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Neighbors Growing Together | Jun 24, 2018

Iowa farmers ‘deeply concerned’ about tariffs, state ag leader says

By Erin Murphy, Lee Des Moines Bureau | Apr 06, 2018

URBANDALE — Iowa farmers are “deeply concerned” about the potential for increased trade taxes and a possible trade war between the U.S. and China, the state’s top agriculture official says.

Mike Naig, Iowa’s secretary of agriculture, said this week China’s tariff on pork and proposed tariff on soybeans — both of which came in response to proposed U.S. tariffs on Chinese metal and technology — already are impacting the value of some of Iowa’s biggest exports.

That makes Iowa farmers, who have been operating with slim profit margins for roughly four years, uneasy, Naig said.

“Folks are deeply concerned about it, and rightfully so. There’s just so much uncertainty,” Naig said in an interview. “It’s very much top of mind.”

The trouble started in March when President Donald Trump enacted $50 billion in new tariffs on Chinese aluminum and steel. Trump said the tariffs were needed to help restore balance to international trade deals that he has described as unfair to the U.S. China responded by enacting $50 billion in tariffs on a number of U.S. products, including pork.

China is the No. 3 importer of U.S. pork; $1.1 billion of pork is shipped to China annually.

Iowa is the top pork-producing and pork-exporting state in the nation, according to the Iowa Pork Producers Association. There are roughly 20 million hogs and 600 hog farms in the state.

This week, Trump announced another round of proposed tariffs on Chinese technology, citing unfair trade and patent practices. China responded with another round of proposed tariffs of its own, this time including soybeans. Roughly a third of U.S. soybeans are exported to China, according to the Iowa Soybean Association. Iowa is the No. 2 producer of soybeans in the U.S., next to Illinois. Roughly a fourth of the state’s soybean crop is exported to China, Naig said.

“I acknowledge there are some trade issues that need to be resolved between the U.S. and China and our overall trading relationship,” Naig said. “But we would want (the president’s administration) to understand and know that we don’t want agriculture to be the bargaining chip here. So we would really encourage the administration to work with the Chinese to try to resolve these issues as quickly as we can so we can try to minimize the impact on the market.”

The enacted and proposed tariffs already have made an impact. Soybean futures fell as much as 2 percent before rebounding thanks in part to a severe drought in Argentina. Hog futures fell a record 6 percent, according to Bloomberg.

“The good news is there’s some time, and our expectation is and our understanding is there are negotiations ongoing,” Naig said. “Our hope is that we can resolve these issues in a way that minimizes the impact on the markets. But it’s also true that while those tariffs may not formally come into effect until four to six weeks out, the markets react in real time, so we started (Wednesday) with soybeans down 5 percent.”

Iowa farmers already were dealing with an agriculture economy that has been sluggish for roughly four years. Farm income has been stagnant, and crop prices have been near or below the cost of production.

“Overall, we’ve got an ag economy where we’re definitely experiencing some financial stress,” Naig said. “This certainly doesn’t help that situation.”

Naig said his department has been in communication with the federal ag department as well as Iowa’s governor and congressional leaders.

“There are real issues to work out. So on one hand you say it’s good to address those,” Naig said. “But just as real as those issues are is the impact of a retaliation against ag products that are important to Iowa. Nobody wins in a trade war, is what I think most folks will say.”

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