The “phase one” Sino-U.S. trade agreement called for a doubling or tripling of U.S. ag exports to China, but with four months left in the year more farmers than not are skeptical the sales bonanza will be realized, according to a Purdue University poll released on Tuesday.
There is reason for doubt: Sales moved slowly for months before accelerating in late summer.
Slightly more than half — 53 percent — of the large-scale farmers and ranchers taking part in Purdue’s monthly Ag Economy Barometer said it was unlikely that China would fulfill its commitment to import $36.6 billion of U.S. food, agricultural and seafood products this year; 47 percent said they thought China would do it.
It was the first time that Purdue asked producers that question, said professor Jim MIntert, one of the Purdue economists who oversees the barometer, a monthly gauge of farmer sentiment.
“It was a bit surprising given that China has been making significant purchases in recent weeks,” said Mintert. “My hypothesis is that farmers are skeptical (of) China’s trade intentions and, possibly, China’s viability as a longer-term source of demand strength.” Purdue did not ask farmers to explain their views, Mintert said, so his hypothesis has not been tested.
China was active in the ag export market beginning in mid-July, with large and frequent purchases that raised hopes in the Farm Belt of higher commodity prices. China was the No. 1 market for U.S. farm exports before the trade war. Now it ranks third, behind Canada and Mexico. U.S. farm exports, the source of 20 cents of each $1 of farm revenue, slumped in fiscal 2019 and 2020.
Trump administration officials routinely list the phase-one agreement as one of President Trump’s victories in agricultural trade, along with the U.S.-Mexico-Canada Agreement and an agreement by Japan to give the same tariff treatment to U.S. farm exports as other countries in the successor to the Trans-Pacific Partnership.
Customs data show Chinese imports totaling $11 billion of U.S. food, agricultural and seafood products from January through August, said the Peterson Institute for International Economics. To reach the goal of $36.6 billion, China would have to import more than $5 billion of the goods in the final four months of 2020.
Agriculture Secretary Sonny Perdue said last week, “I’m not sure they’re going to make it but they’re trying.” Meeting farmers in Wisconsin, Perdue said, “Non-agricultural trade issues get in the way.”
The Ag Barometer is based on responses from 400 farmers and ranchers who produce at least $500,000 a year of agricultural products; America’s largest operators. There is a margin of error of 5 percent. The latest survey was conducted from Sept. 21-25, which overlapped with USDA’s announcement that up to $14 billion was available in the second round of coronavirus aid to producers. The barometer reading of 156 was the highest since the pandemic struck.
Four of 10 producers told the Ag Barometer they would plant cover crops on corn or soybean land this fall. Among those planting cover crops, 52 percent said the crops would be planted on less than one-third of their corn and soybean acreage. Most of the farmers who use cover crops have been planting them for four years or more.