FARGO, N.D. — Farmers are anxiously monitoring President Trump’s trade negotiations, fearing China will skip its fall purchase of soybeans and leave them in limbo with banks and bill collectors.
North Dakota exports approximately two-thirds of its annual $2 billion soybean crop to China. But the next harvest, due just before critical midterm elections, could sit on the shelf if the U.S. and Beijing don’t resolve an escalating trade dispute. That could leave farmers unable to meet their payments and jeopardize financing to re-plant for next year.
“If you’re a banker, are you going to like not getting your money?” Jim Broten, who owns and operates a sizable family farm 90 miles northwest of Fargo that grows barley, corn and soybeans, said in a mid-August interview with the Washington Examiner. “That’s when the crunch is going to come.”
North Dakota agriculture generates $10 billion annually. Along with oil drilling, the industry is a major economic driver in a sparsely populated state dominated by farmland. Most commodities are exported, with the bulk of soybeans designated for China. Growers cultivated the Chinese market, and investments were made in sophisticated infrastructure to quickly load and transport soybeans to ports in the Pacific Northwest.
Once in Portland or Seattle, soybeans are loaded onto giant cargo ships headed for Asia. The journey, from being loaded on rail cars in North Dakota, to docking in China, can take as little as three weeks.
Farmers in North Dakota have come to rely on trading relationships with Asia, especially Beijing. Crops are planted to satisfy those markets, with logistics designed to speed commodities west. Trump, by placing tariffs on a range of Chinese and other foreign imports in a bid to extract more favorable terms from U.S. trading partners, threatens to disrupt this carefully built system.
China retaliated with tariffs on a laundry list of American exports, and for now, has stopped ordering soybeans. But it’s not just exports to China that has farmers fretting. Trump initiated disputes with several countries, and North Dakotans are concerned that wheat and corn exports also will suffer. Long term, they worry China and others will permanently shift a significant percentage of purchases to competing foreign producers.
“It’ll be a huge problem for all the farmers and all the middle men and anybody in the supply chain — it’ll be a huge problem,” said Rick Burgum, chairman of The Arthur Companies, a firm (grain elevator in industry jargon) that purchases commodities from North Dakota farmers and resells them to big exporters. “We don’t know what we’re going to do with all our crop.”
Another major North Dakota export, farm equipment, worth more than $700 million annually, is already feeling the pinch from Trump’s steel tariffs. Meant to resuscitate American steel manufacturing, the president’s policies are damaging the competitiveness of U.S. manufacturers that use steel in their products. In a Wednesday tweet, Trump dismissed the naysayers.
“Our Country was built on Tariffs, and Tariffs are now leading us to great new Trade Deals — as opposed to the horrible and unfair Trade Deals that I inherited as your President. Other Countries should not be allowed to come in and steal the wealth of our great U.S.A. No longer!” Trump said.
Eugene Graner, a commodities broker in Bismarck, the state capital, agrees with the president. He supports the administration’s aggressive trade policies, particularly as it relates to China, and predicted little minimal negative repercussions for North Dakota agriculture. Trade talks with China are scheduled to resume later this month.
Graner said that Trump’s timing for challenging China was impeccable, coming after last year’s harvest was sold but before this year’s goes to market. He noted that the price of soybeans have been trading at relatively stable prices during the dispute, and predicted Beijing would place orders this fall, paying the tariff if necessary, because Argentina and Brazil, the other two primary growers of soybeans, don’t harvest enough to handle China’s insatiable demand.
There’s also the issue of North Dakota growers’ existing trading relationships with China, Graner said. Beijing buys more than 50 percent of its soybean imports from Brazil; more than 30 percent are purchased from the U.S. Beijing could import far more U.S. soybeans, but simply chooses not to. Trump’s hardball tactics with China could change that, Graner said.
“I’ve read the book, Art of the Deal,” said Graner, president of Heartland Investor Services. “He does things in a big way. If you’re going to fight a trade war, you don’t do the art of politics and the death by 1,000 cuts and we go on a six-year journey that we’re going to change China’s ways while we suffer. No, he does it big. He takes a scoop shovel and he aims for the forehead of the [president] of China — and he whacks him.”
All of this is unfolding in the heat of a major Senate campaign pitting vulnerable Sen. Heidi Heitkamp, a Democrat, against at-large Rep. Kevin Cramer, a Republican, in a GOP state that largely supports Trump and his agenda.
Jitters about the president’s trade policies are bipartisan.
Jim Broten, the farmer from Dazey, N.D., is a Democrat who supports Heitkamp and is a Trump critic. Rick Burgum, who runs the grain elevator firm headquartered in Arthur, N.D., is a staunch Republican and backing Cramer. He supports the president’s trade policies in principle, if not completely in practice, and lauds the administration’s deregulation agenda.
Neither Broten nor Burgum would dismiss the possibility of trade becoming a major political issue in the Senate campaign, should differences with China continue past the midterm elections. If voters revolt, Cramer could bear the brunt, given his ties to Trump. That’s probably why the congressman pressed the White House to propose $12 billion in stopgap funding to keep farmers afloat if matters aren’t resolved quickly.
In interviews with the Washington Examiner, Heitkamp and Cramer both chose their words carefully, hinting at their angst with the president’s agenda but stopping short of outright condemnation, although the state Democratic Party has been hammering Cramer on the issue.
“I still don’t feel like people feel like this is a four-alarm fire. But I think that as this goes on … We’re hearing through the grapevine that bankers are very, very concerned,” Heitkamp said.
Added Cramer: “The vast majority of farmers I talk to clearly have some anxiety; and each week that anxiety heightens a little bit because we get closer to the harvest. At the same time, they’ve been on the short end of most of these trade deals.”
