The largest U.S. farm group urged trade negotiators “to write the next chapter” in Sino-U.S. relations this week by eliminating trade war tariffs that are depressing ag exports, an important part of farm income. On Monday, the USDA reported an uptick in soybean exports to China, but there was no sign of large “goodwill” purchases on the eve of negotiations in Shanghai.
Before the trade war, China was the No. 1 customer for U.S. farm exports, with annual purchases of $21 billion or more. The USDA estimates that China, the world leader in soybean, cotton, and rice imports, will buy $6.5 billion worth of U.S. food and ag exports this year. The United States has found alternative markets for most but not all of the sales lost to tit-for-tat tariffs.
“Reopening the door to one of the largest markets in the world is key to helping farmers get back on their feet,” said Zippy Duvall, president of the American Farm Bureau Federation. “We wholly support the administration’s efforts to stop unfair trade practices by China. Now it’s time to write the next chapter in our trade relations by eliminating tariff barriers.”
Groups speaking for pork, soybean, and wheat growers also supported the removal of tariffs in the past few days, coupling the goal with expressions of appreciation for billions of dollars in trade war payments. The American Soybean Association said it was glad the administration recognized “the ongoing struggle of soybean farmers caught in the middle of the trade war with China. Yet ASA continues to ask for a quick and positive resolution to the current tariff on U.S. beans going into China that has disrupted the market.”
The National Association of Wheat Growers urged speedy resolution of the trade war, and the National Pork Producers Council said its top priorities are “an end to the trade dispute with China” and a new trade accord with Japan. The highly contagious African swine fever (ASF) is sweeping through China’s hog herd and creating a “historic sales opportunity” in the world’s largest pork-eating nation, said the Pork Council. The trade war prices U.S. pork out of the Chinese market.
Analysts at Rabobank, an international food and agriculture lender with headquarters in the Netherlands, expect China’s hog inventory to be cut in half by the end of this year due to ASF, with a further reduction of 10 to 15 percent in 2020, said market news agency AgriCensus. It quoted Rabobank as saying, “Given its rapid progression, we suspect all Asian pork herds are at risk of ASF within the year. We expect Vietnam’s pork production to drop by 15 percent to 20 percent year-on-year in 2019.”
China housed more than 440 million hogs, half of the world total, in 2018, before ASF arrived. Rabobank said it would take five years for China to rebuild pork production to pre-epidemic volumes.
The USDA said 600,000 tonnes of soybeans, equal to 22 million bushels, bound for China were inspected at U.S. ports in the week ended last Thursday. It was the largest tonnage in five months, reported Reuters. However, soybean shipments to China during the first six months of this year were the smallest since 2004, according to Bloomberg. Soybeans used to be the major U.S. ag export to China. U.S. stockpiles are forecast to top 1 billion bushels, almost double the previous record, when this year’s crop is ready for harvest.
Since China and the United States agreed in late June to resume trade talks, President Trump and other administration officials have said China would make large purchases of U.S. farm products. China has demurred on whether it committed to making those purchases. Chinese sources raised the possibility over the weekend of goodwill purchases to buoy sentiment among negotiators in Shanghai.