On Oct. 23, the U.S. Agriculture Department and Office of U.S. Trade Representative (USTR) issued their joint “Interim Report on the Economic and Trade Agreement Between the U.S. and China,” in which they report that China’s ongoing purchases this year of agriculture products has added up to $23 billion, which is 71% of what was targeted for their purchase under the Phase One Agreement in trade. Moreover, it is reported that “China has implemented at least 50 of the 57 technical commitments” of the agreement.
A USDA Oct. 23 press release summarized the 13-page report, to show China’s volume of purchases for the top five major commodities—corn, soybeans, sorghum, pork and beef. Corn sales, for example, were 8.7 million tons—an all time high. The volume of the others is running above levels in 2017, the last big year for trade. In addition, other U.S. agricultural products are selling at record or near record volumes to China: alfalfa hay, peanuts, pecans, prepared foods and pet food.
Agriculture Secretary Sonny Perdue is effusive in praise for President Donald Trump, saying, “his negotiating strategy is working.” Trade Secretary Robert Lighthizer said, “Since the Agreement entered into force eight months ago, we have seen remarkable improvement in our agricultural trade relationship with China, which will benefit our farmers and ranchers for years to come.”
This positive news is a big plus in U.S.-China relations as such, showing the win-win principle, in terms of food. At present, China has need to import certain food commodities, given the combined impact of the southern China 2020 floods, the African Swine Fever reduction to the hog inventory, the localized droughts affecting harvest, etc. On the U.S. side, farmers and ranchers still have the capacity to produce surplus, despite all the looting from the intermediary cartels, which handle the sales.
In addition to what’s happened so far, there are signs of more big purchases to come. For corn, for example, there are indications China may lift the tariffs and quota on U.S. corn imports, which has kept the volume below 7-10 million tons a trade year, so that many millions more tons of corn may be purchased.
The rising and mutually beneficial flows of food between China and the U.S. also pose the prospect of collaboration to get food on an emergency basis to Africa and points of need in Asia and the Americas, and to commission increased output for the coming harvest cycles. In absolute terms, the output of basic foods must be increased in the world, and under conditions for farmer income levels to be maintained, and infrastructure and technology improved. In recent weeks, U.S. farmers are seeing the prices rise significantly—very unusual during harvest seasons, for corn and soybeans, for example, which shows both speculation—a constant problem until it is outlawed, and the fact of running into shortages—a very dangerous sign. For example, corn per bushel has shot up 80 cents a bushel, from $3.20 or so to over $4.00.
The USDA press release specifically spoke of collaboration: “USTR and USDA continue to work closely with the Chinese government to ensure that the Phase One Agreement is fully and properly implemented, so that access for U.S. food and agricultural products into the Chinese market can continue to expand moving forward.
