Trade War Impacts Missouri Exports, Local Member of the Missouri Farm Bureau Responds

May 21, 2019

Credit Fen-tastic/Flickr, License: https://creativecommons.org/licenses/by-nd/2.0/legalcode

China has announced it will be place tariffs on $60 billion in American goods in response to the United States’ tariffs on $200 billion on Chinese products.

Down in Dunklin County, Missouri Farm Bureau District 6 Board Member Barry Bean says he's felt the impact of the trade war on his own cotton trading.

Bean says 88% of cotton and a substantial amount of corn and soybeans are exported out of Missouri, and that the unpredictability of the trade war situation has hurt the value of Missouri goods and exports.

He sells a substantial amount of his product to a Chinese company, but has not sold them a bale of cotton in about seven months because his buyer is now purchasing from Brazil, Australia, Pakistan and India.

Those who have been farming for several decades are more familiar with the sense of unpredictability due to similar situations during the Clinton Administration. In the past, the government has asked farmers to “take one for the team,” when the Chinese were taking advantage of American buyers. He says, though, it may take some time for things to normalize again between international trading firms.

“If we lose our relationship with our biggest customer, we’re not really sure how long that’s going to take to recover,” he said.

It will take longer for sales relationships to be rebuilt.

“Whenever this trade war is settled, we’re going to be looking at an impact that will extend months and years,” he said. “It’s not going to be days and weeks.”

Who is responsible, he said, is up for debate: whether China is to blame for not being fair and honest traders or whether the Trump Administration is mishandling the issue. He said it was not clear how long it would take them to recover from the current economic situation, compared to storms or bad crops. Those factors, also including market changes and pests, are more predictable and easier to cope with.

“In agriculture, we’re used to volatility in markets, and we’re used to volatility in the conditions of production,” Bean said. “We are in a position to withstand a lot of volatility. I know occasionally we read reports that maybe overreact to some of the volatility. But the sort of volatility we’re seeing now is something that we’re not really that well-prepared to withstand.”

Despite the impact, Bean said many farmers understand Pres. Trump's motivation, and they’re hopeful that there’s a plan in place for the long term.

“We understand that it’s for all the right reasons, and we certainly want to do our part, but there is still a lot of concern as to whether tariffs are really the best mechanism to move this forward,” Bean said.

He says he recognizes how China has used currency manipulation to their advantage and other trade practices, such as underreporting their imports.

The farming community also recognizes the disputes over intellectual property rights currently being fought with China, Bean says. In 1994, the General Agreement on Tariffs and Trade resulted in much of the textile industry going to China. There’s been a shift since America’s cotton industry began going overseas, with Asia being the major buyer, that has resulted in China, with a centrally controlled economy, having the ability to “effectively determine the price of cotton in the world.”

He said that free trade has been a staple in agriculture since the 1970s.

“We saw the potential in opening up world markets to free trade because we believed that American agriculture could compete with agriculture from any of our competing countries if we simply had a level playing field,” he said.“And what we wanted was that level playing field where supply and demand determined the prices. And not international diplomacy, not ego battles, (and) not political or military issues.”

He said producers have a “complicated set of feelings” about the trade war.