BLOG: Major U.S. farm conference focuses on China

ORLANDO, Fla. — China is top-of-mind for all the farm groups attending the 2019 Commodity Classic.

Davie Stephens, president of the American Soybean Association, said there is no question that the U.S. is going to suffer permanent losses in the Chinese market.

He noted that the market wasn’t built overnight. It took decades to develop.

Soybean exports to China have climbed from US$414 million in 1996 to $14 billion in 2017.

China is starting to make some goodwill purchases in hopes of securing a trade deal with the U.S., which is a good first step.

But that won’t reverse the 20 percent price drop caused by China’s 25 percent import tariff on the crop.

“Goodwill won’t restore the damage tariffs have done,” he said.

ASA chair John Heisdorffer said soybean growers are suffering. The situation is reminiscent of the 1980s when farmers were telling their children to go to college and not return to the farm.

“We’ll get through this,” he said.

“It’s tough.”

Lynn Chrisp, president of the National Corn Growers Association, said corn growers are also feeling the financial strain caused by low commodity prices.

U.S. President Donald Trump has been tweeting that China is about to buy oodles of U.S. soybean and corn products.

Chrisp isn’t putting much faith in that tweet. He has been hearing about the potential for a market breakthrough in China his entire farming career. There have been periods of surging demand but they have been short-lived.

The NCGA feels the U.S. Department of Agriculture’s Market Facilitation Program was a slap in the face to corn growers.

The program was designed to compensate growers for the loss of the Chinese market caused by the tariff dispute.

The NCGA sponsored a study that determined China’s tariffs drove down corn prices by 44 cents a bushel. The compensation they received didn’t come close to covering that.

“When they made the announcement that it was going to be a penny for corn, we were shocked,” said Chrisp.

The USDA acknowledged it didn’t take into account lost sales of ethanol and distillers grains, which both have an impact on corn prices.

Chandler Goule, chief executive officer of the National Association of Wheat Growers, shared some good news about China with reporters.

The World Trade Organization has ruled in favour of the U.S. in a WTO challenge about China’s price supports for wheat, corn and rice.

“We’re very happy with (the ruling),” he said.

NAWG has calculated that China is paying its wheat growers $10.40 a bushel for their crops.

Goule said U.S. farmers would be happy with $4.

NAWG estimates the price support is costing U.S. farmers $640 million a year and it has been happening for many years, so the total cost is in the billions of dollars.

“If they’re going to be a member of the WTO, they’re going to have to play by the same rules,” said Goule.

He expects China to challenge the WTO ruling.

Contact sean.pratt@producer.com

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