By MICHELE F. MIHALJEVICH

Indiana Correspondent

WEST LAFAYETTE, Ind. — As the trade conflict continued last week between the United States and China and several other countries, the Senate passed a non-binding resolution by a vote of 88-11 calling for Congressional approval before the president may cite national security as a reason for imposing tariffs.

When President Donald Trump originally announced tariffs on steel and aluminum imports in March, he said protecting the two industries was necessary for the country’s national defense. The July 11 Senate vote was a “clear rebuke of this administration’s trade policy,” said Sen. Jeff Flake (R-Ariz.), one of three primary sponsors of the measure.

“This vote represents the strongest and most straightforward message this chamber has delivered against the administration’s abuse of trade authority. Imposing tariffs on products from allies that pose no threat to our national security is just plain wrong.”

Flake – along with Republican Sens. Bob Corker of Tennessee and Pat Toomey from Pennsylvania – introduced a similar binding resolution in June but it has yet to come to a vote.

Also last week, the Office of the U.S. Trade Representative said the administration is considering imposing a 10 percent tariff on an additional $200 billion worth of Chinese goods. A decision won’t be made until after August 31, according to media reports.

The United States has already imposed or announced tariffs on $50 billion worth of Chinese goods. China responded with tariffs – or threats – on $50 billion worth of U.S. products.

Meanwhile, three Purdue University professors of agricultural economics said farmers in the Corn Belt may lose thousands of dollars if a recent drop in corn and soybean prices doesn’t reverse itself. The economists spoke July 3 during a webinar presented by Purdue’s Center for Commercial Agriculture.

Corn and soybean prices dropped sharply from May to June. December corn futures fell from $4.30 per bushel in late May to $3.58 in mid-June. November soybean futures declined from $10.60 to $8.64 in the same period.

“We have to hold two fingers up when we talk about the major drivers of this huge decline in prices,” noted Purdue’s Chris Hurt. “The first finger we hold up is obviously very good yield potential on this crop. The second is the worrisome nature of tariffs that are in place and threats of other tariffs.”

Michael Langemeier, also associate director of the center, illustrated how much a Hoosier farmer could have lost financially from late May to late June by examining a 3,000-acre operation in west-central Indiana. The farm has 1,500 acres each of corn and soybeans.

In January 2018, the farm’s working capital per crop acre was $369. In late May, it was $394 and in late June, after the price drop, it was $316. Net farm income dropped about $235,000 during the period.

“Cash flow could be very tight again,” Langemeier said. “And this is just looking at 2018. In reality, I’m worried about the lingering impacts of this drop in soybean prices. That loss is not going to disappear moving into 2019.

“This year looked like it was going to be a neutral year. But that neutral situation has turned very negative. Those with tight liquidity may have problems. We could see reduced revenue for corn and soybean farmers. It depends on whether these prices stay low.”

Jim Mintert, center director, agreed with his colleague’s assessment. “Let’s be honest about it,” he explained. “If you look at the reduction in working capital per crop acre, there are some farms in Indiana and elsewhere in the Corn Belt that will not survive this.”

In the USDA’s June 29 acreage update, the agency said farmers will plant 89.1 million acres of corn, about 760,000 acres more than trade had predicted. About 89.6 million acres of soybeans are anticipated, down about 230,000 from pre-report expectations. All wheat acreage was projected to be 47.8 million acres, about 700,000 more than expected.

Overall, U.S. farmers have 3 million more acres this year over last devoted to 17 specific crops, Conservation Reserve Program land and hay, Hurt said. “The incentives for profitability look pretty good if you look back at late March and into April and May. We brought some more acreage in. That’s not what we need today.”

USDA has projected an average yield of nearly 180 bushels per acre for corn and almost 50 bushels for soybeans. Long-range weather forecasts don’t seem to indicate conditions that could cause a noticeable yield drop, Hurt said.

The tariff spat with China will impact soybean prices more than corn, he noted. Last year, the United States sold $12.4 billion worth of soybeans to China and $148 million in corn. Mexico, the No. 1 buyer of U.S. corn, purchased 580 million bushels in 2017. Mexico is considering a 10 percent tariff on U.S. corn and other agricultural commodities.

“The tariffs will lead to U.S. soybeans costing more than Brazilian beans for the Chinese,” Hurt said. “Obviously China is not going to buy beans from the U.S. in the short term. They’re going to buy from Brazil.

“China will eventually need to buy U.S. beans. They’ll need to buy quite a few beans from the U.S. But we’re the last supplier, the residual supplier.”