Planting season, always a critical time for farmers, has become more nerve-wracking for U.S. growers of soybeans and corn.
In a move that caught many in U.S. agriculture by surprise and sent grain futures swinging, China on Wednesday announced planned tariffs on American shipments of the two crops. The measures are set to take effect in 60 days. That gives some farmers the opportunity to make a last-gasp switch to another crop or variety in hopes of fetching a better price.
But for others — perhaps most — it’s too late to make a change.
Most North American farmers have by now purchased seed, fertilizer and other inputs based on what they intend to plant. Even though they can tweak their plans, those big costs largely lock them in.
So they are approaching planting season full speed ahead, if more white-knuckled than usual.
Hearing the news, “The emotion was to panic,” said Nathan Dorn, a farmer in Gage County about 30 miles south of Lincoln.
Watching soybean prices dive, then rebound, he said it was scary to see how political posturing in China and Washington could have a direct impact on his family farm business’ bottom line.
But his plan for dividing his acres evenly between corn and soybeans hasn’t changed — it was set last fall when he fertilized the corn acres.
There is still some room to strategize. If the tariffs come to pass and soybean prices are hit especially hard, he might try to sell corn sooner, and use his bin space to hang onto soybeans for a better price down the road, for example, he said.
His family would respond to lower prices by spending less.
“Those are decisions that are going to affect my small community,” he said. “The local grocery store isn’t going to do as much business.”
Northeast Nebraska farmer Anne Meis said she’s trying to keep calm and not make decisions based on the day-to-day news, even though she’s frustrated that export markets her industry has worked years to build are at risk.
“It’s rattling, but you have to stay steady and continue to look at the big picture,” said Meis, who grows corn and soybeans about 40 miles west of Norfolk.
Her extended family’s farm operation looks to produce about 30,000 bushels of soybeans this year, so when she saw the price fluctuating Wednesday by more than 40 cents a bushel, “We’re talking thousands of dollars.”
In Wilton, Iowa, east of Iowa City, farmer Dave Walton said he had some wiggle room in his planting strategy, and could switch some acres from soybeans to corn if necessary.
“It puts it into flux,” said Walton, who intends to watch prices closely in the next few weeks amid expectations that China and the U.S. will negotiate to avoid an outright trade war.
North Americans farmers have until around the end of June to put soybean seeds in the ground, while corn planting typically ends a month earlier. The U.S. Department of Agriculture said last week there will be 88 million acres of corn and 89 million acres of soybeans, covering a combined area larger than California.
The stakes are especially high this year given the state of the agricultural economy. A succession of bumper harvests has led to gluts and depressed crop prices. The USDA projects net farm income will fall to a 12-year low of $59.5 billion, less than half the record level seen in 2013.
The specter of trade disruption has been hanging over the U.S. farm economy ever since Donald Trump was elected on a platform that included promises to challenge China and renegotiate the North American Free Trade Agreement.
There’s still uncertainty over whether the tariffs will be enacted, how high they will ultimately be, and how long they might last, said Chris Hurt, a professor of agricultural economics at Purdue University in West Lafayette, Indiana.
On Thursday, Trump said he had directed Agriculture Secretary Sonny Perdue “to implement a plan to protect our farmers and agricultural interests.”
World-Herald staff writer Barbara Soderlin contributed to this report.