China’s appetite for imports raises prospects in the US agricultural belt

Donald Trump’s trade war with China has left American farmers dependent on government aid to survive. But China is now at the center of a reversal in farmers’ fortunes, as an export boom and soaring food prices have led to a recovery in the US agricultural economy.

The United States is on track to ship $37.2 billion in agricultural goods to China this year, led by sales of soybeans, corn, tree nuts, beef, wheat and poultry, according to the USDA. Climate forecast. The amount is 23 percent of total US agricultural exports, estimated at $164 billion.

Increased demand from China, combined with supply restrictions on corn and soybeans caused by drought in Brazil, has led to an increase in global growth. food prices, providing more support to American farmers.

“Things have really changed,” said Mark Wilson, a corn grower from Toulon, Illinois. “She looks so beautiful now.”

US farmers received unprecedented government support after China responded to Trump’s tariffs with punitive tariffs on US agricultural goods in 2018. The hoped-for delay quickly faded in early 2020, when Beijing pledged massive agricultural purchases under a trade deal with the US. The epidemic spread and prompted Washington to provide more aid.

Government Payments It pushed net US farm income in 2020 to its highest level since 2013, adjusted for inflation. Economists at the USDA project that income will fall 8 percent with many of these payments gone in 2021. But at $111.4 billion, the total will still be 21 percent higher than the average annual income between 2000 and 2019.

Soybeans, which are pulverized to make pig feed and vegetable oils, have historically been the largest agricultural export of the United States to China. But China also entered the market American corn Significantly, with 23.2 million tons shipped or booked for the marketing year ending in August, compared to less than 200,000 tons five years ago, government data showed.

Corn and soybean prices this spring approached all-time highs when a brutal drought in the summer of 2012 devastated US production. While the growing season is early, forecasters this year expect healthy crops, enabling farmers to benefit from soybeans selling for more than $15 a bushel and corn over $6 a bushel.

“The aid was just a band-aid to get us going, and we were always hoping to see that kind of demand and these kinds of prices,” said Dave Walton, a soy and corn farmer from Iowa. “We have decent conditions, we put the crop in the ground and it looks great now. So there is a lot to be thankful for.”

Billion dollar bar graph showing crop and livestock sales mostly to offset lower agricultural subsidies

Strong US agricultural belt sales to China come as tensions between Washington and Beijing escalate. Biden’s administration in recent days Declare dozens of Chinese companies are banned from US investors due to national security concerns, while most of Trump’s tariffs on Chinese goods persist.

Continued sales is “the $64,000 question that everyone wants to know the answer to,” said Scott Irwin, an agricultural economist at the University of Illinois. But he added, “I see no reason for China’s purchases to change significantly, at least on a global scale.”

Beijing promised to import in At least 80 billion dollars of US agricultural products over two years in its early 2020 trade deal with the White House. China was 22 percent behind its 2021 commitment as of April, but it was “catching up QuicklyAccording to the US Farm Bureau Federation, a lobbying group.

Joseph Glauber, a former chief economist at the USDA, was reluctant to adopt the initial trade deal for higher sales. He cited the country’s partial recovery from African swine fever, which has decimated the country’s pig herd, as a force behind the demand for feed grain.

“I don’t think this is a temporary phenomenon,” Glauber said. “I think China will continue to be a very strong importer.”

The trade war that started in 2018 has made some parts of the agricultural industry cautious Accreditation on Chinese purchases. John Baez, an advisor to the US Soybean Export Council, said diversification of demand was a “key objective,” with the industry spending on marketing in Southeast Asia, North Africa and the Middle East.

“We’re very dependent on China right now,” Bayes said. “But, you know, China is very dependent on the rest of the world for soybean production as well.”

The US Farm Bureau Federation said it would not pressure Washington for more subsidies. “We are not in the business of asking for money or alleviating suffering when things get better,” said Veronica Neigh, an economist at the union. But, she added, if exports to China were to head south, farmers might once again need help.

In Iowa, Walton is cautiously optimistic: “We’ll see an increase in earnings for sure. It won’t be a big windfall, or diamonds, but it will be comfortably profitable for a while.”

trade secrets

The Financial Times has revamped Trade Secrets, their daily must-read briefs about the changing face of international trade and globalization.

Register here To understand the nations, companies, and technologies that are shaping the new global economy.

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button