By Clint Thompson
The exports of American agricultural products increased substantially in 2021, most notably in China due to the Phase One Agreement. Veronica Nigh, economist with American Farm Bureau Federation (AFBF), highlighted China’s purchasing increases during AFBF’s meeting in Atlanta earlier this month.
“They went from purchasing about $22 billion worth of Ag products in 2016 down to $9 billion in 2018. Then we had the Phase One Agreement where U.S. and China agreed to purchases to the tune of about $80 billion over the course of 2020 and 2021. In 2020, China rebounded dramatically. We exported $26 billion worth of product in 2020,” Nigh said. “Just through 11 months of this year (2021), we’ve already kicked the previous totals out of the water. The Chinese have almost purchased $30 billion worth of Ag products through the first 11 months of the year.
“The question is, were these purchases a result of the Phase One Agreement or truly is there demand there?”
Night’s presentation also highlighted the reality of potential trade with China. While America depends on China to import its product, China is not reliant on American goods.
“When we look at China’s purchases overall from the world, the U.S. is actually not that big of a participant. Our $30 billion pales in comparison,” Nigh said. “Their total imports look to be about $130 billion in the world. There’s a lot of buying compacity. What the Phase One Agreement has shown us is they have the ability to choose who they purchase their products from.”
The U.S.’s exports have increased to other countries as well; from $16.5 billion to $23.3 billion in Mexico; $20.5 billion to $22.8 billion in Canada; $10.7 billion to $13.0 billion in Japan; $9.3 billion to $9.7 billion in the EU; and $7.1 billion to $8.7 billion in South Korea.
There are various geopolitics at play that will impact America’s ability to continue to profit from its agricultural exports. These include the ongoing COVID-19 pandemic, Mexico’s biotech rules, the European Union’s farm to fork strategy and Russian natural gas production.
“We’re having a great year, and 2022, we could continue to have a great year. There’s also a lot of things that could change that for us,” Nigh said. “Some of these issues are within agriculture. Some of them are issues outside of agriculture. They all have an impact on our lives.”