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Soybean farmers can't replace China's business
Story Date: 4/23/2018
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Source: POLITICO'S MORNING AGRICULTURE 4/20/18
U.S. soybean exports to China could fall by as much as 65 percent if the tit-for-tat trade battle between the world's two largest economies prompts Beijing to slap retaliatory tariffs, according to a soon-to-be published report from Purdue University. The study comes after China announced earlier this month that U.S. soybeans could be hit with a 25-percent tariff if President Donald Trump pulls the trigger on planned tariffs to punish Beijing for its forced technology transfers, Pro's Blake Paterson writes.
Brazil comes out winning: If a U.S.-China trade war comes to fruition, China is expected to rely even more on Brazil for soybeans. Brazil is the largest soybean exporter to China, a title it snatched from American farmers seven years ago.
Silver lining for U.S. growers: U.S. soybean farmers could find some substitutes for its loss in business by expanding in other markets that now take in Brazilian beans.
"Brazil will take a big chunk of our market with China, and we'll take a chunk of Brazil's market elsewhere," Wally Tyner, a professor of agricultural economics at Purdue and author of the report, told POLITICO. The European Union, Mexico, Indonesia and Japan are among the nations likely to increase imports from the U.S., Tyner added.
Uncertainty remains: Even by cutting into Brazil's other markets, there is no combination of alternative routes available that could sufficiently make up for a major loss of business with China - a market that accounts for roughly 61 percent of U.S. exports and is worth nearly $14 billion.
"Even assuming these other markets can grow, they probably can't grow to match what China used to do," said Chad Hart, an associate professor of economics at Iowa State University. "China is such a dominant player. You can't even put together the rest to add up to China in the market right now."
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