News ID: 212865
Published: 0644 GMT April 08, 2018

US farmers in 'precarious position' with China as trade war fears escalate

US farmers in 'precarious position'  with China as trade war fears escalate
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American farmers watched this past week with a wary eye as a tit-for-tat trade fight between the world's top two economic superpowers played out and threatened lucrative agricultural exports including soybeans.

American farmers watched warily this week, as a tit-for-tat trade fight between the world's top two economic superpowers played out, threatening lucrative agricultural exports including soybeans, CNBC wrote.

If China follows through on its plan to impose a 25 percent tariff on soybeans, it would make global suppliers like Brazil even more attractive to Chinese buyers. It also would encourage those suppliers to add more acres of soybeans, and then negatively impact the price American farmers can get for their crop.

"Growing trade disputes have placed farmers and ranchers in a precarious position," Zippy Duvall, a Georgia farmer and president of the American Farm Bureau Federation said in a statement on Friday. "We have bills to pay and debts we must settle, and cannot afford to lose any market, much less one as important as China's."

Earlier in the week, the Chinese announced retaliatory tariffs of up to 25 percent on 106 American goods, including soybeans, cotton, corn, sorghum, wheat and beef. It came on the heels of the Trump administration proposing duties on more than 1,300 imported products in China's machinery, electronics, aerospace and robotics sectors.

President Donald Trump then suggested an additional $100 billion in tariffs could come on top of what already was announced, and Beijing official responded that China too was prepared to add more tariffs on US goods. On Saturday, Trump insisted that the US-China trade imbalance was not sustainable.

"A trade war is not good for us," said Art Barnaby, an agricultural economics professor at Kansas State University. "There's a lot of uncertainty as to where this is going to end up."

 

Targeting soybeans

 

The lion's share of the US agribusiness trade to China involves soybeans, which are grown in many farm states where Trump received strong support during the 2016 presidential election. Top soybean growing states include Iowa, Illinois, Minnesota, Nebraska, Indiana, Missouri, Ohio and the Dakotas.

The US sold approximately 33 million tons of soybeans in 2017 to China, or nearly one-third of the beans imported by the Asian country. By comparison, Brazil shipped more than 50 million tons of soybeans last year to China and represented about 57 percent of the total imports.

China buys roughly half of US soybean exports, or about $14 billion annually, and roughly one in three rows of soybeans grown on the nation's farms goes to the world's second-largest economy, according to the American Soybean Association.

Overall, US agricultural exports to China represent almost $20 billion annually for American farmers.

Experts said that if China cuts agricultural exports, it could impact a wide swath of the farm economy — from small to large farmers. It could reduce profits for farmers and make them more willing to delay large purchases, such as new machinery, and encourage them to cut back in other places.

There's already been volatility in the futures markets tied to the tariff threat on soybeans. Other potential impacts could be shipments turned back from Chinese ports or purchases canceled.

The world's second largest economy is also the top buyer of U.S. sorghum, which it uses to feed livestock, but an anti-dumping investigation is expected to curtail purchases this year.

Economists say China's tariffs could create a situation where global agricultural sellers such as the European Union and South America could take share away from the United States in key agricultural commodities sold to China.

   
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