China is a golden market and a potential pothole for U.S. food and ag exports, said 20 farm and agribusiness groups in a letter to presidential aspirants. The letter, delivered ahead of the first debate among Republican contenders on Wednesday, called for diversification of the export market, through new free-trade agreements, to avoid overreliance on China, which buys $1 of every $5 in farm exports.
“Market diversification helps with risk mitigation for U.S. farm goods,” said the letter. “The United States needs to again take the lead in negotiating new FTAs [free trade agreements] with other countries and work to strengthen the rules-based multi-lateral trading system.”
Sales to foreign markets generate 20 cents of each $1 in farm income, so exports are a key to farm prosperity. The USDA forecasts exports, after setting a record in fiscal 2022, will drop by 8 percent to $181 billion this year. With strong demand for imports of fresh fruits and vegetables, wine, beer, coffee, and sugar, agricultural trade would post a $17.5 billion deficit this year — the largest ever and the third in five years.
“This is a wake-up call,” said the agriculture groups, referring to the deficit. For decades, farm exports were a reliable bright spot in the U.S. trade picture.
China’s preeminent position among export markets “leaves U.S. farmers vulnerable to global supply-chain shocks,” said the letter to presidential candidates. Ag exports slumped by 6 percent during the Sino-U.S. trade war. “Opening new markets and growing existing markets for agriculture decreases a reliance upon the Chinese market.”
During the trade war, U.S. officials such as Agriculture Secretary Sonny Perdue spoke about the need to develop alternative markets, but there were few immediate options. On his first day in office, President Trump pulled the United States out of the Trans-Pacific Partnership, whose 12 members accounted for almost 40 percent of the global economy. The remaining 11 countries formed their own trade bloc. The United States and Europe have seemingly intractable disputes over agriculture. Following the Brexit vote, farm groups suggested pursuit of a U.S.-U.K. trade pact.
Despite strained relations, China was forecast to buy $34 billion of U.S. food and ag products in the 12 months ending on Sept. 30, far ahead of the $28.5 billion in purchases by No. 2 Mexico. Chinese state media said earlier this month that “the expansion of agricultural imports is not a bad thing in itself,” although China has a policy of food self-sufficiency. The government encouraged an expansion of food production this year, but typhoons in late July and early August may have damaged an unknown portion of crops ahead of the fall harvest.
Signing the letter were groups that included the American Soybean Association, National Pork Producers Council, National Milk Producers Federation, Farmers for Free Trade, National Association of State Departments of Agriculture, National Association of Wheat Growers, National Corn Growers Association, North American Meat Institute, Corn Refiners Association, National Council of Farmer Cooperatives, and International Fresh Produce Association.