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Trade talks testing North Dakota farmers

BISMARCK — North Dakota farmers are feeling the crunch of a combination of things this spring, and maybe the hardest part is that they can’t control any of them.

“We had a terrible winter, a terrible fall and terrible spring,” said Nancy Johnson, executive director of the North Dakota Soybean Growers Association. “We don’t want to add to that stress.”

But there is additional stress, and the lingering trade talks with China are affecting producers on many levels. Most often mentioned are soybeans, even though the trade negotiations are a much broader topic. Only about 20% of what China normally buys from the U.S. has been sold this year, North Dakota Farmers Union president Mark Watne said. A USDA report for the week ending May 9 showed that no soybeans left the Pacific Northwest. It was the third week in a row. The price of soybeans is at a 10-year low.

Watne said farmers aren’t too optimistic about planting soybeans this spring. They have other options, he said, but when they look at those options the outlook isn’t much brighter. And they have to plant something.

“Everything is down,” he said. “The whole market is down over this thing.”

The trade talks are about much more than tariffs, said Sen. Kevin Cramer, R-N.D. China is a big market, but it’s also one that people see as a threat for the theft of intellectual property, manufacturing products and genetics. He said most of the input he’s received from ag producers and ag businesspeople is in favor of staying the course President Donald Trump has set.

“Nobody wants to, 10 or 20 years from now, wish they’d handled this and stood up to this thing when we had the chance,” he said.

Cramer said the input he’s getting from ag producers depends on each one’s personal situation. For some, the talks are a way to a positive long-term outcome. Others, while they might see the positive too, have a different financial footing.

“While you’re dealing with the long-term, a farmer can be one season from complete disaster and from losing their business, so the short-term is the long-term a lot of times for farmers,” Cramer said.

The talks have gone on longer than Cramer expected and he doesn’t see a clear end in sight. His greatest fear, he said, is the possibility of China finding a commodity source other than the U.S.

“The thing we have going for us is the quality of the product, particularly a product like soybeans, because there aren’t that many producers of soybeans in the world,” Cramer said. “What the U.S. produces for them is pretty spectacular.”

The talks have gone on longer than Sen. Jim Dotzenrod, D-Wyndmere, expected, too. He sees the route taken as a country to impose tariffs on China as a mistake. It might have worked if it had been done in concert with other countries, he said.

“The U.S. by itself in this confrontation is not going to be able to make China make fundamental changes,” Dotzenrod said.

Dotzenrod, a farmer, said there is “more support than you’d think” for the idea that China has not played by the rules, but farmers still need to make enough money to pay their operating loans. China buys nearly five times more U.S. soybeans than the next largest customer, he said. Without China, there is too much grain and not enough demand.

Cramer said recent developments such as the Japanese lifting restrictions on American beef and agreements among Canada, Mexico and the U.S. on steel and aluminum tariffs are reasons for optimism.

Watne said it could take considerable time, possibly two or three years after a trade deal is signed, for the soybean market to come back. Low interest rates are the only thing keeping the current situation from looking like the 1980s, he said.

“It’s out of our control,” he said.

Johnson said the market facilitation program provided some relief for producers, but the talk of support payments gives her the feeling that the talks won’t end soon. Cramer said China has more to lose than the U.S. and the only course of action now is to continue the talks.

“At this point the best outcome is winning the trade war, and quitting now would be worse than if we had never started,” Cramer said. “The only thing better would have been if some former president a long time ago would have stood up to them.”

Rep. Kelly Armstrong, R-N.D., sees the USMCA trade agreement as an important factor in reaching an agreement with China. A recent beef agreement between the U.S. and Japan, changes in labor laws in Mexico and the removal of steel and aluminum tariffs make the passage of USMCA seem more likely than it did a week ago.

"It feels like there's some momentum down here now," Armstrong said.

Sen. John Hoeven, R-N.D., echoed Armstrong's thoughts on USMCA and said it's key that the U.S. gets access to markets. The challenge is getting that agreement in place quickly.

"I think any trade agreements we can get done, as well as getting our trading partners to work with us to put pressure on China, is good," Hoeven said.

China's delays have slowed the trade talks, and those delays have in turn hurt American ag producers. Hoeven said he's been pushing the administration and USDA for another round of assistance if the delays continue. It would not only be for the benefit of farmers, he said, but would send a message to China that the U.S. is ready to do what is necessary to prevail in the trade talks.

"They sell us an incredible amount of product, but they need to start treating us fairly so that we can export into their market as well," Hoeven said.