U.S. farmers see another bleak year despite Phase 1 trade deal

Reuters - Karl Plume in Chicago and P.J. Huffstutter in Dimmit, Texas

Across snow-covered North Dakota, U.S. farmers are stuck with fields full of weather-damaged corn – a crop they planted after the U.S.-China trade war killed their soybean market. Many don’t know yet what crops they’ll plant next season among a host of dicey options.

In Texas, Kansas and Colorado, farmers are weighing whether they should plant fewer acres of corn and more sorghum, even though China has all but stopped buying it. That’s because sorghum costs about half as much as corn to plant, which appeals to farmers wary of investing too much for an uncertain return.

 





 

As the U.S. farm economy reels from the worst harvest in decades after nearly two years of the trade war, U.S. grain growers are struggling to decide what crops might keep them in business.

U.S. President Donald Trump announced last month that China had agreed to double its pre-trade war purchases of U.S. agricultural products over the next two years as part of a Phase 1 trade deal. That brought little comfort to U.S. farmers because China still has not confirmed the commitment or signed any deal.

“President Trump said that we’re all going to need to go buy bigger tractors,” said North Dakota farmer Justin Sherlock. “I don’t think many farmers are going to invest much money until we see that this is a done deal and a long-term deal.”

Trump administration officials say the Phase 1 trade deal with China will be signed in January, though many tariffs will remain in place during further negotiation. Commodity market analysts and agricultural economists warn an agreement won’t be an immediate fix for the U.S. farm economy because the conflict has spurred China to develop new supply chains.

China has, for instance, deepened ties with rival exporters such as Brazil and Argentina. Brazilian soy cultivation is expanding after record exports to China in the past year and China is investing in South American ports.

Making matters worse, China’s need for soy and sorghum to feed livestock is waning because of a deadly pig disease that experts estimate has killed off about half the world’s largest hog herd. China’s hog industry has also worked to reformulate pig rations to include less soy and more alternative feeds that don’t have to be imported from the United States.

“We won’t go immediately back to where we were 18 months ago – maybe not for a long time,” Jay Debertin, chief executive officer of CHS Inc, the largest U.S. farmer cooperative, told grain producers at a recent conference in North Dakota.

 





 

For more: https://www.reuters.com/article/us-usa-trade-china-agriculture-insight/us-farmers-see-another-bleak-year-despite-phase-1-trade-deal-idUSKBN1Z20CK

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