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‘It will be uncomfortable’

South Boston News / June 21, 2018
Members of the farming community are keeping close watch on budding trade wars between the U.S. and its allies and rivals alike, hopeful that the bellicose rhetoric will lead to little lasting damage but concerned it just might.

Halifax County’s economy remains heavily dependent on agriculture, and farm products make up Virginia’s largest export business: $3 billion every year, according to Virginia Farm Bureau.

“It will be uncomfortable” if customers such as China and the European Union retaliate against the U.S. in response to Trump administration tariffs on imported steel and aluminum, said Tony Banks, senior assistant director of commodity marketing Department at the Virginia Farm Bureau.

“This gives us a tremendous amount of concern,” said Banks. “But at the same time it’s still a wait-and-see [situation] because the tariffs have not gone into effect.”

If agricultural products are subjected to international tariffs, Halifax County would likely feel the impact: the county’s top two crops — soybeans and tobacco — are oft-mentioned candidates for tariffs. China may hold the key: roughly two thirds of the world soybean crop moves through China at some point, said Banks, according to information available to Farm Bureau.

Of China’s imported soybean crop, the U.S. produces about a third of the total. With tariffs on U.S. products, Chinese bulk purchasers would look to other countries, particularly Brazil, for cheaper beans, Banks said.

American soybeans would continue to sell on international markets, but tariffs would create a situation where producers likely would have to export to third party middlemen to reach the vast Chinese market.

“At the end of the day, China needs a certain amount of soybeans,” said Banks.

In his example, Halifax farmers would export to a country like Argentina. Argentinian processors could take the soybeans and resell them to the Chinese, but the effect of such a workaround would be higher production costs and lower revenue for growers.

Virginia soybean producers are also in an uncomfortable position after the state expanded its soybean crop by five percent, or 30,000 additional acres. Without a market to support the expansion, commodity prices are at risk of plunging.

Banks acknowledged that soybean farmers are protected somewhat by Farm Bill safety net programs, but he expressed concern that tobacco, swine, and poultry operations in Halifax County would not be covered. The best outcome, he suggested, would be for ballyhooed trade wars to fizzle.

“At the end of the day, we’ve got crops to grow and sell. We don’t need this distraction. It’s not good for the U.S. farmer or the Chinese feedmill,” he said.

Neither side will benefit from imposition of tariffs, Banks added.

Local grower Danny Prevett said he’s been following the news on agricultural tariffs, which he said are just another concern on a growing list for tobacco growers.

“Tariffs are pretty much just threats at this point,” Prevett said.

Prevett said he is more concerned with new regulations coming down that would restrict the strains of tobacco grown in the U.S. to only those that contain 98 percent less nicotine. The Food and Drug Administration has announced it will move to drastically cut the amount of nicotine that cigarettes can have, a proposed regulation that could take years to implement.

Such low-nicotine tobacco is not naturally occurring and can only be produced via chemical extraction or genetic modification, which Prevett feared would turn off countries that avoid purchasing GMO products.

The proposed tariffs would hurt tobacco farmers who have already been suffering. Prevett said, “There’s more tobacco in Halifax than it’s ever been, but less people to grow it.”

He was referring to the concentration of tobacco production with the end of the tobacco program and price support system to boost profitability for smaller growers. “It takes 100 acres to make what [money] you used to make in 20,” he said.

Prevett has not ignored trade tariffs — he has been following the issue closely — but he has been frustrated with the politics and rash of opinions in media coverage. Prevett voted for Trump, who carried Halifax County easily, and he said he trusts in the President to figure out a solution.

“I have confidence in him, but not in a lot of other people,” Prevett said. “Everybody that writes the laws writes for their own pockets.”

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