Deal bodes well for N.C. farmers

 

By Buck Ryan, Special to the Chatham News + Record (NC)

Nov 19, 2020

 

As heated election rhetoric cast dark clouds over U.S.-China relations, a silver lining is emerging for North Carolina farmers.

 

If you have any doubts something historic is happening, get this: U.S. farmers are selling rice to China, the world’s largest rice producer.

 

Nothing goes better with rice than beef and pork, and that’s one reason North Carolina is one of the states positioned to cash in on Phase One of the U.S.-China trade deal, according to an international trade researcher, as control of the pandemic has strengthened China’s economy.

 

“Definitely, there is already significant improvements in the exports and commodity prices, especially in recent months,” said Wendong Zhang, an assistant professor in Iowa State University’s Department of Economics.

 

Zhang’s optimism was echoed in an interim government report on Phase One issued Oct. 23 by U.S. Trade Representative Robert Lighthizer and U.S. Agriculture Secretary Sonny Perdue.

 

“It is still to be seen whether they meet their target,” the report said, “but particularly given the COVID-19 effects on the global economy, they are making substantial progress.”

 

Also offering an optimistic outlook is Ryan Quarles, the president of the National Association of State Departments of Agriculture...

 

8 is a lucky number

 

In English the trade deal is 96 pages, including appendices, but the Chinese version is an 88-page document. Eight is a lucky number in China. Symbolically, the Opening Ceremonies of the Olympics in Beijing began at 8 minutes after 8 o’clock on the eighth day of the eighth month, August 2008.

 

Would U.S. farmers be so lucky? In February, Zhang wondered whether Phase One would be “a big win for farmers or too good to be true?”

 

After all the deal followed nearly two years of a U.S.-China trade war.

 

Zhang noted that in the deal China made “historic and bold promises” and committed to reduce and eliminate structural, non-tariff barriers to U.S. agriculture in China’s market...

 

N.C. sweet spot

 

China’s demand for beef and pork hits a sweet spot for North Carolina farmers and ranchers, just as fruits do for California and Florida farmers and dairy for Wisconsin farmers, Zhang said.

 

According to the government report, U.S. pork exports to China hit an all-time record in just the first five months of 2020, and as of October 8, total accumulated beef sales to China in 2020 were over 25 times greater than those accumulated over the same period in 2017.

 

Outstanding sales of corn to China are 8.7 million tons, an all-time high, the report said, while outstanding sales of soybeans to China stand at 17.4 million tons, double 2017 levels.

 

Asked which U.S. farmers are best positioned to cash in on Phase One targets, Zhang mentioned soybeans grown in the Midwest, where beef and pork are abundant; poultry in the Southeast, including North Carolina; and nuts and wine from California.

 

If there were any question that farmers live in a global economy, Zhang and his colleagues, Xi He and Dermot J. Hayes, put that to rest last month in a policy brief.

 

In the first six months of 2020, they noted, China imported 93% of its corn from Ukraine, 72% of its soybeans from Brazil, 57% of its pork from the European Union and 72% of its beef from Brazil, Australia and Argentina, combined...

 

Farmers hit on both sides

 

Feeling the brunt of a trade war beginning in 2018, weathering storms and natural disasters, then being hit with a pandemic, American farmers will take any good news they can get. The same is true in China.

 

Also beginning in 2018, farmers in China battled African Swine Fever, which wiped out an estimated 180 million hogs, or 40% of China’s herd, last year, and heavy rains and floods in southern China have contributed to renewed outbreaks.

 

Wuhan, a trade hub for the distribution of products for many industries through water, land and air, was shut down for two months, two weeks and two days, ending April 8, 2020, as it became the epicenter of the COVID-19 pandemic.

 

Quick Quiz 2: What country poses the greatest competition for U.S. farmers in meeting China’s demand? And how might it have an edge?

 

Answer: Brazil.

 

“Germany would have been,” Zhang said, “but now they are also dealing with African Swine Fever, which gives the U.S. a rare opportunity for pork exports. Brazil is the biggest competitor because of strategic diversification by China and sharp depreciation of the Brazilian currency this year.”

 

Brown at the Peterson Institute for International Economics added Canada...

 

Soybeans ...

 

Pork ...

 

Sorghum ...

 

Poultry ...

 

Alfalfa ...

 

Corn ...

 

Beef ...

 

Nuts ...

 

Pet food ...

 

Dairy ...

 

The larger picture ...

 

The view from China ...

 

Parting praise for farmers ...

 

more

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