China’s import appetite raises prospects in the U.S. agricultural belt

Donald Trump’s trade war with China has left American farmers dependent on government distributions to survive. But China is now at the heart of an investment in farmers ’fortunes, as rising exports and rising food prices fuel a recovery in the U.S. agricultural economy.

The United States is in the process of shipping a record $ 37.2 billion worth of agricultural goods to China this year, driven by sales of soybeans, wheat, tree nuts, beef, wheat and rye. poultry, the U.S. Department of Agriculture has forecast. The sum is 23 percent of U.S. agricultural exports estimated at $ 164 billion.

Increased demand from China, with limited supply on wheat and soybeans caused by a drought in Brazil, have led to global growth. food prices, provides a further boost to American farmers.

“Things have really changed,” said Mark Wilson, a grain farmer from Toulon, Illinois. “It looks pretty good now.”

U.S. farmers have received unprecedented government subsidies after China introduced Trump tariffs with punitive levies on U.S. agricultural goods in 2018. A hope to reappear in early 2020, when Beijing pledges to buying massive farms in a trade deal with the United States soon faded as the pandemic spread and led Washington to offer more help.

Government payments has brought the U.S. net agricultural income in 2020 to its highest level since 2013, adjusted for inflation. USDA economists predict that income will decline 8 percent as many of these payments disappear in 2021. But at $ 111.4 billion, the total will still be 21 percent higher than the average annual income between in 2000 to 2019.

Soybeans, which are crushed to feed pigs and vegetable oil, have historically been the largest U.S. agricultural export to China. But China has also entered the market for it The US grain in a major way, with 23.2 million tonnes both shipped and booked for the marketing campaign ending in August, compared to less than 200,000 tonnes five years ago, government data have shown.

Wheat and soybean prices this spring are approaching historic highs when a brutal drought in the summer of 2012 devastated U.S. production. While the growing season is earlier, this year’s forecasts expect healthy crops, allowing farmers to profit from soybeans selling for more than $ 15 per bushel and grain above $ 6 per bushel.

“The flea markets were just a Band-Aid to get through, we always hope to see this kind of demand and these kinds of prices,” said Dave Walton, a soybean and grain farmer from Iowa. “We have decent conditions, we just put the culture on the ground and it looks beautiful now. So there’s a lot to be thankful for.”

The $ bn column chart showing Crop and Livestock Sales mainly offset the decline in agricultural subsidies.

Strong U.S. agricultural belt sales in China come as tensions rise between Washington and Beijing. The Biden administration in recent days declared tens of Chinese companies out of bounds for U.S. investors over national security concerns, while most of Trump’s tariffs on Chinese goods persists.

If the sale continues 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 acquisition will change substantially, at least on a global scale.”

Beijing has promised to import into it at least $ 80 billion of U.S. agricultural products in more than two years in its trade deal in early 2020 with the White House. China was 22 percent behind its commitment for April 2021, but it was “late coming soon, ”According to the American Farm Bureau Federation, a lobby group.

Joseph Glauber, former chief economist of the United States Department of Agriculture, was reluctant to recognize the preliminary trade agreement for growing sales. He pointed to the country’s partial recovery from the African swine fever, which has decimated the country’s herd of pigs as a force behind demand for feed grain.

“I don’t think this is a temporary phenomenon,” Glauber said. “I think China will continue to be a very strong importer.”

The trade war that began in 2018 has made some parts of the agricultural industry unhappy trust on Chinese acquisitions. John Baize, a consultant to the U.S. Soybean Export Council, said demand diversification was a “major goal,” with industry spending on trade in Southeast Asia, l ‘North Africa and the Middle East.

“We are now very dependent on China,” Baize said. “But, you know, China depends a lot on the rest of the world even for its soybeans.”

The American Farm Bureau Federation said it was not pressing Washington for more subsidies. “We’re not in the business of 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 were to “go south”, farmers might again need help.

In Iowa, Walton is cautiously optimistic: “We will certainly see an increase in profits. It won’t be a big wind, or diamonds, but it will be comfortably profitable for a while. ”

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