Trade War Stories
Sometimes words spoken years ago still ring true. Just as problems in our food supply system become more apparent, Dakota Resource Council interviewed farmers and ranchers across North Dakota to hear about their experiences as producers in these changing times. COVID-19 has been an economic disaster for our farmers and ranchers but real problems for farmers began before the pandemic when the Trump administration decided to disrespect and grossly underestimate the power of our largest trading partner, China. This futile effort to re-establish American dominance in the region caused unintended consequences and collateral damage to our nation’s farmers. In this the first part of our 3-part series, we present “Farmers and Ranchers in Crisis: Part-1 The Trade War Stories.”
Let’s meet some DRC farmers and ranchers
Tyler Stafslien
Tyler is a family farmer that lives in Makoti, North Dakota about 20 miles southwest of Minot, ND. He lives with his wife and two children on the farm that he inherited when his father died in 2003. Tyler never expected to become a farmer but his sense of duty and love for the land has kept his 4th generation family farm running.
Travis Anderson
Travis lives outside of Warwick, North Dakota which is south of Devils Lake. Travis and his wife Karen farm 3,000 acres that are a combination of soybeans, lentils, sunflowers, and corn. They also raise 200 head of cattle. Travis is an independent farmer and a skeptical man by nature who has been farming for 38 years.
Bill Hejl
Bill’s family lived in Amenia, North Dakota until 1962 when they moved 2 and a half miles to the farm his Mom still calls home. With 40 years of farming under his belt, Bill recently retired and passed his beet, soy, and corn operation down to his son John. A retired ND Air National Guard Lieutenant Colonel, Bill might be soft spoken, but he’s never been quiet when it comes to standing up for farmers.
Jim Dotzenrod
Jim farms with his son outside of Wyndmere, North Dakota. He started farming independently over 30 years ago when he finished his service on active duty with the US Air Force. As a North Dakota State Senator and former nominee for North Dakota Ag Commissioner, Jim is well versed in agricultural policy in the state of North Dakota. After interviewing him it’s clear Jim feels that he, like every other agricultural operator in the state, has lost income and markets because of bad trade policies pushed by the current administration.
The Good Times
Farming has always been cyclical in nature. Surprisingly, this crisis has roots that can be traced back to the early 2000s, which are considered good years for farmers. The Obama administration did not renew the Conservation Reserve Program, which paid farmers to take environmentally sensitive land out of production to reduce erosion, protect the soil, and provide wildlife habitat. This caused farmers to put thousands of acres back into production. Most farmers planted corn, chasing high corn prices and soon after, soybeans, to accommodate Chinese market demand. America enjoyed a near monopoly on the Chinese soybean market enabled by the US’s infrastructure that could accommodate the high volume of soybeans heading to the Pacific Northwest Market for export. Before the trade war, farmers reaped the benefits of high prices and a hungry market.
“Some of the policies during the Obama Administration were good, we had record high prices when he was President. I wouldn’t say it was because of anything he really did. I think it was just of perfect conditions with some droughts and a lot of ethanol plants coming online. The demand was there and it just kind of steamrolled or accumulated to where everything was decent. Later on in the years as we caught up production caught back up the markets got saturated. Idle CRP acres that probably shouldn’t have been planted created a surplus we now can’t get rid of.”
-Travis Anderson
An Uneasy Alliance
The United States has always had a rocky yet necessary relationship with China. President Nixon was the first president to visit the country after the communist revolution of Mao Tse-tung. Sensing a rift between China and the Soviet Union the United States moved in to try and get China to open up economically. Capitalist United States has been at odds with communist China because of human rights concerns, as well as its political, and economic ideologies. But as trade partners, one has always had something the other has wanted. The United States is interested in Chinese goods which are produced cheaply and imported, and the United States has been able to produce and sell the food that China needs to sustain their 1.4 billion people. This alliance was useful at first, but the dynamic of power slowly started to change.
“We should be able to live on trade. Farmers have been concentrating for the past thirty years to create these win-win situations with our customers. Our customers are not just getting a high quality crop, they’re getting some good advice on the entire process to turn it into very good nutritious food. We’ve put a lot of effort in our soybean and corn grower associations to try to create a win-win situation for our customers. So for an Administration to just blow up our relationships and set in motion a process of “demand destruction” when there were other alternatives available, it’s a huge multi year set back for all American agriculture.”
~Jim Dotzenrod
China’s Rise to Power
It’s no secret that when China and the USA first entered trade negotiations China was economically inferior to the US in almost every way. The US entered the agreement with the thought that economic influence would be the key to turning China into a capitalist nation that they could control economically. What they didn’t expect was that China would take American capitalism and blend it into a system of their own increasing its standing on the world stage.
By the early 2010s China had become an economic juggernaut rivaled only by the United States in Gross Domestic Product (GDP.) As China’s middle class grew, so did demand for more luxury items including more pork in their diet. China grew the world’s largest hog herd feeding them with soybeans grown in the United States. Prices and demand went up causing United States farmers to grow and sell more soybeans.
“With China I thought we had an ideal situation. We can produce food better than anyone in the world and they had a population they needed to feed. I thought it was kind of a good thing for a while for them and the Chinese pork industry.”
~Tyler Stafslien
During this time there was money to be made so the US and the world ignored the fact that China was gaining strength and trade leverage. By only being concerned with the bottom line, an opportunity to reign in China’s human rights violations was lost. Now that China is an emerging superpower the rest of the world has lost its bargaining power.
The relationship, which started with an economically superior United States, doing business with an underdeveloped economically weak China, slowly turned into a struggle for world domination. The United States, and by extension the European Union, found themselves without the power to give China the one-sided demands they used to rely on. China started flexing their economic muscles by building infrastructure in African, South American, and Asian countries and bought land and ports to strengthen their position around the world. To deal with the growing threat of Chinese dominance the West responded by creating a trade organization that would rival the Chinese market and at least restore the balance of power. One such organization was the Trans-Pacific Partnership (TPP) which was negotiated with the United States taking the lead in 2016.
Tyler: “Grain prices did seem to kind of go hand-in-hand with the stock market falling and just the fears of a global recession but ultimately the largest chunk is still related to that trade war. The world is interconnected and we have to recognize that. We need to work together with our partners across the world to mutually benefit all people. In North Dakota 90% of our soybeans are exported and 75% used to go to China prior to the trade war. We can’t consume everything. We need customers. When you see trains going that direction to China again, then I’d say we’re taking a step forward in the right direction.”
The Trade War Starts
Meanwhile in the United States, an internal divide was forming. While most people might assume this was along Democrat and Republican lines, it was what could be described as Globalist vs Isolationist. Globalists tend to want free trade from all over the globe and see the world as interconnected. Isolationists want to remain apart from the political and economic affairs of other countries.
In 2016, Donald Trump rode to the White House on an isolationist, America first, platform. He accused China of bad trade practices, citing intellectual property theft, and stealing American jobs. On the campaign trail he said he would rewrite the trade deals with China to be more favorable for the United States. One of his first acts in office was withdrawing from the TPP and placing tariffs on Chinese products which he thought would punish China. His administration believed America was strong enough to handle China on its own and demanded that it come to the table to renegotiate a deal more favorable to the United States. China responded by cutting their markets for US soybeans and investing in South American and Russian soybeans. The market for US soybeans evaporated almost immediately in 2017.
“I think all that the trade war did was speed up Chinese commitment to buying Brazilian soybeans by about three years. And over the past 3 years China invested billions in Brazilian Ports. Now that they have their infrastructure in place, they could care less if they buy from us or not, there’s no leverage anymore.”
-Bill Hejl
“China’s actions indicate they’re going to get the bulk of their product from Brazil and Argentina. They can buy low quality beans from South America and the only thing they’ll buy from us is the higher quality beans we can produce. I’m pretty sure that they’ll be catching up to our technology. They have access to our seeds that we’ve sold to them. It’s not much of a stretch to think that they’re working on copying our seed tech. If that is the case, they eventually won’t need the US market.”
-Travis Anderson
“Throughout this whole process from the beginning of the trade war until a phase 1 deal we’ve heard that X was gonna happen or Y was gonna happen with China. We were gonna have some result that was gonna be better for agriculture and it never came to fruition. I wasn’t rooting for it to fail and I want the trade war to end favorable for US farmers. That being said, you have to be smart. I mean I’m not going to go out and buy a brand new tractor just because they signed phase 1 of the trade deal.”
-Tyler Stafslien