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Trump: China Ag Purchases Already Underway

4 years, 6 months ago American Farm Bureau Federation

President Donald Trump says China will immediately start buying U.S. agricultural products. Via Twitter over the weekend, Trump says China will start buying “very large quantities” of U.S. farm products, adding, “they have already started.” The administration says the agreement Friday includes $40-$50 billion of commodity sales to China over the next couple of years. China already had increased purchases of agricultural goods, like soybeans and pork, heading into the talks last week. China also agreed to certain intellectual property measures, as well as concessions related to financial services and currency. President Trump says the U.S. and China will work quickly to finalize phase one of the agreement and proceed to phase two. Agriculture groups expressed careful optimism following the announcement last week. The American Soybean Association called the partial agreement "good news," but awaits further details on the potential economic impact of the agreement. ASA adds the organization “remains hopeful this is a step toward rescinding the tariffs and helping restore certainty and stability to the soy industry.”

AEM Releases September Equipment Sales Results

September was a fairly solid month overall for retail sales of tractors and combines in the United States and Canada, according to the latest data from the Association of Equipment Manufacturers. Total farm tractor sales in the U.S. increased 18.7 percent in September compared to last year, while combine sales increased 12.3 percent. Year to date, total U.S. tractor sales are up nearly five percent, while sales of combines are up 1.8 percent. For Canada, total farm tractor sales were up 13.7 percent, while sales of combines were down 25.5 percent. Year-to-date, total tractor sales in Canada are down 4.4 percent, while sales of combines have decreased 27.7 percent. AEM senior vice president of ag services, Curt Blades, calls the sales figures solid, but says the organization continues “to hear from our members real concerns about the overall ag economy." AEM is an international trade group representing off-road equipment manufacturers and suppliers with more than 1,000 companies and more than 200 product lines in the agriculture and construction industry sectors worldwide.

Farm Equipment Leasing Doubles

A new report shows the leasing of farm equipment has nearly doubled since 2012. The Wall Street Journal reports Deere & Co. is spending billions of dollars each year on its own equipment for leasing programs. Records show that more than one-third of financed purchases of high horsepower machinery made by John Deere is being leased to farmers and construction builders. Roughly 90 percent of those machines are owned by Deere's financing business. Deere reports that in 2018, leased equipment represented a value of $7.8 billion, compared to more than $2 billion in 2012. Meanwhile, CNH Industrial, the maker of Case IH and New Holland, is also leasing more equipment. The company says more than 40 percent of high horsepower tractor sales are leased, up from 25 percent back in 2012. The current farm economy is drastically different from 2012, around the time farm income reached an all-time high before plummeting over the last few years.

Trade Aid Includes Lamb Purchases

The Department of Agriculture is moving forward with select trade aid provision in buying U.S. lamb products. USDA’s Agricultural Marketing Service recently announced the food purchase of up to $17 million of American lamb for distribution to various food nutrition assistance programs. The products include, but are not limited to, boneless lamb leg roasts and boneless lamb shoulder roasts. The Chief Economist’s office determined the amount to be spent on American lamb. The $17 million allotted is a larger amount than USDA has spent in previous lamb buys. The American Sheep Industry Association is helping facilitate the program between USDA and sheep producers. Meanwhile, the broader trade aid effort, including payments to farmers, remains unclear. USDA had planned another payment to producers this fall, with a final payment early next year. However, a breakthrough in talks with China, and the Japan agreement signed last week, could mean the payments are no longer needed in the eyes of the Trump administration and farmers.

NCGA Making Contributions to Bee Health

National Corn Growers Association staffers recently participated in the annual meeting of the Honeybee Health Coalition. The effort is part of NCGA’s work to ensure corn growers' voices are represented in wide-ranging conversations on sustainability issues. Through its participation, NCGA ensures the coalition includes representation across a spectrum of stakeholders, including grower groups like NCGA, commercial beekeepers, input providers, specialty crop growers and more. Even though corn production does not require pollination from bees, NCGA still engages with groups like the Honeybee Health Coalition to “create dialogue and foster a better understanding” of the similarities and differences in crop production around the country. During the meeting, NCGA staff had the opportunity to lead a discussion on row crop production to allow others to better understand the decisions farmers make. NCGA says farmers can take small steps to support the health of honeybees. One such step is the planting of pollinator habitat on unused land on the farm, such as areas near farm buildings, or on marginal lands, like CRP group.

Midwest, Western Farmers to See Mid-South Cotton Operations

Farmers from Idaho and North Dakota have a unique opportunity to observe cotton and other agriculture-related operations in the Mid-South. A group of farmers this week are touring southern cotton-growing areas as part of the National Cotton Council's Multi-Commodity Education Program. Launched in 2006, the program is a Cotton Foundation education project supported by a grant from John Deere. It is coordinated by NCC's Member Services and local leaders and organizations. The program is designed to provide its participants with a better understanding of production issues and concerns faced by their peers in another geographic region, along with an observation of that region’s agronomic practices, technology utilization, cropping patterns, marketing plans and operational structure. Finally, the program provides tours of the region’s research facilities and its agricultural processing operations and related businesses relevant to the area economy. The group began the tours Monday at NCC headquarters in Tennessee and will travel to cotton farms, warehouses and production facilities in Arkansas.


 The good news from last week's announced partial trade deal with China is a possible doubling of spending on U.S. farm goods. But, the flip side of that coin is continuing uncertainty over details.

 From nearly $20-billion in 2017, to less than $10-billion so far, this year, to as much as $40-to-$50 billion annually in two-years, according to Treasury Secretary Steven Mnuchin.

President Trump in his Oval Office comments with China’s Vice-Premier, on Friday…

“We’ve covered, fully, agriculture, even in terms of agricultural structural issues…and then, in terms of 50-billion dollars of agriculture.”

 But, Bloomberg News reported some traders wanted to see more details before getting too excited, though one economist said the spending levels suggest China would buy a lot of U.S. meat, soybeans, corn and ethanol.

American Farm Bureau trade adviser Dave Salmonsen says agriculture is cautiously optimistic…

“Are they going to start moving and really buying?  Will there be waivers granted?  There have been some, already, from the Chinese government to the private buyers…waivers of tariffs on US imports.”

 But Salmonsen says a broad unwinding of tariffs will depend on a final deal that addresses core issues of intellectual property protection, forced technology transfers, and Chinese industrial subsidies.

Still, Salmonsen says, "a good start," and for ag, a 'win' possibly even ahead of a final deal…

“Oh yeah, if we see movement in the market, we see purchases going, that will certainly be a positive outcome for ag, for these discussions that happened last week with China.”         

The agreement marks the largest breakthrough in costly trade war, and if finalized, could ease the need for another year of Market Facilitation Program payments for producers.

The U.S. will suspend, as part of the interim deal, a tariff hike planned this week on $250-billion worth of Chinese goods and revisit a separate December boost on other goods.

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