Old but true: Price maker vs. taker

I find this to be a very interesting time in the agricultural economy. I have received calls in the past week from folks who have called it quits—selling machinery and finding someone to farm their land.

In fact, they are doing that because they have neighbors the bank is pulling the plug on. All inputs are high and prices are too low; there is no question about it. While I also know farm families that are doing some sort of niche programs and are doing fine, across the board it is simply a tough time to be farmer and to keep the faith that great times are ahead. However, there is one little bit of information (factual or not) that a major trading partner is going to adjust the tariffs on imported United States farm commodities that has everyone hitting the panic button. Don’t hit the panic button.

Yes, China has been trying to be the trading bully on the playground. It is like Eugene Graner of Heartland Investor Services told me on my Rural Route Radio program, “We think we have experience in these things and we are 250 years old. Meanwhile, China has been at it for 2,000 years.” Ag media has really dropped the ball in the past two weeks getting the real information presented. Instead of researching and talking to the people that know, they have just incorrectly reported the fear along with the average mainstream media.

For example, did you know that China already had what it calls a Value Added Tax of 17 percent on U.S. soybeans and 11 percent on wheat? Chinese may not call it a tariff but it is still a tariff. Did you know that all countries in the world can import grain into China with 2 percent foreign matter except the U.S. which is limited to 1 percent? Did you know that China currently owns a third of the U.S. pork production in the name of Smithfield Foods? As for beef, did you know that the poorly crafted existing trade deal with China allows only about 0.05 percent of our production to qualify for import? None of this leads to a fair trading plan with China and yet instead of sharing the real details, ag media has run with the fear-mongering stories cooked up mostly by the agriculture commodity groups in agriculture. I think it is time to ask all of them why they would do that instead of doing what is best for their farmers/ranchers for the future.

I realize that trade is a tough one for anybody who is not involved on regular basis. And I am not pretending to be an expert on the issue. However, thanks to Gov. Pete Ricketts for leading our trade delegation to Japan in September, I have a better handle on the situation than I ever did before I went on that trip.

I know that too many of us in farm country are too quick to make a deal for fear of missing out instead of negotiating the right deal for the long term. I also know that within one week of the threat of China hitting soybeans with a trade war, the nearby contract for soybeans set a contract high. I also know that Argentina, the world’s third largest exporter of soybeans, bought U.S. soybeans this week for the first time in 20 years. I know that the Netherlands and Germany again bought soybeans from us instead of Brazil for the first time in a long time. My grandfather and my father never told me that on the farm everything will always go perfectly but they did say you have to stay the course and do the right thing over a period of time. Well my friends, marketing our products to the world is not without a storm but you weather it and we grow stronger from the toils of our previous years.

I actually find it very interesting that the first voice of reason on all of this China trade discussion did not come from any ag media publication instead it was the Wall Street Journal on April 6, 2018, in a piece entitled “Trumps Trade Tactic Might Work.” This article clearly lays out what I am saying here that when it comes to trade negotiations it is all about negotiations, not just caving in to what the customers wants. In fact, I think this is very clearly a signal to all of us in the food production business. We have all been too quick to allow the U.S. customer to tell us how we will “sustainably” produce their supply of food. Really folks. Wal-Mart doesn’t know the first thing about sustainable food production so why do we sit down and listen to them. They are truly the same bully domestically that China is globally.

Let me remind you that in the past 100 years we have moved the efficiency meter on American agriculture more than any other country in the world. In 1900, it required 5 acres of land to produce enough food to feed one person and today it takes less than a third of an acre. It was the work ethic and innovation of the American farmer that made that happen not some food marketing guru who thinks nitrogen is a greenhouse gas that needs to eliminated.

The other part of the discussion that needs to begin is happening in Australia right now. In my five trips to Australia, I did learn one thing that should cause all of us to take notice. China is buying food production systems. At one point in the past year, the Australian government issued a caution and even put restrictions on China purchasing Australian farms. Last week the Sydney Morning Herald penned a story about the very topic.

“The amount of Australian farm land owned by Chinese interests has surged tenfold in the past year, climbing above 14 million hectares or 2.5 percent of all agricultural land.”

We cannot forget that we have built something very significant in the world of food production. We continue to expand the number of mouths we have to feed daily. We have the ability to convert the God-given resources into the essentials of life more efficiently than any other country in the world. So why would we sell ourselves short when it comes to “marketing” the product of our toils? We simply need better negotiations at home and abroad for the high quality, safe products we produce instead of simply being a price taker. Yes, it’s time we finally become the price makers.

Editor’s note: Trent Loos is a sixth generation United States farmer, host of the daily radio show, Loos Tales, and founder of Faces of Agriculture, a non-profit organization putting the human element back into the production of food. Get more information at www.LoosTales.com, or email Trent at [email protected].