U.S. and Chinese officials are already talking again, albeit long distance, to negotiate an end to a prolonged trade war, but farmers are losing patience as exports continue to suffer.
“They're speaking very much on the phone, but they're also meeting,” President Donald Trump told reporters this week when he was asked about the promised resumption of talks. “Yeah, it's essentially already begun. It actually began before our meeting.”
It’s a good sign, farm group representatives tell Agri-Pulse, but many are skeptical after the on-again, off-again negotiations over the past year that have gotten producers’ hopes up before only to dash them later.
“The Chinese trade deal is kind of like a yo-yo,” says Joel Nelsen, strategic adviser and a past president of California Citrus Mutual. “One day we’re up. Another day we’re down.”
The latest breakdown in talks between the two countries was a little less than a month ago. Trump, after a meeting wiith Chinese President Xi Jinping Saturday in Japan, announced he was postponing any new tariffs on China and that China agreed to immediately begin buying U.S. farm products.
Trump is putting a lot of emphasis on his personal negotiating skills and highlighting his strong personal relationship with Xi, while stressing that he expects the U.S. to get a better deal than China in the talks.
“We really had a great meeting yesterday,” Trump said Sunday during a trip to South Korea after leaving Japan. “And I like President Xi a lot. I consider him a friend.”
Then on Monday, taking a question about when new face-to-face meetings between the negotiators would actually resume, Trump raised the bar for success, saying a deal “has to be better for us than for them because they had such a big advantage for so many years.”
Trump and U.S. Trade Representative Robert Lighthizer didn’t get a deal to lift the Chinese tariffs that have slashed U.S. agricultural exports over the past year, but Trump did say he was preparing to give Xi a list of the farm commodities to be purchased.
“China is going to start … spending money, even during the negotiation, to our farmers, our great farmers in the Midwest …” Trump said this weekend. “And China is going to be buying a tremendous amount of food and agricultural product, and they're going to start that very soon, almost immediately. We're going to give them lists of things that we'd like them to buy.”
But farmers are growing weary of the promises and lack of trade, especially as they deal with difficult planting conditions and low prices.
“We have been waiting at the altar several times on some of these promises and statements,” an Iowa ag industry source told Agri-Pulse. “Getting a bit old and I think fatigue is setting in.”
Mark Albertson, director of strategic market development for the Illinois Soybean Association, said he was disappointed a war-ending deal wasn’t reached this weekend, but still eager for a resolution.
“At this point, we’re looking at a continuation of the perfect storm and here in Illinois we still have a lot of acres that are not planted,” said Albertson. “In a typical year that would cause prices to go higher, but this is anything but a typical year and at the moment the price is still in the basement."
Still, the Trump administration is hoping that the promise that China will deliver on buying a “tremendous amount” of farm commodities will appeal to the Midwest “patriot” farmers who generally supported him in the 2016 election.
The next summit between top U.S.-China negotiators hasn’t been set yet, and the Trump administration isn’t saying yet which ag commodities will be on the list for China to buy.
Soybeans are a safe bet for further Chinese purchases, but Iowa Soybean Association Director of Market Development Grant Kimberley says China has a long way to go before it fulfills previous promises.
“China has to purchase or ship another 11.843 (million metric tons) in order to just get to the level they committed to during the first round of trade truce negotiations,” he told Agri-Pulse. “The marketing year ends on August 31.”
And Kimberly questioned China’s ability to buy much more because the country has a lot less hogs to feed these days because of the rapid spread of African Swine Fever.
California farmers who have come to depend on exports to China are not expecting to have their products on the list that will be given to China. The country has already been buying soybeans, pork, sorghum and cotton during the trade war. Some of those purchases have been simply good-will gestures from China and most all have been made by giant government-run importers like COFCO.
A U.S. meat industry official confirmed that the Chinese government is effectively importing the pork it needs from the U.S. and not charging itself tariffs. That’s not the case for specialty crops like walnuts, pistachios, pears and almonds. California growers mostly depend on much smaller, privately-run Chinese companies to buy their products.
When asked if she expected walnuts to be on Trump's list, Pamela Graviet, the senior international marketing director for the California Walnut Board and Commission, replied: “Probably not.”
China now levies a 65% tariff on in-shell walnuts and a 60% tariff on walnut kernels, and that has cut U.S. exports by more than 50%. U.S. exports of almonds, which have a 50% tariff (up from 10% before the trade war started), have dropped by more than 30%.
Meanwhile, in other parts of the world, the European Union has completed yet another massive trade agreement. This one, with the four South American countries that comprise the pact called MERCOSUR, is the largest ever.
Tomas Baert, the head of the trade and agriculture section at the European Union Delegation to the United States, said Wednesday the pact will slash about $4.5 billion in tariffs between the EU and MERCOSUR (Brazil, Argentina, Uruguay and Paraguay) after it’s implemented.
Baert, who lauded the new pact as a model of international openness, also took a dig at the U.S.: “What I’m witnessing here in Washington is an administration that is pulling out of trade agreements, like the (Trans-Pacific Partnership) or that is renegotiating previous agreements … like (the North American Free Trade Agreement).”
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