Anti-trade sentiment grips the United States

U.S. is undermining the World Trade Organization amid domestic pressure to lower trade

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Glacier FarmMedia – Blake Hurst senses shifting trade winds in the United States, and he doesn’t like the direction they are blowing.

“Agriculture faces some real dangers from a change in our opinion and our approach to trade,” said the president of the Missouri Farm Bureau.

Why it matters: Changing global trade patterns render markets unpredictable and upset supply-demand fundamentals.

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There is a growing feeling inside and outside of Washington that trade is not as important as it once was to the economic future of the country, and that scares him.

Hurst told delegates attending a recent Ag Outlook organized by Agri-Pulse and the Agricultural Business Council of Kansas City that he is uncertain what the goal is of the growing anti-trade movement:

  • Is it to eliminate the country’s trade deficit?
  • Is it to promote fairness?
  • Is it to promote self-sufficiency?

“If that’s the goal, then we farmers have more tractors than we need and I’ve got a coffee habit that’s going to be painful to break,” he said.

What worries him the most is that the anti-trade sentiment is starting to take hold in the farm community.

He met with a group of young agricultural professionals in Indianapolis this spring who expressed zero appetite for pursuing free and open trade.

“All they knew was trade was bad, we were getting screwed, we had to do something,” said Hurst.

He walked away from that meeting thinking his generation failed the younger generation in conveying the benefits free trade has brought to agriculture.

One of the reasons young farmers don’t understand the importance of trade is that they have been sheltered from the impact of restricted trade.

U.S. President Donald Trump’s administration has taken on China and other countries in an attempt to negotiate fairer deals.

That has caused a temporary disruption in trade with some of the country’s biggest agricultural customers.

However, the reduced export revenue has been masked by massive direct government payments to farmers that are expected to amount to US$50 billion in 2020, or 40 per cent of net farm income.

Hurst worries the U.S. is going to continue with its aggressive anti-trade agenda, potentially withdrawing from the World Trade Organization.

However, those direct subsidies could dry up if there is a change in government in November.

“In this scenario, agriculture must shrink and that transition would be painful indeed,” he said.

“John Deere, in this scenario, has a very large inventory of their new million-dollar combine series.”

Bill Even, chief executive officer of the U.S. National Pork Board, said his board of directors has also expressed concern about the growing anti-trade sentiment gripping America.

He said the pork industry has benefitted greatly from trade with 30 per cent of U.S. production moving to overseas markets, up from nothing 25 years ago.

Sales through the first seven months of 2020 are up 20 per cent because of COVID-19 and also to the extra business derived from supplying markets such as China that have been adversely affected by African swine fever.

However, Even said international trade also comes with risks. Germany lost more than $1 billion in export revenue overnight when health officials discovered ASF in wild boar populations in that country.

Jim Sutter, chief executive officer of the U.S. Soybean Export Council, was another panelist extolling the virtues of global trade.

He said 60 per cent of U.S. soybean production is shipped overseas, and global demand for the product continues to grow at an impressive pace.

“Soybeans are in a sweet spot,” said Sutter.

“The world will need a whole other U.S. crop in 10 years.”

World demand grew 17 million tonnes in 2019-2020, up from the 10-year average of 11 million tonnes, because of COVID and China’s rebounding hog herd.

Sutter said the Phase 1 trade agreement between the United States and China has been a godsend, although he doubts China will import half of its two-year commitment in the first year of the pact.

He believes U.S. soybean exports to China this year will likely match the previous record of 36 million tonnes. That would represent 36 per cent of China’s total imports this year.

Sutter encouraged U.S. farmers to plan on continued growth in global soybean consumption for years to come.

This article was originally published at The Western Producer.

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