Behind the Scenes

Tariffs, trade, and the economics of farming

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I did a live Yahoo finance interview a few weeks ago. It was supposed to be about tariffs, trade, and the economics of farming. But… it wasn’t. However, since I was all ready to share all that information, and in case you’re curious, here’s the tariff/ farming shakedown. 

Okay, here goes.

Soybeans

China was the largest importer of soybeans before the tariffs. They use the beans to crush into soybean meal and feed animals. Mostly hogs. 

Now Argentina is the largest importer of American soybeans. Ironically, they have also replaced the US as the largest exporter of soybeans to China. So in short – they import cheap soybeans from the US and then export those soybeans to China.

We should expect China’s demand for soybeans to decrease, since they were hit with a swine flu and are expected to lose nearly 1/3 of their hog population. Now in a logical world that means that the US should be pushing to export more of our pork to China. The problem with that (tariffs aside)?

Ractopamine

China, along with 160 other countries in the world (in other words, pretty much everybody but the US) has a ban on ractopamine, because it’s sketchy stuff and in human trials it had some extreme side effects (folks’ hearts stopping… etc). Yet here in the US it is a commonly used stimulant (it’s similar to adrenaline) in hog confinement buildings. So the United States doesn’t have enough supply of ractopamine-free hogs to increase our exports even if there weren’t tariffs. (Moink pork is ractopamine-free, in case you were wondering. We don’t roll like that. It’s scary sketchy and dangerous stuff.)

Also side note: the largest producer of pork in the US? Smithfield farms…. wholly owned by a Chinese company. Which means with soybeans at a 10 year low… farmers are suffering but Smithfield is making record profits off the cheap soybeans.

So I’m just thinking… Doesn’t it make sense that:

  1. If the entire world seems to think ractopamine is sketchy… shouldn’t the US maybe not go whole hog on it ? ( pun intended).
  2. We should take a hard look at food standards (ractopamine and bleached chicken) so that we can be better positioned to export if we want/ it makes sense? Most of the world bans bleached chicken as well but here in the US 97 percent of the chicken is dipped in chlorine. (Moink Chicken is Bleach Free, in case you were wondering.)

Also, off-topic, but access to high-speed internet for a Skype interview is actually more difficult than you might think here in #ruralworld