Last November, voters expressed a strong preference for President Trump’s ability to manage the economy over that of his opponent. However, the first 10 months of the new Administration have prompted strong concerns from both sides of the political aisle. Farmers have been adversely affected more than most by Trump’s decisions. A good example of this is how his policies are affecting the soybean market, which is extremely important to Maryland’s Eastern Shore.
Soybeans are the second most important crop grown in Maryland, exceeded only by corn in value of production. The Maryland Eastern Shore is the stronghold of the state’s soybean production, with the most prominent counties being Queen Anne’s, Caroline, Talbot, Kent, and Somerset.
President Trump has taken action in two separate policy areas that have had a negative impact on the soybean market. First, one of his first steps as President was to allow Elon Musk (in his own words in February) to “spend the weekend feeding USAID into the wood chipper,” referencing the roughly 90 percent cuts in contracts for non-military foreign aid that the U.S. offers to needy countries.
The U.S. has long supported American farmers by purchasing and sending soybeans abroad to help nations unable to support themselves because of such factors as droughts and poverty. Soybeans sent as aid are used to address worldwide hunger and malnutrition, as well as to provide feed for livestock. The precise numerical impact on soybean exports for this purpose is not yet known, but soybeans are a major component of the U.S. foreign aid system.
The second source of President Trump having upended the soybean market is through his highly controversial tariff policies. His approach to tariffs has been widely criticized by both liberal and conservative economists as inconsistent and erratic, without any measurable strategy or goal. Trump’s aggressive approach towards China–amounting to more than a 57 percent average tariff on Chinese goods–has created very serious repercussions for U.S. soybean producers.
China is responsible for purchasing 52 percent of U.S. soybean exports, accounting for $12.6 billion to U.S. farmers last year. In turn, soybean exports represent more than half of US production, so changes to the overseas picture have a profound effect on the total soybean market. Retaliating against Trump’s moves against it, China had been cutting its purchases of U.S. soybeans almost in half since Trump initiated his attacks on the country. Since May, China has totally stopped U.S. soybean purchases, in addition to instituting a 37 percent tariff on U.S. soybean imports.
It gets worse. Even though Trump has agreed to bail out Argentina’s flagging economy with $20 billion as a means of supporting the country’s far-right President heading into an election, Argentina has turned around and dropped its tax on its own soybean sales, prompting China to make a massive one-million-ton purchase from that nation. This move signals China’s attempt to vastly reduce, if not simply drop, the U.S. as a soybean supplier on a permanent basis. In response, Trump’s Agriculture Secretary, Brooke Rollins, has said American farmers need to stop selling to “a country that isn’t aligned with our values,” promoting a dubious economic plan to place ideological constraints on America’s farmers.
How badly Eastern Shore soybean producers will be hurt by Trump’s aid and trade policies remains to be seen, but the outlook is not positive. Even though Maryland Eastern Shore soybean farmers benefit from high demand from nearby domestic poultry producers, the harm to farmers will likely be significant. Why? Because U.S. soybean exports to China flow from both the East and West coasts of the U.S., Eastern Shore soybean farmers will now likely see greater competition from producers in nearby states. For example, soybeans are Virginia’s top agricultural export, valued at more than $1.4 billion.
Furthermore, this competition will put downward pressure on already low prices for this commodity, which has fallen from $13/bushel a few years ago to $10 in the current market. Farmers’ profit picture at this moment is somewhere between minimal to non-existent. Further darkening the picture ahead, Trump’s new tariffs on foreign steel and fertilizer are simultaneously raising production costs for soybean farmers.
Soybean production is at a high level this year, with storage facilities nearly full and there is increasing concern that exporting firms will stop purchases in light of the declining market.
President Trump has said that he wants to help farmers out with funds collected by the U.S. on foreign imports subject to his tariffs. The Trump Administration has said it soon will make an announcement to this effect. Sources also indicate that this plan is still under discussion at this writing. Trump spokespersons claim that it will take several months before any money might be forthcoming.
The bottom line for Maryland Eastern Shore soybean farmers is that even if bailout money materializes, it is not what is needed. American Soybean Association President Caleb Ragland has called the offer a “Band-Aid.” Besides, it being an insufficient amount to account for losses already incurred, he indicated that American soybean producers need additional markets and higher prices–exactly what the Trump trade and aid policies are closing off.
As for our own Representative Andy Harris, there is no evidence he has made any attempt to formulate a solution to assist Eastern Shore soybean farmers (or, if he has, there is no evidence he has been effective in doing so).
Both President Trump and Representative Harris frequently claim to support relieving agricultural (and other) markets from government interference. Ironically, in the case of soybeans, the government programs they have initiated are, in fact, the cause of a powerful negative predicament for Eastern Shore farmers and their markets.
Wilson Dean was the Owner/President of a publishing and consulting firm for 34 years, providing economic, energy, and environmental policy and pricing forecasts for global clients. He lives in Talbot County, enjoying kayaking, wildlife, and spending time with his grandchildren.
