China is a big buyer of US soybeans. These farmers are bracing for tariff impact.
| Tolono, Ill.
More than just clouds hang over Jeff Fisher鈥檚 farm here in central Illinois. High costs, low crop prices, and a stack of bills worry him. Tariffs and other possible retaliation from China, the key export market for Mr. Fisher鈥檚 soybeans, have boosted the usual uncertainty.
Spring planting is supposed to reinforce farmers鈥� innate optimism. This year, the mood is subdued.
鈥淚鈥檓 getting squeezed from in front; I鈥檓 getting squeezed from behind. I鈥檓 getting squeezed a lot of times from the right, and sometimes I鈥檓 getting squeezed from the left,鈥� says Mr. Fisher, sitting in his tractor, while intermittent rain keeps him from planting. 鈥淪o which direction do you go to get some relief?鈥�
Why We Wrote This
One reality of America鈥檚 current economic uncertainty, caused partly by tariffs, is that farmers are having to adjust plans for this year without knowing what supplies and prices will be.
The stress runs especially high here in Illinois, the United States鈥� No. 1 soybean-producing state. Soybean prices have fallen to four-year lows. The that the average farmer will lose $100 for every acre of soybeans they plant. The same holds true for corn, but soybeans are far more vulnerable to trade retaliation. The U.S. exports about 15% of its corn; for soybeans, it鈥檚 roughly half. Most of those go to a single customer: China.
Those losses could grow due to new tariffs. China, which last year bought $12.8 billion of American soybeans, has now imposed new duties. That鈥檚 more than doubled the cost for Chinese processors who buy from the U.S. Instead, they鈥檙e buying increasingly from South America, particularly Brazil, already the world鈥檚 No. 1 soybean exporter.
Next year, Brazil is expected to increase production. U.S. producers, by contrast, will struggle to maintain their export volumes, economists say. The industry is looking to increase nonfeed uses of soybeans, including biodiesel and plastics.
If the U.S.-China trade war drags on, 鈥淭here is the potential to get quite a bit worse on the price side,鈥� says Scott Gerlt, chief economist at the American Soybean Association in St. Louis. He estimates that current Chinese tariffs could slice an extra 50 cents off the already low price of soybeans. They鈥檙e currently hovering around $10 per bushel. If Chinese tariffs escalate, the impact could be a full dollar discount on prices, he adds, due to weakened Chinese demand putting downward pressure on prices.
Even without tariffs, this was already shaping up as a difficult year. After some very profitable years in the early 2020s, record soybean harvests around the world lowered prices. Inflation has raised farmers鈥� costs for everything from seed and fertilizer to farmland rentals, eating away at financial reserves they may have built up during the good years.
U.S. Department of Agriculture聽
Then there鈥檚 the weather uncertainty, which can make or break the harvest, no matter how promising spring planting looks.
鈥淵es, tariffs have an impact,鈥� says Michael Deppert, a farmer in Green Valley, Illinois. 鈥淏ut there are a lot of risks [and] so many different issues that are going on right now that you can鈥檛 really pinpoint one thing or another. It鈥檚 the accumulation of everything.鈥�
The gloom isn鈥檛 spread evenly in farm country.
Cattle ranchers are enjoying a banner year because beef prices are high and input costs are low. They鈥檙e paying less to feed their cattle because soybean and corn prices are down. Hog producers, too, are looking for a rebound after losing, by one count, they sold last year.
The prices of major crops have fallen sharply, but most established farmers such as Mr. Fisher and Mr. Deppert should survive because their costs are lower. Economists say that newer farmers, who have to rent most of the land they farm and sometimes the equipment as well, will probably lose money this year, barring some unforeseen circumstance.
鈥淔or them, it is a very severe situation,鈥� says , director of the Food and Agricultural Policy Research Institute at the University of Missouri. 鈥淢any people had a lot of reserves built up in 2021 and 2022, [but] those reserves have been pulled down very sharply鈥� or disappeared entirely. The Federal Reserve Bank that farm debt at rural agricultural banks rose a notable 7% last year, led by farmers borrowing to pay for the inputs they need for spring planting.
The political impact seems muted so far. In rural farming areas, which overwhelmingly supported President Donald Trump in last year鈥檚 election, most farmers don鈥檛 support the president鈥檚 tariffs, according to a March . Still, the administration has suggested it will step in and help financially, just as it did during the first U.S.-China trade war in 2018. So there鈥檚 a willingness to wait and see how it plays out, even here in hard-hit soybean country.
鈥淭his tractor, that planter, everything I own has a lot of steel in it. And it鈥檚 being imported from Japan and China and so forth,鈥� says Mr. Fisher. 鈥淪o Trump has done some good鈥� by using tariffs to revive American manufacturing, he continues. 鈥淪hort-term pain is worth long-term gain.鈥�
If the administration can reach trade deals that boost exports of U.S. farm goods, that could be a net plus, he adds.
And it鈥檚 planting time. Farmers here have already started putting seeds in soil so rich, it turns black when it rains.
鈥淚t鈥檚 going to be super challenging, especially financially,鈥� says Mr. Deppert, the Green Valley farmer. But 鈥淲e鈥檙e in a good spot because the weather is great here right now. So it鈥檚 time to plant 鈥� time to get your mind off some of the planning and some of the other things that can get a guy down.鈥�
