How China is finding ways to replace US farmers in response to trade war

NEW YORK - Consider the soya bean. A legume about 1cm in size, it is eaten from the pod as edamame or processed into tofu, soya milk and other products. But that is not why it is one of the world’s most lucrative commodities. High in fat and protein, soya beans are what much of the world’s livestock eat.

And now the humble crop is at the centre of the trade war between the US and China.

The US sells more soya beans to China, by value, than any other single product. In 2024, that amounted to more than 27 million tonnes, worth US$12.8 billion (S$16.8 billion), or about nine US cents of every US dollar of goods the US sold to China.

But with the enormous tariffs erected between the two countries over the past two weeks, those sales are likely to suffer soon. That is bad news for the American farmers who grow soya beans and the Chinese chicken and hog farmers who buy them – and potentially very good news for the nation ready to step in: Brazil.

American soya bean farmers are worried about whether their biggest customer will keep buying. More than half of US soya bean exports went to China in 2024, but the price just went up 135 per cent under the tariffs China installed in response to President Donald Trump’s 145 per cent tax on Chinese imports.

“Farmers deal with bad weather. We deal with pests. We deal with tractors breaking,” said Ms Heather Feuerstein, who owns a farm near Grand Rapids, Michigan. “That’s our lives.”

But tariffs? “This is a threat to our continued way of life,” she said.

While Mr Trump says his bulwark of tariffs will create a renaissance in American-made goods, thousands of soya bean farmers like Ms Feuerstein fear he will devastate American agriculture in the process.

At the same time, he could, inadvertently, be helping soya bean farmers in Brazil and Argentina.

The two South American countries produce 52 per cent of the world’s soya beans, including 40 per cent from Brazil alone, compared with 28 per cent for the US. No other nation is close.

“Once they can’t get it from the US, they’ll need to take more from Brazil,” said Ms Neusa Lopes, a top executive at Girassol Agrícola, a major soya bean producer in Brazil’s biggest soya bean state, Mato Grosso. “And to take more from Brazil, they will have to pay more for it.”

The soya bean market involves a complicated web of commodities traders, shipping companies and futures contracts, so prices are often a moving target, but recent spot prices showed that South American soya beans had become more valuable in the wake of the tariffs.

Ms Lopes, whose company plants soya beans and corn across more than 68,800ha, an area nearly the size of New York City’s five boroughs, said she could now sell a 59kg sack of soya beans for about US$21, up 10 per cent from March. Most of her crop goes to China, which is already by far Brazil’s largest soya bean buyer. But now Ms Lopes hopes to earn more for the same crop.

The prices are rising later than the Brazilian and Argentine farmers would have wanted. Harvest season is ending in South America, and they have already sold nearly three-quarters of their stocks, said Mr Andre Nassar, president of the Brazilian Association of Vegetable Oil Producers, which represents the nation’s largest soya bean producers. But those who have not yet sold are now capitalising – or holding off and betting that the trade war will last, likely meaning even higher prices ahead.

In other words, the South Americans are sitting pretty.

Some 6,400km to the north, Ms Feuerstein is in a bind. The annual turn of seasons means she must begin planting her more than 81ha soon. If she works hard, the weather cooperates and the bugs are managed, in late fall she will harvest 10,000 or more bushels, over 272,155kg of soya beans.

Some might be sold to local dairies or a nearby crush facility, where the soya beans are processed into oil and meal. Others will be sold immediately after harvest to a local grain elevator, or stored on the farm to sell later.

“I would love a crystal ball right now,” Ms Feuerstein said. “I don’t think anything that we have traditionally done is necessarily what we should be doing right now. I think everything is changing from minute to minute.”

American soya bean farmers say there is not much they can do besides plant and hope for the best. Many rotate their fields between corn and soya beans, to improve soil health and for diversification. But they have already bought their seeds, fertiliser and other equipment and cannot pivot on a dime.

Instead, their hopes lie in longer-term alternatives, ones that cannot possibly replace China today but maybe can in a decade or two. Organisations like the US Soybean Export Council and the American Soybean Association are trying to develop larger markets in countries like India, Egypt and Mexico. New soya bean crush plants are coming online in the US, and researchers are studying soy as a biofuel and other non-feed uses.

The US has gone down this path before. During his first administration, Mr Trump initiated a trade war against China, and Brazilian soya bean farmers were the beneficiaries. From 2017, just before that trade war, to 2024, China increased its annual imports of Brazilian soya beans 35 per cent to 72.5 million tonnes while cutting imports of US soya beans 14 per cent to 27 million tonnes, according to data from the two countries.

“This hasn’t reversed. It’s remained,” Mr Nassar said. “If China maintains high tariffs on American commodities, the same will happen. There will be another substitution of American exports with Brazilian ones.”

What is different this time – aside from much higher tariffs – is that China has poured money into warehouses, railroads, ports and other infrastructure in Brazil over the past decade to get more of the country’s soya beans onto Chinese ships.

That includes the opening in 2025 of a giant terminal at Latin America’s largest port in Santos, Brazil. Cofco, a Chinese state food giant, is behind the nearly US$500 million project, which will become its largest port outside China.

China appears eager to reaffirm those ties. Last week, China’s vice-minister of agriculture met with Brazil’s top agriculture officials. And Brazil’s President Luiz Inacio Lula da Silva has announced that he will travel to Beijing to meet with his Chinese counterpart, Mr Xi Jinping, in May. Mr Lula has not yet spoken with Mr Trump since each was elected.

The only thing that prevented ruin for American farmers during the last trade war was a US$23 billion government bailout programme. The Trump administration is again contemplating an agriculture bailout – a tacit acknowledgment that retaliatory tariffs will hurt farmers – but there is no guarantee it would make up for all losses.

“We were very grateful for the emergency assistance we received,” Ms Feuerstein said, “but it did not make our farms whole, and it killed our largest export market.” NYTIMES