Farmers attending Commodity Classic hope for trade resolution
ORLANDO, Fla. — Farmers from across the country attending this year's Commodity Classic were looking ahead at 2019 with hopes for an end to the trade war with China and the lifting of tariffs on other major trading partners.
Recent reports have indicated the United States and China are close to a deal and March 27 has been set as the date for a Trump-Xi meeting in Florida. President Donald Trump has asked China to lift tariffs on agricultural goods since the U.S. did not increase tariffs March 1.
U.S. Secretary of Agriculture Sonny Perdue provided an update while speaking at the convention. He said he sees a conclusion to the talks when the leaders meet in March. However, he says the meeting may or may not result in a deal.
"We hope a deal is eminent, but there again I don't want to raise expectations because it's never over in negotiations until it's over," he says. Plus, he says the president won't sign a deal that isn't good for the American people.
The secretary expects the China agreement to include purchases and says the U.S. could double or triple exports for a wide array of agricultural products beyond just soybeans. "I think you'll see in the effort to decrease the trade deficit, I think you'll see a broad array of agricultural commodities from not only the cereals, but feed grains, soybeans, sorghum," he says. To that list he added rice, beef, livestock, ethanol, and dried distillers grains."
Specialty crop purchases could be restored as well. Perdue speculates those purchases could begin immediately after the conclusion of the trade agreement. He says Trump wants China to agree to non-tariff items that will make big purchases possible.
The American Soybean Association says a deal must include China lifting tariffs on U.S. ag goods. Valley City, N.D., farmer Monte Peterson serves on the ASA Board and is vice chairman of the United States Soybean Export Council. "I think from a farmer point of view, we really need to have tariffs removed," he says. "That is going to free up the opportunity for soybeans to flow and freely trade into China again."
Peterson says they also want clarity on whether the most recent 10 million metric tons of soybeans China committed to buy will be old crop or new crop. Old crop purchases are critical with a 910 million bushel ending stocks figure and the Brazil soybean crop being harvested. He says U.S. soybean farmers can't just rely on the recent purchases made by state-owned enterprises.
The other critical trade issue is ratification of the USMCA or United States Mexico Canada Agreement. Members of the National Corn Growers Association say it is their top priority because Mexico is their top corn market.
"There's a lot of work to be done on USMCA, but I know our members are going to make the calls to lawmakers to get it over the finish line," Iowa farmer and NCGA Vice President Kevin Ross says,
The USMCA is facing opposition by House Democrats and the other hurdle is the Section 232 tariffs on steel and aluminum imports still in place for both Canada and Mexico.
Perdue says he can't provide a timeline for when those will be removed. "I was one of those that assumed the 232 tariffs would be resolved with the signing of the agreement," he says.
Perdue says trade negotiators in all three countries agree it is in the best interest of all parties to drop the tariffs, but adds, "You also know President Trump favors tariffs. I have come to the conclusion tariffs as a leverage mechanism are very effective. I think he's validated that. I think once you use that leverage, I'm working to persuade him the leverage is no longer needed."
Farm groups did get some good news on the trade front during Commodity Classic as the World Trade Organization ruled against China in their anti-dumping case against the United States.
"Anytime that an anti-dumping case comes out in our favor it's good news to our ears, but we want fair deals and want to make sure other countries are held up to the same standard," Ross says.