La. Soybean Farmers Feel Effects Of Chinese Tariff

Aug 23, 2018

SOYBEANS: 2nd Largest Row Crop for Louisiana
Credit Courtesy: LSU AgCenter

TRADE WAR - Thanks to the recent tit-for-tat tariffs going on between China and the United States, it’s fair to say that current trade relations between the two nations aren’t at their best.   And  for  Louisiana Soybean farmers, their business has suffered as a result.  Charles  Canatella  farms  4,000 acres of soybeans along the Atchafalaya River in Melville, Louisiana.  His crop is part of a $700 million dollar soybean industry in Louisiana, which is the state’s second largest row crop.

“Most of it is loaded right here in Baton Rouge and New Orleans and exported around the world" explained Canatella.

The country that buys  the most soybeans from Louisiana  farmers  like Canatella is China. Michael Deliberto  is assistant professor of Agricultural Economics at LSU.

Michael Deliberto, assoc. prof LSU Dept of Agricultural Economics & Agribusiness
Credit Courtesy: LSU

Deliberto says "When you look at the level of soybean exports that come out of Louisiana," he says, "we mirror that percent. Probably 57 to 59% of Louisiana soybeans go to China.”

But thanks to the recent 25% tariff China has placed on soybeans in retaliation to the Trump administration’s tariffs on China’s aluminum and steel imports, exports of Louisiana soybeans to China have dropped and so has the price of soybeans which was more than $10 a bushel before the tariff. Now it’s $2 less which makes it harder for soybean farmers like Canatella to stay in business.

Canatella explains “If you're fortunate enough to make an average crop or an above average crop, it takes about $10 for you to get your money back. That leaves you a little bit for living expenses, but not much,”

Mike Strain, Commissioner - La. Dept. of Agriculture and Forestry
Credit Courtesy: La.Gov

But some feel the trade war with China will run its course and turn out in favor of American farmers.  Mike Strain, Louisiana’s Commissioner of Agriculture and Forestry thinks trade negotiations will eventually give the U.S. farming industry better prices for its products.

Strain says "What happens is when these commodities are down is that they  go through a year and don't make any money. We hope that when we get these trade negotiations done that we will have a number of years where we are going to experience a very strong market for all of our commodities." Strain emphasized "And so I think at the end of the day, we will be in a much better place. And now we have to stand up and support the President and the administration; we cannot back down."

Charles Canatella, Louisiana Soybean Farmer
Credit Courtesy: WRKF Baton Rouge

In the meantime, the Trump Administration plans to help U.S. farmers through this trade slump with a $12 Billion dollar aid package.   But like most farmers, Canatella would prefer “trade over aid” and have a stable soybean market.

Canatella  says "I don't think I'll get much money out of $12 billion, if I get any. We'd rather have a good price per bushel and then we can deal with the rest, but you know, the uncertainty, it keeps you up at night.”