Treasury Secretary Steve Mnuchin is meeting with Chinese officials this week to discuss trade tariffs. President Trump announced a tariff on Chinese steel and aluminum and the Chinese responded with tariffs on American products. It鈥檚 escalated to at least $50 billion dollars in tariffs for each country. The extra charges on Chinese steel may please Ohio steelworkers but it worries Ohio farmers.
Tom Trout of Hickory Tree Farm in Medina County walks through his garage by several 8-wheel-drive John Deere tractors and other equipment.
鈥淭his is the planter. This is what we do plant soybeans with. This is a 15-inch row planter. It could have the capability of also planting corn.鈥�
It鈥檚 almost time to take that 40-foot-wide planter out to the fields. But when news broke this spring that President Trump was calling for tariffs on Chinese steel Trout had to pause.
鈥淵ou wake up in the morning and the first thing you do about 5:30 鈥� 6:00 o鈥檆lock check your phone, beans down 50 cents overnight. It about makes you [have a] heart attack.鈥�
Jennifer Pemberton, a grain merchandizer at Deerfield Ag Services in Portage County saw it on her desktop computer hooked to the Chicago Board of Trade.
鈥淲hen President Trump announced it we saw a drop of about 60 cents that day,鈥� Pemberton said.
The Chinese retaliated by slapping a 25 percent tariff on soybeans, which is the number one agricultural product for Ohio farmers.
鈥淲e鈥檝e seen a little volatility up and down since then,鈥� adds Pemberton.
"So everyday there鈥檚 a little bit different. But when the Chinese announced we saw another big down-day. And then we slowly creep our way back up to where we were at. So we鈥檙e not quite back up to that point yet. We鈥檙e about 15 cents off the high [of $10.40 a bushel].鈥�
China is now looking to Brazil for the grain and Europe now appears ready to buy some of that American crop.
鈥淐hina has actually purchased $14 billion worth of soybeans from the United States last year. So to kind of explain that, that鈥檚 every third row of soybeans. So that鈥檚 a lot of soybeans, and I don鈥檛 really see that Europe will take up that whole gap,鈥� Pemberton speculated.
A study from the University of Illinois and Ohio State predicted the surplus caused by Chinese tariffs would mean a 10 percent drop in prices. And Pemberton says net farm income is already at a 12-year low due to higher expenses.
鈥淚t鈥檚 tough,鈥� says Pemberton. 鈥淚t鈥檚 tough right now. When you look at the income that you鈥檙e getting versus what you鈥檙e putting into the investment, especially if you have to rent ground, it鈥檚 not ground that you own.鈥�
And yet area farmers are not panicking. Jim Morlock of Morlock Grain Farms in West Salem, Medina County, expects demand to rise.
鈥淚 think the world has a high demand for meat protein. To have a meat protein you have to have a grain protein. Well, beans are kind of king there,鈥� Morlock said. 鈥淎nd that鈥檚 what we鈥檙e seeing: more and more total bushels needed every year worldwide. And they got to come from somewheres. And we know the world can ship within months to anywhere.鈥�
Morlock says the family farm was not invested in overseas trade back when his dad was it.
鈥淣o, matter fact I can remember my dad working with potatoes and apples and eggs locally in Cleveland, a local market,鈥� Morlock recalled. 鈥淎nd I mean right to the corner, before we had all the big distributors. And my grandpa, probably. I don鈥檛 think they would.. very rarely talk about anything global. Or had a clue. But now, yeah, we sure worry about it. It鈥檚 amazing.鈥�
At Deerfield AG Services, Jennifer Pemberton watches trucks pull in to fill 20-foot shipping containers with soybeans.
鈥淭hey go from our facility back up to Cleveland. And then get on rail in Cleveland and head over to a port whether it鈥檚 New Jersey or Norfolk or whichever port we happen to be working with the buyer on,鈥� Pemberton explained 鈥淎nd then from there they get loaded on a vessel and sent over to the Asian continent, so places like Indonesia, Thailand, places like that.鈥�
South America is also a big player.
鈥淎rgentina is buying soybeans from us right now,鈥� noted Tom Trout. 鈥淲e buy Argentina soybeans and bring them up the east coast. We bring a lot of corn in from the south. It鈥檚 hard - not a lot of feed grain is grown in the Carolinas due to inclement weather. That鈥檚 a big cotton area. They do feed a lot of livestock, poultry. It鈥檚 cheaper for them to bring it up the east coast than it is for us to truck it down there.鈥�
You might think the farmers are upset over the Trump tariffs that started this trade battle. But they say they know how hard China has been on Ohio manufacturers. And they鈥檙e not reacting to every swing on the commodities exchange.
鈥淲e鈥檒l wait and see,鈥� says Tom Trout in Homerville. 鈥淚 think a lot of this is negotiation. 鈥業 want this鈥� and 鈥楾hey want this鈥� and somewhere we鈥檒l meet in the middle and everything will move forward just fine so.鈥�
The Trump Administration is also trying to renegotiate NAFTA and is now beginning to look again at the Trans Pacific Partnership.
Computer screens on the desk of Jen Pemberton are locked on the Chicago Board of Trade. But she puts it into perspective.
鈥淥ur industry is probably driven most by the one factor that we can鈥檛 control... and that鈥檚 the weather.鈥�
Which has changed dramatically from a week ago.
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