China’s import demand improves the prospects of the U.S. farm belt

Donald Trump’s trade war with China has made American farmers rely on government relief funds to survive. But China is now at the center of a reversal of the fortunes of farmers, as booming exports and soaring food prices have promoted the recovery of the US agricultural economy.

The U.S. Department of Agriculture said that this year the U.S. will export 37.2 billion U.S. dollars worth of agricultural products to China. Sales of soybeans, corn, nuts, beef, wheat and poultry will reach record levels. forecastThis amount accounts for 23% of the total US agricultural exports estimated at 164 billion U.S. dollars.

Increasing demand in China, as well as restrictions on the supply of corn and soybeans caused by the drought in Brazil, have contributed to a surge in global demand. Food prices, Which provided further impetus for American farmers.

“Things really got better,” said Mark Wilson, a corn grower from Toulon, Illinois. “It looks pretty good now.”

After China imposed punitive tariffs on American agricultural products in 2018 in response to Trump’s tariffs, American farmers received unprecedented government subsidies. In early 2020, Beijing promised to purchase agricultural products on a large scale under a trade agreement with the United States, but it quickly disappeared. The pandemic spread and caused Washington to provide more aid.

Government payment Promote U.S. net agricultural income in 2020 to reach the highest level since 2013, adjusted for inflation. Economists at the U.S. Department of Agriculture predict that income will fall by 8% in 2021, as many of these payments will disappear. But the total is 111.4 billion U.S. dollars, which will still be 21% higher than the average annual income from 2000 to 2019.

Soybeans are pressed into pig feed and vegetable oil, and have historically been the largest export of agricultural products from the United States to China.But China has also entered the market American corn Government data show that 23.2 million tons have been shipped or booked for the sales year ending in August, compared with less than 200,000 tons five years ago.

This spring, corn and soybean prices were close to historical highs, when a severe drought in the summer of 2012 destroyed US production. Although the growing season is early, forecasters expect crops to be healthy this year, enabling farmers to use soybeans that cost more than $15 per bushel and corn that costs more than $6 per bushel.

Dave Walton, a soybean and corn farmer from Iowa, said: “The handouts are just band-aids to help us through the difficulties. We have always hoped to see this kind of demand and this kind of price.” “We have good conditions. We just planted the crops in the ground and it looks great now. So there is a lot to be thankful for.”

The billion-dollar bar chart shows that crop and livestock sales mainly offset the decline in agricultural subsidies

As tensions between Washington and Beijing escalated, sales to China from the U.S. agricultural belt were strong.The Biden administration in recent days Announced dozens Of Chinese companies have banned American investors from entering due to national security concerns, and most of the tariffs imposed by Trump on Chinese goods adhere to.

Scott Irwin, an agricultural economist at the University of Illinois, said whether sales will continue to be “a $64,000 question that everyone wants to know the answer to.” But he added: “I don’t see any reason why China’s purchases will change significantly, at least globally.”

Beijing commits to imports At least 80 billion U.S. dollars In the trade agreement with the White House in early 2020, American agricultural products for more than two years. As of April, China’s 2021 commitment is 22% behind, but it is “catching up” Quickly“According to the lobbying group the U.S. Farm Bureau Federation.

Joseph Glauber, the former chief economist of the U.S. Department of Agriculture, is reluctant to attribute sales growth to the preliminary trade agreement. He pointed out that the country has partially recovered from African swine fever, which has led to a significant reduction in the country’s pig herd, which is the driving force behind the demand for feed grains.

“I don’t think this is a temporary phenomenon,” Glauber said. “I think China will continue to be a very powerful importer.”

The trade war that began in 2018 has caused some agricultural rely About China sourcing. US Soybean Export Council consultant John Bizer said that demand diversification is a “primary goal” for the industry’s marketing expenditures in Southeast Asia, North Africa and the Middle East.

“We are very dependent on China now,” Bai Ze said. “But, you know, China’s soybeans are also heavily dependent on the rest of the world.”

The U.S. Bureau of Agriculture said it would not impose more subsidies on Washington. The federation’s economist Veronica Nigh said: “When things get better, our job is not to ask for money or to relieve pain.” But she added that if exports to China “go south” , Farmers may need help again.

In Iowa, Walton is cautiously optimistic: “We will definitely see an increase in profits. This will not be a big windfall or a diamond, but it will be profitable for some time.”

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About the Author: Agnes Zang