Blow to US farmers as China slams door on farm purchases

Bags of soya bean at a grain wholesale market in Beijing. Chinese firms have stopped buying US agricultural products, and American Farm Bureau Federation president Zippy Duvall called the announcement "a body blow to thousands of farmers and ranchers
Bags of soya bean at a grain wholesale market in Beijing. Chinese firms have stopped buying US agricultural products, and American Farm Bureau Federation president Zippy Duvall called the announcement "a body blow to thousands of farmers and ranchers who are already struggling to get by". PHOTO: EPA-EFE

BEIJING • Chinese companies have stopped buying US agricultural products, China's Commerce Ministry said yesterday, a blow to US farmers who have already seen their exports slashed by the more than year-old trade war.

China may also impose additional tariffs on US farm products, the ministry said, raising the barrier to future trade that further targets rural states which 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) worth 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 United States 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 soya beans 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 worth of US farm produce last year - mainly soya beans, 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 were groundless.

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

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

Beijing imposed a 25 per cent tariff on soya beans in July last year in response to US tariffs on Chinese goods.

China is honouring agreements signed earlier to import US soya beans, 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 soya beans had been loaded and shipped to China last month 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 soya beans, 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 soya bean sale to China since June, of 68,000 tonnes from the crop that will be harvested this autumn. Additional sales through Aug 1 could be recorded in the next US government export sales report tomorrow.

Two million tonnes of US soya beans destined for China will be loaded this month, followed by another 300,000 tonnes next month, Mr Cong said.

 

However, the US Department of Agriculture said on Monday that less than 600,000 tonnes of soya beans was inspected for export to China in the week to 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 have been thankful for the aid payments. They have helped, but we would rather have open markets because it creates stability in our financial sectors," said Mr Derek Sawyer, 39, a corn, soya bean, wheat and cattle farmer from McPherson, Kansas.

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

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 07, 2019, with the headline 'Blow to US farmers as China slams door on farm purchases'. Print Edition | Subscribe