US farmers face risk of losing Chinese market: official

The escalation of the trade friction between China and the US will obviously bring impacts on the US agriculture, said Han Jun, Vice Minister of Agriculture and Rural Affairs, during an interview with People’s Daily. Han, who is also the deputy director of the office of the central agricultural work leading group, said that although the White House and the US Department of Agriculture declared a $12 billion bailout to help US farmers weather the trade war, the latter would still face the risk of losing Chinese market on which they had invested decades of efforts. China decided to impose 25 percent tariff on $34 billion worth of US imports including agricultural products as a countermeasure after the US released a list of Chinese exports worth the same value facing extra tariffs on July 6, Han noted. Soybeans are the most important products in China-US agricultural trade. The Organization for Economic Cooperation and Development (OECD), last month, predicted a general global balance of soybean supply and demand in 2018, while the US soybean production is estimated at 117.79 million tons this year, down by 1.5 percent from that of the 2017. The US exported 59 percent of its total soybean production to China in the last three years, and is estimated to ship over 30 million tons of soybeans to China in 2018 if the trade friction didn’t happen. However, most Chinese enterprises stopped their soybean purchases from the US since China declared to slap 25 percent tariff on the US soybeans on July 6. The influence will be expanded when the soybeans gradually hit the market this October. The price drop, increased export pressure, as well as the prolonged export cycle would all bring losses to the US soybean growers, and also unfavorable results to the international trade and industrial development of the US soybeans. According to monitoring data, the soybean futures price has experienced a nearly 20 percent plunge upon China’s proposal to impose 25 percent tariff on the US crop early this April. The US and the EU, in a joint statement issued after the meeting between US President Donald Trump and European Commission President Jean-Claude Juncker on July 25, reached a consensus that the EU will increase soybean imports from the US. The 28 EU members imported about 13.65 million tons of US-grown soybeans in 2017, and their maximum import volume of US soybeans was only 5.5 million tons during the period from 2012 to 2016. OECD-FAO Agricultural Outlook predicted that the EU’s annual soybean import will stand at 13 to 14 million tons in the next decade. Even if all of this volume comes from the US, the US will not be able to make up the loss of the huge amount of soybeans that could have been exported to China, let alone it is impossible for EU to import all the soybeans from the US. The open hearing held by the US House of Representatives on July 19 also indicated the concerns of the US society over the loss of market share, as the share on the Chinese market is a hard-won result after years of operation by the US industry associations of soybean, cereal, dairy products, meat, aquatic products, fruit and nuts. Han said that Chinese market of agricultural products is of fierce competition where the US products have to face higher cost if the trade friction continues to escalate. As a result, the share of US products will be largely reduced and finally be taken by their rivals. It will be hard for the US to regain the Chinese market once the other countries become reliable suppliers for China, the official said, adding that it is the last thing that the US agricultural industry hopes to see, and they don’t want their long-term interests to be damaged by the tariff policy. “In China, it took 36 years of trying to build up markets and relationships with marketers,” said US Soybean Export Council CEO Jim Sutter, while Brazilian Minister of Agriculture, Livestock, and Supply Blairo Maggi expressed that his country is capable of doubling the cultivated area of soybeans which currently stands at 85 million acres. What the US agricultural industry values is the huge market in China, just as what has been said in the letter to the US trade representative Robert Lighthizer written by the US Wheat Associates and other US farm organizations: lost market share is incredibly difficult to regain.

By Gao Yuncai

(People’s Daily)