High tariffs effect soybean season

Professor Patrick Westhoff of the Food and Agricultural Policy Research Institute discussed the effect of high tariffs on soybeans. (Lexie Petrovic/KRCG13).

Higher tariffs have lowered crop sales to China, the world's largest market.

Professor Patrick Westhoff has been working with FAPRI, the Food and Agricultural Policy Research Institute, for over 20 years. He said increasing tariffs had increased the price of soybeans in China, making sales there significantly decrease. This also resulted in soybean price reductions nationwide as well as reduced prices in exports to other countries.

"So a tariff is a tax on an import," he said. "So if a country tries to sell a product from their country to another country and the tariff is applied, that raises the price in the imported country. It also has the effect of reducing the price in the exported country."

Westhoff said the higher tariff has majorly impacted Missouri so far.

"Soybeans is the number one crop produced in the state of Missouri by value and number of acres planted by soybeans relative to other crops so it's a big deal for agriculture here in Missouri."

China had always been the largest customer to the United States, and their lack of business is making sales fluctuate.

"The problem is China is just so big," Westhoff said. "They accounted for more than sixty-percent of U.S. exports of soybeans two years ago and so when we have lost a large part of that market now, it's almost impossible to make that up in other markets."

Westhoff said although these tariffs have weakened the United States relationship with China, they have reduced soybean prices across the nation and have increased exports to other countries.

"We are already seeing lower prices on the market for soybeans because of these tariffs already in place, that has reduced our sales to China but the lower prices here have resulted in more use of soybeans in this country and more exports to other countries besides China."

The lowered prices are projected to increase soybean sales in the United States.

"We'll probably see more U.S. consumption of soybeans because of the lower prices in the market. People can afford to buy more."

However, despite the expected influx in American soybean sales, Westhoff said many soybeans are still going to be leftover.

"Every year there is a certain amount of soybeans that is left in bins before the new crops come in. That amount is expected to more than double this year."

If the leftover soybean prediction proves true, farmers will be encouraged to plant less crops heading into next season.

"We're going to have lower prices we would have had for soybeans to go to U.S. farmers, lower incomes for the soybean producers, and I think this might persist in the 2019 and probably means they will plant fewer soybeans in 2019."

Westhoff said President Donald Trump and China have been in talks about negotiating future crop deals, but not much regarding future steps has been confirmed so far.

"If they could actually get a framework agreement, there's maybe some chance at least that the tariffs may get pulled back a bit," he added. "We'll see what happens, of course the market initially was very excited when they heard that news but they're a little more skeptical now today so we'll see what happens."

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