China is a golden market, however, it is also a potential pothole for U.S. food and ag exports, said 20 farm and agribusiness groups in a letter to presidential aspirants. The letter, delivered ahead of the first debate among Republican contenders, called for diversification of the export markets through new free-trade agreements to avoid over reliance on China, which buys $1 of every $5 in farm exports.
“Market diversification helps with risk mitigation for U.S. farm goods,” said the letter. “The United States needs to again take the lead in negotiating new Free Trade Agreements (FTAs) with other countries and work to strengthen the rules-based multi-lateral trading system.”
Sales to foreign markets generate 20 cents of each $1 in farm income, so exports are a key to farm prosperity. The USDA forecasts exports, after setting a record in fiscal 2022, will drop by 8% to $181 billion this year. With strong demand for imports of fresh fruits and vegetables, wine, beer, coffee, and sugar, agricultural trade would post a $17.5 billion deficit this year — the largest ever and the third deficit in five years.
“This is a wake-up call,” said the agriculture groups, referring to the deficit. For decades, farm exports were a reliable bright spot in the U.S. trade picture.
China’s preeminent position among export markets “leaves U.S. farmers vulnerable to global supply-chain shocks,” according to the letter. Ag exports slumped by 6% during the Sino-U.S. trade war. “Opening new markets and growing existing markets for agriculture decreases a reliance upon the Chinese market.”
Despite strained relations, China was forecast to buy $34 billion of U.S. food and ag products in the 12 months ending on September 30, far ahead of the $28.5 billion in purchases by Number 2 Mexico. Chinese state media said earlier this month that “the expansion of agricultural imports is not a bad thing in itself,” although China has a policy of food self-sufficiency. The government encouraged an expansion of food production this year, but typhoons in late July and early August may have damaged an unknown portion of crops ahead of the fall harvest.
Signing the letter were groups that included the American Soybean Association, National Pork Producers Council, National Milk Producers Federation, Farmers for Free Trade, National Association of State Departments of Agriculture, National Association of Wheat Growers, National Corn Growers Association, North American Meat Institute, Corn Refiners Association, National Council of Farmer Cooperatives, and International Fresh Produce Association.
EDITOR’S TAKE:
The ag groups stated the case for increased trade diversification very well. China has been the dominant customer for our ag products for many years. That said, increasing tensions between the U.S. and China, coupled with China’s aggressive expansion into Africa, expose the danger of having such a large percentage of our ag exports going to a single purchaser. There are still many countries that would be excellent trade partners. It is a matter of identifying those specific targets and actively negotiating FTAs now. Waiting too long could prove to be a huge mistake on the part of U.S. trade negotiators.
For the time being, however, exports, while declining slightly, are still strong. U.S. agriculture is still strong. Farmers/ranchers still have plenty of income. Now is the perfect time to put your best foot forward with AgTruckTrader.com. And don’t forget to entice them with AgPack® - now worth up to $32,000 in exclusive rebates and discounts.
