Tag Archives: China

The outlook for the United States farm economy depends on the implementation of new trade agreements and the evolution of animal and human disease outbreaks.

The University of Missouri Food and Agricultural Policy Research Institute reports that while net farm income increases in 2020, under a baseline assumption of continued trade friction with China, other indicators of the health of the farm economy are not as positive. Projections show that with an assumed return to normal planting and growing weather in 2020, there will be an increase in projected area, yields and supplies and lower prices for corn and soybeans in the 2020/21 marketing year.

With trend yields, 2020 corn production increases to 15 billion bushels, putting downward pressure on prices, which are projected to average $3.57 per bushel. With soybeans, an increase in production drops prices to $8.48 per bushel, before considering the possible impacts of the “Phase 1” trade agreement. Additionally, potential African swine fever impacts, along with the impact of COVID-19, could change the farm economy in 2020, as well.

The Department of Agriculture Tuesday said there’s progress in the implementation of the U.S.-China Phase One Economic and Trade Agreement. Agriculture Secretary Sonny Perdue says China has taken several additional actions to reach its agriculture-related commitments.

The actions include the signing of a protocol that allows the importation of fresh California nectarines, and the lifting of a ban on imports of U.S. beef and beef products from animals over 30 months of age. Additionally, China has updated its lists of facilities approved for exporting dairy, infant formula, seafood, and fish oil and fish meal.

Also, China’s new tariff exclusion process went into effect on March 2 and importers can now apply for exclusions from retaliatory tariffs. Perdue says USDA will continue to closely monitor China’s implementation of the agreement that was signed February 14, 2020. Perdue adds, “These implementation measures are promising steps showing that China is taking steps to fulfill their purchase commitments.”

Beijing recently made U.S. poultry shipments eligible for exemptions from extra tariffs and poultry shipments to China are on the rise. A Reuters article points out that the additional tariff relief may give China a greater ability to follow through on promises to buy significantly more American agricultural goods as part of the Phase One trade deal.

U.S. chicken producer Tyson Foods says its chicken shipments are already rising as a result. China had said last month it would grant exemptions on retaliatory duties to 696 U.S. goods as part of its efforts to ease the trade war between the two largest economies in the world. Jim Sumner, President of the USA Poultry and Egg Export Council, says U.S. poultry wasn’t eligible for the exemptions until last week. “We’re now getting the product into the country without any retaliatory tariffs,” Sumner says.

Global meat and poultry suppliers are competing for sales to China, where an African Swine Fever outbreak has trimmed the hog herd by more than 40 percent, raising the need for protein imports. Beijing removed an almost five-year ban on U.S. poultry imports in November, which U.S. Trade Representative Robert Lighthizer says would mean an additional $1 billion in shipments to China every year. “We’re now on a level playing field with other poultry suppliers to China,” Sumner adds.

The spread of coronavirus is causing a glut of protein in U.S. cold-storage facilities. The Wall Street Journal says the protein backup includes pork, chicken, and beef intended for export to overseas markets that have been hit by the outbreak.

The quantity of breasts, thigh meat, and drumsticks has grown by 12 percent through the first month of 2020, climbing to 957.5 million pounds, which is the highest level ever during January. The amount of pork in storage climbed 11 percent higher in January 2020 than it was at a year ago at the same time. Joe Sanderson of Sanderson Farms, Incorporated, says, “The cold storage facilities we deal with are all busting at the seams.”

U.S. meatpackers have been counting on big orders coming in from China as trade tensions between the two countries eased. However, the coronavirus outbreak has put an unexpected dent in that hope. Huge numbers of people across China aren’t eating out, but rather are staying home, which in turn is slowing down meat consumption in China. That hurts the amount of demand for U.S. protein products. Government-mandated quarantines have created logistical snarls in transportation across China. “The ports are basically backed up,” says Tyson CEO Noel White.

U.S. pork producers don’t seem optimistic about a potential trade deal with the European Union coming together anytime soon. Nick Giordano is the Vice President of Global Government Affairs for the National Pork Producers Council.

Giordano tells Politico that he’s “very skeptical” that the two sides will even reach a mini agreement in the weeks ahead. He feels the real goal should be a comprehensive trade pact covering all sectors of agriculture. “It’s outrageous that a market of that size, with that level of income, is so closed to us,” Giordano says. “They’re stealing jobs from us because of their protectionism and that’s unacceptable.”

The VP says there will be widespread support in the U.S. agriculture community for the Trump Administration to take tough action against the EU if there are no concessions regarding a more open EU market. Meantime, U.S. cattlemen might annually sell $4 billion worth of beef to China within the next five years.

Kent Baucus, Senior Director of International Affairs with the National Cattlemen’s Beef Association, says the Phase One trade deal and the meat shortage in China cause by African Swine Fever should drive U.S. beef exports higher. “We haven’t even scratched the surface on the Chinese market,” he says. “There is a tremendous amount of unmet protein demand in China.