Town hall series seeks to continue conversation on trade

August 7, 2020 | Bethany Baratta

Trade, supply chains and the future of American agriculture were topics of discussion during a recent event hosted by the Iowa Soybean Association (ISA), kicking off a series of nationwide conversations.

“In recent years, we have seen significant disruptions to agricultural trade with tariffs and retaliatory tariffs decreasing exports, depressing commodity prices and increasing the costs of some farm inputs,” said ISA CEO Kirk Leeds during the AgTalks town hall event. At the same time, we’ve seen some glimmers of hope with the new U.S.-Mexico-Canada Agreement (USMCA) and other preliminary bilateral efforts.”

ISA hosted the first event; four additional virtual town hall events are scheduled to take place within the month.

Market diversification

Jim Sutter, CEO of the U.S. Soybean Export Council (USSEC), says the organization continues to work to diversify its export portfolio. He noted USSEC’s “What it Takes” initiative, launched in 2018, aimed at keeping U.S. soy exports at the same approximate 60% level regardless of the loss of the China market.

“Diversification of markets has been the primary focus of the soy industry even before the China trade uncertainty, but now it’s more important than ever,” Sutter said.

Those efforts are paying off, he said.

Once a small blip in U.S. soy’s portfolio, Bangladesh, Pakistan and Egypt have grown to a combined 5 million tons this year.

However, Sutter noted that other competitors are also stepping up their efforts to grow market share.

Brazil is producing larger crops, as land is being converted to cropland. Aiding in increased production is a weak Brazilian Real giving Brazilian farmers higher prices for their crops locally. Aggressive investments and purchases of Brazilian soybeans is also improving their infrastructure, positively impacting Brazil’s competitiveness.

“The spread is narrowing between Brazil and the U.S. in terms of export capability,” Sutter said.

With the phase one agreement between the United States and China now implemented, Sutter said he’s hopeful China will meet its purchase commitments.

“We’ve had a relationship there for 40 years, and I believe that relationship is still in good shape,” Sutter said.

Recent purchases of U.S. soybeans are a good sign of China meeting it’s purchase commitments, he said. But closures of consulates in tit-for-tat moves amid espionage claims disrupts progress, Sutter said.

“Uncertainty is not good for future purchases,” Sutter said.

The United States will likely be China’s main source for soy for the next five months because of the sheer numbers of bushels of soybeans available.

“But that’s not the kind of supplier we want to be,” Sutter said. “We want to be the supplier of choice, … not the last resort.”

Solutions

To achieve larger soybean sales to China and other export partners, barriers to trade must be knocked down, Sutter said.

“What we need to do is ensure the U.S. is operating on a level playing field with our competing exporters and that the U.S continue to be a leader in openness and reliability as an exporter,” Sutter said.

Some of the solutions suggested by Sutter and others on the panel:

• Support of the GSM-102 program, which provides credit guarantees to encourage financing of commercial exports of U.S. ag products;
• Removal of Section 232 tariffs on steel and aluminum;
• China’s complete follow-through of purchase commitments made under the phase one agreement;
• Full implementation of the USMCA, including agreed upon standards for ag biotechnology and increased transparency of sanitary and phytosanitary measures.

These policies would increase exports of U.S. soybeans and other agricultural products, Sutter said.

“We know our farmers produce a sustainable product and we have a great export supply chain,” he said. “We just need to be sure we have the right environment to be selling in.”

Outlook

The quality and consistency of U.S. soy is head and shoulders above the rest, Sutter said. And programs like the U.S. Soybean Sustainability Assurance Protocol (SSAP) is one way U.S. farmers demonstrate their commitment to sustainability and continuous improvement. During times of uncertainty, like the current COVID-19 global pandemic, the SSAP gives some assurance to buyers about the sustainability and reliability of U.S. soy.  About 40% of U.S. soybean shipment year to date have carried the SSAP certification. Global soybean demand grows, on average, about 400 million bushels per year. This presents a great opportunity for U.S. soy, Sutter said.

“We’re going to need the equivalent of another U.S. crop to supply the world in 10 years’ time,” he said. “I think that gives us all optimism as we’re trying to grow our production here in the U.S. and do our work internationally to make sure we capture a share of that.”

 Hear more of the conversation by watching the recorded session here. Sign up to participate in upcoming virtual town events at www.AgTalks.net. 

Contact Bethany Baratta at bbaratta@iasoybeans.com.

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