US farmers suffer 'body blow' as China slams door on farm purchases

China imported US$9.1 billion (S$12.6 billion) of US farm produce in 2018 - mainly soybeans, dairy, sorghum and pork - down from US$19.5 billion in 2017, according to the American Farm Bureau. PHOTO: REUTERS

BEIJING (REUTERS) - Chinese companies have stopped buying United States agricultural products, China's Commerce Ministry said on Tuesday (Aug 6), a blow to US farmers who have already seen their exports slashed by the trade war which has lasted more than a year.

China may also impose additional tariffs on US farm products, the ministry said, raising the barrier to future trade that further targets rural states that supported US President Donald Trump in the 2016 election.

Mr Trump said last Thursday that Beijing had not fulfilled a promise to buy large volumes of US farm products, and vowed to impose new tariffs on around US$300 billion (S$414 billion) of Chinese goods, abruptly dimming prospects of a trade deal.

China on Monday also let the yuan weaken past the key seven-per-dollar level for the first time in more than a decade. The US responded by designating China a currency manipulator.

American Farm Bureau Federation president Zippy Duvall called the announcement from China "a body blow to thousands of farmers and ranchers who are already struggling to get by".

Tariffs imposed by China on US soybeans have slashed exports of the most valuable US crop and forced Mr Trump's administration to compensate farmers for two years with combined spending of as much as US$28 billion.

China imported US$9.1 billion of US farm produce in 2018 - mainly soybeans, dairy, sorghum and pork - down from US$19.5 billion in 2017, according to the American Farm Bureau.

The National Pork Producers Council said in an e-mail message that it was important to end the trade war so that pork producers could "more fully participate in a historic sales opportunity".

An outbreak of African swine fever has killed millions of pigs in China. US meat exporters had hoped to take advantage of the disease to export more pork to China but 62 per cent retaliatory tariffs have limited sales from the US.

China's Ministry of Commerce said in a statement that it hoped the US would keep its promises and create the "necessary conditions" for bilateral cooperation.

Earlier, China's state broadcaster CCTV reported an official from China's National Development and Reform Commission as saying that Mr Trump's accusations that it had not bought promised volumes of US agricultural goods as groundless.

Overall, China has purchased about 14.3 million tonnes of last season's soybean crop, the least in 11 years, and some 3.7 million tonnes still need to be shipped, according to US data.

China bought 32.9 million tonnes of US soybeans in 2017, before the trade war.

China applied a 25 per cent tariff on soybeans in July last year in response to US tariffs on Chinese goods.

China is honouring agreements signed earlier to import US soybeans, according to Mr Cong Liang, secretary-general of the National Development and Reform Commission, CCTV reported. The report said that 2.27 million tonnes of US soybeans had been loaded and shipped to China in July, since Mr Trump met Chinese President Xi Jinping in Osaka at the Group of 20 summit at the end of June.

China bought 130,000 tonnes of soybeans, 120,000 tonnes of sorghum, 60,000 tonnes of wheat, 40,000 tonnes of pork and products, and 25,000 tonnes of cotton from the US between July 19 and Aug 2, Mr Cong said, according to the report.

Weekly US data on Aug 1 confirmed the first new US soybean sale to China since June, of 68,000 tonnes from the crop that will be harvested this fall. Additional sales through Aug 1 could be recorded in the next US government export sales report on Thursday.

Two million tonnes of US soybeans destined for China will be loaded in August, followed by another 300,000 tonnes in September, Mr Cong said.

However, the US Department of Agriculture said on Monday that less than 600,000 tonnes of soybeans were inspected for export to China the week ended Aug 1, fewer than the previous week.

Farmers can start applying for the next round of trade aid this month, but trade uncertainty makes long-term planning difficult.

"We've been thankful for the aid payments. They have helped but we'd rather have open markets because it creates stability in our financial sectors," said Mr Derek Sawyer, 39, a corn, soybean, wheat and cattle farmer from McPherson, Kansas.

"There's just so much volatility right now because nobody knows the rules of the game and nobody knows how to look at things going forward."

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