U.S. flagged vessels headed for China made an abrupt U-turn last month and headed for new ports. It wasn’t the weather that forced the change of course, but rather the contents in the ships’ hulls.
Sorghum – a grain grown in Texas and other Plains states and mostly sold as livestock feed – was just targeted by the Chinese in retaliation for U.S. imposed tariffs on a variety of goods ranging from steel to electronics.
Although the cargo involved is relatively small in the overall scope of agricultural trade, it did send off alarm bells for farmers who are depending on exports to lift them out of a slumping rural economy marked by low commodity prices.
“If China really does start slapping tariffs on everything, like soybeans and corn, things could get really ugly, really fast,” one commodity market analyst explained to Reuters.
And while China’s high-profile actions grabbed all the headlines in April, there were plenty of other examples of unfair trade practices harming America’s farmers from coast to coast.
For example, U.S. rice producers are dealing with a resurrected subsidy scheme in Brazil that is fueling exports, depressing global prices and taking market share from America – all in violation of international trade rules.
USA Rice, a trade association representing U.S. producers, sat down with Agri-Pulse to explain the situation. The publication summed things up like this:
Brazil’s government uses the two programs – the Premium for Product Outflow (PEP) and the Equalization Premium Paid to the Producer (PEPRO) – to help farmers sell off their stocks and move rice from big production areas to states where little or none is produced.
But the government has also previously used the programs to help get rice surpluses out of domestic silos and onto the international market.
The USA Rice Federation does not yet have solid proof, but the circumstantial evidence is strong. Brazilian rice exports to the U.S. for the first two months of this year are 60 percent higher than they were in January and February of 2017. That coincides with Brazil’s renewed use of the two subsidy programs that have not been operational since 2011…
If you take into account that the cost of transporting that Brazilian rice to the U.S. is far more expensive than sourcing domestically, it’s just more evidence that Brazil is selling subsidized rice at below market value, said USA Rice spokesman Michael Klein.
That is technically considered dumping and it’s against WTO rules.
Brazil isn’t the only bad actor either. In just the past couple of weeks:
- The U.S. Trade Representative’s office called out India and Indonesia for their nontariff barriers to U.S. dairy products – nonsensical roadblocks that include India telling U.S. dairymen what they are allowed to feed their herds.
- Pakistan and India were taken to court at the WTO for illegally subsidizing sugar exports, which have only exacerbated the world’s most distorted commodity market. Days later, India responded by announcing new subsidy programs.
- Europe signed a new trade deal with Mexico in hopes of eating away at U.S. market share and making it harder to market common-name foods, like parmesan cheese, shipping from America.
This is the international reality facing American agriculture as Congress continues to debate the 2018 Farm Bill. That piece of legislation will not fix the trade transgressions abroad, but it will provide U.S. farmers some safety net as they wrestle with resulting market swings.
Makes you wonder why some anti-farm organizations are lobbying to rip up the safety net – in essence, rewarding the world’s worst actors and setting rural America up for failure.