By Jesse Newman and Jacob Bunge
CHICAGO -- U.S. soybean farmers worked for decades to make China
their biggest foreign customer. Now they face a tougher challenge:
weaning themselves off the market.
As trade tensions cut deeply into exports, U.S. soybean farmers,
industry groups and government officials are seeking a stronger
foothold in international markets beyond China, including Europe
and Southeast Asia.
"While we've enjoyed the market share, has China become
dependent on us or have we become dependent on China?" Agriculture
Secretary Sonny Perdue said at an industry event last week. "That's
not a healthy economic balance."
A temporary truce struck by Presidents Trump and Xi Jinping at
the G-20 Summit in Argentina this month boosted optimism that trade
tensions, which have roiled the U.S. Farm Belt, could ease.
The U.S. agreed to postpone planned tariff increases as the two
countries begin negotiating other thorny issues.
Soybean futures rose Wednesday after the U.S. Department of
Agriculture announced sales to Mexico, as well as 110,000 metric
tons of soybeans sold to "unknown destinations," that some in the
market believed to be China. This, combined with reports of other
purchases by Chinese companies, drove hopes that China would soon
be regularly buying soybeans from the U.S.
Despite the truce, farmers and others are working on multiple
fronts to secure a home for U.S. soybeans amid the uncertainty:
pitching their oilseeds in other countries, trying new varieties
for domestic use and planning to switch fields over to corn next
spring.
Any such changes, though, present risk and logistical hurdles.
Replacing China is a tall order. China last year bought 57% of all
U.S. soybeans that were exported, more than eight times the total
sold to Mexico, the next-biggest buyer by quantity, according to
data from the U.S. Department of Agriculture.
Since the turn of the century, no other country has matched
China's purchases of U.S. soybeans. As China imposed retaliatory
tariffs on the U.S. oilseed, however, exports to China plunged 62%
in the first 10 months of 2018 compared with year-earlier
levels.
The U.S. Soybean Export Council, a farmer- and industry-funded
group, has launched a project aimed at making up for lost sales to
China.
Members of the council in November joined a regional trade
exchange in Spain, where they worked to connect U.S. soybean
exporters with buyers from the European Union, Middle East and
North Africa.
Jim Sutter, the council's chief executive, said, "It's far from
a guarantee it will work," adding that trade relationships can take
years to build. The group is continuing efforts in China despite
the trade interruption, and U.S. farmers are hopeful the market
will reopen.
The Trump administration also is trying to sell American crops
to a wider range of buyers.
In Washington, the USDA's Foreign Agricultural Service has
dispatched Ted McKinney, undersecretary for trade, to Indonesia and
South Africa to promote U.S. soybeans since China implemented its
tariffs.
Mr. Perdue told farmers recently that the agency is working to
open more doors to U.S. soybeans in places like Japan, India and
Malaysia.
The USDA will close 2018 with six foreign trade missions,
compared with the typical three to four a year. Seven more are
scheduled for next year.
USDA officials are pushing other countries to eliminate what the
U.S. sees as unjust requirements related to crop quality and
safety, which would help break down barriers in some foreign
markets, said Greg Ibach, the USDA's undersecretary of agriculture
for marketing and regulatory programs.
In July, Ohio-based soybean farmer Bret Davis joined USDA
officials on the trip to Indonesia where he toured a food plant,
munched on local chips made with soy-based protein, and talked up
the protein content and amino-acid balance of American
soybeans.
"It's been a hard learning curve right now because of the sharp
decline from China," Mr. Davis said.
Pivoting away from China could spell big changes for the U.S.
agricultural industry and its infrastructure investments.
China's past demand for soybeans typically translates to four
months of heavy sales, packing oilseeds onto trains bound for
Pacific Northwest ports, where agricultural companies have built
terminals to supply crops to Asian countries.
Diversifying the market for U.S. soybeans around the globe could
mean spreading exports more evenly throughout the year, and may
direct more crops toward East Coast and Gulf of Mexico ports,
soybean-industry officials said.
Some see a chance to sell more soybeans at home. Minnesota-based
startup Calyxt Inc. is marketing gene-edited soybean seeds that
produce a vegetable oil free of trans fats.
Farmers can collect a premium growing Calyxt's specialty
soybeans, and reduce their exposure to China's influence on
commodity soybean prices, said Jim Blome, the company's chief
executive.
Tregg Cronin, who farms near Gettysburg, S.D., planted about 60%
of his soybean acres this year with Calyxt's beans, which he said
fetched him a price 25% better than his typical varieties.
"The premium became not only a bonus, but the difference between
making money and losing money on our soybean crop," he said.
U.S. farmers aren't giving up on China. "China is so big, no
matter what they do we're always going to feel it," Illinois farmer
Frank Legner said. "It will be nice to have those other markets to
dampen the blow."
--Kirk Maltais in New York contributed to this article.
Write to Jesse Newman at jesse.newman@wsj.com and Jacob Bunge at
jacob.bunge@wsj.com
(END) Dow Jones Newswires
December 12, 2018 17:18 ET (22:18 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.