Since 1976, Tommy Briscoe has been farming the St. Leonard 750-acre farm that has been in his family for six generations. Briscoe raises corn, wheat, and sorghum for cereal grain.
It is his 350 acres of soybeans that have been a source of consternation during the economic feud between the United States and China.
“It put a hurting on my business because it made the price drop,” Briscoe said of the tariffs China imposed on soybeans, and other products, in early 2018.
China’s levies were a retaliatory response to multiple U.S. tariffs on Chinese imports imposed by President Donald Trump (R) because he believes the country has been engaging for decades in unfair trade practices.
“This revolves around issues such as a lack of access to Chinese consumers on the broader Chinese market as well as very significant issues regarding intellectual property and the forced taking of intellectual property,” explained economist Anirban Basu, the CEO of Sage Policy Group Inc. in Baltimore.
Briscoe recalled the 1980 grain embargo when President Jimmy Carter (D) put ban on wheat sales to Russia for invading Afghanistan and how it took so long for the price of the crop to rebound.
“This is not going to be an overnight fix because Donald Trump is taking the tariffs off,” Briscoe said, amid rumors of relief due to continuing trade talks.
“A lot of my [soybeans] probably go to Purdue and they usually crush them for oil,” Briscoe said. Soybeans can also be used as meal, made into soy milk, soy flour and tofu.
“I am selling them for a dollar to two dollars cheaper [a bushel] to almost three dollars cheaper than what they were four or five years ago,” Briscoe said.
Briscoe said a lot of it is supply and demand and that the midwest controls the market.
“If they have a good crop, the price is going to go down. If they have a bad crop, the price is going to go up,” Briscoe explained.
To add insult to injury, Briscoe said there are quite a few variables, including the weather, that makes the crop unprofitable.
“With soybeans, we hit a dry spell — it’s going to be next to nothing. We haven’t had a real good rain since the first of July,” Briscoe said, sharing that his farm does not have irrigation or a center pivot and cannot afford the expense of putting in a well.
Briscoe said he has no choice but to absorb the costs and hope that his other crops will make up for the shortfall.
“This year, my cornmeal was very good. That’s helping me out a lot,” Briscoe said, but later admitted that none of his crops really make a lot of money.
Despite the unpredictability of the weather and the market, Briscoe said he will probably continue to raise soybeans, but is investigating other agricultural streams of revenue.
“My accountant asked me why I keep farming,” Briscoe said. “I told her two reasons: I enjoy what I do and I’m dumb.”
Commissioner Earl “Buddy” Hance (R) raises corn, sorghum, and soybeans on his 600-acre farm in Port Republic. “China was our number one purchaser of soybeans,” Hance said, but added he understands why the President put the tariffs in place.
Hance said until this trade war gets settled, soybeans are in a holding pattern.
“This year [I had] only about 150 acres,” Hance said of this year’s soybean crop. “Back in the ’90s, I had all soybeans for a couple of years.”
Hance also sells his soybeans to Perdue and said the company is the biggest buyer of soybeans which he said crushes for oil, and uses beans for meal as well as sells raw soybeans to China.
Hance recalled when soybeans were being sold for $15 a bushel, but said the prices as of late for soybeans are unattractive.
“Soybeans need to be $9 or $10 to make a living,” Hance said.
The former state Secretary of Agriculture explained that Maryland grows a surplus of soybeans yielding a negative basis, or no equity.
“Our basis is 70 cents off of the market price,” Hance explained. “So, if the market price for soybeans is $8.83, we make $8.13 — which is why I plant less.”
To make matters worse, Hance said in the summertime soybeans are the preferred choice for deer, which is why he plants sorghum as a substitute because deer do not eat the plant in its early growing phase.
Hance said, “as a farmer, you make a decision and look at the future” to decide what crop will be profitable.
“It’s hard to measure the specific impact of the trade war on agricultural because so many other factors are at work,” said Basu, who was hired by the county to write its five-year economic development plan for 2017-2021.
The economist said weather, farmers’ planting decisions, investor sentiment, interest rates and the price of equipment affect farm outcomes.
“There is plenty of anecdotal evidence suggesting that soybeans farmers, in particular, have been negatively impacted by the trade wars,” Basu said, noting that the producer, or farmer, eats the cost of the tariffs.
Basu pointed to the period of 2013-16, which preceded the trade war when farm income fell dramatically due to numerous factors and decisions were made to drive down prices.
“But for the trade disputes, the global economy would be stronger, there would be more demand for American agricultural output, prices would be higher and farm income, consequently would be higher, than it has been,” Basu explained.
Basu said corn used to be $8 a bushel but is trading at $4 a bushel. He said soybeans at less than $9 a bushel and wheat prices have not recovered from the decline mid-decade.
Basu believes the trade war is frustrating efforts by many farmers, including family farmers, to recover from that three year period.
“It is doing that largely by limiting their recovery in commodity prices,” Basu explained. “Increasingly, at least some farmers are borrowing more money to pay their bills.”
Basu said payments from the U.S. Department of Agriculture to farmers have gone up, contributing stable farm income that is not from farm output.
“Many farmers will tell you they rather be generating income the old fashion way from farming and marketing their commodities intelligently — instead of checks from the government,” Basu said.
The economist said he believes the federal government has been issuing larger checks to farmers is because “they recognize fully the trade wars have undermined the financial strength of a number of farmers” and that the government "does not want to jeopardize the ongoing commercial viability of the farming enterprises."
Basu believes the issue may be resolved by the 2020 Presidential election, as Trump may want the trade war behind him. However, China may wait to resolve the dispute hoping for someone else on the other end of the negotiating table.
“What is good for the American farmer is a quick resolution — the alleviation of uncertainty, the opening of new markets,” Basu said, noting the relief would have to come in the form of trade agreement approved by Congress.