South Dakota soybean farmer urges president to keep China markets open to American crops

Since he started farming in the 1970s, soybeans have gone from taking up little land statewide to rivaling corn. Each crop now takes up nearly six million acres of farm land in South Dakota and last year, soybeans took up more space than corn.

With other national soybean farm leaders, Schmitz last week urged President Donald Trump not to get in a tariff fight with China, which has promised to increase duties on U.S. crops, including soybeans, in retaliation.

South Dakota’s 11,000 soybean growers are going to feel the effect of losing markets in China, he said. Last week, the day President Trump announced he planned to increase tariffs on Chinese products imported into the United States, grain markets fell as China responded in kind.

A one-day drop of about 40 cents a bushel last week was equivalent to an income loss on paper of $15,000 to $20,000 to the average South Dakota soybean farmer, Schmitz said in a letter to Trump posted on the Soybean Association’s webpage.

It’s a bad time for such moves, he says, after farm incomes have dropped for five consecutive years from the historic highs enjoyed for about three years.

So far, it’s only talk, Schmitz said in an interview with the Capital Journal on Monday. But talk can rock markets and can lead to real trade barriers that hurt American farmers, he said.

“I am old enough to remember when we got in a trade war with the Soviet Union,” Schmitz said of the legendary 1980 U.S. embargo on selling grain to the communist Soviet Union, a move made by President Jimmy Carter because of the Soviet invasion of Afghanistan.

(The United States boycotted the Olympics that year, too.)

Using food as a weapon in international affairs went down as a black mark in most people’s books on Carter, who lost the 1980 election to Ronald Reagan, for that and other reasons.

Grain prices to American farmers fell heavily and it changed the world market for decades, Schmitz said.

“It was the same situation,” he said. “The farm economy was going down. It started the same way: just rhetoric that went back and forth.”

But it got to the point where neither side would back down, he said.

It resulted in effects felt still today, he said.

Needing a new source of livestock feed and human food, the Soviet Union turned to Asia and South America and its huge demand sparked the start of farming on a massive modern scale in Brazil and Argentina, Schmitz said.

Still today, Brazil’s soybean production is a main rival for U.S. farmers, he said. “Ever since they have been competitors.”

“If we don’t learn from history, we are doomed to repeat it,” Schmitz said.

Schmitz’s family was growing corn and soybeans even back in 1980 in the southeast corner of South Dakota that was even then kind of in the Corn Belt, when statewide soybean acres were only about 250,000. They have climbed steadily, hitting a record 5.7 million acres last year. And China is a key customer.

“China is just huge. About every third row of our soybeans in the field, nationwide, go to China,” Schmitz said.

About 70 percent of South Dakota’s soybeans leave the state once they are harvested, Schmitz said.

Because of location and rail service, most of South Dakota’s soybeans get shipped west to the Pacific Northwest, by rail, where “a very significant amount” gets shipped to China, he said.

“And we are partners in that,” he said. “The checkoff dollars farmers pay (so much per bushel sold at the grain elevator) have built that market.”

That’s why he and members of the South Dakota Soybean Research and Promotion Council visited China in August 2017.

“I was amazed,” Schmitz said. “They were not the country I had anticipated.”

A state of the art processing facility as big as any in the world, a single port that had storage enough for a third of South Dakota’s entire soybean crop.

Like many farmers across the state, Schmitz uses “no-till” farming, not digging down each year’s crop residue, but keeping the harvested stand and planting a new crop into it, preserving water and soil health. He alternates corn with soybeans, while planting CRP grasses on about 20 percent of his land to provide water and wildlife benefits, and giving bees plenty of flowes to pollinate

Schmitz said he found the Chinese customers for U.S. soybeans to be very savvy and very business-oriented. “We wanted to find out what they were looking for, to find out what we can do to make our products more valuable to them,” he said. “We had great discussions. They are very frank, asking what our weather was like, ‘Can you be reliable?’”

“They use a lot of soy oil for food. But they are really after the protein in soybeans for livestock feed.”

In his open letter to Trump, Schmitz urged him to “reverse the damage” already done to soybean prices and work to keep China from imposing more tariffs on imported U.S. soybeans.

“Years ago I read his book, ‘The Art of the Deal,’” Schmitz said. “And he is doing just what the book described. When he deals with folks he’s very clear in what he wants, makes sure he has the upper hand, so he irritates them to the point they feel frustrated. Then he will say, ‘Let’s sit down and do a deal that will benefit both of us.’ I’m just very concerned that I’m the tip of the spear. If anything goes wrong, we are the first to go down.”

Coming back from China last August to harvest his beans and corn, Schmitz found out the Chinese soybean processors are quite serious as customers.

“Not even six weeks later, a number of those folks we visited with in China came to Sioux Falls and wanted to come to our farms. So they really depend on our crop production. It’s a benefit back and forth, it’s a trade, sharing. We would hate to lose that.”