A trade deal between the U.S. and China is possibly near, according to Farm Journal Washington correspondent Jim Wiesemeyer, as China’s top economic advisors arrive in Washington to work through issues.
While the deal could be announced as early as this week, trade concerns continue to weigh on U.S. agriculture. Some economists say during a time when margins are already tight, agriculture has a lot to lose.
“25 percent or more of what we produce today is leaving the United States, losing those markets as a result of WTO action or countries just deciding they also want to move to other countries, that's potentially a big problem,” said Scott Brown, economist and professor with the University of Missouri. “When across the board we've seen an expansion of ag commodity supplies, it comes at a very bad time for just about every commodity we can talk about in agriculture.”
Ray Starling currently serves as the special assistant to the president for agriculture and agricultural trade. He says he understand the angst in farm country right now.
“In the ag world we feel like notwithstanding the inequities and the unfairness around the world with regard to the conversation about free trade, we have still done pretty well,” he said in an interview with U.S. Farm Report. “We are selling a lot of our product elsewhere and we are worried that we will upset the apple cart with regard to keeping those markets open.”
However, Starling said what agriculture is missing is how much ground there is to potentially gain. Dan Basse is the CEO of AgResource Company. His ag marketing firm recently compiled a chart showing as China's appetite to buy more soybeans continues to grow, the U.S. is losing market share.
“We used to be up over 54 percent, we’re now heading into the upper 30s,” said Basse. “A lot of that's been due to of course- in large- South American production. Brazil has been ramping up their production, and they are always anxious to sell their beans and they're heading to China.”
“That's something we need to reverse,” said Starling. “We are still selling them more and more soybeans every year in terms of pure number of bushels, but as a percentage of their market, we should be nervous that we are not growing along with their market.”
Basse said looking longer term, China is expected to continue to continue to buy more beans, and if the U.S. doesn't fix lingering trade issues with China, the U.S. could miss the boat.
“The Chinese continue to ramp up soybean imports,” said Basse. “USDA forecasts about 103 million metric tons in the recent WASDE report. I imagine that at some point China in the next five years will take close to 120 million tons. We'd sure like to grab a big share of that.”
The president has stated clearly in the past that it's not only free trade, but fair trade for which the administration is striving. Basse said it's those unfair practices coming to light as the trade dispute with China plays out.
“The Chinese are raising trade barriers to us in terms of our product today,” said Basse. “Brazilian and Argentinean beans are sailing right through without a problem. China has picked on us on foreign matter and weed seed, however, that issue has just come up in the last couple of weeks and is new. We believe it's related to the trade dispute that's ongoing.”
Basse says looking past just soybeans, it's the meat sector that also has room for improvement, and resolving years of trade issues could open the door for more meat exports into China.
“When I think about the opportunities for beef and pork into China, it's tremendous, and so it's the meat sector that we're most excited about, should we get a level playing field,” said Basse.
Starling said as products like U.S. poultry continue to face barriers into China, said agriculture's "do no harm" mantra when it comes to trade is setting the bar too low.
“If I think if we think long- term about the ag economy and where we need to go in the fact that our production is going to continue to increase, our technologies are going to continue to get better, our farmers are going to continue to be smarter and be better at managing all the inputs and the elements that they have to put up with, if that's the case, we're going to have to sell more, not just do no harm,” said Starling.
That's why Starling said even though there may be some short-term pain, the administration is optimistic about the possible long-term gain with future trade to China.
“The president is committed to getting better than we already have, and we're going to need a lit bit of room to get there,” said Starling. “So bear with us. We would just ask for that patience to continue and give us a chance to try to make some progress on some of these issues.”