Many of you are likely familiar with the age old saying “it’s not worth a hill of beans”, but for many farmers in Illinois a hill of beans (soy beans that is) are not only their livelihood, but also could be worth a pretty penny. Unfortunately, the issue that many of these soybean farmers are currently facing is finding an alternative method of meeting the diminished demand due to the ongoing trade war with China. Thinking inside of the box just may be the answer.
How Things Used To Be
Prior to the commencement of the US’s trade war with China, Illinois farmers had an extremely strong and steady customer for their sizable soybean crop. In the past, China had been purchasing approximately 70 metric tons of soybeans per year and unfortunately, the recent tariffs have severed this income stream for US soybean farmers.
Prior to the commencement of the US’s trade war with China, Illinois farmers had an extremely strong and steady customer for their sizable soybean crop. In the past, China had been purchasing approximately 70 metric tons of soybeans per year and unfortunately the recent tariffs have severed this income stream for US soybean farmers.
Just How Many Soybeans Are We Talking About?
Actually, quite a lot! There are just over 4.5 billion bushels of soybeans harvested in the US annually and Illinois has accounted for just under 700 million of those bushels. This has obviously caused a major financial issue for these farmers and has caused the Illinois Soybean Association to ask their members to consider other alternatives to increase demand and replace some of the previous crop sent to China.
What They Are Trying To Do Now?
The Illinois Soybean Association is looking to other Asian countries to offset some of the loss to China. Southeast Asia and Taiwan are two of the major markets that the association is hoping can increase product demand and attempt to drive up prices, which have dramatically plummeted from just under $11 per bushel (less than 1 year ago) to the disappointing current rate of $8.87 per bushel.
One option farmers are trying out is to sell and ship smaller containers to these Asian markets. Obviously, proximity to shipping hubs like Chicago are key, since profits decrease as product is transported. Farmers also need to address the issue of getting the empty containers to their farms to be filled, while doing so in an efficient and economical manner. Despite these challenges, many farmers and grain elevators are now expanding into the container market. Still others are hoarding their crops in hope of seeing an increase in prices, which can be quite a gamble and experts are expecting the sales to container markets to increase significantly.
Soybean farmers, especially Illinois farmers who lead soybean production this year, will undoubtedly be keeping a close eye on this new sales market. This is likely going to be an uphill battle, as the deficit from China will be quite a substantial loss, but it’s great to see the initiative and out of the box thinking to get things back on track and back.
—DAVENPORT LAROCHE, shipping container authorities headquartered in Hong Kong