A limited agreement easing trade restrictions with China appears like great news for farmers, who have struggled due to the trade war.
Some farmers are doubtful, KCUR-FM reported. The farmers are concerned that agriculture exports will suffer for years, and they’ve got history to back them.
Corn and soybeans prices began increasing last week after discussions of a potential trade deal. It was good news for Tom Kreisel, who farms near tiny Houstonia, Missouri.
“The last couple of days, they’d been up,” says Kreisel. “But they had took a nosedive before that, so we need to make that back.”
In the summer of 2018, the prices for U.S. farm commodities plummeted after China announced retaliatory tariffs against them. Many farmers subsequently lost money. The Trump Administration has since dished out about $28 billion in so-called Market Facilitation Payments over the last two years to compensate some farmers for what they have suffered under the trade war.
It’s difficult to assess those losses, and by some estimates, corn and soybean farmers have been overcompensated. However, many farmers asserted they would prefer having free trade than taxpayer-funded assistance.
“I would 10 times rather have a market than to have somebody give me a few dollars cash and then brag about it,” says John Vogelsmeier, who farms near Sweet Springs, Missouri.
Even with recent gains, soybeans are still about 20% less valuable than they were when the trade war began. Vogelsmeier said no one is trusting the recent price gains. The terms of the provisional agreement still have not been made public.
“Everyone’s trying to nail down just what has been agreed to,” said Scott Irwin, an agricultural economist at the University of Illinois.
President Trump has said the deal will force China to spend $50 billion annually on U.S. farm products. That’s double what the Chinese were buying before the trade war.
China has vowed to purchased at least $40 billion in U.S. products each year. Which is still billions more than China has ever bought from America, according to U.S. negotiators.
Irwin said this about $16 billion bump in sales would be great for farmers — if it occurs.
He noted he’s worried that this de-escalation may come too late to prevent long term harm to the trading relationship.
“From the beginning, that has been for me, personally, the nightmare scenario,” said Irwin. “History suggests that once you break an important relationship trade wise like this, it is very difficult to fully recover your market share.”