Large ag exports to China create risk for U.S., says FCA chief
U.S. agriculture is running the risk of becoming overly reliant on large exports to China just over a year after Washington and Beijing de-escalated their trade war, said the head of the Farm Credit Administration on Wednesday. “Any time you’re dependent on a single country, like we are with China, we’re at risk,” chairman Glen Smith told a House Appropriations subcommittee.
The USDA forecasts record-high ag exports to China this year as part of an export boom that has boosted commodity prices and is expected to result in higher-than-average farm income. China would account for $1 of every $5 in U.S. ag exports this year.
Smith used the example of President Carter’s partial embargo on grain shipments to the Soviet Union, imposed in January 1980 as retaliation for the Soviet invasion of Afghanistan. Grain prices declined briefly, export volumes fell a bit, and U.S. competitors were emboldened to expand production.
“The short answer: yes, we’re at risk,” replied Smith to Rep. Jeff Fortenberry of Nebraska, who asked if the ag sector was too dependent on China. U.S. farm exports fell 6%, to $135.5 billion, in fiscal 2019, when the Sino-U.S. trade war took hold.
Smith said the farm economy was in better shape than a year ago, thanks to the commodity boom, an upturn in exports, and record-setting federal subsidies to offset the impact of the pandemic. “While producers certainly need a well-deserved dose of optimism, as a grain producer, I know how markets can reverse course,” he said. Farmers endured low income for six or seven years before grain prices strengthened last fall. “To say we are in good times would definitely be an overstatement now,” he said.
High-speed internet service “has become essential to survival” for rural communities as a consequence of the pandemic, said Smith, in appealing for additional funding for rural broadband.
A video of the subcommittee hearing is available here.
To read Smith’s written testimony, click here.