International trade policy always evokes passionate emotions, so Missourians predictably have had strong reactions to President Trump’s recent actions against China. Missouri Farm Bureau (MOFB) has made a number of statements expressing concern about the effect of Chinese retaliation against American agricultural products. Missourians responded with criticisms and concerns on MOFB’s social media, and several are worth a closer look.
MOFB President Blake Hurst issued a video statement where he explained how increasing import taxes on American goods would almost certainly reduce Chinese imports of those products and create surplus supply in the U.S., thereby reducing prices and hurting America’s farm economy and rural areas. YouTube viewer Tom K. took exception to this view, stating, “Agriculture goods are homogenous and priced at the world commodity price. If China does not buy soybeans Missouri farmers can sell to someone else.”
At first glance, this makes perfect sense. Goods like soybeans ARE essentially homogenous and can be sold to any willing buyer. However, China currently buys over 60 percent of the soybeans the U.S. exports, worth over $14 billion per year. A study by Purdue University found that the proposed soybean tariffs could cause a 71-percent decrease in Chinese soybean imports. This would place almost one-quarter of all U.S. soybeans back on the market without a ready buyer.
Put simply, the world soybean market is fairly saturated right now and does not have many other countries seeking this excess capacity. A major drop in Chinese purchases would simply result in enormous new supply against the current demand, making prices drop dramatically.
On Facebook, Matt T. expressed another commonly-held belief, saying, “Family farms hardly exist (anymore). . . . It would seem to be a bigger threat to . . . U.S. corporate farming.” This is actually untrue. U.S. Department of Agriculture statistics show that over 97 percent of today’s farms are owned by families, not corporations. Over 88 percent of all U.S. farms are small family farms.
Many people confuse large multinational food companies like Kraft or General Mills with the farmer raising the raw products. But the vast majority of American farms are still run by families. Any harm caused to the American agricultural industry would hurt families first and foremost.
Facebook user Kevin H. voiced an opinion often heard in politics today, saying, “If you would quit buying products from China and buy US products we would be much better off.” There are some merits to this argument, although many readers would be hesitant to give up their iPhones or increase the cost of goods at Walmart by half or more.
For the farming economy, though, we need places to sell our goods. American farmers are the most effective producers in the world, and America does not have enough demand for the bounty we produce. Rural America needs trade to survive and thrive.