Tariffs Hold China Beef Trade Hostage


By Kayla Sargent

 

Beef producers secured a market win in Japan last week, but have yet to see any progress with one of the world’s largest potential markets in the neighboring country of China.  As Chinese negotiations disintegrated in mid-May, not only did the beef industry express concern, but nearly all agriculture producers could now be affected by the tit-for-tat tariff war.

“We were moving along nicely, but then that deal blew up, Trump added more tariffs and China will probably respond with more retaliatory tariffs,” Montana Stockgrowers Association (MSGA) President Fred Wacker said.  “We need to get this resolved because (that market represents) half a billion people in China.”

According to Wacker, those people have a desire for high-quality American beef, especially that produced in Montana.  MSGA has been working with Chinese officials to secure a direct beef marketing program for the past several years.  The trade war with the country has put proceedings on hold temporarily, but Wacker is still confident in the “Montana direct to China” beef deal the organization has been developing.

“This China thing is a real deal,” he said.  Wacker said he still receives numerous emails and phone calls inquiring about the deal and is still in contact with the Chinese counterparts regularly.

“They have great interest in Montana beef.  The two times they have been here to meet with us in Bozeman and Miles City, they just loved the clean air and clean water.  We are in a really good position for Montana beef,” he said confidently.

But the tariffs are “holding up” the final negotiations.

“You can’t settle on a trade agreement with a foreign nation with all this going on because we don’t know what the prices will be,” Wacker said.

Beyond delaying MSGA’s direct deal, Wacker said the trade environment has had a noticeable negative affect on both feeder cattle and fat cattle futures.

“Yes, there is a great affect going on for beef producers,” he said.  “It’s not good for China and it’s not good for Montana or U.S. agriculture. We need to get the tariff thing settled and stop using agriculture as a settling point.”

U.S. farmers have also felt the pinch of “using ag as a settling point.”  According to National Farmers Union (NFU), China intends to place retaliatory tariffs on an additional $60 billion worth of American goods including beef, fruit, vegetables, peanuts, sugar, wheat, chicken, and turkey. Previous Chinese tariffs have already targeted soybeans, pork, and sorghum.

“China’s unfair and manipulative trade practices are clearly a problem that need to be fixed,” NFU President RogerJohnsonsaid. “But addressing these practices has created new problems for American farmers and ranchers in the form of lost export markets, a commodity glut, and severely depressed prices.  Family farmers and ranchers have borne the brunt of the trade war with China. The ever-worsening financial challenges being forced on family farmers and ranchers cannot be overstated.”

In response to the financial strain that the Chinese trade war has placed on American agricultural producers, Secretary of Agriculture Sonny Perdue told reporters in a conference call from South Korea that a second round of assistance payments is in the works.

While he emphasized that the details have yet to be finalized, “calculations initially probably range between $15 to $20 billion,” Perdue said.  “We’re expediting at the President’s direction so farmers, as well as China, can know they cannot use the political impact of damaging our farmers to our great exporters in this trade disruption.”

Perdue said he expects payments to be in the form of direct commodity payments in the second round of financial assistance.  NFU advised Secretary Perdue on how to best “craft a package that will adequately address the broad, long-term impact to all of American agriculture.”

Of utmost importance to the organization is that payments be offered to producers of all affected commodities and that rates be based on historical production.  NFU also recommended the USDA work to address a growing oversupply by offering farmers “incentives to reduce overall production.”

American Farm Bureau Federation also notified President Trump that the Trade Aid Package in 2018 was appreciated and helped some farmers make it through to this year, “time is running out for many in agriculture.”  AFBF President Zippy Duvall said the organization “supports efforts to improve trading opportunities,” but hopes a successful conclusion comes soon.

“We ask that your trade negotiators make a deal as soon as possible to end the tariffs that are slashing our exports, destroying a once-promising market for agriculture, worsening the farm economy, and contributing to high levels of stress and uncertainty for many farm and ranch families and other Americans whose jobs are connected to agriculture production,” Duvall stated.  “Mitigation payments can never replace lost markets, but as long as these trade disruptions continue, we ask that your Administration provide assistance so farmers and ranchers can continue to farm.”

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