Retaliatory tariffs during trade war led to $27 billion in lost agricultural exports by end of 2019, USDA report concludes

Percent share of estimated annual losses caused by
retaliatory tariffs, by commodity. (USDA chart)

The Trump administration's trade wars with China and other nations led to a significant reduction in U.S. agricultural exports, a loss of more than $27 billion from 2018 through the end of 2019, according to a new report from the Agriculture Department's Economic Research Service.

The federal government tried to make up for the loses with $28 billion in payments, but the payouts weren't always equitable; corn farmers were paid too much, the Government Accountability Office concluded. Yet, soybeans were the hardest-hit commodity, accounting for nearly 71% of losses, or $9.4 billion annually, the ERS report says. The next largest annualized losses came from sorghum ($854 million), and pork ($646 million).

China accounted for about 95 percent of the losses, or $25.7 billion, followed by the European Union ($0.6 billion), and Mexico ($0.5 billion). Tariffs from Canada, Turkey and India accounted for smaller losses. The U.S. and China signed a trade agreement in January 2020, but China did not fulfill its commitment to buy $80 billion in U.S. agriculture, seafood and other food exports by the end of 2021. Through November 2021, China had only purchased $56.3 billion.

EPA allows pesticide atrazine and related chemicals to stay on the market — with some new caveats

Widely used herbicide atrazine, along with its cousins propozine and simizine, can stay on the market, but with new restrictions on its use. Environmental Protection Agency Administrator Andrew Wheeler announced the interim decision Friday at a farmer roundtable in Niangua, Missouri, Todd Neeley reports for DTN/The Progressive Farmer. Atrazine is the second-most widely used herbicide in the U.S., and is mainly used on corn, sugarcane, sorghum, and landscaping.

The new restrictions are intended to reduce potential harm to human health and the environment; the EPA has found in recent years that atrazine exposure can pose developmental risks to children and reproductive risks to wildlife. The new measures include reducing atrazine and simazine use on residential lawns to protect children who play on them, requiring irrigation immediately after applying simazine to residential turf, and requiring workers who spray the herbicides to wear additional personal protective equipment.

"The agency is finalizing label requirements for all three triazines to include mandatory spray drift control measures, to minimize pesticide drift into non-target areas including water bodies, as well as updating label directions to reduce weed resistance to atrazine," Neeley reports.

The Center for Biological Diversity, a left-leaning nonprofit, plans to file suit against the EPA over the decision. The organization argues that allowing use of triazines at all endangers human health and wildlife, and notes that more than 35 countries have banned or are phasing out use of atrazine. The Center also argues that the EPA essentially modified lab test benchmarks to make atrazine seem safer for humans, and that the old benchmarks would have found atrazine unsafe for use on lawns and turf.

China to allow U.S. to apply for agriculture tariff waivers

China announced Tuesday that, starting March 2, it will allow importers to apply for tariff exemptions on 696 American goods, the third round of such exemptions China has offered in the wake of the Phase 1 trade deal that took effect on Feb. 14., Stella Qiu and Se Young Lee report for Reuters.

"U.S. goods eligible for tariff exemptions include key agricultural and energy products such as pork, beef, soybeans, liquefied natural gas and crude oil, which were subject to extra tariffs imposed during the escalation of the bilateral trade dispute," Qiu and Lee report. "Other products subject to exemption on additional tariffs imposed include denatured ethanol and wheat, corn and sorghum. Some medical devices and metals including copper ore and concentrates, copper scrap and aluminum scrap are also subject to exemption."

The announcement emphasized that exemptions will be granted based on market conditions and commercial considerations, Qiu and Lee report. Though Chinese President Xi Jinping assured President Trump during a recent call that China will meet its Phase 1 purchasing targets, the caveat allows China more latitude in what it buys from the U.S., especially since China has already purchased a large amount of soybeans from Brazil. The coronavirus epidemic may also make it difficult for China to meet its purchasing targets.

EPA proposes new rules on weedkiller atrazine, and environmentalists object; OKs 10 pesticides for hemp

The Environmental Protection Agency proposed new restrictions on the herbicide atrazine Dec. 19. U.S. farmers use about 72 million pounds of it annually, mostly on corn, sorghum and sugar cane.

"In a proposed interim final rule, EPA said it would impose new requirements to minimize workers' exposure to atrazine, including limiting applications on sod and reducing the amount combined with fertilizer," Marc Heller reports for Energy & Environment News. The agency also said it would bar atrazine from being sprayed in liquid form by airplane, which it says would reduce the risk of atrazine hitting waterways or wildlife.

"Environmentalists say EPA's plan weakens protections and would allow 50 percent more of the endocrine-disrupting herbicide linked to birth defects and cancer to end up in waterways," Heller reports. "Environmental groups such as the Center for Biological Diversity have pointed to bans on atrazine use in Europe and said EPA hasn't properly consulted with other federal agencies regarding compliance with the Endangered Species Act."

EPA also approved 10 pesticides for use on hemp, Heller reports.

EPA issues 'emergency exemption' for fourth year to allow limited use of a pesticide that is harmful to bees

The Environmental Protection Agency will allow farmers in 18 states this year to use an insecticide that may kill bees on two crops, sorghum and cotton, that attract bees.

This is the fourth straight year that EPA has issued an emergency exemption for sulfoxaflor, which is not approved for general use. Dow AgroSciences marketed the pesticide, sold under the brand names "Closer" and "Transform" as an alternative to neonicotinoids that harm bees, Zoe Schlanger reports for Quartz. But the pesticide apparently failed to live up to expectations, and was banned in 2015 after beekeepers, environmental groups and honey industry advocates filed suit.

Sulfoxaflor behaves very like neonicotinoids, researchers found. "A paper published in Nature in August 2018 found that exposure to sulfoxaflor significantly lowered bees’ ability to reproduce. Exposed colonies had fewer than half the number of offspring as unexposed colonies," Schlanger reports.

In 2016 EPA reapproved sulfoxaflor but said it could only be sprayed on bee-attracting crops after their bloom period. It allowed exceptions for cotton and sorghum, and could extend further exceptions in the future: "In October 2018, Dow submitted an application to expand the use of sulfoxaflor to rice fields, avocado trees, household plants, tree farms, and greenhouses," Schlanger reports.

U.S. farmers may get less aid than first estimated if trade agreement with Mexico and Canada mitigates losses

Farmers hurt by the trade war with China could get less than the U.S. Department of Agriculture's promised $12 billion because of the new trade deal with Canada and Mexico that replaces the North
American Free Trade Agreement, Humeyra Pamuk reports for Reuters.

USDA announced in August that the first $6 billion would include cash payments to farmers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs. Regarding the second $6 billion installment, Agriculture Secretary Sonny Perdue told Reuters the department will be "recalculating along as we go" because the new agreement might lessen the financial pain felt by some farmers.

Pamuk notes, "American farmers have yet to see the full benefit of the new accord as an ongoing dispute over steel and aluminum tariffs mean they still face retaliatory measures when trading with Canada and Mexico. That agreement also does not address the harm as a result of the trade war."

Perdue told Reuters that the steel and aluminum tariffs were "instrumental" in pressuring Canada to negotiate the deal, but now that it has been signed, the tariffs' purpose has been served and he believes the three countries should return to a no-tariff policy on steel and aluminum.

USDA to pay commodity and hog farmers $4.7 billion to compensate for effects of trade war with China

The U.S. Department of Agriculture announced more details Monday of the program meant to help commodity farmers suffering from the effects of the trade war with China. Soybean farmers will receive most of the combined $4.7 billion in funds from "market facilitation payments." Sign-ups to receive the funds will begin Sept. 4, but farmers will have to show how much their farms produced, Chris Clayton reports for DTN/The Progressive Farmer.

Payments are based on 50 percent of a farmer's production this year, multiplied by the payment rates below:

• Soybeans: $1.65 a bushel; total payments expected, $3.7 billion
• Sorghum: 86 cents a bushel; total payments expected, $156 million
• Wheat: 14 cents a bushel; total payments expected, $119 million
• Corn: 1 cent a bushel; total payments expected, $96 million
• Cotton: 6 cents a pound; total payments expected, $277 million

Hog farmers will be paid $8 a head for 50 percent of the pigs they owned on Aug. 1, with total pork producer payments expected to reach $290 million, Clayton reports. The money comes from USDA's Commodity Credit Corp., which is authorized by law to borrow up to $30 billion to help adjust agricultural markets.

U.S. and China step back from threatened tariffs; Trump tweets at farmers worried about trade war

After two days of negotiation between Chinese and U.S. officials in Washington, D.C., the Trump administration has announced the framework of an agreement between the two countries in their ongoing trade dispute, leading both to step back from threatened tariffs that would hurt American farmers, David Lynch reports for The Washington Post. But the deal's lack of specifics has left interested parties dissatisfied and led many to question whether President Trump, who prides himself on his negotiating skills, is giving away too much to the Chinese.

Trump had earlier demanded a $200 billion reduction in the $375 billion U.S. trade deficit with China, but while the tentative agreement apparently does not meet that goal, he has halted tariffs he had threatened to impose on $150 billion worth of Chinese products. A joint statement issued on Saturday said the U.S. would send a team to China to hammer out the details, "which also may include expanded trade in manufactured goods and stronger 'cooperation' in enforcement of intellectual property protections," Lynch reported in an earlier story for the Post.

On Friday, China's Ministry of Commerce announced it would halt the investigation into U.S. sorghum exports and remove the 178.6 percent anti-dumping tariff it had imposed on U.S. sorghum one month ago. The announcement could be construed as a goodwill gesture in ongoing trade talks. "Chinese officials also said the price of domestic pork in China was falling and restrictions on imported sorghum would increase feed costs on pork producers as well," Chris Clayton reports for DTN/The Progressive Farmer.

The trade war was undermining Trump's agricultural base, to which he appealed on Twitter. He tweeted, "China has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products," but that does not appear to be true, since there is no agreement. Two hours later, he tweeted, "Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce." That remains to be seen; as he clarified, the deal is "potential."

Farm states say they bear 'unfair' brunt of Chinese tariffs; Commerce secretary says administration will try to help

"Several senators whose states are already feeling the effects of escalating U.S. trade tensions with China pressed Wilbur Ross at Thursday’s Senate Appropriations [Committee] hearing on the Trump administration’s tariff strategy," Dave Nyczepir reports for Route Fifty.

Sen. Jerry Moran, the Kansas Republican who chairs the committee said the tariffs imposed by China have done "significant economic harm" to his state, which he noted is a leader in beef, pork, wheat, sorghum and soybean production--all of which have been slapped with heavy tariffs.

Ross, Trade Representative Robert Lighthizer, and Treasury Secretary Steven Mnuchin went to China last week in an attempt to halt the escalating trade war. Both sides delivered specific demands, Ross said at the hearing, but said the gap between what the two countries want remains "wide." 

Agriculture had figured heavily in the trade discussions with China, Ross said, and promised "we will do our level best to minimize the problem and to maximize the support we can provide in helping them."

China slaps 179 percent tariff on U.S. sorghum imports

Statista graph; click on the image to enlarge it.

In the latest salvo in a trade war with the U.S., China announced Tuesday that it will impose a 179 percent tariff on American sorghum, accusing the U.S. of dumping the subsidized crop on Chinese markets, Daniel Shane reports for CNN. China began investigating sorghum imports in February as a warning shot to President Trump about his new steel and aluminum tariffs. The Chinese Commerce Ministry said its ruling is preliminary and that the sorghum tariffs are temporary. China had already announced 25 percent tariffs on U.S. sorghum imports earlier this month, but has not announced when those tariffs will be enforced.

China is America's biggest customer for exported sorghum, importing about $960 million in 2017. The lion's share is grown in Kansas, with Texas following a distant second. Used for livestock feed and in making baiju, a liquor popular in China, the grain thrives in arid pasturelands where wheat does well. "Squeezing the sorghum trade could also hurt America's rural economy -- particularly in states like Kansas -- where President Donald Trump has a lot of support," Shane reports.

Steel tariffs increase equipment prices for U.S. farmers

U.S. farmers are starting to see negative consequences from President Trump's new tariffs on Chinese-made steel and aluminum. The price of American-made steel has increased since the tariffs were announced and remains volatile, bumping up costs for farming equipment such as tractors and grain silos.

"The impact of rising steel prices on agriculture illustrates the unintended and unpredictable consequences of aggressive protectionism in a global economy," Tom Polansek and P.J. Huffstutter report for Reuters. "And the blow comes as farmers fear a more direct hit from retaliatory tariffs threatened by China on crops such as sorghum and soybeans, the most valuable U.S. agricultural export."

U.S. farmers are already working on thin to nonexistent profit margins, Reuters notes. The average farm income is less than half what it was before 2013 because of years of bumper corn and soybean crops that depressed prices. Other countries like Brazil, Argentina and Russia have increased grain exports in recent years, which means more competition and less money for U.S. farmers exporting their crops. Renegotiation of the North American Free Trade Agreement could affect sales further.

One Illinois farmer, a Trump voter named Allen Entwistle, said he decided to put off construction of an $800,000 grain storage system after manufacturer AGCO Corp. raised the price by 15 percent; he said he will have to instead store corn in bags on the ground instead. "President Trump keeps telling us he’s going to get a better deal," Entwistle told Reuters. "When are we gonna make it better?"

China announces, but doesn't schedule, tariffs on crops and other products that seem to target Trump's rural base

The day after President Trump announced tariffs on more than 1,300 Chinese products, China escalated the trade war, saying it would levy 25 percent tariffs on $50 billion worth of U.S. products. The import taxes will likely hurt the rural areas that voted for Trump. There is time for the U.S. and China to negotiate; Trump's latest tariffs won't take effect until after a public comment period ends May 11, and China has not said when the tariffs it announced today will take effect.

"China’s Ministry of Commerce on Wednesday said it plans to impose 25 percent duties on the commodity in addition to other U.S. agricultural produce including wheat, corn, cotton, sorghum, tobacco and beef," Alfred Cang and Phoebe Sedgman report for Bloomberg. "They’re among 106 products ranging from aircraft to chemicals targeted by Beijing in retaliation for proposed American duties on its high-tech goods." Other targeted products include tobacco, whiskey and orange juice, Don Lee and Jonathan Kaiman report for the Los Angeles Times.

China is America's biggest customer for soybeans and cotton, importing about $14 billion in soybeans alone last year. The announcement triggered a drop in soybean, corn and cotton futures, with soybeans falling as much as 5.3 percent to $9.835 a bushel. Sorghum has not yet been targeted for tariffs, but it's another vulnerable item, since China buys about 80 percent of U.S. sorghum exports, worth about $957 million in 2017. China pointedly began investigating sorghum imports from the U.S. after Trump imposed tariffs on steel and aluminum.

This round of tariffs seems to target Trump's rural base: "Trump won eight of the U.S.'s top-10 soy-exporting states in his 2016 election, according to the U.S. Department of Agriculture. Wisconsin and Michigan, both crucial swing states in the election, are also major soybean exporters," Lee and Kaiman report. "Whiskey, to take another example, is a prime product of Kentucky, the home of Senate Majority Leader Mitch McConnell, who has already expressed reservations about Trump's tariff policies. Orange juice is heavily produced in Florida, a key swing state."

Citing an analysis by the Brookings Institution, Greg Sargent of The Washington Post writes, "Agricultural communities are right to worry about what’s happening, but that’s not all: The data also show that other targeted industries should be worried as well. And it reveals that those who are vulnerable to negative impacts from these trade tensions are mostly concentrated in counties carried by Trump." Brookings analyzed the impact on "seven industries producing the products targeted by China’s retaliatory actions, which include fresh and dried fruit and nut farming, stainless steel pipes, pork products, modified ethanol, scrap aluminum and wineries," Sargent reports.

Agriculture secretary says rural economy is 'fragile'; Tenn. farmer says opioids may be as big a threat as anything

In a hearing on the "State of the Rural Economy" before the House Agriculture Committee yesterday, Agriculture Secretary Sonny Perdue acknowledged that farmers are having a tough time these days. "I wish there were better news but there is a lot of stress and a lot of duress on the farms today," Perdue said. He went on to praise the resiliency of American farmers, but said that "the state of the rural economy is fragile," Andy Eubank reports for Hoosier Ag Today.

"I’m very concerned that if prices continue to fall and we have any kind of an average year or below average year that we could be in some real trouble," said Rep. Collin Peterson of Minnesota, the committee's ranking Democrat and former chair. "This is one of the reasons if I had my way I’d like to see a Farm Bill that had an improved safety net going into this situation. But, with no new money, I don’t know how we’re going to do that."

Perdue said part of the stress was because of the "trade environment," and noted that U.S. sorghum prices fell after news surfaced that China is investigating U.S. sorghum exports. The investigation is a warning shot after President Trump imposed high tariffs on solar panel imports, which mostly come from China. The Chinese may also investigate U.S. soybean imports.

While Perdue was talking, the American Farm Bureau Federation was publishing a warning from a farmer about another big issue facing rural America: the opioid epidemic. "Our focus on national regulations and global trade are real issues that need to be addressed, but the future of farming and ranching may be just as dependent on our awareness of curbing the opioid dependency in our grassroots communities where individuals influence national changes," Matt Niswander of Lawrenceburg, Tenn., writes.

"We need rural America’s farmers and ranchers to unite and remove the stigma and veil of shame surrounding opioid use and addiction, and we need additional training for rural healthcare providers to be empowered as strong advocates for non-opioid treatment options," Niswander writes. If we choose to ignore the problem, this epidemic will continue to spread, leaving a devastating impact that will undermine the current state of agriculture in rural America. Rural America’s opioid crisis is here right now."

Trade tensions rise: China probes imports of U.S. sorghum

Less than two weeks after President Trump imposed steep tariffs on solar panels, most of which come from China, and two months after his administration's decision to investigate trade in Chinese aluminum-alloy sheets, China launched a probe into U.S. sorghum imports -- a pointed reminder that U.S. farmers are likely to suffer in a trade war.

"On Sunday, the Ministry of Commerce launched an anti-dumping and anti-subsidy investigation, potentially leading to hefty tariffs on imports of the ingredient used in livestock feed and the fiery Chinese liquor baijiu," Dominique Patton and Michael Martina report for Reuters. "Taking aim at sorghum at a time when the global grain market is in surplus and growers around the world are scrambling to find homes for their products hits at Trump's core political base while avoiding damaging supplies of a product critical at home."

The U.S. imported more than $1 billion worth of sorghum to China last year, making up more than 90 percent of the total sorghum China imports. Most of it comes from Texas and Kansas. A trade war would likely hurt U.S. soybean growers too. Soybeans are the U.S.'s most valuable agricultural export, valued at more than $12 billion last year.

"They believe that if they ratchet up the heat in key red states where there's a large agricultural community that's voted for Donald Trump that it will somehow change the situation," Paul Burke, Asia director at the U.S. Soybean Export Council, told Reuters.

Sudden demand from China, drought tolerance make sorghum the old crop that's new and hot

Sorghum is the new booming export business from the U.S. to China. Sales this marketing year through March 6 are more than 2.2 million metric tons (87 million bushels), and Chinese buyers "are expected to purchase over 3.1 MMT for the 2013 marketing year, representing a whopping 40 percent of the U.S. sorghum crop," reports Agri-Pulse, a Washington newsletter. Sorghum sales last year to China were zero. (U.S. Grains Council graphic)

Tom Sleight, president and CEO of the U.S. Grains Council, told Agri-Pulse, “We’ve always been promoting sorghum as part of our mix in China, but for the longest time most of our sales have been to Mexico. With restrictions on corn imports (as a result on private tariff rate quota allocations) and problems we’ve been having with biotech acceptance of some traits, sorghum has become the new darling in China.”

Sorghum is a grain, forage or sugar crop that is among the most efficient crops in conversion of solar energy and use of water, according to the National Sorghum Producers. Part of its allure is its drought tolerance.

In 2013 U.S. growers, mostly in the High Plains, planted 8.1 million acres of sorghum, down from 27 million acres in 1957 and 13 million acres in 1996, Agri-Pulse reports. But Tim Lust, CEO of the United Sorghum Checkoff Program, said "seed sales appear to be 'way up' and he expects acreage to expand across central Kansas and northern Oklahoma." Agri-Pulse is subscription only, but a free trial is available by clicking here.

What about sorghum? Under-appreciated, drought-tolerant staple crop can also be turned into biofuel

Voice of America photo by Steve Baragona

As the worst drought in decades shrivels U.S. corn supplies, some are seeing the virtues of sorghum, a cereal grain that is a minor part of the U.S. harvest. As the climate changes, experts believe the drought-hardy food and fodder crop may become more popular. Steve Baragona, a Voice of America reporter, found a believer in Nebraska farmer Fred Propkop, above, whose corn and sorghum crops were sown side by side. One is green and lush, the other brown and lifeless.

Years like this one are why University of Nebraska researcher Ismail Dweikat is a passionate advocate for sorghum, an under-appreciated crop. In hot, dry regions of Africa, sorghum is a staple food. Its waxy leaves and deep roots are better suited for dry climates than corn, and Dweikat says that's going to be increasingly important. More droughts are expected worldwide this century as climate change warms the planet.

Sorghum also has potential as a biofuel crop. Dweikat says sweet sorghum, grown for its sugar cane-like stalks rather than for grain, can be turned into ethanol more efficiently than corn. (Read more)