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Will the Trade Tariffs Impact SW Virginia?

The trade tariffs have the potential of playing havoc with small farmers. In fact, if someone specifically wanted to do something that would force these farmers out of business and open the door for even more control by the big agri-corps. This is a very complex issue in part because of timing. The tariffs imposed by the U.S and then countered by China came at peak growing season for most Virginia agricultural plant products. It’s not like farmers can go out and replant with a crop that would perhaps be more viable. Of course, if they did so, it is likely that prices for that crop would also decline rapidly as the most likely crop replacement would be corn. It’s all about supply and demand, but when supply and demand is affected by external forces imposed by governments (there are already enough of those external forces presented by nature) it is just one more problem that affects the livelihood of farmers and the costs of items to average consumers. As in most cases, there is one alternative that gets little attention. A change in harvesting of those existing crops. Edamame has grown in popularity and is found in most larger groceries as either a fresh or frozen vegetable. Edamame is not some super special bean, it is simply immature soybeans. It is what you get when you harvest the green beans rather than waiting for the plant to dry a full maturity. I’m guessing that one reason why this isn’t talked about much is because of there possibly being some difference in harvesting methods. Of course, these are easily grown in backyard and even raised bed gardens for those who want the beans on their table. There is some difference in the variety of soybeans grown as they are cultivated for best flavor, best texture, and of course, best shelf life, but they are are still just soybeans. Perhaps some of the exiting crops could be harvested at this immature stage in order to help offset loses…unless, of course, there have been chemicals used to treat those plants that make it okay for animal consumption or shipping to another country, but not for sale in the U.S. Complexity upon complexity. Nothing is ever simply. This is why people have to think and read for themselves. Otherwise, you are at the mercy of whatever person/group to which you hand over your consumer power. Here are a few articles that talk about the potential impact on Virginia farmers. Whatever impacts Virginia farmers will ultimately impact us all.

Trade war puts Virginia farmers at risk of losing ‘critical market’ in China, By MICHAEL MARTZ Richmond Times- Dispatch Apr 5, 2018

China said this week that it will slap a 25 percent tariff on U.S. soybeans in retaliation for President Donald Trump’s launch of a tariff strike on imports of Chinese goods, raising alarm among state and national agricultural officials about the likely harm to farmers who remain the heart of Virginia’s economy, especially in international trade.
“I would call China a critical market,” said Elaine Lidholm, spokeswoman for the Virginia Department of Agriculture and Consumer Services. “Because agriculture is by far Virginia’s largest private industry, it could affect the economy in general.”
 Soybean prices in Virginia tank as trade war with China escalates, By Robert McCabe , The Virginian-Pilot, Jun 22, 2018
The price of soybeans has dropped more than $1 a bushel since the start of June, said Nick Moody, president of the Virginia Soybean Association and a soybean farmer in Dinwiddie County. “These declines are directly related to the unrest in trade negotiations between the U.S. and China,” he added. Last year, soybeans accounted for $360.7 million – or nearly 62 percent – of the $584 million in agriculture-and-forestry products that Virginia exported to China. In 2017, Illinois ranked No. 1 in the nation for soybean production; Iowa was No. 2; and Virginia was No. 20, according to United States Department of Agriculture data.

The Severe Implications of Soybean Tariffs, By Sara Schafer Top Producer Editor, AG WEB   APRIL 18, 2018 11:00 AM

At the Farm Gate If this tariff goes through, it would result in a significant deterioration in cash flow for U.S. farmers, according to recent analysis from the University of Illinois and Ohio State University. (See the farmdoc daily piece, Impacts of Chinese Soybean Tariffs on Financial Position of Central Illinois Grain Farms,” written by Krista Swanson, Gary Schnitkey, Todd Hubbs, Jonathan Coppess, Nick Paulson and Carl Zulauf). The economists looked at the potential impacts of a 25% soybean tariff on an average central Illinois grain farm (1,700 acres, of which 11% is owned, 44% is share rented and 45% is cash rented). At the end of 2017, the farm has $3,780,000 in net worth, a 26.8% debt-to-asset ratio, a 1.79 current ratio, and a debt coverage ratio of 150.6%. They simulated this farm’s performance from 2018 through 2021. Three alternatives were applied in the simulation:
  1. Lower Prices. Soybean and corn prices likely would decline as a result of the imposition of a 25% soybean tariff.
  2. Lower Prices Plus Lower Costs. As a result of price decrease, non-land costs and cash rents likely will decrease. In addition, acreage in central Illinois and the Midwest, would switch from soybeans to corn.
  3. Farmland Price Declines. Lower commodity prices likely will lead to lower farmland returns and lower cash rents. As a result, farmland prices would decline.
“The imposition of a 25% soybean tariff by China on U.S. soybean exports would result in a worsened financial and wealth position for the case farm examined,” the economists report. “Cash rent declines would need to occur to offset some of the price declines. The 25% tariff would have larger negative impacts on farms with higher debt levels and higher amounts of cash rent. The reverse is true as well.”

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