Source: AgriLife Today
The impacts of potential trade tariffs on crops such as soybeans would send ripple effects through other agricultural commodities, according to a Texas A&M AgriLife Extension Service economist.
Dr. Mark Welch, grains marketing economist in College Station, told farmers at the Central Texas Small Grain Field Day at the McGregor Research Center that a Purdue University study recently projected a 25 percent import tariff by China soybeans would result in a 37 percent decline in U.S. exports.
Consequently, a decline in U.S. soybean exports would lead to fewer soybean acres.
“Where are those acres going to go? They will go to corn,” Welch said. “Given where our corn prices are, we don’t really want any more corn acres.”
From decreased land values to lessening farm net worth, the potential repercussions of tariffs on exports to China could have big impacts, Welch said.
“All of this highlights the fact that these trade implications really do matter to production agriculture,” he said.
Currently, wheat farmers projecting 45-acre bushel yields at $5 per bushel can cover their costs and make some profit.
“That works,” he said. “But if you cut that yield by 25 percent, you’ll need $6.50 a bushel to make it work. That’s why we need to pay more attention to marketing activities.”
Welch said to mitigate potential price risks, producers can integrate cash marketing with other marketing tools and crop insurance.
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