As officials with the United States and China officials meet this month to try and resolve a long-running trade war, the impact of tariffs between the two countries is minimal in the local agriculture industry.
Fourth-generation cattle producer Glen Cope, who runs Aurora-based Cope Farms, along with brother Matthew and their parents O.D. and Pam, said he keeps up on trade war updates in the news as well as agriculture policies that affect farmers and ranchers. In retaliation to tariffs President Donald Trump’s administration placed on U.S. imports from China early last year, China put tariffs on a number of U.S. agricultural commodities, including soybeans, alfalfa and corn.
However, beef was not among the goods China targeted – a relief for cattle farmers like Cope, who was born into the industry and has made a living helping raise 600 cows on nearly 3,000 acres. He’s an advocate for the tariffs the White House leveled against China, as he sees it as a method to achieving fair free trade.
“Free trade is important to the beef industry,” he said.
Total U.S. beef exports in 2017 were valued at $7.3 billion, up from $6.3 billion in 2016, according to the U.S. Meat Export Federation. Full-year 2018 data is not yet available, but through November 2018, exports were tracking at a similar value as 2017.
“I think most producers are very supportive of President Trump’s tariffs,” Cope added. “A lot of us feel like with China and other countries, we’ve had this unfair trade balance with them for years.”
According to the U.S. Bureau of Economic Analysis, the U.S. had a $337 billion trade deficit with China in 2017. The deficit has hovered above $300 billion annually since 2014.
“I think agriculture is willing to have a little bit of short-term pain for long-term gain,” he added.
Brian Hammons, president of Stockton-based Hammons Products Co., said he wasn’t too concerned when retaliatory tariffs were announced last summer by China. He said his primary business crop, black walnuts, was not on the agriculture goods list, but noted pistachios – which Hammons does not produce – were among those targeted. Unlike Cope, Hammons said he questions the value of tariffs in general, including those ordered by the United States.
“I think tariffs are a very bad thing long-term for the economy,” he said. “Fair free trade is very important for economies to function most efficiently and for businesses to operate most effectively. That’s a general philosophy, a general perspective. But when we have a tariff war, I wonder about the end result of that.”
Still at war
U.S. and China representatives have been in discussions this month in advance of Trump’s March 1 deadline for increasing U.S. tariffs to 25 percent on $200 million worth of Chinese products. The current rate is 10 percent.
The trade war also has extended beyond China, as the Trump administration previously added imported solar panels to the tariffs list in January 2018, and levied a 25 percent tariff on steel and 10 percent tariff on aluminum from Canada and Mexico in June 2018, according to past Springfield Business Journal reporting.
Despite the tariffs, estimates from the U.S. Department of Agriculture for exports in 2019 are not dire. According to the department, exports will drop to $141.5 billion this year, down by $1.9 billion from 2018.
However, the USDA said the total is still the third highest on record, with $152.3 billion in fiscal 2014 as the peak.
Patrick Westhoff, director of the Food and Agricultural Policy Research Institute at the University of Missouri, said the state is still feeling a negative impact from the tariffs overall. He doesn’t blame the tariffs as a sole contributor to last year’s decline in value of soybeans and corn – the state’s top two crops. He said their combined value dropped over 14 percent to $3.92 billion in 2018.
“In Missouri, it’s a combination of the tariffs and lower yields, too,” he said. “It’s both of those factors that came into play.”
Westhoff said Missouri has more soybean production relative to its overall mix of commodities, ranking sixth nationally at 290 million bushels, according to the Missouri Department of Agriculture.
“We probably have a little bit larger proportion affected than the average state,” he said of the tariffs’ impact on soybeans, which he noted are grown more prevalently in the northern and bootheel portions of the state.
He said beef is a much bigger agriculture commodity presence in southwest Missouri.
According to the state agriculture department, Missouri is second in the nation in beef cattle at 2.16 million head.
Eye on China
As a longtime contributor to the beef industry, Cope said herd size has been increasing over the last few years as demand for beef grows domestically and internationally.
According to the USDA, 2018 inventory was at 31.7 million head, up from 29.1 million head in 2014 when a drought impacted numbers.
“We haven’t felt the tariff impact much simply because we weren’t selling much beef to China in the first place,” Cope said. “But that certainly is a market beef producers would like to tap into.”
Hammons said his company had previously looked into the China market back in 2011, even making multiple trips to the country. He said China doesn’t have black walnuts, but it does have a domestic walnut like the English walnut typically grown in California.
The Chinese consumers don’t know what a black walnut is or understand the difference in flavor like those in the Ozarks do, he added.
The tariffs on walnuts in China make the price for black walnuts quite a bit higher than the walnuts already produced there, he said, noting it was ultimately a barrier to establishing a market in the country.
“We’re a small company, so we don’t have a lot of resources to spend on going overseas to develop new markets where there aren’t any – especially if we don’t know there’s consumer interest,” Hammons said of his 80-employee business, declining to disclose annual revenue. “China was interesting partly because it’s such a dynamic place. But I do see tariffs as a long-term barrier to potentially seeing that happen.”
Both Hammons and Cope believe the U.S. and China meeting this month is a positive sign, and they’re optimistic the trade war between the world’s two biggest economies could be soon coming to an end.
“I think a lot of people are optimistic about this,” Cope said, adding China has been dealing with an outbreak of African swine fever – an incurable disease in pigs but not harmful to people – since August 2018.
According to the Ministry of Agriculture and Rural Affairs in China, the country by mid-January had culled more than 916,000 pigs from around 100 outbreaks of the disease.
“It has absolutely decimated their pork industry and their pig herd,” Cope said. “In a way, we’ve got potentially a leg up in these trade negotiations because of this African swine fever they’ve got. I think they’ll be willing to negotiate a lot sooner than maybe they normally would.”
SBJ compiles news on the respiratory virus outbreak.
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