The Trump administration’s announcement this week to provide aid to farmers is merely a Band-Aid on a wound the president created.
In recent weeks, soybean prices have fallen to near-decade lows, shedding 20 percent since the Trump administration announced plans to penalize China for alleged intellectual-property theft and unfair trade prices. China retaliated with a 25-percent tariff on U.S. soybeans, meaning U.S. farmers are getting lower prices for the commodity.
Six years ago this month, soybean prices in the United States hit a 20-year high, raking in an estimated $17.58 per bushel.
A year ago, that price had fallen to an average of $9.89.
As of Friday morning, the price was $8.62.
BUT ON TUESDAY, as the U.S. Department of Agriculture announced a $12 billion three-part plan to borrow money from the U.S. Treasury to pay producers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs, prices jumped .94 percent.
The USDA also will buy the surplus of commodities including fruits, nuts, rice, legumes, beef, pork and milk that would otherwise have been exported and distribute them to food banks and other nutrition programs. In addition, the plan will help farm groups develop new export markets.
“This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy,” said Secretary of Agriculture Sonny Perdue.
Soybeans are the No. 1 agriculture export in the country, with 2017 sales topping $27 billion. Indiana produces about 5 percent of the nation’s soybeans.
The 25-percent tariff on soybeans alone could cost Hoosier farmers about $150 million.
AS PURDUE UNIVERSITY Agriculture Economist Christopher Hurt recently told The Goshen News, the losers in a trade war involving soybeans are the producers and consumers.
“This is costly to the soybean farmers who take a loss of up to $3 billion per year and to the Chinese consumers with similar losses up to $3 billion per year,” Hurt said.
While $12 billion in so-called emergency relief is a benefit to farmers affected by the escalating trade disputes with China and other countries, it’s not the long-term solution most are hoping for.
As U.S. Sen. Todd Young, R-Indiana, and other industry leaders have said this week, Hoosier farmers need fair access to the international marketplace — not government handouts.
Representatives at the local, state and national levels should put pressure on the Trump administration to follow through on the plan to fix the issue of free trade and simply place a Band-Aid on the problem.