ANKENY, Iowa -- The USDA is now allowing farmers to apply for bailout funds after their bottom line has been impacted by the ongoing U.S./China trade war.
The government plans to give soybean farmers like Tim Bardole 82 cents per bushel now, and another 82 cents down the road if a trade agreement isn’t hammered out. The max a farmer can possibly get in aid is $125,000. Even with the injection of cash, Bardole says it's not enough.
“I don't think anybody producing soybeans has a choice but to take it whether they want to or not…it's still below break-even” he said.
Bardole says in his area soybeans are at $7.70/bushel. He says that $9.30/bushel is his break-even point. At the moment, the bailout will get him less than halfway there…a bailout he says he doesn't want…but has to take.
“No farmer wants subsidies of any kind. The way we want to make money is trade” he said.
Iowa Soy Association CEO Kirk Leeds says China is more than willing to dig their heels in on a trade deal and aren’t in a hurry to get one done.
“The Chinese have a much longer view of the world history than we do. We think two-year election cycles, they think dynasties” said Leeds.
That's what he says really scares farmers.
“Soybeans have fallen about two dollars a bushel, and we produce somewhere around 560 million bushels, this is a big deal, this really hurts. The bigger impact could be in 2019. If we haven’t fixed this trade dispute with china we could be looking at significant losses for Iowa farmers in 2019” he said.
As the years go on, China can become less dependent on U.S. soy.
“They can’t produce enough for their own, South America currently doesn't have enough soybeans to replace the U.S. but it's possible, because there's a lot of land, rainforests, and grassland that can be brought into production” said Leeds.
Leeds says Chinese executives are pumping money into infrastructure in Brazil to expand the country’s soy production, and in turn, become less dependent on U.S. soy, with or without a trade deal.
If a trade deal isn't struck soon, Leeds warns the relationships China would create with other producers could end with them importing less from the U.S. than they did before the tariffs.