Nixon temporarily froze the prices of consumer goods and restricted exports of food in 1973 in response to rising inflation, a move that essentially cut off exports of US soybeans. It worked, creating a surplus and lowering prices for American consumers.
But the embargo — which lasted for just three months — prompted Brazil to step up its supply, particularly to Japan, creating a formidable competitor on the world agricultural stage and leaving a lasting impact on the American soybean industry.
“It inspired the Japanese to go look for somebody else and, basically, that action created the Brazilian soybean industry,” said Andrew Novaković, a professor of agricultural economics at Cornell University.
Brazil nearly tripled its soybean production over the next decade, and growth continued as Japan made financial investments to help turn Brazil’s wooded grasslands into a suitable place to grow soybeans — a move that also accelerated deforestation in the country.
Before Beijing targeted US-grown agricultural products with tariffs, China was the biggest market for American soybean growers. Some US farmers, who have been some of those hardest hit by the trade war, are worried they won’t ever get the Chinese market back.
“I don’t think, from an agricultural perspective, that we’ll be a primary supplier to China again,” said Grant Kimberley, who grows soybeans and corn in Iowa and is the director of market development at the Iowa Soybean Association.
“I think the Chinese are pouring money into South America right now,” he added.
Brazil can’t meet all the soybean demand in China, which typically buys a majority of the world’s production. But Argentina, India and Russia could be other options if relations with the US don’t improve.
“I think we’ll gain the market back. But it’s got to be a fair, reciprocal and free trade environment, not allowing China to cheat,” Perdue said.
Farmers said they don’t think things will go back to normal anytime soon.
“I wouldn’t be surprised if this lasts until after the election,” said Kimberley. “This may be the new normal for the next decade.”