Exports Are Important to U.S. Agricultural Industry

Agricultural exports have a positive impact on farmers’ and ranchers’ bottom line, according to Iowa State University agricultural economist Dermot Hayes.

“China is a big player for the U.S. when it comes to exports. They are getting six shipments of corn from the U.S. right now. Certain U.S. genetically modified corn has been banned by China since 2013,” Hayes said.

With China’s growing population, they do not have room to grow the grain they need and permits are required to change how an area of land is being used. The land can be unaffordable for the nation’s farmers. Crowded areas mean there is not room for large buildings. Currently, an eight-story sow farm is being constructed in China.

Taxes around the world are value added to products sent out of different countries. The U.S. does not have this tax. Hayes said this has added a 20 percent duty to U.S. imports in these countries. The impact on agriculture because of these taxes would be amazing and would turn the U.S. into an export powerhouse. Profitable companies would buy up companies with large export sales.

“Agriculture is on the sidelines of these decisions. Wal-Mart is against the change,” Hayes said.

President Donald Trump rejected the Trans-Pacific Partnership, which would have given the U.S. free access to an extra 200 million consumers in Japan and Vietnam. Hayes said all the countries involved in TPP are moving forward with TPP-1, which would include all but the U.S.

“The new agreement would give the U.S. $40 duties as opposed to $9 duties if we were included in the agreement. This could lead to making the U.S. meat industry have less access to China, even with the recent announcements to open beef trade with China,” Hayes said.

“The agreement through TPP had been in the works for nearly eight years and Trump wants to throw that away.”

China already has several free trade agreements with other countries and continues to work on more. Hayes said if access to U.S. agricultural products becomes more difficult, China will find products elsewhere.

“The U.S. ag industry relies heavily on exports to China. Pork inventories continue to grow and the breeding herd continues to become more productive. Profitability should improve for pork producers by the end of the year,” Hayes said.

While the U.S. sow herd is expanding, the addition of double shifts at pork plants and new plants coming on line should provide for ample slaughter space, thus shifting profits back to producers.

China imports 3 million tons of pork from around the world, but the use of the feed ingredient Paylean, a ractopamine that has been fed to American hogs to help them gain muscle faster while eating less grain, has kept the U.S. out of that market. Some countries have questioned the safety of ractopamine. U.S. pork is being backfilled to countries without that ban who send pork to China, therefore China is indirectly driving the U.S. pork market, according to Hayes.

“Chinese pork producers have not been friendly to the environment, which is why the Chinese pork industry has not been doing well. The government has shut down production, but the Chinese people still demand the protein product,” Hayes said. “The Chinese know that the U.S. has high quality agricultural products and continue to demand our grains and meat.

“This is why we need to continue to pay attention to the environment and water quality in livestock production because so many consumers around the world watch how we take care of our animals and demand our products,” Hayes said.

Source: Jennifer Carrico, High Plains/Midwest Ag Journal

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