As state and national races heat up ahead of the November elections, the urban media is paying particular attention to trade issues and their implications. For example, POLITICO reported this week that Europe Union (EU) can’t replace China as U.S. soy buyer, and spent considerable time elaborating that conclusion.American farmers are now supplying more than half of the EU’s soybeans, and during the 12 weeks from July through mid-September, U.S. soy exports to the EU were 133% higher than during the same period last year. The U.S. accounted for 52% of all EU soybean imports, compared with 25% over the same period in 2017.But there’s a catch, the report says. While the increase in European imports provides real help to farmers, it doesn’t come close to replacing the business with China that U.S. soybean growers have lost due to retaliatory tariffs.The U.S. exported about $587 million worth of soybeans to Europe over the 12-week period, which is roughly $2.5 billion on an annualized basis. China, the world’s largest importer of soybeans, bought up $12.3 billion worth of U.S. soybeans in 2017 — some 60% of all US soy exports.The news is that “those sales have dried up since China imposed a 25% retaliatory duty on soybeans and a host of other U.S. agricultural exports in July,” POLITICO says. And, the price of soybeans has plummeted about $2 per bushel, or 20%, since June — making them “very attractive” to European buyers. It cited a European Commission report released Thursday and noted that USDA projects agricultural exports to China will drop by $7 billion in the fiscal year starting Oct. 1 “as soybean sales are expected to be sharply lower due to retaliatory tariffs.”The EU figures show that the U.S. has now supplanted Brazil as Europe’s top soy supplier, at the same time that Brazilian soy exports have swept into the Chinese market amid the U.S.-China trade spat.POLITICO notes that Europe is a sizable market, “so growth (hopefully sustained) helps,” but according to Chad Hart, an associate economics professor at Iowa State University, “compared to China, this is only a partial offset.”And the trade war shows no signs of easing. China announced on Tuesday that it would place tariffs on another $60 billion worth of U.S. goods this week, shortly after President Donald Trump gave the go-ahead for new tariffs on $200 billion in Chinese imports. The American Soybean Association said Thursday it was “highly concerned” about the latest escalation.Still, absolutely everything is being interpreted in political terms now, including a soy sales uptick that doesn’t offset the current downturn, POLITICO says. EU sales offer “at least some relief…and it’s something the President can claim credit for after he and European Commission President Jean-Claude Juncker agreed in July. “Any gains in soybean trade are significant right now, given the free fall soybean prices have been in,” Hart told POLITICO.In addition to the growing trade issues, the ag establishment is watching the farm bill conference, especially on the issue of proposed changes to the nutrition programs. POLITICO says that conservative groups advocating trimming social safety net programs held a call Thursday urging farm bill negotiators to “go with the House’s work requirements for SNAP recipients.”The call came as House and Senate agriculture leaders are struggling to reach agreement on major portions of the farm bill, including on SNAP policy, which has long been considered the toughest piece of the puzzle.This is a tough fight, POLITICO thinks. Senate Agriculture leaders have been clear for months about their doubts that stricter work requirements can garner the 60 votes needed to pass the Senate – but conservatives on Thursday reiterated they won’t accept one without more work requirements. The call included experts from The Heritage Foundation, the American Enterprise Institute and the Foundation for Government Accountability, as well as state leaders from Texas and Kansas.“From our understanding, the Senate has been intransigent about making a compromise,” said Jason Turner, executive director of Secretaries’ Innovation Group, which represents conservative state officials who administer SNAP and other social aid programs. Asked what a compromise would look like if it doesn’t include stricter work requirements, Turner said: “There's other things that can be done, but they wouldn't be sufficient to call for an agreement.”Well, we will see. Fights over the nutrition programs are not new and typically get settled because the support for renewing the overall bill is very great. However, the times are different now and all battles are tougher. Farm bills are often late and this likely will be no exception. Certainly, this is one of the more important fights producers need to watch as it intensifies, Washington Insider believes.
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