The sector wants to see commitments turn into shipments, an industry rep said
By Diego Flammini
Staff Writer
Farms.com
China’s purchases of U.S. ag goods during the first year of the Phase 1 trade agreement between the two countries is a positive note for the industry, an ag economist said.
“We’re certainly trending in the right direction,” Dr. John Newton, chief economist with the American Farm Bureau Federation, told Farms.com.
As of Oct. 23, China has bought $23.6 billion in U.S. farm products, the Interim Report on the Economic and Trade Agreement between the U.S. and China says.
That figure amounts to about 71 percent of China’s intended ag purchases set out in the Phase 1 agreement representatives from the two countries signed in January.
The trade deal went into effect on Feb. 14, meaning March is the first full month the agreement was in place.
The report accounts for sales through the first eight months of the year and sales expected to take place based on outstanding shipments to China.
To make good on its intended purchases in the first year of the agreement, China would have to buy nearly $13 billion in additional farm products.
“The report acknowledged that the purchase target of $36.5 billion was unlikely to be achieved this year due to COVID-19 issues but, certainly, exports to China are going to be a lot stronger this year than they have been over the past few years.”
The report, a joint publication between the United States Department of Agriculture and the Office of the U.S. Trade Representative, highlighted five commodities that have experienced export growth to China this year.
Outstanding corn sales, for example, are at an all-time high of 8.7 million tons. And pork exports hit an all-time record in the first five months of 2020.
The soybean, sorghum and beef sectors have also benefited from the deal thus far.
“China’s recent purchases of U.S. soybeans has been a helpful development for producers,” the American Soybean Association told Farms.com in a written statement. “It is our understanding that the products have to reach China by the end of the year to count towards the 2020 Phase 1 target.”
These increase in exports have led to better prices, Newton said.
“It’s great news when you think about what corn prices and pork prices have done in recent months,” Newton said. “After the last seven months of what we’ve been seeing with demand destruction because of COVID-19, higher prices are certainly a breath of fresh air.”