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Donald Trump’s trade war with China left American farmers dependent on government donations to survive. But China is now at the heart of an investment in farmers ’fortunes, as booming exports and rising food prices fuel the recovery of the U.S. agricultural economy.
The United States will send China a record $ 37.2 billion in agricultural products this year to China, led by sales of soybeans, corn, nuts, beef, wheat and poultry. forecast. The sum is 23% of total U.S. agricultural exports estimated at $ 164 billion.
Rising demand from China, coupled with drought and soybean supply constraints caused by drought in Brazil, have driven global growth food prices, providing further impetus to American farmers.
“Things have really changed,” said Mark Wilson, a corn grower in Toulon, Illinois. “It’s fine now.”
U.S. farmers received unprecedented government subsidies after China loathed Trump tariffs with punitive impositions on U.S. agricultural goods in 2018. A long-awaited move in early 2020, when Beijing pledged to make agricultural purchases massive according to a trade deal with the United States, quickly disappeared the pandemic spread and caused Washington to provide more aid.
Government payments it pushed U.S. net agricultural income in 2020 to its highest level since 2013, adjusted for inflation. USDA economists predict that revenue will decline by 8%, as many of these payments will disappear in 2021. But with $ 111.4 billion, the total will remain 21% higher than average annual revenue between 2000 and 2019. .
Soybeans, which are crushed to make feed and vegetable oil, have historically been the largest agricultural export from the United States to China. But China has also entered the market US corn broadly speaking, with 23.2 million tonnes shipped or reserved for the marketing season ending in August, compared to less than 200,000 tonnes five years ago, government data showed.
Corn and soybean prices this spring have approached historic highs when a brutal drought in the summer of 2012 devastated U.S. production. While the growing season is early, this year’s forecasts are for healthy crops, which will allow farmers to take advantage of selling soybeans for more than $ 15 a boxwood and corn above $ 6 a boxwood.
“The fact sheets were just a help in getting that, we were always looking forward to seeing that kind of demand and that kind of pricing,” said Dave Walton, an Iowa soybean and corn farmer. “We have decent conditions, we just put the harvest on the ground and now it’s very good. Therefore, there are many things to be thankful for ”.
Strong sales of the U.S. agricultural belt in China are occurring as tensions between Washington and Beijing increase. The administration of Biden in recent days dozens declared of Chinese companies limits US investors for national security issues, while most of Trump’s tariffs on Chinese products persist.
If sales would continue it was “the $ 64,000 question that everyone wants to know the answer to,” said Scott Irwin, an agricultural economist at the University of Illinois. But he added: “I see no reason why China’s buying should change substantially, at least on a global scale.”
Beijing promised to import to at least $ 80 billion of American agricultural products for two years in its trade agreement in early 2020 with the White House. China was 22% behind its commitment for 2021 in April, but “is catching up quickly“, According to the American Farm Bureau Federation, a pressure group.
Joseph Glauber, a former chief economist at the U.S. Department of Agriculture, was reluctant to credit the preliminary trade agreement for increased sales. He noted the country’s partial recovery from African swine fever, which decimated the country’s herd of pigs, as a force behind demand for food grains.
“I don’t think this is a temporary phenomenon,” Glauber said. “I think China will continue to be a major importer.”
The trade war that began in 2018 caused some parts of the agricultural industry to be heartbroken confidence in Chinese shopping. John Baize, a consultant to the U.S. Soybean Export Council, said diversifying demand was a “primary goal,” as the industry spent on marketing in Southeast Asia, North Africa and the Orient. Medium.
“Right now we are very dependent on China,” Baize said. “But, as you know, China is heavily dependent on the rest of the world for its soybeans.”
The American Farm Bureau Federation said it would not pressure Washington to get more subsidies. “We don’t dedicate ourselves to asking for money or alleviating suffering when things get better,” said Veronica Nigh, the federation’s economist. But he added that if exports to China “go south,” farmers may need help again.
In Iowa, Walton is cautiously optimistic: “We are sure to see profits increase. It won’t be a big wind or diamonds, but it will be comfortably profitable for a while ”.
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