President Donald Trump says the Chinese will buy $50 billion worth of farm products as part of a phase one deal struck last week, but that would mean China would have to double the amount it bought from US farmers before the trade war started.
“Those numbers are almost unfathomable,” said Mary Kay Thatcher, a fifth-generation Iowa farmer who advocated for the American Farm Bureau for more than 30 years and is now a senior lead of government relations at the agriculture company Syngenta.
“I’m not really sure we can actually produce that much product to send. But I’m sure the agriculture industry would be more than happy to try,” Thatcher added.
Trump is touting the China deal – the text of which has not yet been made public – as a big win for farmers, claiming last week they’ll “have to go out and buy much larger tractors.” They are a politically important group for the President, and they’ve been hit hard by the trade war, prompting Trump to give them billions of dollars in aid over the past two years.
The numbers have been repeated by other top administration officials. “You could think of it as $80 to $100 billion in new sales for agriculture over the course of the next two years – just massive numbers,” said US Trade Representative Robert Lighthizer in an interview with CBS on Sunday.
In 2017, before tariffs were imposed, the United States exported a total of $24 billion in agricultural products to China – half of which was made up by soybeans. Other top exports were tree nuts, pork, and cotton.
“There are rightfully many doubts about the President’s claim that China will purchase $50 billion in ag products in a single year,” said Brian Kuehl, the co-executive director of a coalition group called Farmers for Free Trade.
“Our hope is that this is not another empty political promise to farmers,” he added.
The US is currently sitting on a record number of soybeans in storage, but that doesn’t necessarily mean China can buy them all up at once. Since the trade war began, it started purchasing more soybeans from Brazil instead of the United States. Plus, China has not said that they would lift its tariffs on US goods, which make them more expensive than products from other countries. Demand for soybeans, which are often used as animal feed, has softened since China’s hogs have suffered from African Swine Fever.
It’s possible that American sellers could divert exports headed to other countries and send them to China instead. Increasing exports of higher-value goods, like fruits and vegetables, could also help meet a $50 billion target.
“We are very comfortable that our farmers, ranchers, and growers can meet those numbers,” said a senior administration official on a call with reporters last week, adding that the US Department of Agriculture was consulted. The deal also addresses non-tariff barriers for US agriculture, including issues with China’s process for approving biotech crops.
But there is still some concern that the two-year purchase commitment won’t improve farmers’ long-term access to the Chinese market.
“It seems to me that this gives China a lot of control over the relationship,” said Darci Vetter, who served as chief agricultural negotiator for the US Trade Representative’s office under President Barack Obama.
“They can pick winners and losers and manage trade with the US rather than create a relationship based on supply and demand – which is what US agriculture needs and wants,” she added.
A lot of American farmers have struggled over the past year as bad weather delayed planting and they face trade uncertainty on several fronts. Other countries put tariffs on their products in retaliation to Trump’s steel and aluminum tariffs, and the uncertainty around the renegotiated North American Free Trade Agreement hung over their heads for more than a year. The deal, known as the US-Mexico-Canada Agreement, is up for a vote in the House this week. The Senate is expected to vote on it next year.
Iowa farmer Dave Walton welcomed the news of the phase one deal with China, but also said it was “surprising” that Beijing would commit to purchasing a specific value of goods, which he said could skew the market.
“What I would have been happy with is if the governments agreed to get out of the way,” Walton said.