Farm Progress

China trade challenge presents sorghum opportunity elsewhere

Sorghum growers look to build new markets amid China trade spat.

Chris Cogburn

April 27, 2018

3 Min Read
GOOD FOR SORGHUM: The ethanol industry has been a stabilizing force for grain producers, including sorghum growers. The industry is making significant investments in marketing to make consumers aware of the advantages of renewable fuels.

American farmers are the most resilient group in the world. Each spring, they heed the advice King Solomon gave in Ecclesiastes 11:4 and plant regardless of wind and clouds in hopes of harvesting a crop in the fall. Driven by a combination of faith and stubbornness, farmers have the singular ability to build for tomorrow — even when they know tomorrow may never come for their farm. Why do they do it year after year, decade after decade? I think the answer lies in the unmatched opportunity afforded by agriculture in America.

If farmers plant every year with faith they’ll have something to harvest, why don’t they trust someone will buy that harvest as well? I think they do, and the faith of sorghum farmers in the face of recent market uncertainty has been inspiring.

On April 18, 2013, the USDA Foreign Agricultural Service officially reported the first ever large-scale purchases of U.S. sorghum by China. The market grew rapidly over the next five years, and the billionth bushel was shipped to China the first week of 2018. A comparatively small, $1.5 billion commodity had become America’s second-largest agricultural export to China.

The news of the billionth shipped bushel was quickly overshadowed. Five years after that first FAS report — almost to the day — on April 17, the Chinese Ministry of Foreign Commerce imposed a preliminary 178.6% tariff on U.S. sorghum stoking trade war fears and effectively closing the crop’s largest market. The size of the tariff was a surprise, but NSP staff had been working for over two months with a number of stakeholders to defend U.S. sorghum farmers first accused of dumping, or selling below the cost of production, on Feb. 4.

As we continue working diligently to demonstrate U.S. sorghum is not dumped in China and the trade relationship has been a win-win, we find ourselves looking to take advantage of opportunities presented by this challenge. As always, our farmers have shown incredible resolve and are joining us in this effort.

Led by our farmers, we have had extensive discussions with every ethanol producer in the Sorghum Belt over the past several weeks, and they’re looking forward to stepping back in as the world’s largest market for U.S. sorghum. In fact, in many areas, sorghum basis will drop no further as ethanol producers are already providing a floor. This is very encouraging news given sorghum basis in these areas is normal relative to history. We worked for a decade to build the ethanol market so the loss of other outlets — even ones as large as China — would not devastate the industry. That work is paying off.

We are also partnering with state governments to organize trade missions to build long-term markets and find short-term homes for sorghum already produced or soon to be harvested. Our farmer leaders met with more than 100 grain buyers in Spain seeking to open markets there and in other European Union nations almost a month before the preliminary tariff was imposed. Governors as well as state commissioners and secretaries of agriculture have spoken out in solidarity and made trade promotion resources available, and we continue to work with the federal government at all levels to open new markets, as well.

So, why should we move forward when our largest market has just closed? For the same reason farmers plant with no guarantee of a harvest year after year, decade after decade: American agriculture affords unmatched opportunity. Sure, recent developments with China are frustrating. But, as a direct result of these challenges, the next few years will bring the most significant opportunities for building new markets for U.S. sorghum in the history of the industry.

Join me in looking past the wind and clouds and pursuing opportunity.

Cogburn writes from Abernathy, Texas. His Twitter handle is @nspchris.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like