs are in place to mitigate losses, however insufficient McCaskill or others feel they are. According to Food and Agricultural Policy Research Institute figures, if fully doled out, this aid will close much of the gap in Missouri.
Harder to quantify is the effect of the promotion program intended to help farmers find new markets, but it exists.