The Real Soy Worry

By ART CULLEN

After President Trump slapped trade sanctions on China, everyone expected that the Chinese would respond with actions against US soybeans. At first, the Communist government retaliated against lesser crops plus ethanol and pork. Ethanol sales to China are not anywhere near our concern over $14 billion worth of soy — and Iowa is the biggest exporter of soy among the states. The Chinese toy with American pork sales a lot, nothing new there. Then, on April 4, Chinese officials announced they will impose a 25% tariff on 106 US products, including soybeans, if the tariff dispute is not resolved.

Even if it does get caught up in a trade kerfuffle, it is most likely a temporary blip, an opportunity to remind the USA of the world’s biggest soy and pork market. The Midwest is where Trump drew his support. It’s no doubt part of the reason that former Iowa Gov. Terry Branstad is ambassador in Beijing.

Consider this:

Chinese leader for life Xi Jinping’s first goal is to feed his people. That’s why he visited Iowa as a young regional technocrat back in the 1980s. It was a key reason he revisited Muscatine just before he was elevated to president in 2012. He and Branstad forged a friendship born of necessity, and it has been kept up. The Chinese agriculture department built a model of an Iowa farm to show how you raise crops and livestock most efficiently. Monsanto and Pioneer are eager to sell seed technology in China. Iowa State University scientists operate labs in China overseen by the seed giants and staffed by Chinese post-graduate students from Iowa State University. They already have our seed technology. We have educated their ag science class. China has no near-term interest in upsetting that vital relationship. Whether Trump knows it or not, neither does the USA nor Iowa. Which is why so many farmers and ag-business folks are worried.

China can slap some tariffs on US soy and drive down the markets temporarily. The same with pork. They will be back buying when they need the soy and pork. That should not be our primary concern.

Our attention should be drawn to the deteriorating quality of our soybean crop compared to higher-quality crops coming out of Argentina and Brazil. We recall a leader of the Iowa Soybean Association several years ago warning about declining oil content in our crops, and of better quality from nations near the equator. Since then, Brazil has made huge inroads into Asian soy markets and already has overtaken us as the leading supplier. That China can even toy with the thought of retaliating on US soy suggests that our product is not best in price or quality.

And that is because of degraded soil.

Iowa State University agronomist Rick Cruse, who runs the Daily Erosion Project, warns that Iowa crop quality is declining because of eroded soil. We are losing an average of two tons of soil from BV County farmland per year. The soil can regenerate itself at half a ton per year. Cruse says it is showing up in protein content in corn and soybeans. He also explains that China’s wheat yield is falling every year because of its own soil loss problems.

Iowa farmers are putting a tariff on themselves by allowing their soil to flow down to the Gulf of Mexico.

It is showing up in trade. Those who worry that trade retaliation will hurt soy prices fail to appreciate how much their price structure has been hurt by heavier erosion wrought globally by climate change, and how that already is damping land values.

That’s the issue to watch. Trade spats come and go. Soil just goes. And then the price. And then the yields. And then the farmer.

Art Cullen, managing editor of The Progressive Populist, won the 2017 Pulitzer Prize for editorial writing in his day job as editor of The Storm Lake (Iowa) Times, which recently also received the Tom and Pat Gish Award from the Institute for Rural Journalism and Community Issues at the University of Kentucky, and the Milton D. Hakel Award for Excellence in Agricultural Communications from the National Farmers Union.

From The Progressive Populist, May 1, 2018

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