U.S. farm producers brace for hit to exports to China in Trump administration

By Casey Hall, Brenda Goh and Mei Mei Chu

SHANGHAI (Reuters) - U.S. agriculture producers are bracing for the prospect of a fresh trade war under U.S. President-elect Donald Trump again hitting exports of farm goods to China, but they said while any new tariffs would hurt, they felt better prepared.

Several U.S growers of crops from almonds to soybeans are in China this week for the China International Import Expo (CIIE), an event aimed at encouraging import purchases, and to meet officials.

The sector is still reeling from up to 25% tariffs Beijing slapped on U.S. farm imports from soybeans to sorghum during the 2018 trade war in retaliation against duties imposed by the Trump administration.

China is the largest market for U.S farm goods and is its biggest customer for soybeans, the top U.S. export to China, but it has been trimming purchases. U.S. agricultural exports to China fell 24% last year to $29.1 billion, according to the U.S. Department of Agriculture (USDA).

That is expected to fall further this year but China will remain a key market, said Jason Hafemeister, USDA Acting Deputy Under Secretary for Trade and Foreign Agricultural Services.

"It's a concern," Hafemeister said. "Even in the last couple of years we've recognised the potential for disruption in U.S.-China trade so a lot of our efforts have gone into diversifying our markets," he told Reuters on the sidelines of CIIE.

Trump, who clinched a win in this week's presidential election, has floated a blanket 60% tariff on Chinese goods, with American agriculture exports widely expected again to be a key focus of China's retaliation.

"They need food, we produce a lot of food ... We hope that things don't spin out of control and that things stay proportionate," Hafemeister said.

The U.S. farm industry has sought to expand into Southeast Asia, Africa and India, and beyond bulk grains to value added products, but China's size and appetite are hard to replace.

"It’s difficult to find another market that moves the needle, so you have to find many markets to even come close to that," said Ryan LeGrand, the U.S. Grains Council CEO.

Verity Ulibarri, a sorghum farmer in New Mexico who also chairs the U.S. Grains Council, said the industry has positioned itself to be able to mitigate trade war risks.

"As we look to the future as to what may or may not happen, having that experience gives us more of a feeling of how to navigate that. We’re not scared, we know there are risks," Ulibarri said, referring to the 2018 trade war.



Trump's election win sent China's soymeal and rapeseed meal future contracts rallying on Thursday.

"It looks like almost everything is on the table," said Allan Garbor, chair of the AmCham Shanghai business chamber. "But personally, I would say, we really hope that the area of food and agriculture is a safe area for everybody."

Source: Investing.com