US soya farmers eye new markets
Trade tension with China result in declining exports
US soya-bean farmers have worked for decades to make China their biggest foreign customer. But now they face a tougher challenge: weaning themselves off that market.
US soya-bean farmers have worked for decades to make China their biggest foreign customer. But now they face a tougher challenge: weaning themselves off that market.
With trade tension cutting deeply into exports, US soyabean farmers, industry groups and government officials are looking for a stronger foothold in the global markets beyond China, including Europe and Southeast Asia.
“While we’ve enjoyed the market share, has China become dependent on us or have we become dependent on China,” agriculture secretary Sonny Perdue asked last week.
“That’s not a healthy economic balance.”
A temporary truce struck by presidents Donald Trump and Xi Jinping at the Group of 20 summit in Argentina in December boosted optimism of easing in that trade tension that has roiled the US “farm belt”.
The US agreed to postpone planned tariff increases as the two countries begin negotiating other thorny issues.
Despite the truce, farmers and others are working on many fronts to secure a home for US soya beans amid the uncertainty: pitching their oilseeds in other countries, trying new varieties for domestic use and planning to switch fields over to maize next spring. Any such changes, though, present risk and logistical hurdles.
Replacing China is a tall order. In 2017, China bought 57% of all US soya beans exported, more than eight times the total sold to Mexico, the next-biggest buyer by quantity, according to figures from the US department of agriculture.
Since the turn of the century, no other country has matched China’s purchases of US soya beans. As China imposed retaliatory tariffs on the US oilseed, however, exports to China plunged 62% in the first 10 months of 2018 compared with levels of the year before.
The US Soybean Export Council, a farmer- and industryfunded group, has launched a project aimed at making up for lost sales to China.
Members of the council joined a regional trade exchange in Spain in November, working to connect US soya bean exporters with buyers from the EU, Middle East and North Africa. Jim Sutter, the council’s CEO, said: “It’s far from a guarantee it will work,” adding that trade relationships can take years to build.
The group is continuing efforts in China despite the trade interruption and US farmers are hopeful the market will reopen.
The Trump administration is also trying to sell US crops to a wider range of buyers. In Washington, the department’s Foreign Agricultural Service has dispatched Ted McKinney, undersecretary for trade, to Indonesia and SA to promote US soya beans since China implemented its tariffs.
Perdue told farmers recently that the agency is working to open more doors to US soya beans in places such as Japan, India and Malaysia.
The department will close 2018 with six foreign trade missions, compared with the typical three to four a year. Seven more are scheduled for 2019.
Department officials were pushing other countries to eliminate what the US saw as unjust requirements related to crop quality and safety, which would help break down barriers in some markets, said Greg Ibach, the department’s undersecretary of agriculture for marketing and regulatory programmes.
In July, Ohio-based soya bean farmer Bret Davis joined department officials on the trip to Indonesia where he toured a food plant, munched on local chips made with soya-based protein and talked up the protein content and amino-acid balance of US soya beans.
“It’s been a hard learning curve right now because of the sharp decline from China,” Davis said.
Pivoting away from China could spell big changes for the US agricultural industry and its infrastructure investments.
China’s past demand for soya beans typically translates to four months of heavy sales, packing oilseeds onto trains bound for Pacific Northwest ports, where agricultural companies have built terminals to supply crops to Asian countries.
Diversifying the market for US soya beans around the globe could mean spreading exports more evenly throughout the year, and may direct more crops towards East Coast and Gulf of Mexico ports, soya bean industry officials said.
Some see a chance to sell more soya beans at home. Minnesota-based start-up Calyxt is marketing gene-edited soya bean seeds that produce a vegetable oil free of trans fats.
Farmers can collect a premium growing Calyxt’s specialty soya beans, and reduce their exposure to China’s influence on commodity soya bean prices, according to Jim Blome, who is the company’s CEO.
Tregg Cronin, who farms near Gettysburg, South Dakota, planted about 60% of his soya bean areas in 2018 with Calyxt’s beans, which he said brought him a price 25% better than his typical varieties.
“The premium became not only a bonus, but the difference between making money and losing money on our soybean crop,” he said.
US farmers were not giving up on China. “China is so big, no matter what they do we’re always going to feel it,” Illinois farmer Frank Legner said. “It will be nice to have those other markets to dampen the blow.”
WHILE WE’VE ENJOYED MARKET SHARE, HAS CHINA BECOME DEPENDENT ON US OR HAVE WE BECOME DEPENDENT ON CHINA?