Ohio Farmers Watching Tariff And Trade Talks

Treasury Secretary Steve Mnuchin is meeting with Chinese officials this week to discuss trade tariffs. President Trump announced a tariff on Chinese steel and aluminum and the Chinese responded with tariffs on American products. It’s escalated to at least $50 billion dollars in tariffs for each country. The extra charges on Chinese steel may please Ohio steelworkers but it worries Ohio farmers. 

Tom Trout of Hickory Tree Farm in Medina County walks through his garage by several 8-wheel-drive John Deere tractors and other equipment.

“This is the planter. This is what we do plant soybeans with. This is a 15-inch row planter. It could have the capability of also planting corn.”

It’s almost time to take that 40-foot-wide planter out to the fields. But when news broke this spring that President Trump was calling for tariffs on Chinese steel Trout had to pause.

“You wake up in the morning and the first thing you do about 5:30 – 6:00 o’clock check your phone, beans down 50 cents overnight. It about makes you [have a] heart attack.”  

 Jennifer Pemberton, a grain merchandizer at Deerfield Ag Services in Portage County saw it on her desktop computer hooked to the Chicago Board of Trade. 

 “When President Trump announced it we saw a drop of about 60 cents that day,” Pemberton said.   

  The Chinese retaliated by slapping a 25 percent tariff on soybeans, which is the number one agricultural product for Ohio farmers.

“We’ve seen a little volatility up and down since then,” adds Pemberton.   

"So everyday there’s a little bit different. But when the Chinese announced we saw another big down-day. And then we slowly creep our way back up to where we were at. So we’re not quite back up to that point yet. We’re about 15 cents off the high [of $10.40 a bushel].”

China is now looking to Brazil for the grain and Europe now appears ready to buy some of that American crop.

“China has actually purchased $14 billion worth of soybeans from the United States last year. So to kind of explain that, that’s every third row of soybeans. So that’s a lot of soybeans, and I don’t really see that Europe will take up that whole gap,” Pemberton speculated.

A study from the University of Illinois and Ohio State predicted the surplus caused by Chinese tariffs would mean a 10 percent drop in prices. And Pemberton says net farm income is already at a 12-year low due to higher expenses.

“It’s tough,” says Pemberton. “It’s tough right now. When you look at the income that you’re getting versus what you’re putting into the investment, especially if you have to rent ground, it’s not ground that you own.”

And yet area farmers are not panicking. Jim Morlock of Morlock Grain Farms in West Salem, Medina County, expects demand to rise.

“I think the world has a high demand for meat protein. To have a meat protein you have to have a grain protein. Well, beans are kind of king there,” Morlock said. “And that’s what we’re seeing: more and more total bushels needed every year worldwide. And they got to come from somewheres. And we know the world can ship within months to anywhere.” 

Morlock says the family farm was not invested in overseas trade back when his dad was it.

“No, matter fact I can remember my dad working with potatoes and apples and eggs locally in Cleveland, a local market,” Morlock recalled. “And I mean right to the corner, before we had all the big distributors. And my grandpa, probably. I don’t think they would.. very rarely talk about anything global. Or had a clue. But now, yeah, we sure worry about it. It’s amazing.” 

At Deerfield AG Services, Jennifer Pemberton watches trucks pull in to fill 20-foot shipping containers with soybeans.

“They go from our facility back up to Cleveland. And then get on rail in Cleveland and head over to a port whether it’s New Jersey or Norfolk or whichever port we happen to be working with the buyer on,” Pemberton explained “And then from there they get loaded on a vessel and sent over to the Asian continent, so places like Indonesia, Thailand, places like that.” 

South America is also a big player.  

“Argentina is buying soybeans from us right now,” noted Tom Trout. “We buy Argentina soybeans and bring them up the east coast. We bring a lot of corn in from the south. It’s hard - not a lot of feed grain is grown in the Carolinas due to inclement weather. That’s a big cotton area. They do feed a lot of livestock, poultry. It’s cheaper for them to bring it up the east coast than it is for us to truck it down there.”  

You might think the farmers are upset over the Trump tariffs that started this trade battle. But they say they know how hard China has been on Ohio manufacturers. And they’re not reacting to every swing on the commodities exchange. 

“We’ll wait and see,” says Tom Trout in Homerville. “I think a lot of this is negotiation. ‘I want this’ and ‘They want this’ and somewhere we’ll meet in the middle and everything will move forward just fine so.” 

The Trump Administration is also trying to renegotiate NAFTA and is now beginning to look again at the Trans Pacific Partnership. 

Computer screens on the desk of Jen Pemberton are locked on the Chicago Board of Trade. But she puts it into perspective.

“Our industry is probably driven most by the one factor that we can’t control... and that’s the weather.”

Which has changed dramatically from a week ago.