Cramer debate comment downplayed importance of China trade to ND
FARGO -- The Oct. 26 debate in North Dakota's U.S. Senate race featured a lengthy back-and-forth on trade and tariffs between incumbent Heidi Heitkamp, a Democrat, and her Republican challenger Kevin Cramer, during which Cramer downplayed the imp...
FARGO - The Oct. 26 debate in North Dakota’s U.S. Senate race featured a lengthy back-and-forth on trade and tariffs between incumbent Heidi Heitkamp, a Democrat, and her Republican challenger Kevin Cramer, during which Cramer downplayed the importance of China to North Dakota in terms of trade.
“In fact, China represents 1 percent of North Dakota’s exports,” Cramer said.
But Simon Wilson, executive director of the North Dakota Trade Office, said that 1 percent number comes from the U.S. Department of Commerce and doesn’t include shipments of bulk commodities - like soybeans - out of North Dakota. That means it doesn’t represent the true importance of exports to China to the state’s economy.
“The challenge is bulk exports are generally not tracked from the state of North Dakota,” he explained.
If a train of soybeans goes out of North Dakota to the Pacific Northwest, as approximately 70 percent of the state’s soybeans have in past years, the export of those soybeans gets tacked on to whatever state has the port from which they leave. That means Washington and Oregon may show exports of $4 billion to $6 billion in soybeans even though data from the U.S. Department of Agriculture’s National Agricultural Statistics Service show that soybeans aren’t even reported as a crop in either state.
Trade officials use a variety of tools, including NASS data and the numbers on exports from ports, to figure out the value of bulk ag commodity exports.
“We estimate that there is an additional $3 billion to $4 billion in total bulk agricultural products exported from North Dakota to a foreign country,” Wilson said. “This means we export about $10 billion of products a year.”
For just tracked exports, the top foreign destinations for North Dakota products in 2017 were, in order, Canada, Mexico, Australia and China.
“If you add the annual soybeans that typically went to China of $1.3 billion to $1.5 billion a year, it would move China to the second largest trading partner behind Canada,” Wilson said.
While other countries also import North Dakota ag bulk commodities, he said the “vast focus of soybeans going into China” overshadows those numbers.
Nancy Johnson, executive director of the North Dakota Soybean Growers Association, said rough data shows North Dakota’s crop harvested in 2017 had a value of more than $2.133 billion. If 70 percent of that went to China, that means China accounted for $1.49 billion in purchases of North Dakota soybeans.
Though she said the trade relationship with China “wasn’t perfect,” it had been good for North Dakota farmers.
“We had a pretty effective deal with China,” Johnson said. “We didn’t change it. We blew it up.”
‘Well, this is why we have bins’ Cramer’s comment on how much North Dakota sells to China wasn’t the only part of the debate that had many in the soybean industry scratching their heads.
“I had a roundtable discussion in here with soybean farmers from North Dakota with Sen. Joni Ernst, one of your colleagues from a big soybean- and corn-producing state,” Cramer said to Heitkamp. “Do you know I couldn’t get one of them to oppose the tariffs? Not one of them. You know what they said? Well, this is why we have bins. This is why I sold that 10.50 a bushel.”
“If I had my phone here, I’d show you a picture of a mound of soybeans on the ground in the rain in Casselton. There are no bins, Kevin. Those beans will be wrecked by that rain. They’ll be wrecked by the exposure to the elements,” Heitkamp retorted.
Cramer’s roundtable with Ernst on Oct. 12 featured about a dozen farmers, including Terry Wanzek, a Republican state senator from Jamestown who raises a variety of crops in central North Dakota. The farmers at the discussion were an “impressive group” representing “serious” farmers, Wanzek said. While the farmers did have concerns, Wanzek said they were in agreement that, in the short term, it is worth the pain to get more fair trade with China.
“We all believe he’s trying to get us a better deal,” Wanzek said of President Donald Trump.
Johnson said some farmers will have no problem binning whatever beans they didn’t market before the price fell. But she said there’s a “wide range of people’s ability to do that.” Some farmers were relying on cash sales of soybeans to make cash flow or to pay down on loans, and some have had to sell other commodities that they planned to otherwise store. Others have to pay for additional storage.
“Any marketing plans people had done certainly did not come to fulfillment,” Johnson said. “I think a lot of people will find they are going to have some challenging conversations with their financial people.”
Planning for the future also may be difficult. Even if other markets fill China’s needs and the U.S. can fill the gaps for other countries, “every other stock will be drained down first. They will come to us last,” she said. “Now you’re hoping for a market, and hoping is a crappy marketing strategy.”
Wanzek also conceded that he, too, has a “twinge of doubt” that the situation will clear up, though he still is optimistic that relations will get back to normal. Soybeans have become an important crop in terms of profitability and competition for other crops, he said.
“I will tell you, if we’re in the same situation a year from now, I might not think the same way,” Wanzek said.