The challenges that American farmers face, struggling with exports of their soybeans and other crops, show once again the importance of open and fair trade. The current higher U.S. tariffs, along with retaliatory measures by trading partners, pose a problem for everyone.
For example, China, which is not only a significant market for U.S. farmers but also imports roughly half of the world’s traded soybeans, has progressively shifted its suppliers, now sourcing more produce from South America and Latin America.
The renewed trade friction between the countries has only accelerated the trend and left the U.S. farmers in a challenging position with one of their key export markets.
China learned from the first time President Trump levied higher tariffs on them, and their consequent retaliatory tariffs, and started shifting its sources for some of its agricultural products. We now read various articles that sum up the challenge faced by U.S. farmers as:
Clearly, the trade war has not only challenged farmers in terms of export markets, but they also face labour shortages in some regions. The anti-immigration policy has arguably been unsuitable for agriculture, which, to some extent, relies on foreign labour.
Of course, the challenges differ from farmer to farmer and by region. However, it is probably fair to say that so far, the U.S.’s higher tariffs and retaliatory measures by some trade partners are causing more damage to farmers.
There is perhaps a message here for South Africans who care about agriculture, a recognition that the trade friction is causing headaches for all. For us, it presents profound uncertainty for exporting farmers and agribusinesses (to the U.S.), mainly citrus, table grapes, ostrich, wine, and nuts, amongst others. It has also introduced volatility into the global grains and oilseed markets, which in turn affects our grains market.
Equally, the U.S. farmers face economic pain as some of their key markets have retaliated. The core message is that open and fair trade is the only good path for major agricultural producers, and this includes us in South Africa.
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