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Stephen, MN heveUSDOT 0 Betsy Jensen stands near one of the farm trucks parked at the family farm near Stephen, Minn., on Monday. Dan Gunderson | MPR News Now that spring has finally arrived in Minnesota, the Jensen family is scrambling to get crops planted on their northern Red River Valley farm. But the usual optimism of a spring planting season is tempered this year by worries about the ongoing trade dispute between the United States and China. China has responded to increased tariffs on goods sold in the U.S. by raising tariffs on crops like soybeans. As a result, soybean prices fell, throwing an unexpected challenge at farmers. Betsy and Brian Jensen pause during the busy spring season. Dan Gunderson MPR News We're not used to having the markets yanked out from under us. There's so much un We don't know how to handle that," said Betsy Jensen, who farms with her husband and father-in-law near Stephen in Marshall County. uncertain "So, I guess, when nobody gets along, the farmers seem to be paying the price for it, unfortunately." It's been a tough spring for farmers across the state. Wheat and corn seeds should be in the ground by now, but planting across Minnesota is well behind the five-year average, according to a weekly report published by the U.S. Department of Agriculture. crops like small grain or corm are planted too late in the year, the heat of July hits just as the plants are pollinating and filling seeds- and heat stress can reduce yields. Fargo Stephen Marshall County Stephen, Minn. William Lager | MPR News But soil temperatures have been too cold, until now, for seeds to germinate. The soil temperature just reached 50 degrees on the Jensen farm. "And 50 is go time, that's when corn can go on the ground," Jensen said. "And so, for Pete's sake, it's May 13 and it's 50. Like, we just hit 50. That's quite discouraging." raging" is the theme of the spring for many farmers across Minnesota. As they've waited for a reluctant spring to make its appearance, international trade disputes keep ratting the markets, driving crop prices lower. A planter stirs up dust as it buries rows of canola seeds. Dan Gunderson | MPR News But earlier this week, on a 70-degree May day, there were five tractors rolling on the Jensen farm, tilling, fertilizing and planting across some of the family's 5,000 acres. Brian and Betsy Jensen run the farm growing wheat, barley, com, soybeans, canola and sugar beets- along with Brian's dad, John. They also raise and sell several varieties of wheat seed There's a lot of family history on their fourth-generation farm. Fields are named for the people who settled the land decades ago: A clump of trees mark the spot where Jens Jensen's farmstead once stood- on the field that now bears his name. "I will say probably one of the weaknesses of farmers is their emotional attachment to the land," she said. "Land doesn't love you back. You know, with affection, we call them Mabel's and Jens and Clifford's but yeah, you know what? The land doesn't love us back." Jensen also teaches farm management at Northland Community and Technical College in East Grand Forks, Minn. She helps struggling farmers with financial planning. And when farmers are faced with tough financial decisions, she said, that's a crucial difficult-thing to remember. Farming is a lifestyle, but it's also a business. though Still, she admits it's hard to ignore that connection with the land they depend on for a living. "On a warm spring day, there's a fresh smell in the air-a yeasty smell that makes it seem like something's cooking," she said. This spring, Jensen has been taking calls at all hours from nervous, frustrated farmers still trying to ink operating loans. She helps farmers develop their financial plan for the year, and helps them navigate the sometimes confusing world of finances. Two of her clients ended up in a state-run farmer lender mediation program to avoid foreclosure The program allows farmers to request mediation, and lenders are then required to allow 90 days to renegotiate or restructure their debt. One farmer she advises has decided to quit, rather than go deeper in debt and risk losing his land He's planting his last crop this spring This is China's soybean breadbasket' Its a challenging time even for someone who teaches farm finance and marketing. When Jensen finalized her own farm's financial plan in February, she was confident in her projections: They would plant more soybeans than usual, because soybeans cost less to grow than other crops. And, she figured, the country's trade issues with China-which buys most of Minnesota's soybeans- would be resolved before the crop was ready to sell. JENSEN The Jensens grow several varieties of wheat on their farm. Dan Gunderson MPR News Now that trade talks with China appear to be at an impasse, she's second-guessing that decision. This is China's soybean breadbasket right here," she said. "All of our beans go west, and they go into China, and so we're taking it particularly hard." Earlier this spring, as soybean prices fell and more trade turmoil loomed on the horizon, the Jensens considered switching some of their soybean acres to corn, which needs a lot more fertilizer- and therefore costs more to grow- but might bring a better price at harvest. But that additional cost, they found, would be prohibitive. Turns out, you can't get fertilizer today," Jensen said. "A year ago, we paid $280 a ton for fertilizer. This year, it's $500." So instead of changing their plan, like a lot of farmers, the Jensens will just hope the politics of trade don't wipe out the possibility of profit this year. Jensens grow more crops than many Minnesota farms, and they grow wheat for seed, which other farmers are already buying. Jensen hopes one of their crops will bring in enough to help balance the books at the end of the year. A few months ago, Jensen said she thought 2019 could be a profitable year. Now she's hoping for a break-even year The remains of last year's corn crop is tilled before a new crop is planted on the Jensen farm. Dan Gunderson | MPR News The financial reality also affects farm management decisions. The Jensens would like to switch some of their land to a no-till approach, a practice with less environmental impact and some financial savings. In no-till farming, farmers plant seeds into the residue of last year's crop without tilling the soil. But to do so would require new equipment, and that's not an investment they can make. And in the meantime, Betsy Jensen is trying to sound hopeful as she counsels other farmers who are in financial trouble, but she admits optimism is in short supply "It just seems like we're under a black cloud this year, so I'm waiting for a silver lining," she said. "But for now, it's definitely a black cloud." 1) Draw a well labeled supply and demand graph for soybeans in the United States and a well labeled supply and demand graph for soybeans in China. Show that without trade, soybeans are plentiful and cheap in the United States but soybeans are in popular and expensive in China. Use your graphs to explain what happens when the two countries trade.

Answer 1

If there is no trade in US and China , prices will rise up in China and will decrease in US as US have enough soybeans to feed it population and increasing supply of it in US will lower the prices of it which is complete loss to farmers, as they are already in loss. As Demand of soybeans in US is near to elastic, raising its supply when China is not trading with US will leads to raise quantity of soybeans as much with raising prices a little. Refer to the diagram,

As China have deficiency of soybeans in its country and imposing tariffs on US goods will make Chinese soybeans cheaper in China and people will rely on that inspite of relying of US soybeans. As supply of soybeans in China is near to perfectly inelastic, and demand at its normal, raising demand will raise prices much further than increase in quantity level. Increasing tariffs will cost China in either increase its Soybeans production to sufficient level or reduce tariffs from US so that it can be imported in cheaper rates. Refer to the diagram here, Trading in US and China of soybeans will increase the prices in US and decrease it in China and make everyone better off. US farmers will be better off that they are getting enough prices to cover their cost or to reach break even point, Chinese people are happy that they getting it in low prices. Trade policies are not even now, maybe it could stabilize in some months or so.

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