Harvesting in a trade war: U.S. crops rot as storage costs soar

By Mark Weinraub and P.J. Huffstutter

 

FILE PHOTO: Eric Honselman opens a shed which holds 75,000 bushels of corn he was forced to store after his regular bins were filled to capacity with corn and soybeans on the family farm in Casey, Illinois, U.S., October 25, 2018. REUTERS/Mark Weinraub

 

(Reuters) - U.S. farmers finishing their harvests are facing a big problem - where to put the mountain of grain they cannot sell to Chinese buyers.

 

For Louisiana farmer Richard Fontenot and his neighbors, the solution was a costly one: Let the crops rot.

 

Fontenot plowed under 1,000 of his 1,700 soybean acres this fall, chopping plants into the dirt instead of harvesting more than $300,000 worth of beans.

 

His beans were damaged by bad weather, made worse by a wet harvest. Normally, he could sell them anyway to a local elevator - giant silos usually run by international grains merchants that store grain.

 

But this year they aren't buying as much damaged grain. The elevators are already chock full.

 

"No one wants them," Fontenot said in a telephone interview. As he spoke, he drove his tractor across a soybean field, tilling under his crop. "I don't know what else to do."

 

Across the United States, grain farmers are plowing under crops, leaving them to rot or piling them on the ground, in hopes of better prices next year, according to interviews with more than two dozen farmers, academic researchers and farm lenders. It's one of the results, they say, of a U.S. trade war with China that has sharply hurt export demand and swamped storage facilities with excess grain.

 

In Louisiana, up to 15 percent of the oilseed crop is being plowed under or is too damaged to market, according to data analyzed by Louisiana State University staff. Crops are going to waste in parts of Mississippi and Arkansas. Grain piles, dusted by snow, sit on the ground in North and South Dakota. And in Illinois and Indiana, some farmers are struggling to protect silo bags stuffed with crops from animals.

 

U.S. farmers planted 89.1 million acres of soybeans this year, the second most ever, expecting China's rising demand to give them better returns than other bulk crops.

 

But Beijing slapped a 25 percent tariff on U.S. soybeans in retaliation for duties imposed by Washington on Chinese exports. That effectively shut down U.S. soybean exports to China, worth around $12 billion last year. China typically takes around 60 percent of U.S. supplies.

 

The U.S. government rolled out an aid program of around the same size - $12 billion - to help farmers absorb the cost of the trade war. As of mid-November, $837.8 million had been paid out.

 

Some of that money will pass from farmers to grain merchants such as Archer Daniels Midland Co <ADM.N> and Bunge Ltd <BG.N>, who are charging farmers more to store crops at elevators where there is limited space. Bunge and ADM did not respond to requests for comment on storage fees.

 

The storage crunch and higher fees have boosted revenues at grain elevator Andersons [ANDE.O], Chief Executive Officer Pat Bowe said in an interview.

 

"It's paying a grain handler to store - it's the old-fashioned way to make money," Bowe said.

 

These are also boom times for John Wierenga, president of grain storage bag retailer Neeralta. Sales of their bags - white tubes up to 300 feet now littering Midwest fields - are up 30 percent from a year ago.

 

"The demand has been huge," Wierenga said. "We are sold out."

 

HIGHER FEES

 

Farmers are feeling the pinch. Those in central Illinois could pay up to 40 percent more than in previous years to store crops over the coming weeks, agricultural consultant Matt Bennett estimated.

 

That amounts to between 3 cents to 6 cents a bushel, Bennett said, a painful expense for a crop that was already expected to deliver little income to farmers.

 

Storage rates are swinging wildly, depending on the elevator location. Grain dealers at rivers typically charge more than their inland counterparts because they are more dependent on export markets.

 

At some Midwest river terminals, farmers were paying 60 cents a bushel to store soybeans until the end of the year - more than twice as much as a year ago. Some commercial terminals are charging farmers to just drop off their soybeans.

 

The trade war has only exacerbated the strain on storage, which has been a persistent problem in recent years due largely to a worldwide oversupply of grains.

 

Even before this fall’s harvest, around 20 percent of total grain storage available in the U.S. was full with corn, soybeans and wheat from previous harvests, according to the U.S. Department of Agriculture. That was the highest in 12 years for this time of year.

 

Some grain merchants are also charging additional fees for farmers who deliver less-than-perfect soybeans, said Russell Altom, a soybean farmer and senior vice president of agricultural lending at Relyance Bank in Pine Bluff, Arkansas.

 

"I've never seen things this bad," Altom said. "I know several farmers who hired lawyers, to see if they can sue over the pricing and fees issues."

 

Eric Maupin, a farmer in Newbern, Tennessee, said he was facing so-called dockage rates of between 60 cents at $1.20 per bushels at Bunge Elevators in his area - more than three times as high as a year ago.

 

"Damage can be anything - a split bean, one that's too small, one that's too big - whatever," Maupin said.

 

Some farmers are pulling farm equipment out of barns to make room for the overflow of grains.

 

After packing nearly half a million bushels of corn and soybeans in their usual steel bins, Terry Honselman and his family found some additional space in 35-year-old shed on their Casey, Illinois, farm.

 

Most years, the building protects farm equipment and bags of seed. Now, it is stuffed with 75,000 bushels of corn.

 

Like others, Honselman is banking on a resolution to the trade war before this spring - when he says he will need the space back for his planting supplies.

 

(Reporting by Mark Weinraub in Chicago and Casey, Illinois; and P.J. Huffstutter in Chicago; Editing by Caroline Stauffer, Simon Webb and Paul Thomasch)

 

-- © Copyright Reuters 2018-11-22

"Trade wars are good and easy to win."

Typical Trumpenomics - the farmers who voted for Trump are getting meager handouts in compensation and the big corporations are getting the lions share of the government's 'bailout'. 

 

It seems that the republicans love corporate welfare but can stand the thought of actually helping the poor, working or middle-classes!

I don't understand, Australian agriculture is in the grip of a drought, what would be the cost of buying at a low price & shipping this feedstock to Oz for the cattle & pigs?

Most of it will go to cattle feed, this is why the US has the best beef quality in the world...

As always with Hunpty Dumpty; Words and reality have trouble matching up. 

 

he made a great show of claiming there will be 12 billion for farmers caught in this. However so far roughly 840 million has been sent out. In our state, among the fruit growers, complaints about how do we apply? Where do we apply ... Help.? 

 

Maybe Humpty will give a tweet about this next bowel movement.

1 hour ago, Tailwagsdog said:

I don't understand, Australian agriculture is in the grip of a drought, what would be the cost of buying at a low price & shipping this feedstock to Oz for the cattle & pigs?

that smacks of socialism, we can't be having that

When you leave important decisions to a childish mind you have to expect problems. Go on America, vote for him again to show your dislike for these very people benefiting!

 

According to the latest reports, Trump has sidelined the hardline negotiators with the Chinese. He can't go into the next election with this situation in place. So we can expect to see a settlement pretty much like the one that is supposed to replace NAFTA. Very little of substance will be accomplished and Trump will proclaim a victory.

Donald Trump’s $12 billion bailout of farmers who were hurt by his trade wars has been a big failure

 

President Donald Trump’s $12 billion bailout of farmers who had been hurt by his trade wars has been a massive bust politically — and a New York Times report has found that very little of it has gone to the struggling farmers who need it most.

 

According to the Times, the bailout program “has done little to cushion the blow” of the president’s trade wars, “with red tape and long waiting periods resulting in few payouts so far.”

 

In fact, the Times estimates, just $838 million of the $6 billion worth of bailout funds that have been authorized so far has been paid out.

 

https://www.salon.com/2018/11/19/trumps-12-billion-apology-to-farmers-hurt-by-proves-to-be-a-dud_partner/

 

 

Tired of winning yet?

2 hours ago, ezzra said:

Most of it will go to cattle feed, this is why the US has the best beef quality in the world...

 

You’d have to be a murican to believe that.... which is ok.... but please know, your wrong.

 

https://www.telegraph.co.uk/food-and-drink/features/worlds-best-sirloin-steak-revealed/

 

25 minutes ago, Tug said:

Tired of winning yet?

You would think that they would be tired of 'winning' after 1975.

 

There is only so much comfort food  that you can eat in any given century.

I think everyone's praying for some sort of trade deal/resolution between Trump and Xi next week in BA? Interestingly enough, trade hawk Peter Navarro has been sidelined.

 

The market sell-off(s) might weaken the Trump position somewhat?

 

White House trade adviser Peter Navarro ‘excluded from Xi Jinping-Donald Trump dinner’

 

https://www.scmp.com/economy/china-economy/article/2174333/white-house-trade-adviser-peter-navarro-excluded-xi-jinping

 

 

The odds that the US and China don't reach a trade deal just got higher: Cramer

 

https://www.cnbc.com/2018/11/19/cramer-odds-of-no-us-china-trade-deal-just-got-higher.html

 

 

Sell the Rumor? Trade Negotiations and Soybean Prices

 

A recent rally in soybean prices rested on the potential for a trade deal between the United States and China. A few rallies occurred since the escalation of trade issues between the U.S. and China in June. According to University of Illinois agricultural economist Todd Hubbs, the question becomes should one sell on rallies associated with trade negotiations. 

 

https://www.agweb.com/article/sell-the-rumor-trade-negotiations-and-soybean-prices/

3 hours ago, edwinchester said:

"Trade wars are good and easy to win."

Famous last words !

 

(Wishful thinking, I wish these were his last words. Waiting anxiously)

Indeed..one would wish that these infantile palookas would go away.

 

One wonders what their education system is all about-it obviously isn't about having an empire because they are too infantile to grasp even the bare essentials of having such a thing.

The story in the OP - utter madness after reading through it.

Utter madness.

Meanwhile the middlemen and storage facilitators get fat (read rich).

Bit like over here and pretty much everywhere else, middlemen (and supermarkets) make the money and the farmer gets Jack ShIt.

As someone mentioned, in a sensible world, this stuff would be sent at cost price to drought regions like Australia as cattle feed instead of being ploughed under.

Meanwhile in Yemen & Africa, children starve...........

4 hours ago, ezzra said:

 the US has the best beef quality in the world...

They don't, Japan (Kobe) is much better

Good idea then Donald,the other Donald with the surname Duck could do a better job than this fool.

4 hours ago, ezzra said:

Most of it will go to cattle feed, this is why the US has the best beef quality in the world...

But can not sell it due to Trumps trade war...

Question:

(Reuters) - U.S. farmers finishing their harvests are facing a big problem - where to put the mountain of grain they cannot sell to Chinese buyers (?)

 

Answer:

... into the Trump-Tower

 

13 minutes ago, marko kok prong said:

Good idea then Donald,the other Donald with the surname Duck could do a better job than this fool.

Maybe Trump's surname should be changed to something that rhymes with duck...

        Its sickening to see such waste, when the price of bread has shot up in recent years, due to alleged shortfalls in grain.

The government will bail the corporate farmers out. 

17 minutes ago, puck2 said:

Question:

(Reuters) - U.S. farmers finishing their harvests are facing a big problem - where to put the mountain of grain they cannot sell to Chinese buyers (?)

 

Answer:

... into the Trump-Tower

 

 

Good idea.... except for one big problem....

 

Put the grain there, and before you know it, it's all going to be eaten by the rats who own the place... 

16 minutes ago, grumpy 4680 said:

        Its sickening to see such waste, when the price of bread has shot up in recent years, due to alleged shortfalls in grain.

Ah...

 

 

3 hours ago, Tug said:

Tired of winning yet?

He's won for the highest trade deficit ever! With China! ????

 

https://www.census.gov/foreign-trade/balance/c5700.html

3 hours ago, Tug said:

Tired of winning yet?

Trump has had sooooo much winning as of late.  Let's see, the mid term shellacking, stock market meltdown, Ivanka e-mails, "raking" America great again, thousands of military vets not getting paid their benefits, stern lecture from Chief Supreme Court Justice, Abuse of Power allegations, losing asylum ruling in the 9th circuit, and finally, being the recipient of a new nickname--"Saudi Arabia's bitch."  So much winning. 

5 hours ago, ezzra said:

Most of it will go to cattle feed, this is why the US has the best beef quality in the world...

Ha! Now it will be tainted with glyphosate courtesy of Monsanto! Anybody for a cancer burger?!

5 hours ago, bristolboy said:

According to the latest reports, Trump has sidelined the hardline negotiators with the Chinese. He can't go into the next election with this situation in place. So we can expect to see a settlement pretty much like the one that is supposed to replace NAFTA. Very little of substance will be accomplished and Trump will proclaim a victory.

I'm sure that is his game plan, but he better act fast.  Once new suppliers and transportation links are established the buyers tend to stick with them.  Specifically, once Chinese buyers have become comfortable with buying from Brazil and other countries, US farmers will have an uphill task to win back market if and when tariffs are lifted.

 

The 2018 election showed that many farmers will accept a few months of hardship, but will they be so forgiving if they are still losing money, and possibly their farms, in 2020?