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Opinions differ on impact of trade talk delays.

Opinions differ on U.S./China trade talk delay

Trade agreement delay ramifications.

American Farm Bureau Federation President Zippy Duvall said that delaying a trade deal between the U.S. and China will only exacerbate financial difficulties for farmers already struggling with low commodity prices and rising production costs.

Duvall, in a statement released Dec. 3, took issue with President Trump's suggestion that a deal with China not only might not occur before the end of the year but also could be delayed until after the 2020 election. He said further delay in reaching an agreement would pose more hardships on struggling farmers already facing rising bankruptcy rates.

"The more time that passes, the more difficult it will be to win back this important export market, regardless of any trade agreement," Duvall said. "We understand that tough talk is part of trade negotiations," he said, but insisted that delay will further imperil American farm families.

He added that farmers have received "critical support" from the latest round of trade aid to farmers, especially for those out of operating capital following multiple setbacks in 2019, including historic flooding, devastating hurricanes, poor planting and harvesting weather, and a sluggish farm economy.

"But trade aid payments are not making farmers whole," Duvall said. "A trade agreement with a market as important as China’s must be a priority."

Duvall also encouraged Congress to pass the United States-Mexico-Canada Agreement (USMCA) "to send a message to the rest of the world that we are back in the game.”

Other opinions

The American Farm Bureau response is not shared by other market observers.

Mississippi State University cotton market specialist O.A. Cleveland said much more than tariffs and delayed trade talks affects commodity prices.

"The sad news is that American agricultural and commodity organizations have failed to understand that world trade is changing, not because of the tariff, since the tariff tiff is only [one] player in the transformation of world trade. World trade is not going back to where it was. Period."

Cleveland said the world of ag commodities will not go back, "China or no China, tariff or no tariff. A new status quo is being developed/discovered. Tariff or no tariff, cotton prices and the cotton market is no less and no more impacted, generally."

Cleveland said speculators in the market do influence prices on tariff news, but not by much.

He dismisses the notion that cotton is being hurt by trade disputes. "Why then are U.S. forward sales the second highest on record? Exports sales forecasts are 17% above the same time last year. Cotton has weathered the storm," he said. "We are now selling more cotton than before the Chinese tariff."

He disagrees with U.S. agriculture leadership that the tariff doomed them. "It was a card, but only one card in the deck."

John Robinson, Texas AgriLife Extension economist and cotton market specialist, leans toward the Farm Bureau position.

"Demand for cotton is facing challenges from slowing economies," Robinson said in response to a Farm Press enquiry. "A continuation of U.S./China tariffs could make this situation worse."

Bobby Coats, economist, Arkansas Department of Agriculture, agrees with Cleveland.

Numerous factors

"Most believe the ongoing trade disputes are the primary factors limiting trade with China and other trading partners," Coats told Farm Press. "In reality, a host of fiscal, monetary, trade and regulatory policy issues limit our relationship with our global neighbors. The U.S. has simply reached a point that it can no longer single-handedly drain our resources to support global growth or economic activity. This is not new to history; all great countries reach a point where they find themselves in a position where their resources are systematically siphoned off."

Coats said demand for U.S. agriculture commodities has diminished. He cites intensifying "broad-based policy negotiations across the world, especially since early 2018," as critical factors.

The European Union, he says, must make hard economic, social, and political decisions. "Things will get worse before they get better. China has well-thought out goals to achieve technological, financial, and military supremacy," he says. Those goals will persist, he adds, until [Chinese] leadership changes. "It's up to U.S. leadership to limit their aggression."

Coats points to Russia, Turkey, Iran, Saudi Arabia, and other nations with territorial ambitions, some as a means of survival. "Mexico and Canada are the bright spots in an uncertain world, but their economic maturity will take time."

U.S. technology, Coats says, offers a ray of hope. "We see a massive technological revolution, but that revolution requires money. The next decade will be a technological marvel if we invest wisely. We (the U.S.) "should print money and invest in accelerating a massive technological revolution. That investment, he says, will restore the U.S. to a position "as strong as we once were."

Economic strength

"The economic strength of our farm community and nation is dependent upon strong trade agreements," says Jeff Aiken, president, Tennessee Farm Bureau Federation. "The successful completion of the trade negotiations with China, as well as, Mexico and Canada are top priorities of the Tennessee Farm Bureau Federation.

"We urge the administration and Congress to keep this as their number one priority and finalize the agreements without delay. Tennessee farmers have endured distressed markets, record low commodity prices and extreme weather conditions for the past five years. We are grateful for the Market Facilitation Payments. The assistance has allowed many family farms to stay in business during the trade negotiations."

But assistance is not enough. Aiken says trade agreement delays result in more stress on Tennessee farmers and threatens the U.S. industry's ability to regain lost trade opportunities.

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