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China focus of Farm Foundation trade forum
 
By Michele F. Mihaljevich
Indiana Correspondent

OAK BROOK, Ill. – China was the focus of a recent Farm Foundation Forum on expectations for U.S. trade and negotiations. Current and former government officials, along with those in the private sector, participated in the Feb. 23 virtual event.
Gregg Doud, chief agricultural negotiator for the Office of the U.S. Trade Representative in the Trump administration, said 2020 was a good year for U.S. agricultural exports after a slow start. “If you look at the last three months of 2020 and U.S. ag exports to China, those are three of the four best months in history of ag exports to China,” he noted. “In fact, 55 percent of what we sent to China was in October, November and December. We did that in the midst of a pandemic. I think we all understand that.”
Doud was one of the primary negotiators for the U.S.-China phase one trade agreement, which took effect Feb. 14, 2020. Under the pact, China promised to buy about $40 billion in U.S. agricultural products, including soybeans, corn, wheat, pork, poultry and beef, in each of the next two years. Doud is currently vice president of global situational awareness and chief economist at Aimpoint Research.
Before the phase one negotiations began, about 1,500 facilities in the United States, such as those in beef processing, dairy and pet food, were eligible to export agriculture products to China, Doud said. Today, more than 4,000 are eligible.
In addition to the export of bulk commodities (primarily row crops), “there are so many other processed products and finished products and dairy products, etc., that we have access to China now that we never had before and this is a major change,” he said. “The improvements in market access that we now have in place are going to treat us well here going forward.”
As for 2021, Doud stressed the need for price competition and infrastructure improvements.
“When you do long-term (outlook) models, the lines are smooth. The forecast is always a very straight line. This is not going to be smooth. The volatility that we are going to see going forward as a result of China and everything else going on I think is something we all have to wrap our head around a little bit.”
The USDA has forecast a record $157 billion in U.S. export sales for fiscal year 2021, up $21.3 billion from fiscal year 2020. The growth projection is based on strong China demand, said Sharon Sydow, senior economist with the USDA’s Office of the Chief Economist. U.S. exports to China are expected to total a record $31.5 billion.
The outlook for prices has corn at $4.20 per bushel for the 2021-22 crop year, down from $4.30 for 2020-21, she said. Soybeans are forecast to increase from $11.15 to $11.25, and wheat is expected to rise from $5 to $5.50.
The projected increase in prices has led to a forecast of more planted acres this year, Sydow noted. Acreage planted in corn, soybeans and wheat this year is expected to total 227 million, up 6.9 million over last year.
As for export expectations, she said China and Hong Kong are forecast to be growing markets for beef, pork, poultry, soy and grains from 2020 to 2030. For example, China is expected to import 140 million metric tons of soybeans by 2030, Sydow said.
Over the next few years, consumer trends may play a bigger role in how food is produced, said Kanlaya Barr, lead economist for John Deere. Consumers increasingly want products that adhere to environmental standards, she noted. She referenced a study that found 48 percent of consumers are willing to adjust their buying habits to reduce environmental footprint. The study also found 81 percent believe that companies should help improve the environment.
“I am encouraged by many of the sustainability efforts that are already in place in the past several years or in the pipeline that would lead to better outcomes for stakeholders,” Barr said. “These efforts will continue to open doors for U.S. agriculture exports.”
Cassandra Kuball, vice president of Michael Torrey Associates, said many in trade policy had rip up their playbooks under the Trump administration. She doesn’t agree with those who say the Biden administration will simple reset and go back to “same as normal. I actually think it’s more of a rebrand. What we’re seeing is still very much care about the commitments that we’ve engaged in over the past few years but it doesn’t stop there. What we’re going to be watching for is seeing how the Biden administration is going to be setting itself up. We’re not going back to square one and I don’t think food and agriculture in itself necessarily wants to start from square one either.”
3/2/2021