China fell short on trade agreement promises, but American farm exports hit record in 2021; farmers pessimistic

Though China failed to fulfill its Phase I trade agreement promises, American farmers still had a banner year in 2021, beating its previous crop export record by more than $22 billion. However, farmers' confidence has continued to decline for nearly a year.

"The 2020 agreement that de-escalated the Sino-U.S. trade war set unrealistically high goals for U.S. exports to China and failed to deliver on them by large margins, say analysts. Overall, China bought just 57% of the goods and services it committed to buying as part of the 'phase one' agreement. The agriculture sector, at 83%, came closest to reaching its export goal," Chuck Abbott reports for the Food & Environment Reporting Network. "The phase one agreement expired at the end of 2021, with China clearly far from compliance. The Commerce Department released the year-end trade figures this week. The trade deficit with China widened to $355 billion, an increase of $45 billion from 2020. Overall, the U.S. trade deficit was a record $859 billion in 2021."

Most of the deficit comes from soybeans; they make up about 60% of U.S. agricultural exports to China. "Soybean sales plunged during the first year of the trade war, and although they recovered, in the end they reached just two-thirds of the needed volume," Abbott reports. 

Though exports fell short of the trade deal's terms, China still bought a record $33 billion in U.S. agricultural exports in 2021. In fact, "six of the 10 largest customers for U.S. farm and food goods, led by China, Mexico, and Canada, made record purchases during calendar 2021," Abbott reports. Overall, U.S. farm exports hit a record $177 billion in 2021.

However, farmers' confidence has steadily declined since last April, according to Purdue University's Ag Economy Barometer. "More than 40% of the large-scale farmers and ranchers polled by Purdue said they expect the next 12 months will bring bad times for the agricultural economy, nearly twice the number of those who believe good times lie ahead," Abbott reports. "Producers were even more pessimistic about their own operations; 15% said they expected to be better off financially a year from now, and nearly 45% said they would be worse off. One in four said they expected to borrow more money from the bank to cover operating costs this year than in 2021, with higher input costs the overwhelming reason."