As we hustle to harvest this year’s corn and soybean crops, Iowa farmers find themselves in the bull’s-eye of a nasty and escalating trade battle between the United States and China. Like many farmers, I find myself in a dilemma over trade policy.
Like most farmers, I believe free and open trade provides the best opportunities for us to prosper. But we also want our government to take the necessary actions to protect us against unfair trade practices and to stand up to violations of trade rules and abuses of our trading relationships.
China, in a number of instances over the years, has just not played fair. For all its buying power and potential, China has long been a problematic and unpredictable customer for Iowa agriculture, and for other sectors of the U.S. economy.
There was an expectation around the world that China would conform to world trading rules when it joined the World Trade Organization (WTO) in 2001. But, for many commodities, that has not happened.
Over the years China has implemented non-tariff barriers on a wide variety of products that Iowa farmers ship there, including corn, DDGs, beef and pork. The Chinese government has disrupted trade in poultry meat, grain sorghum, soybean meal and many other products. Those actions have hurt farmers from Iowa and all over the United States, denying them potential markets and limiting income.
The stated reason behind each of China’s tariff and non-tariff barriers has been different. But all appeared to be politically motivated to protect China’s farmers and ag processors.
A good example is China’s temporary ban on imports of U.S. corn containing a biotech trait called MIR 162. The trait, which helps plants resist insect damage without pesticides, was approved in the United States and most other countries and was originally accepted in China.
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However, China abruptly changed course and then stopped imports of corn with the MIR 162 trait in 2013. That move roiled corn markets and drove down world prices. Then, about a year later, China reversed course, and again accepted corn imports with the MIR 162 trait.
China provided little information on why it banned then ultimately accepted corn with the MIR 162 trait. But many market observers noted that the country faced a surplus of corn in 2013 and needed a way to slow imports. In addition, domestic users in China were stuck with high-priced contracts, and these moves by the government allowed them to take advantage of falling prices.
The MIR 162 biotech trait was not alone. China has maintained a slow and opaque process for approving all biotech traits, leaving seed genetics companies and growers in the dark about if and when new products will be approved.
China also banned imports of U.S. beef, citing concerns over a BSE diagnosis in a single animal in Washington state in 2003. Finally, work by Ambassador Terry Branstad and others persuaded China to lift the ban in 2017, more than a decade after other Asian importing countries had welcomed U.S. beef.
In pork, China has maintained a high tariff on imports to protect its domestic market. It has also blocked imports of pork raised with a feed additive designed to promote leanness, despite its approval by world health organizations.
In the late 1990s, China had become a significant importer of soybean meal. But by 2000, it virtually banned soybean meal imports in order to support the rapid development of a state-supported soybean crushing industry, causing disruptions to soybean crushers around the world and reducing opportunities for value-adding activities in the United States and other major soybean producers. Yes, China has become the largest crusher of soybeans in the world, but it got there by unfairly stifling competition in soybean meal trade.
The list of China’s tariff and non-tariff barriers goes on. But the bottom line is the same: other than for soybeans, China has been and remains an unreliable customer for U.S. farmers that uses state trading enterprises and government policies to manipulate markets.
And now, China has targeted U.S. pork and soybeans to try to influence U.S. elections and politics.
The history of trade with China, along with today’s conflicts, highlight the danger of relying too heavily on a single market, even one with as much potential as China. It also underscores the value of market development work by the Iowa Farm Bureau Federation and other farm organizations to build new and diverse markets, instead of relying on just one or two big buyers.
Market diversity clearly is the key to maintaining sustainable, robust export demand.
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• Dave Miller is the director of research and commodity services for the Iowa Farm Bureau Federation.