- "For North Carolina soybean growers, who rely heavily on advanced machinery and global export markets, this pressure is especially real." Kelly Lester, John Locke Foundation
Soybean farmers are set to be impacted as John Deere, one of the nation’s largest manufacturers of heavy farm equipment, recently announced a major production shift to counter $500 million in tariff-related costs.
John Deere has announced that it plans to reevaluate supply contracts to increase efficiency and cost savings to offset increased costs incurred due to tariffs, according to a report by the Wall Street Journal. John Deere reported $100 million in additional costs due to tariffs in the last quarter and expects to incur an extra $400 million in tariff-related costs by the end of the fiscal year in October.
“Tariffs on steel and aluminum may sound like a blow against foreign industry, but the real damage is hitting farmers, food producers, and families,” Kelly Lester, policy analyst for the Center for Food, Power and Life at the John Locke Foundation, told the Carolina Journal. “Equipment manufacturers like John Deere are facing over $500 million in new tariff-related costs and, despite their best efforts, they may have no choice but to pass those costs onto the consumer. This comes at a time when farmers are facing depressed crop prices and high input costs. For North Carolina soybean growers, who rely heavily on advanced machinery and global export markets, this pressure is especially real.”
This follows another recent blow to agriculture and the soybean industry when China recently cut its imports of soybeans from the United States. As the No. 1 buyer of US soybeans, China’s cuts dramatically impacted the agricultural industry of North Carolina. China accounts for 48% of US soybean exports. In 2022, North Carolina exported $446 million in soybeans, according to the Office of the US Trade Representative.
“Due to 25% retaliatory tariffs imposed on U.S. soybeans by China in 2016, the US soy industry did lose market share in China (to Brazil) and has not fully recovered,” Charles Hall, executive director of the North Carolina Soybean Producers Association, told the Carolina Journal. “Brazil has been incentivized to compete with the US for the China market, and this competition is manifested in logistics & infrastructure investments in both nations.”
According to data from the National Oilseed Producers Association (NOPA) the soybean production industry in North Carolina was valued at $2.9 billion and accounted for 4,940 paid jobs; these numbers are based on data collected between Oct 2018 and Sept 2021.
“We’ve long recognized the need to diversify our global markets, and that’s why we’ve done our share of work to help develop markets like Vietnam and Thailand, where US soy is in demand,” continued Hall. “Our best customers are right here in our backyard – North Carolina’s amazing animal protein industry. Hogs and chickens are the No. 1 customers for protein meal made from NC soybeans. We’re always mindful that our customers know and appreciate the value of a reliable supply of high-quality NC soybeans.”
The United States Department of Agriculture (USDA) reported that approximately 1.63 million acres of soybeans were harvested in North Carolina in 2023, down from 1.68 million in 2022. Soybeans are the 5th in cash receipts for NC. Soybeans account for about 5.7% of farm cash receipts for North Carolina in 2023, according to a USDA report.
“Soybean farmers in North Carolina are less reliant on exports than soybean growers in most other states thanks to the large number of animals raised in the state that eat soybeans as part of their feed,” Dr. Jeffrey Dorfman, professor and extension economist at North Carolina State University (NC State), told the Carolina Journal. However, the state’s farmers still export a sizeable share of their crop. In addition, market prices for domestic uses are impacted by the quantity exported and the world price, so the trade situation is important to all commodity farmers.”
In 2022, 5,683 farms produced soybeans across all 100 counties, but predominantly in Piedmont and the Coastal Plains regions, according to Hall. Most soybean farmers also grow other crops, such as corn, cotton, tobacco, and sweet potatoes.
“So far, we have been lucky in that the enormous uncertainty in the trade arena has not translated into lower prices for agricultural commodities,” continued Dorfman. “That could still happen, but it hasn’t happened yet. I urge all North Carolina farmers with the opportunity to lock in sales through forward contracting or to lock in prices by hedging in the futures markets. Downside price risks are much larger than the chances of upward price improvements, so if you can guarantee a positive return on a crop, please do so. Otherwise, all the trade uncertainty will continue to add an extra source of worry for farmers.”
Due to the uncertainty created by the current trade climate, most farmers may not be investing in new equipment. This is dealing an additional blow to manufacturers like John Deere, which are already feeling the impacts of increased costs due to the tariffs.
While most farmers may not be investing in new heavy machinery right now, experts say they are maintaining and repairing their current equipment and feeling the impact of supply chain crunches, delayed shipping, and the availability of parts.
“There’s never a great time for additional cost, but certainly not at a time when the market’s depressed,” Deere CFO Josh Jepsen told the WSJ. “It does apply pressure to a more challenging time, not only for Deere but the uncertainty that it drives from a customer base.”
While the company expects to raise prices in some cases, Deere hesitates due to their recent price increase due to inflation. Jepsen told WSJ that the company sometimes expects to raise prices, which may result from inflation rather than a reaction to tariffs.
According to experts, tariffs and the current trade climate directly impact the food supply chain and production system from top to bottom.
“Tariffs also drive up the cost of tinplate steel used in cans, making everyday items like beans, soup, and tomato paste more expensive for consumers,” continued Lester. “Not to mention, that trucks used to transport food will also become more expensive due to metal tariffs, meaning the cost of transporting food from farm to shelf may rise too. Subsequently, consumers will face higher grocery bills while farmers grapple with even thinner margins. Trump’s trade agenda claims to defend American industry, but it’s imposing hidden taxes on the very people it promises to protect.”
Analysts warn that the trickle-down impact—from manufacturers to farmers to consumers—is putting intense pressure on North Carolina’s agricultural producers, who help feed the world. At the same time, it’s squeezing family budgets across the state, many of which are already struggling with food insecurity.