China coronavirus: US agriculture secretary unsure if trade deal farm purchase agreement will be affected

Coronavirus has cast further doubt on China’s ability to buy US$36.5 billion of agricultural goods from the United States in 2020 as part of the phase one trade deal.

US Agriculture Secretary Sonny Perdue says the outbreak will have ‘ramifications economy-wide’, though stopped short of saying it would disrupt purchase goal

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The virus has cast further doubt on China’s ability to buy US$36.5 billion of agricultural goods from the United States in 2020. Photo: AFP

Published: 11:06am, 30 Jan 2020Updated: 1:04pm, 30 Jan 2020

US Agriculture Secretary Sonny Perdue said on Wednesday he does not know whether China’s coronavirus outbreak will upset Beijing’s pledge to radically increase purchases of American farm goods as part of the countries’ recent trade deal.

The virus has cast further doubt on China’s ability to buy US$36.5 billion of agricultural goods from the United States in 2020. Traders were already questioning the commitment as rival soybean supplier Brazil harvests a massive crop and a deadly pig disease curbs Chinese demand for soy used to feed livestock.

China, in the deal signed on January 15, promised to buy at least an additional US$12.5 billion worth of US farm products in 2020 and at least US$19.5 billion in 2021 over the 2017 level of US$24 billion.

But US futures prices have since dropped 5 per cent for soybeans and 8 per cent for pork as China, the world’s biggest soybean importer and pork consumer, has failed to make major purchases.

It obviously is going to have some ramifications economy-wide, which we hope will not inhibit the purchase goal that we have for this year

Sonny Perdue

Agricultural producers have grown worried China’s demand will temporarily suffer as the government has quarantined cities in a bid to contain the coronavirus. Delays or reductions in China’s planned purchases could put more pressure on US farm incomes that suffered during the countries’ bruising trade war.

“It obviously is going to have some ramifications economy-wide, which we hope will not inhibit the purchase goal that we have for this year,” Perdue told reporters on a conference call.