US officials to meet soybean and pork farmers’ groups as concerns grow over fallout from China trade war
US trade representative to discuss possible fallout with agribusiness after Donald Trump decided to slap heavy tariffs on Chinese goods.
American agribusiness groups, including representatives from the American Soybean Association, have been invited to a special meeting in Washington with Trade Representative Robert Lighthizer to discuss the possible fallout from any trade war between the US and China.
The meeting, which will “address trade issues facing our nation’s producers and agribusinesses”, will be convened on Friday, according to one person familiar with the situation, who added that officials from the National Pork Producers Council were also invited to the meeting.
Soybeans are the leading US export to China in terms of value, while pork is one of the products targeted in Beijing’s response to US President Donald Trump’s decision last week to levy punitive tariffs on Chinese goods.
Farmers’ representatives have warned that many farmers cannot afford to lose any income, although exporters said they had met Chinese officials to discuss ways to keep the trade in soybeans going.
To follow through with the order, Lighthizer is drawing up a list of Chinese products that will face tariffs amounting to as much as US$60 billion annually.
China’s commerce ministry said just hours after Trump’s announcement on March 22 that Beijing would impose 15 per cent import tariffs on 120 types of US products, including fruit, wine and steel pipes, worth US$977 million.
It also plans to impose 25 per cent import duties on another eight categories of products worth US$2 billion, including pork and recycled aluminium.
Jim Monroe, a spokesman for the pork producers council, declined to comment on the meeting, saying only that: “As an advocacy organisation, we meet regularly with administration and government officials.”
An official from the trade representative’s office declined to comment.
Protecting agriculture would provide some cover for US President Donald Trump, who drew substantial support from farming states for his winning presidential campaign of 2016.
At the same time, the move would leave other high-ticket export products, such as Boeing jets and Caterpillar tractors, more exposed to trade action.
Iowa, for example, exported US$1.8 billion worth of oilseeds and grains to China, the state’s second largest foreign market after Canada, in 2016, according to data compiled by the US-China Business Council.
China was Nebraska’s top international export destination, with Chinese buyers taking in more than US$1 billion of agricultural products from the rural state.
Trump won both states in the presidential election. Voters there and in many other Midwestern agricultural US states have a lot riding on soybean sales to China.
At US$14 billion, soybeans accounted for about 9.2 per cent of the US’s total 2017 exports to China, and nearly three quarters of the value of its agricultural product exports to the Asian country.
China is also concerned about its soybean trade.
Officials at the department of international cooperation at China’s agriculture ministry met members of the US Soybean Export Council in Beijing this week.
“The Chinese had called for the meeting and wanted to discuss soybean issues and it sounds like they don’t want a disruption either in the soybean flow,” Kevin Scott, who serves on the soybean export council’s board of directors, said. “I think they’re trying to get that worked out.”
The US exports about 60 per cent of its soybean output to China, and roughly half that amount goes to mainland Chinese crushers, which turn the beans into soymeal for animal feed and cooking oil.
“We’re kind of at break-even right now on soybeans on the farm level as far as price goes and profitability, and if we lose 10 to 20 per cent from our market price, for a typical farmer that is US$40,000 to US$80,000 of income that’s lost and that’s more than we can put up with right now,” Scott said.
By comparison, US median household income was $59,039 in 2016.
“Rural America helped put the president in office,” American Soybean Association president John Heisdorffer, who plans to attend the USTR meeting in Washington, said.
Approaching the 2020 presidential election, “we will balance all the good things the administration has done with whatever else happens and I’m sure [how soybean exports are affected by trade action] will be a big part of that”, said Heisdorffer, who produces soybeans on a family farm in Iowa.
Heisdorffer said he plans to raise the possibility at the USTR meeting that farmers in Brazil, China’s largest soybean supplier, would be prompted to expand soybean growing acreage to replace any amount of US soybean supply China lost as a result of trade action against American products.
China’s soybean demand has surged in recent years as a result of steady economic growth, which has led to higher incomes.
That growing wealth allows more people to have meat-rich diets, raising soybeans’ importance as animal feed.
Limited amounts of arable land relative to China’s population restricts the amount of soybeans that can be grown in the country.
“China’s agricultural imports reflect its relative scarcity of land resources, and its most prominent imports are oilseeds, oils and cotton – products that have high land requirements per unit of output,” the US agriculture department said in a special report on China’s growing demand for agricultural imports.
“China has become a net importer of grain, but its grain imports are still modest in comparison with its oilseed imports … Officials in China now acknowledge their country’s need for agricultural imports and are emphasising agricultural trade and investment in diplomacy,” said the report, which was published in 2015.