Step toward trade agreement or necessary due to ASF?
China plans to waive tariffs on some American soybean and pork imports, according to reports.
It is unclear whether this move signals progress on U.S.-China trade talks or if China sees it as a requirement to overcome the effects of the African swine fever (ASF) virus that has killed more than 1 million of the country’s pigs since the outbreak began in August 2018.
Tariffs of 25% on U.S. soybeans and pork have been in effect in China since July 2018.
China has agreed to buy up to $50 billion in U.S. farm products as part of a tentative trade deal between the two countries. The “first phase” of a trade deal was announced by U.S. President Donald Trump on October 11.
China’s State Council said in an announcement that Chinese companies have already “imported certain quantities of goods from the United States.”
China’s soybean stocks near record lows
According to China’s National Grain and Oil Information Centre, the country’s soybean stocks are close to record low levels.
Soybeans make up 60% of the $20 billion of agricultural products that the U.S. exports to China.
In 2017, the United States exported 56.2 million metric tons (mmt) of soybeans, with China buying 37.5 mmt – nearly $12.4 million in whole soybeans and $24 million in soybean oil – according to SoyStats.
According to the U.S. Department of Agriculture (USDA) National Agriculture Statistics Service (NASS), the value of soybeans grown in 2017 was $41 billion, second only to corn at $48.5 billion.
Throughout the U.S.-China trade war, China has imported less and less of America’s soybeans and instead increased imports of raw soybeans from Brazil and Argentina for crushing in China.
US pork’s opportunities in China
As a result of ASF, China’s Ministry of Commerce has said it plans to increase its pork imports this year by 40% to more than 3 million tons.
Based on an analysis by Iowa State University (ISU) Economist Dermot Hayes, the National Pork Producers Council said recently that unrestricted access to the Chinese chilled and frozen market would reduce the overall trade deficit with China by nearly 6% and generate 184,000 new U.S. jobs in the next decade. According to the analysis, U.S. pork sales would generate $24.5 billion in sales if U.S. pork gained unrestricted access to the world’s largest pork-producing nation over 10 years.