President Donald Trump said he’s prepared to deliver more aid to farmers hurt by the trade war with China, but concerns are growing that the U.S. agriculture industry could suffer a long-term loss of market share as other countries rush in to fill Chinese orders.
The nation’s leading farm group called China’s decision this week to halt imports of U.S. agricultural products “a body blow” to the nation’s farmers, a crucial constituency for Trump.
The president responded with assurances of continued assistance to farmers in a tweet Tuesday, suggesting he would add to the $28 billion in trade aid he has approved for the farming industry over the past two years.
“As they have learned in the last two years, our great American Farmers know that China will not be able to hurt them in that their President has stood with them and done what no other president would do,” Trump said in a tweet. “And I’ll do it again next year if necessary!”
An earlier analysis by the Environmental Working Group showed direct “trade aid” payments went to more than 563,000 participants in 2018 through April 2019. Recipients in Illinois received the largest share of the market facilitation payments, totaling $1.1 billion through April, followed by those in Iowa, who got $979 million, and those in Minnesota, who got $676 million.
Trump has maintained support among the rural voters who overwhelmingly backed his election.
But farmers and their lobbyists in Washington increasingly respond with demands for “trade not aid” as shifts in trading patterns harden.
Brazil and Argentina are capturing larger shares of soybean sales to China, the largest export market for the oilseed. Total U.S. soybean exports in the 2018-2019 growing season dropped to 46.3 million metric tons from 58.1 million the prior year. At the same time, Brazil and Argentina’s combined soybean exports rose to 86 million metric tons from 78.3 million prior the year, according to the U.S. Department of Agriculture.
Farmers in Brazil also are investing to convert more land to soybean production to satisfy Chinese demand, raising the country’s long-term capacity to grow crops.
The chairman of the trading arm of China’s top food company this week told an industry event in Sao Paulo that his company expects to increase soybean purchases from Brazil by 5 percent a year for the next five years.
Johnny Chi, chairman of Cofco International, also said his company plans to boost investments on logistical supports in Brazil.
Archer-Daniels-Midland Chief Executive Officer Juan Luciano said on a conference call with analysts last week that the damage to U.S. agriculture grows the longer the tariff dispute continues, though he doesn’t think it has yet done irreparable harm.
“People find alternatives, and eventually they become a little bit more comfortable with those alternatives,” he said. “So this is not good for the U.S. farmers.”
Zippy Duvall, president of the American Farm Bureau Federation, the nation’s largest and most influential general farm organization, said U.S. farmers are “grateful” for the money the Trump administration has given them so far, but “we know that aid cannot last forever.”
He said China’s ag import cutoff announced Monday was “a body blow to thousands of farmers and ranchers who are already struggling to get by.”
After months of insisting a deal was imminent, Trump’s trade rhetoric recently has shifted to suggest that resolution with China might not come until after the 2020 election. But in an interview Tuesday with CNBC, National Economic Council Director Larry Kudlow said that, while Trump is “very unhappy” with China’s reversals and with the pace of negotiations, he’s still looking to deal.
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“We’re planning for the Chinese team to come here in September,” Kudlow said. “The president has said if you make a good deal — good progress on a deal, maybe he’ll be flexible on the tariffs. On the other hand, if there’s no progress on the deal, then the tariffs might get worse.”
Bloomberg, Reuters and the Washington Post contributed.