As Branon Osmundson harvests soybeans in Randall, Iowa, the combine’s blades cut the stems, pods are pulled apart and the hard yellow beans fill the hopper. Osmundson’s cousin pulls a matching red Case I-H tractor up alongside, positioning the attached grain cart to catch the beans as they’re augured out of the combine.
Osmundson is relieved to be in the field on a windy, clear day because he waited through weeks of heavy rain before his crops were dry enough to harvest. Beyond the rain, stubbornly low crop prices have been exacerbated by the trade war that decimated the once-lucrative Chinese market for soybeans. China used to be the biggest buyer of U.S.-grown soybeans. But this year, in retaliation for similar U.S. tariffs on Chinese imports, China imposed a 25 percent tariff on imports of U.S. soybeans, resulting in a dramatic drop in shipments.
Meanwhile, the U.S. Department of Agriculture still predicts a record soybean harvest, which only further complicates the situation.
Osmundson says the price he will get is $2 per bushel lower than last year because of the uncertainty in the export market. That could end up costing him tens of thousands of dollars.
“It’s one more thing that we have pretty much no control over, it seems like, that affects us greatly,” he says. “So I guess we’re just kind of rolling with the punches on this.”
And the punches keep coming. The new tax law that reduced corporate taxes also changed the rules for cooperative businesses — and many farmers sell their crops to the local grain cooperative. Keri Jacobs, an agricultural economist at Iowa State University, says the law’s changes make deciding whether to stick with a co-op a dicier proposition for some farmers.
“That’s what’s hard to nail down,” Jacobs says. “And that’s where farmers are in their marketing decision process at this point.”
For example, a farm with lots of employees might be better off selling to a private ethanol plant, while one with no employees might benefit from co-op membership. Mike Helland, who farms near Huxley, Iowa, and serves on the board of Heartland Co-op, says even though he has been paying close attention, he still doesn’t understand how the changes will affect his bottom line.
“I’ve contacted my accountant about it and he’s still going to school and learning about it, so he didn’t feel comfortable at this point advising,” Helland says.
For now, Helland is more concerned with bringing in his crop. “Most of us will be glad when this year’s just over,” he says.
The Agriculture Department promised farmers $12 billion to help offset the tariff impact, but Osmundson says that is not a real fix.
“That’s kind of a short-term solution to a very maybe possibly long-term problem,” he says. “But we are in an election year, so I figured there would probably be something like that coming out.”
At the Key Cooperative elevator in Roland, Iowa, employee Steve Webb cranks open the hopper on a semi to let soybeans cascade into a pit. From there, they’ll be conveyed to a nearby storage bin. Iowa State University economist Chad Hart, who closely follows grain markets, says higher prices are on the horizon.
“As we look out into the spring of 2019, we do see some reasonable prices out there,” Hart says. “But that means we’re going to have to hold this crop for six, seven months to get there.”
And with all the rain, quality is a concern, he says. Some elevators may be storing soybeans that can’t sit that long. Meanwhile, Mexico, Malaysia, Indonesia and even Argentina have stepped in to buy U.S. soybeans.
“China went and bought a lot of beans from Argentina,” he says, which “left [Argentina] a bit too short. They had to come into the world market. They bought some from us. And so you’re seeing some really interesting trade flows.”
But still, about 200 million bushels that would have gone to China need to find another customer.
On dry days, farmers are razor-focused on just getting in this late crop. But with tariffs, taxes and quality to worry about, this nerve-wracking season isn’t going to end when the last beans hit the bin.