A truce in the field

Chinese trade buyers, Kansas farmers, feel the brunt of trade war

During his trip to Kansas City, President Donald Trump asked farmers for patience amid his trade war.

A day later, 225 miles to the west in a sorghum field in central Kansas, it didn’t take long for farmer Matt Splitter and a Chinese trade team to reach their own truce.

Not that either party has the power to end the dispute anytime soon, Splitter, 32, said.

“I’m with you,” the fifth-generation farmer told the small group of Chinese buyers at his farmstead near Lyons. “I don’t like it either. I wasn’t elected president, either.

“But, unfortunately for us, standing here together, we are the ones suffering from it,” Splitter said.

Trade relief offered

Trump is standing by his campaign promise to confront China about its trade imbalances and unfair policies.

Sorghum, however, has had a growing relationship with the country since the market there opened in 2013. Now, the crop is among the first victims of the trade war’s crossfire. Splitter said prices dropped about 40 cents in February after China launched an anti-dumping probe and Trump slapped steep tariffs on the imports of solar panels and washing machines. Prices have stayed at those lower levels.

Tensions escalated July 6 when the U.S. imposed a 25 percent tariff on $34 billion in Chinese goods. China retaliated, imposing an equivalent tariff that largely affects the U.S. agriculture sector, including sorghum, corn, soybeans and cotton.

Kansas is the No. 1 sorghum producer in the United States with farmers harvesting more than 200 million bushels in 2017. China is the nation’s biggest buyer. Last year, the country imported a majority of the crop, worth $1.1 billion.

Splitter said other commodities also are victims of the trade battle. The area’s soybean prices have dropped $2 to $2.50 because of the tariffs.

Soybeans are one of the largest U.S. products exported to China. Splitter said there is too much supply to fill the demand domestically. Now other big soybean producers like Brazil are stepping into the U.S. share of the market.

On July 24, the Trump Administration announced $12 billion in emergency aid for U.S. farmers feeling the burden of the trade war.

Splitter called it “a step in the right direction to alleviate some of those issues.”

Farmers have financial obligations, he said. Moreover, the trade war comes amid an already depressed farm economy.

In Kansas, net farm income has dropped by more than half since 2013, according to the Kansas Farm Management Association. Commodity prices that hit record highs five or six years ago have declined, causing some farmers to struggle to make payments.

The bailout will help, Splitter said, but added, “It won’t fix it. The only thing that will fix it is ‘let’s get these markets back up. Let’s be able to trade in the world market again.’ But it is encouraging to see the administration recognizes it.”

Sign up for HPJ Insights

Our weekly newsletter delivers the latest news straight to your inbox including breaking news, our exclusive columns and much more.

“Send a letter to Trump”

Splitter and the trade team quickly formed a friendship. The group asked Splitter questions on crop insurance, the size of his farm and where he markets his crop. They took pictures of the crop as Splitter gave them a lesson about how the crop grows and pollinates.

Splitter also pointed out the silage trucks driving by, noting some farmers are chopping their corn for silage because it is so dry.

He told them despite the export woes, he is able to take his corn and sorghum to an ethanol plant located 7 miles away.

Zhongda Liu, business manager for one of China’s top three grain buyers, said about 80 percent of U.S. sorghum is used for swine and poultry feed. Another 20 percent is for the growing liquor market.

Liu said China likes to buy U.S. sorghum.

“Importing the US grain is a better choice because of price and quality,” he said.

Currently, China is using its large reservoir of domestic corn. The country also purchases barley from Australia and Europe, Liu said.

“I’d like you to buy mine,” Splitter said, adding, “I’m a small guy in the whole picture, but I appreciate your willingness to explore buying our sorghum.”

Splitter asked the Chinese team what they thought he could do to help.

“Send a letter to Trump,” one member said through translation.

Forging strong relationships

Bryan Lohmar, the country director for the U.S. Grains Council’s Beijing office, said the trip also included stops at farms and shipping areas in Texas.

The common theme of the trip, he said, is that both sides are optimistic the trade war can be resolved.

Pat Damman, field director for Kansas Sorghum, said the visit was about building relationships.

“It’s our job to keep the relationships we have strong, and that is exactly what we are trying to do this week,” he said. “With all the work we have put in China the past decade, we are at a crucial point right now.”

Damman added it was good for the team to see what was going on in farm country beyond the condition of the sorghum grown in the fields.

At a stop at Ag Mark in Concordia, the team learned that 85 percent of the cooperative’s sorghum was exported last year.

Several farmers along the way also reiterated the importance of trade to their bottom line, Damman said.

He said he thinks most farmers understand Trump’s intentions to restructure U.S. trade policy.

“It definitely needed to be fixed, and everyone understands that,” he said. “It’s just the economic situation we are in, it is just a bad time for it to happen.

“Truthfully, we will come out better off, but we have to live through it first.”

Splitter, too, said he is understanding. Everyone evaluates, at some point in time, the position of his or her business. That’s what he sees Trump doing with trade.

“I hate that the American farmers are a bargaining chip in the deal,” Splitter said. “I really don’t care for that. But we hope this is short lived. The ultimate goal is to see the world markets back open and to be able to sell our commodities on the world market again like they were, if not better.”

Amy Bickel can be reached at 620-860-9433 or [email protected].