China will follow through with the billions of dollars in additional ag purchases that it promised to make as part of the “phase one” trade pact with the U.S., but the coronavirus outbreak may delay the sales, Agriculture Secretary Sonny Perdue told reporters Thursday.
In the pact that the U.S. and China signed on Jan. 15 China agreed to import $36.5 billion in U.S. farm commodities in 2020 and $43.5 billion in 2021. That’s a major increase from the country’s normal purchases that totaled about $20 billion in 2017, before the U.S. began placing tariffs on China, sparking a trade war.
“Obviously we’ve got hardline numbers on an annual basis and we expect China to live up to that,” Perdue said on the sidelines of USDA’s annual Agricultural Outlook Forum.
But the secretary also stressed that China will likely need more time to combat the spread of the coronavirus that has kept workers at home, snarled ports and closed processing facilities.
“If we had someone come into work and they were sick, we’re going to help them get well before we expect them to start producing,” he said in an analogy.
USDA Chief Economist Rob Johansson told Agri-Pulse that it will be possible for China to meet its commitment this year, but the numbers don’t yet reflect that.
The latest forecast is for the U.S. to export $14 billion worth of ag commodities to China in fiscal year 2020, which ends Sept. 30. That number does not include seafood, ethanol and some other commodities and leaves another three months for China to get up to its pledged $36.5 billion.
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And U.S. ag exports are already benefitting from increased trade with China, Johansson said.
“The outlook for 2020 is more positive, as U.S. agricultural exports are currently forecast at $139.5 billion, up $4 billion from 2019, with nearly all of that increase due to higher projected exports to China,” he said in a speech at the Outlook Forum.
Much of that increase is due to China’s new demand for pork as the country wrestles with outbreaks of African swine fever. Chinese hog production last year dropped by 195 million head and that’s expected to drop another 80 million head this year.
“Even with tariffs and ractopamine bans in place, China has dramatically increased purchase of U.S. pork with purchases from the U.S. up 150% from 2018,” Johansson said. “While China has mainly looked to the EU and Brazil to supply their shortfall in production, with the phase one deal in place, we would expect a larger portion of that heightened demand to be filled by U.S. exporters. This past December U.S. exports to China hit a new monthly record of 102,000 metric tons.”