US Farmers May Have Lost Their China Market Share

December 11th, 2019


Category: Policy

December 11th 2019 – ( – The US-China trade war, combined with an outbreak of African swine fever that has decimated the pig population in China, has prompted Beijing to make some changes to its food imports. While China previously sourced many of its agricultural imports from the United States, it is now buying more from other nations. 

That is not going down well. But surely Washington must have foreseen that retaliatory measures by Beijing, in response to President Donald Trump’s imposition of tariffs on Chinese goods, would target agricultural imports from the US?

US officials should have known that China would redraw its agricultural supply lines. After all, Chinese people still have to eat, trade war or no trade war, and China relies on food imports, a fact that has come into sharper focus as a consequence of the outbreak of African swine fever.

Thus, circumstances have dictated that China diversify its sources of food imports. And Beijing might decide that it quite likes it that way. It must be better for China’s food security to be less dependent on one supplier, the US, especially when relations between Beijing and Washington may not be as cordial in the future as they once were. US farmers might not regain their market share even if a trade settlement is concluded with China.

In the meantime, the impact of African swine fever has put pressure on pork prices in China. As a result, consumers have been seeking alternative, less-expensive sources of protein. Step forward, New Zealand, which has had a free-trade agreement with China since 2008. While China-US trade relations remain rocky, Beijing’s trade ties with New Zealand look solid.

Indeed, in early November, China and New Zealand announced

an upgrade to their FTA. “This ensures our upgraded free trade agreement will remain the best that China has with any country,” New Zealand’s Prime Minister Jacinda Ardern said on November 4. If trade war deal is near, will the future for US and China be any better?

Chinese consumers have certainly been buying New Zealand beef and lamb as alternatives to pork. Analysts at the Bank of New Zealand, in their overview of the nation’s agribusiness last week, “see sheepmeat export values significantly higher on firm pricing as strong demand in offshore markets comes up against tight supply”, noting that the African swine fever outbreak in China has “added to already strong demand for alternative proteins”.

As for beef, the report also notes an 11 per cent rise in New Zealand beef exports in the year to October 2019. “China has effectively been outbidding the [United States] for [New Zealand] product,” the bank’s analysts wrote, adding that China has taken more than half of New Zealand’s beef exports in recent months.

US cattle farmers could have expected to benefit from this rise in Chinese demand for beef, but for the trade war. Additionally, China continues to be a hugely important export destination for New Zealand’s all important dairy sector. Others have also benefited from China’s changing buying habits for agricultural products.

US-China decoupling amid their trade war? It’s next to impossible

China has imposed

tariffs on US soybeans

as part of the trade war but still needs the product for use in food and livestock feed, so has sought to source it elsewhere.

Step forward Argentina and Brazil. Both countries have supplied China with soybeans that, before the US-China trade war, Beijing would probably have sourced from American farmers. Brazil alone exported a monthly record of 5.16 million tonnes of soybeans in November, with some 94 per cent destined for China.

Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.

Trump has noticed. “Brazil and Argentina have been presiding over a massive devaluation of their currencies … which is not good for our farmers,” he tweeted on December 2 before announcing

new US tariffs

on Argentine and Brazilian steel. Yet both Brasilia and Buenos Aires have been pushing back against their currencies’ weakness.

Trump’s intervention seems more like an attempt to punish Argentina and Brazil for having the temerity to supply soybeans to China.

But a resolution of the US-China trade war doesn’t necessarily mean things would go back to the way they were. The trade war and the impact of African swine fever have forced China to rethink. Washington may find Beijing has redrawn China’s agricultural supply lines in indelible ink.

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