Threat of soybean tariffs raises fears among Maryland farmers, and questions about ‘America first’

It’s planting time for Eastern Shore farmer Jason Scott, and as he buries seeds in a dozen dusty rows at a time, prices for his soybean crops are strong.

The excitement of this day, he says, is rivaled only by the harvest, when he learns just how much he has grown, and what it’s going to be worth.

But when that day comes, will the beans be worth so much?

For Scott and other farmers in this mostly Republican region of the state, the threat of a trade war with China, motivated by the America first philosophy that propelled President Donald Trump into office, looms over the start of this growing season. Farmers are uneasy as the Trump administration brokers tariff negotiations that are aimed at helping U.S. steel and aluminum compete with foreign imports — but which could also provoke retaliation from China that could send soybean prices plummeting.

Scott, a 36-year-old who studied agricultural economics at the University of Maryland, obsessively watches commodity prices and market fluctuations on his iPhone from behind the wheel of his John Deere.

“Anything can happen in these trade wars, and that’s what’s concerning,” the Dorchester County farmer said. “We may be saving 160,000 jobs in the steel and aluminum industry, but you might be hurting a half a million farmers.

“We may not lose our jobs, we may not lose our farms, but if the price of soybeans goes down a dollar, I can certainly tell you that it’s not going to be easy to swallow.”

As Trump weighs tariffs on metal imports and major revisions to the North American Free Trade Agreement and other deals, agriculturists from across the Midwestern bread basket fear that China could respond with a devastating blow to American farms with a tariff on soybeans, the single largest U.S. export to China.

Some of the president’s strongest cheerleaders in 2016 are now begging for his favor, hoping and trusting that he will uphold pledges to protect them, or if not, at least make it up to them.

That is no less true in Maryland, a state that didn’t support Trump in the 2016 election and where most of a relatively smaller crop of soybeans is sold to the Delmarva chicken industry, not to China. The legume is the state’s top crop by acreage, and its second most valuable, at $232 million last year.

As a commodity, soybeans are bought and sold on an international market. So if Chinese demand disappears, the price falls everywhere.

Six in 10 voters on the agriculture-heavy Eastern Shore voters supported Trump, twice his level of support statewide. Chip Councell, a farmer of soybeans, corn, wheat and vegetables in Talbot County, said he believed the businessman would get deals done to build up the economy — not weaken their segment of it.

“I think farmers are extremely concerned about some of the trade rhetoric that we’re hearing,” Councell said. “We’ve got to hope that all this works out. It’s going to take us a long time to recover if it doesn’t.”

The proposals have come like dominoes over the past two months.

Trump’s move to impose 25 percent tariffs on metal imports in March prompted concern among U.S. trade organizations; China responded with levies on U.S. products, including pork, wine and some fruits and nuts. Trump followed with tariffs on industrial technology and medical products worth $50 billion of U.S. imports from China; in exchange, China proposed taxing U.S. exports of cars, aircraft and agricultural goods — including soybeans.

Many of the tariffs, including the one on soybeans, are for now just threats, hanging uncertainty over global agriculture and industry. And there are signs that the Trump administration has not given its final word on trade policy changes.

Just this week, Trump for a second time delayed imposition of tariffs on steel imports from Canada, Mexico and Europe. Trump’s top economic advisers traveled to Beijing on Thursday to discuss trade with Chinese officials.

Trump has acknowledged that China could be targeting his political base, but has held firm.

“Our farmers are great patriots,” he said last month from the White House. “They understand that they’re doing this for the country. We’ll make it up to them.”

But farmers say they weren’t expecting to face such a sacrifice when Trump was elected.

Travis Hutchison, another Talbot soybean grower, gave the president credit for trying to improve the country’s trade position, a core element of his promise to “Make America Great Again,” and praised him for his efforts to ease regulatory burdens on farmers and other businesses.

But he said he wouldn’t call himself “a die-hard fanatic” for Trump.

“He’s trying to make changes. We just have to see how it works out,” Hutchison said. “It’s still early in the ballgame.”

Maryland Farm Bureau Executive Director Valerie Connelly said she is in constant communication with the American Farm Bureau Federation, which is pressing U.S. Agriculture Secretary Sonny Perdue and other Trump advisers on the agriculture industry’s worries about a world trade shakeup. (Perdue, the former Georgia governor, is not related to the family that founded the chicken company based in Maryland.)

“The president made clear he is not looking to harm the farm industry,” Connelly said. “We’re monitoring it very carefully.”

At the same time, farmers are competing with the oil industry for Trump’s support as the White House considers loosening a requirement that oil refiners mix ethanol and biodiesel, made from corn and soybeans, with petroleum. Trump has so far boosted the farmers, saying last month he would allow the sale of fuel containing 15 percent ethanol year-round.

U.S. Rep. Andy Harris, Maryland’s lone Republican in Congress, said farmers should have confidence in the administration and not simply focus on any threat to soybeans. China currently does not accept any poultry imports from the U.S., but if that prohibition is weakened or removed as a result of the ongoing negotiations, it could be a boon to the Delmarva peninsula, he said.

“If we gain, as a result of these negotiations, a breakthrough in the poultry policy, that could be very beneficial to both farmers and poultry producers on the Eastern Shore,” Harris said. “At this point, soybean tariffs are caught up in a much larger discussion about trade. This is early in the entire trade negotiation, and in the end, Maryland farmers actually have a lot to gain.”

Most Maryland farmers haven’t changed their plans for this season, Connelly said. They plant about 500,000 acres of soybeans a year, the 21st largest soybean crop in the nation, according to the U.S. Department of Agriculture. If they were to reduce that number, it would likely mean a shift to corn, the state’s second-biggest crop, and its most valuable.

They lock in prices for much of that crop in contracts before the season begins, for an average last year of $9.20 per bushel for more than 25 million bushels harvested. This year, despite a brief price slide when the Chinese tariffs were announced, farmers stand to make as much as a dollar more per bushel.

Much of the state’s crop goes to the grain-crushing plant in Salisbury where Perdue makes feed for its growers’ chickens. The poultry giant also sells some grain overseas, spokesman Joe Forsthoffer said.

The Delmarva peninsula doesn’t grow enough grain to fulfill Perdue’s needs, Forsthoffer said, so even if exports to China drop off, the company will buy Maryland’s soybeans. But that doesn’t mean the farmers have nothing to fear.

“The unknown is what, if any, impact all these trade issues and potential tariffs may have on prices,” Forsthoffer said. “It’s really too early to even speculate on where this is going to end up.”

For Scott, that means despite current favorable prices, any share of the crop that isn’t already sold — 40 percent of it for the sixth-generation Hurlock farmer — is at risk.

It’s one more thing to worry about in a profession already buffeted by the whims of the weather, government regulation and consumer tastes.

“I think you kind of have to be an optimist to be a farmer,” he said. “You’re planting these seeds out in the soil, and it’s subject to the weather and pests and weeds.”

Scott is a student of his industry. He dabbled in engineering and business before focusing on agricultural economics at the University of Maryland. The family business pulled him back to Dorchester County in 2003.

Ever since, Scott has been striving and tinkering for any way to increase yields of soybeans, corn and wheat, and to lower costs.

He tests different varieties of corn and the ways they respond to different types of fertilizers. He samples soybean tissue throughout the season to ensure the crop is getting the right nutrients.

He has started using soybean seeds that have been coated in fungicide so he can plant them in late April, instead of waiting into May. The fungicide protects them from wet and cold conditions and allows the plants to blossom by June 21 — the summer solstice, when there is maximum sunshine.

Any drop in price would cut into whatever gains he can make through such meticulous research and planning.

“We’re always trying to be on the cutting edge and trying to do different things to maximize our yield,” he said. “At the end of the day, it’s the number of bushels and what you sell them for. That’s what matters.”

Instead of using tariffs to help U.S. exports compete, he wishes Trump and his trade advisers would strip away such market interventions. Because despite rhetoric that the policies can make America great again, he says, they always come with a downside.

“In rural areas, you get a lot more, ‘America first,’ that type of mentality,” he says. “I think what a lot of people don’t realize is when the government creates trade barriers or different rules and quotas and things like that, there is someone that it’s going to hurt.”