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U.S. trade outlook looks bright, reps say

Article cover photo
Gregg Doud, chief agricultural negotiator in the Office of the United States Trade Representative, said that he is in constant contact with China about the implementation of phase 1. (Photo: Joseph L. Murphy/Iowa Soybean Association)

By Bethany Baratta, ISA senior writer

Despite the global spread of COVID-19, work continues to expand export opportunities for U.S. soybeans, two high ranking trade officials told Iowa Soybean Association (ISA) directors on phone calls recently.

“As we’re getting ready to put our seeds in the ground we’re happy to hear that the grain is still moving to our customers,” said ISA District 9 Director Pat Swanson of Ottumwa.

The implementation of the phase 1 agreement between the United States and China is underway, said Gregg Doud, chief agricultural negotiator in the Office of the United States Trade Representative (USTR).

“We are talking to China every single day by phone calls or emails or letters,” Doud said. “The dialogue is good. The conversations and the tenor of the conversations are quite productive.”

Large recent purchases of U.S. wheat, sorghum and corn is a good sign that China is serious about meeting its purchase obligations under the agreement, said Ted McKinney, U.S. Department of Agriculture (USDA) Under Secretary for Trade and Foreign Agricultural Affairs.

“They have yet to miss a deadline, as we have yet to miss a deadline,” McKinney said regarding purchases. “I still believe that they will honor it. They signed it on a very public stage, and if there’s one thing they think about, it is saving and keeping face, their image in the world. We’re holding them to that.”

Recent price spreads between U.S. and Brazilian soybeans favored U.S. exports, Doud noted. That could help bolster sales to China and other trading partners.

Around the world

The United States has its eye on several countries, including Vietnam and others, to establish and support ongoing trade conversations, Doud and McKinney said.

That’s welcome news, said Marty Danzer, ISA district 4 director from Carroll, who met with a Vietnamese delegation in Iowa in February.

“In visiting with the people from Vietnam, I think there is a ray of hope there that we can gain more market share there,” Danzer said. “I think the big thing we have to do is keep the quality and consistency of U.S. soybeans front and center in our discussions with Vietnam and partners around the world.”

McKinney said he’s excited about the potential in Vietnam. Those its population and size aren’t equivalent to China, it’s a country that’s showing interest in U.S. products. Vietnam’s favorability to the United States is around 80%, McKinney said. That exceeds its favorability to China, at 20%.

“That is working very much in our favor.,” McKinney said.

No country is without its hurdles, McKinney said. Vietnam has said it’s banning the use of glyphosate there but said the ban wouldn’t apply to imports of products from the United States and other countries.

Conversations surrounding glyphosate, GMOs and gene editing are happening with other trading partners, McKinney said. That will continue, he said.

McKinney said a free trade agreement with Kenya is forthcoming. U.S. total exports of agricultural products to Kenya totaled $37 million in 2018, according to the USTR, and could expand under the agreement.

Doud said he’s very encouraged with the progress that’s been made in discussions with Vietnam, the United Kingdom and Indonesia.

Ted McKinney, U.S. Department of Agriculture Under Secretary for Trade and Foreign Agricultural Affairs, said the Chinese haven’t missed a deadline yet. (Photo: Joseph L. Murphy/Iowa Soybean Association)

Obstacles

Neither Doud nor McKinney said they were hopeful of any sort of ag-related agreement with the European Union (EU)—at least anytime soon.

“Overall I don’t see any signal of the EU wanting to enter into a broader conversation with us on agriculture,” Doud said. “They’re kind of fiddling with things on the edges and I don’t see anything new or different on that front in the foreseeable future.”

India is a difficult market to crack open, Doud said, but it does represent opportunity for U.S. soybean exports, said Jim Sutter, CEO of the U.S. Soybean Export Council (USSEC).

Doud said USTR is focused on exports of DDGS, ethanol and dairy products to the country. The challenge, he said, is India’s high tariff rates. India’s average WTO-bound tariff for agricultural products is 113.5%, according to the International Trade Administration.

“The potential there with over 1 billion people and growing is enormous,” Doud said. He said USTR has been working on prying the door open to India exports since discussions wrapped up with China. The EU, Doud said, has been working on entering the India market for 13 years without success.

Our eyes are wide open and we’re still talking to them on a very regular basis,” he said. “Hopefully here at some point just by dogged persistence maybe we can get something going here. We think if we can get the door open a crack hopefully we have the opportunity to swing it open further as we get down the road.”

USSEC has identified India as an emerging market for U.S. soybeans. USSEC has been working in India to help build the country’s understanding of the importance of protein in the diet. Once those doors are open to U.S. exports, Sutter said exports of U.S. soybean meal and other soy products could soon follow.

“We believe that long term and in some years down the road, because of the size of India’s population, the potential to consume protein and their inability to grow very much of it themselves, we think there is a huge opportunity,” Sutter said. “And we’re working hard to get there.”

Swanson said the conversations with Doud and McKinney represent hope that markets will improve after COVID-19 exits.

“They gave me some optimism that once we get passed this hurdle the world is experiencing (COVID-19) the markets are going to come back for us because there is still trade work being done,” Swanson said.

Contact Bethany Baratta at bbaratta@iasoybeans.com.

For media inquiries, permission to republish articles or to request high-res photos, please contact Katie James, ISA Public Relations Manager at kjames@iasoybeans.com. © 2020 Iowa Soybean Association. All rights reserved.