MAGNOLIA, KENTUCKY (RFD-TV) — The United States is one step closer to realigning global trade following this week’s progress in negotiations with China. As part of the deal, China has agreed to purchase at least 75 million metric tons of U.S. soybeans over the next three years, along with additional trade concessions.
Speaking at the National FFA Convention in Indianapolis, U.S. Secretary of Agriculture Brooke Rollins said the progress has been long overdue, noting the struggles many farmers have faced in recent years.
“Obviously, we have been struggling in the farm economy over the last number of years, perhaps one of the worst farm economies in any of our lifetimes, especially for our row croppers -- so, really being hyper-focused on that,” Secretary Rollins said. “This President had a vision on Liberation Day in April of this year. He laid it out for all of America and for the world that no longer would America bow at the altar of other countries, trade, and tariff regimes. That instead, we are the United States of America, and we will drive that train wherever we believe and however we believe it is best for our own country.”
Caleb Ragland, president of the American Soybean Association (ASA), joined us on Friday’s Market Day Report to share his reaction to the news of this soybean sale. Considered “welcome news,” but also a return to near-normal trade relations with China.
“Well, we’re excited to see this announcement, and I think that what it all comes down to is the details and making sure that there is follow-through from the Chinese and they keep the commitments that they’ve made,” Rangeland told RFD-TV. “That’s what we’re going to have to wait and see, and it will take some time, but the announcement was welcome news, and we just hope it comes to fruition. When the soybeans are unloaded and there’s cash on the barrel head, that’s when we’ll really get excited, but that’s a big step in this direction.”
In his interview with RFD-TV News, Ragland discussed what the deal means for growers, whether the agreed volumes are enough to restore confidence in the soybean market, and how likely China is to follow through on its commitments.
“This gets us back in the ballpark of where we’ve been the last three to five years, so this isn’t huge new volumes, but it’s getting us back to somewhere in that ballpark of around 25% of the U.S. crop if we hit that 25 million metric ton baseline -- so that’s a good start, but it’s exciting to hear that maybe there’s more top-end potential,” Rangeland said. “But what it all comes down to is we have to be competitive, and we have to deliver a good product at a good value, price-wise.”
Despite the U.S.’s large soybean sales to China, Brazil remains its top grain export supplier in terms of price. Rangeland said reducing tariffs on exports, as well as removing them on imports needed for inputs, is key for American farmers to make a living from the markets. He said farmers want to make money for their crops, not hope for a bailout.
“So hopefully that will happen, and the barriers such as tariffs that have been in our way will not be there, and we can be on a level playing field and compete,” he said. “When we have that opportunity, we’re going to win. The American Soybean is the best soybean in the world market, and the buyers like it, but it has to be priced competitive as well. Hopefully, this announcement is a big step in that direction because our American soybean farmers want to make a living from the market. We want opportunities in the market. We don’t want to be hoping for some government bailout to fix the farm economy. We do well when we have the opportunity from the market, and that’s what we want.”
Rangeland also addressed rising input costs, farmers’ address to the Senate Judiciary Committee this week, and the impossible situation soybean farmers face.
“We have two problems: we’ve had an income problem and a cost problem. It’s kind of ‘the chicken or the egg,’ which is the bigger issue,” Rangeland said. “The testimony we gave early this week to the Senate Judiciary Committee talked about the rising costs that we’re experiencing for all inputs —for equipment, just across the board record-high cost of production — and when you contrast that with sale prices for our commodities that are as much as 50% lower than they’ve been in the last three to five years, it’s a very big problem. It’s not a sustainable economic situation.”
Given current commodity prices and the mounting expenses producers are facing, farmers are at a crossroads. They are clear about what they want to see from the Administration. Rangeland says, it all comes down to fair, competitive markets and fewer tariffs on inputs.
“The message we deliver is: we need competition in the market; we need barriers such as tariffs [removed] that are rising input costs — our analysis says 12% of current input costs are due to tariffs on imported goods that are used in inputs — you start adding all these different things together and it makes our costs higher,” he explained. “It’s just an uncompetitive situation that we’re looking at when you see commodity prices that are similar to what they might have been 10, even 20 years ago, and then costs at record highs. It just doesn’t contrast. You can’t yield enough to overcome that. Our message is: we need opportunities; the free market needs to work; and there needs to be plenty of competition both on the farm side and the supplier side.”
Corey Rosenbusch with The Fertilizer Institute joined us to discuss supply chain disruptions and what farmers should watch as global tensions impact fertilizer markets.
