Farmers growing skeptical of victory in Sino-U.S. trade war
American farmers were dogged supporters of President Trump’s trade war with China, accepting as “patriot farmers” the pain of retaliatory tariffs in the belief Beijing would be forced to alter its trade practices. But they are becoming skeptical of victory: Only half of them believe the trade war will be resolved to their benefit and even fewer believe China will meet its “phase one” commitments negotiated with the Trump administration.
“Farmers’ attitudes regarding the trade dispute with China have changed over the course of 2020,” said Purdue University on Tuesday. As recently as February, 80% of the large-scale farmers and ranchers polled by Purdue for its monthly Ag Economy Barometer expected the dispute would end in their favor. In its latest poll, only 50% said they expected the dispute would “ultimately be resolved in a way that benefits U.S. agriculture.”
It was the lowest level of support since Purdue began asking the question in July 2019. “In a related question, only 44% of respondents to the November survey said they think it’s likely that China will fulfill the ‘phase one’ trade agreement requirements, down from 59% a month earlier.” China vowed to buy $36.6 billion of U.S. food, agriculture, and seafood products this year but had purchased less than half that amount — $15.6 billion — from January through the end of October.
“Optimism about the trade dispute started to fade last spring,” when belief in success slipped to 64% in April, wrote Purdue economists James Mintert and Michael Langemeir, who oversee the Ag Barometer. The latest telephone survey of 400 large-volume producers was conducted from Nov. 9-13, shortly after Democrat Joe Biden was declared the president-elect.
Besides a more dour attitude on the trade war, farmers were less optimistic of growth in ag exports over the next five years or the likelihood of additional coronavirus aid from the government. Producers said they expected to see higher tax rates, more environmental regulation, and a weaker farm safety net in the future. The Ag Barometer fell to a reading of 167, a drop of 16 points from its record high of 183 in October.
“The decline… was the result of weakened expectations for the future on the part of agricultural producers,” said Purdue. Producers’ views of the health of the sector at the moment improved from October, “buoyed by the ongoing rally in agricultural commodity prices.” The “current conditions” index was at its highest level ever, 187.
Because the Ag Barometer measures a single sector of the economy, it is more variable than broader gauges, such as the University of Michigan’s consumer confidence survey, said Mintert a month ago. “Given what’s taken place in the U.S. ag sector in 2020, the volatility we’ve seen is not surprising. The pandemic clearly reduced income prospects for all of U.S. agriculture in late winter and early spring. Income prospects bottomed out in late spring/early summer and rebounded dramatically this fall, which largely explains the shift in the Barometer,” he said.
The Ag Economy Barometer is available here.
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