US farm­ers in need of ad­vice af­ter China halts pur­chases, switch­ing to other pro­duc­ers

Global Times US Edition - - BIZCOMMENT - By Wang Ji­amei Page Ed­i­tor: [email protected] glob­al­times.com.cn

It is more ur­gent than ever for Amer­i­can farm­ers to seek plant­ing ad­vice from US Pres­i­dent Don­ald Trump in­stead of agron­o­mists amid the es­ca­lat­ing trade war be­tween the world’s two largest economies. Trump, who re­peat­edly vowed to pro­tect Amer­i­can farm­ers, should just tell his loyal sup­port­ers frankly that they should switch crops if it’s not too late be­cause there will be no ex­ports of US agri­cul­tural prod­ucts to China for as long as the trade war drags on.

Af­ter Trump threat­ened last week to im­pose an ad­di­tional 10 per­cent tar­iff on the re­main­ing $300 bil­lion worth of Chinese ex­ports to the US start­ing from Septem­ber 1, China’s Min­istry of Com­merce said that Chinese com­pa­nies have halted pur­chases of US farm prod­ucts. Now the loy­alty of Amer­i­can farm­ers to Trump is fac­ing a real test, as it re­mains to be seen whether they can af­ford to lose such a large mar­ket as China in the com­ing years.

So far, Trump has been good at sud­denly es­ca­lat­ing the trade row with China for rea­sons he doesn’t re­ally un­der­stand. Ac­cord­ing to Trump, he would im­pose an ad­di­tional 10 per­cent tar­iff on $300 bil­lion Chinese goods be­cause China had not ful­filled its prom­ise to buy large amounts of US farm prod­ucts. Since July 11, Trump has com­plained sev­eral times that China hadn’t started buy­ing US agri­cul­tural prod­ucts. Dur­ing the G20 Osaka meet­ing at the end of June, China agreed to buy more US farm goods to fa­cil­i­tate re­sumed trade talks.

But China quickly dis­missed such ground­less ac­cu­sa­tions. Ac­cord­ing to a CCTV re­port cit­ing Cong Liang, sec­re­tary gen­eral of the Na­tional De­vel­op­ment and Re­form Com­mis­sion, China is hon­or­ing agree­ments signed ear­lier to im­port US soy­beans. In July, a to­tal of 2.27 mil­lion tons of US soy­beans had been shipped to China.

Au­gust is ex­pected to see 2 mil­lion tons of US soy­beans loaded for China, and there will be an­other 300,000 tons in Septem­ber.

More­over, Cong was quoted in the re­port as say­ing that dur­ing the pe­riod from July 19 to Au­gust 2, China pur­chased 130,000 tons of soy­beans, 120,000 tons of sorghum, 60,000 tons of wheat, 40,000 tons of pork and pork prod­ucts, and 25,000 tons of cot­ton from the US. It is not the first time that Trump’s claims on the trade bat­tle have been stun­ning in their reck­less­ness, and Amer­i­can farm­ers, who bear the cost of such reck­less­ness, have strug­gled for the past year. China used to be the big­gest buyer of US soy­beans in the world, with pur­chases of 32.9 mil­lion tons of US soy­beans in 2017. Yet, due to the trade war, Chinese buy­ers have pur­chased about 14.3 mil­lion tons of soy­beans from the US since Septem­ber 2018, the low­est level in 11 years, ac­cord­ing to US data. More­over, soy­bean prices plum­meted as US stock­piles soared to a record 3.736 bil­lion bushels as of De­cem­ber 1, 2018, ac­cord­ing to data from the US Agri­cul­ture De­part­ment. Ac­cord­ing to a re­port by Politico, US farm debt is ex­pected to reach $427 bil­lion this year, ap­proach­ing levels not seen since the 1980s farm cri­sis. Also, in the first three months of 2019, the de­fault rate for farm loans held by banks hit its high­est level in seven years. So far, the Trump ad­min­is­tra­tion has of­fered $28 bil­lion in fi­nan­cial aid to help Amer­i­can farm­ers get through the dif­fi­cult times and to com­pen­sate for their losses, and this week Trump hinted at more aid if it’s nec­es­sary.

While the sub­si­dies may bring some tem­po­rary re­lief, the value of the lost mar­ket is im­mea­sur­able. Af­ter all, Amer­i­can farm­ers can­not rely on sub­si­dies for a liv­ing and to sup­port their fam­i­lies in the long run. With the trade war on­go­ing, US farm­ers may find some small al­ter­na­tive mar­kets, but it is im­pos­si­ble to find an­other mar­ket as big as China for their prod­ucts.

In the mean­time, farm­ers in other coun­tries are look­ing for­ward to fill­ing the mar­ket gap in China. At present, at least nine coun­tries in­clud­ing Brazil, Ar­gentina, Rus­sia, Ethiopia, Kaza­khstan, Bo­livia, and Ukraine are ac­tively seek­ing to sell soy­beans to China. In late July, China’s Gen­eral Ad­min­is­tra­tion of Cus­toms an­nounced ap­proval for soy­bean im­ports from Rus­sia and wheat im­ports from the Kur­gan re­gion of Rus­sia.

Un­der the cur­rent cir­cum­stances, while trade talks may still re­sume in Septem­ber, it would be hard for Amer­i­can farm­ers to ex­pect much progress from the ne­go­ti­a­tions or any turn­around in their sit­u­a­tion, espe­cially in the short term.

If it’s not too late, farm­ers had bet­ter switch crops for the up­com­ing plant­ing sea­son. As for next sea­son, ask Trump if he’s still sit­ting in the

White House. The au­thor is a re­porter with the Global Times. bi­zopin­[email protected] glob­al­times.com.cn

Il­lus­tra­tion: Luo Xuan/gt

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