By Mark Weinraub
HAZELTON, N.D., Sept 17 (Reuters) - As the 2018 harvestapproached, North Dakota farmer Mike Appert had a problem - toomany soybeans and nowhere to put them.
Selling was a bad option. Prices were near decade lows asU.S. President Donald Trump's trade war with China weighedheavily on the market. Temporary storage would only buy him alittle bit of time, particularly in an area where coldweather can damage crops stored in plastic bags.
So Appert, who farms 48,000 acres (19,425 hectares), cut acheck for $800,000 to build eight new permanent steel bins. Thatallowed him to hold onto his bumper crop and wait for prices torecover.
He sold half of the 456,000 bushels stored on his farmthroughout the following summer, earning about $1 more perbushel and avoiding storage at nearby CHS elevators or an ArcherDaniels Midland Co. processor in the area.
But most farmers do not have $800,000 to spend on steelbins, and many are going under. The number of U.S. farms fell by12,800 to 2.029 million in 2018, the smallest ever, as the tradewar pushes more farmers into retirement or bankruptcy.
Roger Hadley, who farms 1,000 acres in Indiana, was unableto plant any corn and soybeans this year after heavy rains addedto farmers' woes.
He spent most of the summer trying to plant a combination ofgrasses, a so-called cover crop, so he could apply forgovernment aid and try again next year.
"The guys that got rich are getting richer," Hadley said."It has frustrated a lot of guys."
In farming, size does matter. The farms left standing afterthe trade were will likely be some of the biggest in thebusiness. Appert's operations are more than 100 times biggerthan the average American farm and the advantages provided bythat magnitude are becoming even more critical as the trade warstretches into a second year.
The declining number of U.S. farmers could hurt the world'stop grain merchants such as ADM and Bunge, who will havefewer suppliers. Additionally, farmers will have less need torent space in the merchants' grain silos as big farmers likeAppert have plentiful storage on their own farms.
ADM said it would continue changing to meet the needs of itscustomers. Bunge did not respond to an email seeking comment.
By the end of 2018, the average U.S. farm size rose to 443acres, a 12-year high and up from 441 acres in 2017, accordingto the latest U.S. Department of Agriculture data.
And the biggest farmers are growing their operations evenmore as retiring farmers choose to lease their land rather thanselling it.
When land becomes available for lease, only the biggestfarmers can readily shoulder the costs needed to expand.
The size of the loans smaller farmers would need to buyequipment, for example, are too big for applicants with littlecollateral, said Dave Kusler, president of the Bank of Hazeltonin Hazelton, North Dakota.
"It is almost impossible with what the costs are," Kuslersaid. "In this area you can't make a living on 1,000 acres."
Critics say the Trump administration's policy ofcompensating growers for lost sales due to the trade war paysthe bigger farm operations more, since payments are calculatedby acres farmed.
(For a graphic on Trump's trade war farm bailout: https://tmsnrt.rs/2Yu32ns)
The Environmental Working Group, a conservationorganization, said in a recent study the top 1% of aidrecipients received an average of more than $180,000 while thebottom 80% were paid less than $5,000 in aid.
Appert said that big farmers receive bigger outrightpayments but less per acre than small farms because of a$500,000 cap per farm.
'BOOM, BOOM, BOOM'
Big farms can reap the full benefits of new high-techequipment that boosts farm yields.
Doug Zink, who farms 35,000 acres near Carrington, NorthDakota, said he likes to trade in his fleet of fourcombines and planters nearly every year to ensure that hisequipment is under warranty, which saves thousands of dollars inmaintenance costs and helps avoid breakdowns during key seedingand planting periods.
They also receive deep discounts - as much as $40,000 forsome combine harvesters that can cost as much as $400,000 -allowing them to upgrade more often.
Manufacturers are increasingly willing to cut such deals tokeep clients as the number of customers falls. Deere & Cosaid that it will reduce production by 20% at its facilities inIllinois and Iowa in the second of half of the year. Rivalagricultural machine makers AGCO Corp and CNHIndustrial have also slashed production to keepinventory in line with retail demand.
Large farms also have the easiest access to capital, withbankers still eager to provide loans to growers with plenty ofcollateral.
"The ag trend is going to larger farms," Kusler, the bankpresident in Hazelton, North Dakota, said "The loans get muchlarger."
Appert had no problem getting a loan to financeexpansion.
"If you want to get a mortgage and buy a piece of land it isjust boom, boom, boom," he said.(Reporting by Mark Weinraub; Editing by Caroline Stauffer andMarguerita Choy)