12 Billion to Help Farmers
Earlier this week USDA Secretary of Agriculture Sonny Perdue announce that 12 Billion dollars in aid was on the way to help farmers caught in the trade war with China. Since China announced a 25 percent tariff on soybeans imported from the United States bean prices have fallen more than $2.00 a bushel and corn has dropped more than 70 cents. Remember China used to be our largest export market for beans, by far.
The basic supply and demand in the world for soybeans has not changed. The fact is South America cannot supply all the beans that China needs. That is unless the people in China are going to go back to eating rice 3 times a day instead of meat. A simple way around the tariff is for another country to buy beans from the United States and then transfer them to China.
Another loop hole big enough to sail a ship full of beans through was announced by China about a week ago. Beans imported into China going into the state reserve would not have to pay the 25 percent tariff. So, you can import beans into the state reserve and then move them out of the reserve to the end users in China without paying the 25 percent tariff.
It would seem like there was no reason for beans to drop over $2.00 a bushel. Why did corn drop over 70 cents a bushel when China imports almost no corn from the United States? It would seem like the big money funds decided it was bearish and began selling bean and corn contracts. The tariffs and trade war talk gave them an excuse.
There are very few details on how this 12 billion dollars will be paid to farmers at this point. In addition will pork producers be included? They have really been hurt because China used to import a lot of Pork from the United States. I am not aware of other industries in the United States that have really been hurt with this trade war other than agriculture. So, if we are on the tip of the spear so to speak maybe the government should help farmers with these tough times. However, virtually all farmers would rather get money from the market rather than the government!