Spotlight: American farmers relieved on possible U.S. reversal on China tariffs

Source: Xinhua| 2018-05-24 15:14:39|Editor: ZD
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by Peter Mertz

DENVER, the United States, May 23 (Xinhua) -- Waves of relief rippled across America's farmland these days, as the United States and China recently have reached consensus not to launch a "trade war" against each other and sit down for economic and trade consultations.


"Removing the threat of tariffs not only allows us to breath a significant sigh of relief, it leaves us optimistic that we will be able to continue to expand our relationships with importers in the Chinese market," said Michelle Erickson-Jones, president of the Montana Grain Growers Association (MGGA).

Erickson-Jones, of Swedish descent, is a fourth-generation Montana farmer who produces wheat, corn, safflower, sunflower, barley, alfalfa, and beef, on 10,000 acres (40.4 square kilometers) in south central Montana.

Montana is America's leading grower of dry peas, beans, and lentils, and is the U.S. top 3 producer of wheat, barley, flaxseed, hay, alfalfa, canola, and honey, according to 2017 U.S. Department of Agriculture (USDA) statistics. Its 59.8 million acres (240,000 square kilometers) of farmland rank only second in the nation behind Texas.

Agriculture is the top economic driver in Montana. Farms are large in this vast state that borders Canada, an economic sector with gross revenues of 4.6 billion U.S. dollars last year, according to April 2018 USDA data.

"We are optimistic that the discussions are heading in a more positive direction," Steve Mercer, spokesman for the U.S. Wheat Associates (USW), told Xinhua Tuesday.

USW is "the industry's market development organization," working in more than 100 countries and regions to "develop, maintain and expand international markets to enhance wheat's profitability for U.S. producers and its value for their customers," USW's website says.

Mercer told Xinhua that "speaking for wheat export market development stakeholders," he urged China to buy more wheat.

In return for U.S. President Donald Trump's reversal, Beijing said it would buy more American agricultural and energy products -- holding on for now an escalating, full-blown U.S.-China trade war ignited by Washington early this year.


Overall, most industry insiders were reserved in their support of the dramatic U.S. foreign policy shift, due to the mercurial nature of Trump's tariff threats and what that inconsistency means to agroeconomics.

"The fragility of agricultural markets that has been observed in the past few months suggests that even a small negative signal about trade relationships could lead to another large downward price swing," cautioned Montana State University (MSU) professor Anton Bekkerman.

Because of its significant agroeconomic position, Montana has attracted some of the most brilliant, academic "agroeconomic" minds in the country, many like Bekkerman trained at renowned North Carolina State University.

When Trump signed off on 60 billion dollars worth of tariffs on Chinese goods in March, markets were relatively stable, with futures prices remaining relatively flat and not much inter-day volatility, Bekkerman told Xinhua Tuesday.

But after mid-March, "markets have experienced large intraday price swings and increased inter-day price uncertainty," said the award-winning national expert in the agroeconomics field.

"This kind of volatility makes it more difficult for both buyers and sellers of wheat to make management strategies," he noted.

Inconsistent foreign policy in regard to trade and macroeconomics has been a Trump theme and a source of frustration for both Democrats and Republicans since the brash billionaire won the presidential election in 2016.

Study after study has shown that if retaliatory tariffs were enacted, American farmers would get hurt -- yet Trump has proceeded anyway -- until just this week.

And, it is not only with crops that Montana leads the nation in agricultural muscle: In livestock, it ranks in the Top 8 U.S. states in production of beef, sheep, lamb, and wool production, USDA data shows.

Gaining statehood in 1889, Montana has been reliably Republican in recent presidential elections, having voted for only two Democrats since 1952, and where Trump beat Democratic candidate Hillary Clinton by over 20 points in 2016.


Under the potential deal, China will purchase from American farmers practically as much as the farmers can produce, Trump said in a series of Twitter posts on Monday.

"The Trump Administration simply does not know what it is doing," David Richardson, a Washington insider and Seattle attorney, told Xinhua Tuesday.

"We are certainly encouraged by the news that the United States and China have made positive steps towards ending the current trade war that is harming U.S. farmers and ranchers," Erickson-Jones said Tuesday.

"However we still have a long way to go to take this framework to a finished deal but this was an important first step," she added.

Bekkerman agreed.

"The best thing that can happen to pacify the uncertainty is the release of details about a negotiated trade deal and an actual signed agreement. Until then, the market rollercoaster ride is likely to continue," he said Tuesday.p Despite market uncertainty spawned by Trump administration inconsistencies, industry insiders remained steadfast that Monday's Trump Tweets were a sign of a new direction.

"We are encouraged by the announcement that trade tensions between the U.S. and China may be easing, and especially pleased with China's comments on increasing imports of American agricultural products," said MGGA Executive Vice-President Lola Raska.

"We will continue to be engaged in the process as details of the proposed framework are negotiated," she told Xinhua.

"We still have a long way to go to take this framework to a finished deal but this was an important first step," Erickson-Jones said.