In theory, closing off China鈥檚 soybean market due to the trade dispute with the U.S. on top of generally low prices for the commodity should affect all industry players, big to small. Agriculture economist Pat Westhoff begged to differ.
鈥淭he impact on total revenue may be very similar across the scale of production,鈥� according to Westhoff, who鈥檚 an ag economics professor at the University of Missouri. 鈥淏ut sometimes the effect on net revenue can be very different. So a given price that may be difficult for a large producer can be catastrophic for a small producer.鈥�
In other words, if you鈥檙e a farmer who plants only soybeans on relatively few acres, you鈥檙e probably in trouble.
Large agribusinesses have worldwide sources and markets in lots of countries, and even medium-sized farmers in the U.S. have diversified enough to stay afloat.
That鈥檚 the case for Robert Alpers, a farmer in the central Missouri town of Prairie Home. He farms 4,000 acres, about half soybeans, half corn. But his family also has a 550-head cattle operation and a side business of making and fixing farm necessities equipment like feeding troughs and livestock gates.
The trade war and subsequent rough soybean market has had a negative impact on his family, but those other sources of income and the size of his operation has mitigated some of the pain.
鈥淥ur family鈥檚 fortunate enough, we鈥檝e got over 300,000 bushels of storage,鈥� Alpers said while taking a break from tending to newborn calves. 鈥淪o we鈥檙e able to hold our crop for a better price. We鈥檝e got livestock, and the corn market has moved up a little, so we have moved some corn on the cash market.鈥�
Alpers said between diversification and the tariff bailout , he鈥檚 in a good spot, but most of his friends and neighbors aren鈥檛 as lucky.
They鈥檒l have to make some difficult decisions this year, he said, because farmers don鈥檛 suddenly go bankrupt. They start cutting, borrowing more and eventually get in over their heads. And the low prices and lack of market access due to the tariffs are the kind of thing that can get that ball rolling.
Even with his storage, cattle business and corn crop, Alpers said if there鈥檚 another round tariffs, he鈥檒l be forced to make tough decisions. But it won鈥檛 sink him.
鈥淭his farm has been in my family for almost a century. And we have plans to keep that going,鈥� he said.
Protected by a global reach
Alpers also knows that large agribusinesses, the ones that buy, sell and process soybeans, will be fine.
鈥淭he CEOs of the big companies, they鈥檙e not sitting there in their offices twiddling their thumbs,鈥� he said, 鈥渢hey鈥檙e trying to move product, somewhere.鈥�
Cargill, Archer Daniels Midland, Bayer and even CropLife America, the trade group that represents the industry, declined Harvest Public Media鈥檚 requests to comment.
But Cargill CEO David MacLennan told in late January that the company has 鈥渉ad to shift supply chains from North America to South America鈥� 鈥� buying instead soybeans from Brazil and Argentina.
Those places, Westhoff noted, aren鈥檛 in a trade war with China, and are markets that the multinational corporations already work in.
鈥淪outh American soybeans are going to be capturing a premium in the Chinese market than would they would have had, had it not been for the tariffs,鈥� he said.
Large agribusiness companies are lobbying the Trump administration for an end to the trade war so U.S. soybeans can fully return to the Chinese market. Cargill鈥檚 MacLennan specifically said in an January that it鈥檚 in his company鈥檚 best interests to protect North American farmers.
But as the tariffs continue, how long anyone in the soybean business will be able to last depends on how big they are.
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