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Farm groups express praise, concern for continued trade recovery

Jennifer Houston, NCBA President. Photos courtesy The Hagstrom Report

Farm groups praised the China deal signed today, although some expressed concerns about whether the Chinese would fulfill their expectations and called for another round of Market Facilitation Program payments.

American Farm Bureau Federation President Zippy Duvall said, “Today’s signing is an important step in giving America’s farmers and ranchers the ability to get back to business in the global market. China was once the largest market for U.S. agricultural products but has dropped to fifth largest since retaliatory tariffs were introduced. This agreement will help turn around two years of declining agricultural exports. The potential of tens of billions more in exports is welcome news for farmers who are eager to compete on a more level playing field.

“This is a great way to start the new year, but there is more work to do. We encourage the Senate to pass the U.S.-Mexico-Canada Agreement to increase export opportunities with our North American neighbors,” Duvall added. “We also look forward to additional trade agreements with countries that are locking in deals with our competitors. This must be a focus in 2020.”

National Farmers Union President Roger Johnson said, “After so many months of uncertainty and escalating tensions, it is a good sign that our two countries appear to have found common ground. We are hopeful that this deal will meaningfully address China’s problematic trade practices and intellectual property theft as well as finally establish some stability for American farmers’ export markets.

“But given the numerous deals that have been reached and then breached in the past two years, we are also skeptical. And without more concrete details, we are deeply concerned that all of this pain may not have been worth it. Not only has this trade war cost farmers billions of dollars’ worth of sales to China, but it has also bruised our reputation, making other trading partners reluctant to work with us,” Johnson added. “To justify these lasting damages, this deal must deliver more than vague, unenforceable, short-term commitments – we need real and lasting behavioral change from China, and we need reliable and robust agricultural export markets. That is the standard the Trump administration should be aiming for as it negotiates the next phase of this agreement.”

National Corn Growers Association President Kevin Ross attended the ceremony and said, “Signing the phase one agreement with China is a step in the right direction to resolving the trade dispute with China and restoring the trading relationship between our two countries. As more specifics become available, we will closely monitor implementation to ensure that the commitments are upheld and that U.S. corn farmers resume trading with Chinese customers. NCGA urges the administration to quickly commence phase two negotiations and work to resolve retaliatory tariffs.”

Corn Refiners Associaton President and CEO John Bode said, “The signing of a phase one agreement with China is a positive step forward, and hopefully a sign of good things to come for our nation’s farmers, ranchers, and agri-businesses. While details remain unrevealed, China and the U.S. have announced a stage one agreement that includes reforms to China’s intellectual property protections, technology transfer, expanded agriculture purchases ($40 billion-50 billion), reduced barriers to financial services, expanded U.S. import purchases (i.e., $200 billion), currency manipulation, and improved dispute resolution procedures.”

American Coalition for Ethanol CEO Brian Jennings said, “Among other provisions, the partial agreement includes a commitment by China to purchase agricultural products over the next two years, including U.S. ethanol and distillers grains. Phase one represents a positive step in the right direction, especially once we have evidence that China has made actual purchases of U.S. ethanol and distillers grains, but given ongoing export and domestic market constraints, there is much more work to do. The signing of this partial trade deal with China doesn’t erase the pain still being felt at home due to the artificial lid EPA’s mismanagement of the Renewable Fuel Standard has placed on domestic ethanol demand. Further, today’s trade agreement follows reports that China suspended its plan to implement an E10 nationwide mandate this year, raising more uncertainty for the industry. We remain hopeful the next phase of talks with China can conclude with the restoration of a robust and enforceable trade relationship.”

Renewable Fuels Association President and CEO Geoff Cooper said, “We are very optimistic about the potential of this agreement for American agriculture and the renewable fuels industry — with the inclusion of ethanol and key co-products like distillers grains — and are looking forward to more specific details on the agreement. America’s ethanol producers have experienced significant economic losses due to punitive Chinese tariffs on our products, and we are eager to return to a more open trading relationship with China. Chinese consumers understand that using ethanol can lower fuel prices and help address major air quality concerns in urban areas across the country. In addition, the ethanol industry’s animal feed co-products are an economical source of nutrition for China’s livestock and poultry sector.”

Growth Energy CEO Emily Skor said, “The signing of the phase one trade agreement with China today is another positive step toward restoring market confidence for U.S. biofuel producers. We’re grateful to U.S administration officials for their continued work on securing this trade agreement at such a pivotal time for our nation’s agriculture and renewable energy industries. Breaking down trade barriers between our nations will provide a valuable opportunity to restore demand for American biofuel, and we hope to soon see biofuels and DDG exports back on the Chinese market.”

American Soybean Association President Bill Gordon, a grower from Worthington, Minn., said, “We have long supported changes to how China conducts business with the world, in agriculture and other industries. Today’s signing addresses many of those concerns and is a positive for the U.S., including reduction of non-tariff barriers to trade that are important to soybean growers and other agriculture groups. Yet, as an industry, we have a lingering unease regarding the tariff on U.S. beans, which was not addressed in this deal. China needs to take action, and, as a goodwill gesture, offer to remove its retaliatory tax on our soybeans.”

U.S. Wheat Associates (USW) and the National Association of Wheat Growers (NAWG) said they are “very encouraged by the signing of a phase one trade agreement with China.” Chinese imports of U.S. soft white (SW), hard red spring (HRS) and hard red winter (HRW) wheat classes were trending up before abruptly ending when China implemented retaliatory tariffs on U.S. wheat and other agricultural commodities in March 2018, the group noted.

“Even though China has huge domestic wheat stocks, they were buying more U.S. wheat because they needed it to meet growing demand for higher quality wheat foods,” said USW President Vince Peterson. “The losses we demonstrated soon after China stopped importing U.S. wheat have only grown since then, so we hope the agreement signed today signals a potential turn-around.”

Adding to the optimism, Peterson added, is China’s separate agreement to work toward filling its 9.6 million metric ton reduced tariff rate quota (TRQ) for wheat imports. “If the changes are in fact implemented, and Chinese millers can respond to market signals, most of the TRQ should be used. For U.S. wheat farmers, the phase one deal and TRQ compliance would create a very welcome opportunity for Chinese miller customers to once again apply the technical expertise and assistance USW provides to use wheat with specialized end-use applications that distinguishes U.S. wheat from domestic Chinese supplies.”

“Wheat farmers have experienced the harm of unfair trading practices at the hands of China for far too long, as reinforced by the recent WTO wins. This step forward in negotiations between the U.S. and China is a tremendous way to begin the new year,” stated NAWG CEO Chandler Goule.

“Our organization and the farmers we represent agree with the Trump administration that China has not been transparent about its protectionist policies,” Peterson said. “Now it remains to be seen if China will comply fully with its WTO commitments and this new agreement so that trade between our two countries can flourish.”

U.S. Grains Council Chairman Darren Armstrong, a farmer from North Carolina, said, “The U.S. Grains Council is pleased to see the signing today of a phase one deal with China, which should reduce continued market uncertainty and incentivize China to purchase significant amounts of the full range of U.S. agricultural products, including grains, distiller’s dried grains with solubles (DDGS) and ethanol, to total at least $80 billion over the next two years.

“The structural reforms, particularly those affecting feed grains, agricultural biotechnology, and sanitary and phytosanitary measures – once fully committed and implemented – will hopefully offer lasting impacts beyond short-term commitments to make accelerated, market-driven purchases.”

National Cotton Council Chairman Mike Tate, an Alabama cotton producer who was at the White House for the signing, said, “While we welcome phase one and are hopeful about the potential for future increased sales to China, U.S. cotton producers continue to face a challenging economic climate. As such, we encourage President Trump and USDA to follow through with the third tranche of MFP [Market Facilitation Program] payments as quickly as possible.

“Since the middle of 2018, the ongoing trade dispute between the United States and China has been front and center in any discussion of the cotton market,” Tate said. “Cotton prices remain well below pre-dispute levels due to China’s imposition of a 25% retaliatory tariff. That’s why removal of these tariffs should be a high priority for any upcoming dialogue between the two countries.”

National Sorghum Producers Chairman Dan Atkisson, a sorghum farmer from Stockton, Kan., said, “We anticipate fully analyzing the terms of the deal, but as for what we understand today, it offers more opportunities for our growers to once again become competitive in the Chinese market and to regain relationships with our customers there. We know we have the sorghum to sell, and we know our customers in China want our product. Therefore, we look forward to re-establishing business at the shipment levels we saw before this process began.”

The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) praised the agreement, but stressed that “work with China is not complete until the retaliatory tariffs against all U.S. dairy exports are fully lifted.”

“Today’s announcement of a deal that makes progress on regulatory restrictions and other nontariff barriers hindering dairy trade is a positive step forward. These are important deliverables that USDEC has been pressing China for over the course of the last few years,” said Tom Vilsack, president and CEO of USDEC and the Agriculture secretary in the Obama administration. “We need to continue to work with our government, China’s government and our customers to finish the job by lifting the remaining Chinese retaliatory tariffs against our exports.”

“America’s dairy farmers have been disproportionally harmed by China’s retaliatory tariffs, and we cannot ask our farmers to continue operating under this financial uncertainty,” said NMPF Chairman Randy Mooney, a dairy farmer from Rogersville, Mo., who was at the signing ceremony.

International Dairy Foods Association President and CEO Michael Dykes said, “Today, the two most powerful economies in the world began to restore a positive, mutually beneficial trade relationship, and dairy producers and processors across the United States are grateful. To put the importance of this development in perspective for America’s dairy industry: Over the next decade, China represents a $23 billion market opportunity for U.S. dairy, and it is essential to our producers and companies that we have a trade relationship with China that further levels the playing field for American dairy and provides expanded market access for our growing industry. In addition to purchases of U.S. agriculture products including dairy, the deal includes commitments by the Chinese to reduce non-tariff barriers affecting infant formula and extended shelf-life milk — an important concession achieved by the U.S. administration.” National Cattlemen’s Beef Association President Jennifer Houston, who was at the White House, said, “The phase one agreement with China will be a game changer for the U.S. beef industry. For many years, Chinese consumers have been denied access to high-quality U.S. beef — the same U.S. beef we feed to our families. Non-scientific trade barriers like the ban on production technologies, the extensive traceability requirements, and the 30-month BSE restriction have greatly limited our ability to tap into growing beef demand in China. The removal of these massive trade barriers gives Chinese consumers access to the U.S. beef they desire, and it gives America’s cattlemen and cattlewomen the opportunity to provide U.S. beef to a growing consumer base that represents one-fifth of the global population and a middle class that is greater than the entire U.S. population. We cannot begin to express our thanks to President Trump for fighting for America’s cattle producers.”

R-CALF USA CEO Bill Bullard issued the following statement:

“We have supported the increased tariffs on China products since the beginning and have encouraged tariffs on cattle and beef from countries that maintain a persistent trade surplus with the United States. We are cautiously supportive of the Phase One China Agreement but remain concerned that the only effective way to address China’s ongoing cheating and its subsidized exports from its state-owned enterprises is to maintain strong tariffs. We’ll soon see if this works.”

North American Meat Institute President and CEO Julie Anna Potts said, “We are encouraged by the phase one deal with China, which eliminates non-tariff barriers to trade with our fastest growing market for meat and poultry products. It remains vital to address retaliatory tariff issues, which have made it difficult to export to China.”

Michelle Erickson-Jones, a Montana farmer who is the spokesperson for Farmers for Free Trade, said, “While phase one makes incremental progress, it remains to be seen whether it will deliver any meaningful relief for farmers like me. This deal does not end retaliatory tariffs on American farm exports, makes American farmers increasingly reliant on Chinese state-controlled purchases and doesn’t address the big structural changes the trade war was predicated on achieving. The promises of lofty purchases are encouraging, but farmers like me will believe it when we see it.

“In the months ahead, we will be closely scrutinizing the purchase promises in this agreement. We will see whether phase one takes steps to dig out from the hole the trade war created or whether, like previous ag purchase promises, it is all talk. In the meantime, the administration should waste no time in returning to the negotiating table and reaching an agreement that ends the trade war for good.”

–The Hagstrom Report


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