Trump urged to ensure implementation of China trade agreement

By Erin Voegele | June 17, 2020

Several biofuel producers and trade groups are among the nearly 200 organizations that sent a letter to President Trump on June 16 calling on him to ensure the continued implementation of the U.S.-China Phase One Trade Agreement.

The letter notes the agreement is critical to both the near-term and longer-term success and growth of American agriculture and the millions of American jobs the ag sector sustains. “While the current pace of U.S. agricultural exports to China is below the pace needed to meet the Phase One goals, American farmers, ranchers, and rural communities remain optimistic that the purchases under this agreement will accelerate and be fulfilled by China, and that as a result, the American agriculture sector will enjoy important market opportunities,” the groups wrote in the letter. “This is especially important considering that U.S. net farm cash income in 2020 is projected to decline 9 percent or $11 billion from the prior year. In inflation adjusted dollars, U.S. net farm cash income is down nearly 30 percent from the recent high in 2012.”

The letter stresses that the U.S. food and agricultural industry supports more than 22 million jobs and accounts for 20 percent of the U.S. economy. “Our industry is the economic backbone of rural America, stimulating employment throughout the United States,” the groups wrote.

They also stress that the Phase One Trade Agreement with China is vital to economic stability and growth for America’s farmers, food manufacturers, food industry workers, agribusinesses and the full spectrum of other non-agricultural sectors of the U.S. economy whose jobs and economic well-being are dependent upon agriculture.

An attachment to the letter notes that China is the second largest gasoline market in the world and represents an immense opportunity for U.S. ethanol exports. China produced approximately 1.14 billion gallons of fuel ethanol last year. That volume is only one-fourth of the volume necessary to meet the country’s E10 goal. “While China is in the process of increasing ethanol production capacity, there will still be a significant deficit that will need to be filled by the international market,” the groups said in the attachment. “As the most cost-competitive supplier of ethanol and the only country able to meet such large demand volumes in the short term, the United States is poised to serve as a significant contributor to Chinese ethanol imports should tariff issues be addressed. Prior to the trade dispute, the U.S. exported $165 million (109 million gallons) worth of ethanol to China in the 2017/18 marketing year (Sept-Aug)—a figure that could dramatically increase with increased market access and continued adoption of E10 at the provincial level. U.S. ethanol is also one of few products within the agriculture portfolio capable of generating $1 billion worth of sales to China in the short term.”

The attachment also states that China imported more than 50 percent of the exportable supply of U.S. dried distillers grains with solubles (DDGS) in marketing year 2013’-14, amounting to approximately 6.2 million metric tons. In 2016, however, China initiated anti-dumping and countervailing duty investigations of U.S. DDGS exports, resulting in final duties of up to 96.2 percent in tariffs and taxes. As a result, exports fell to a record low of 168,000 metric tons during marketing year 2017-’18. That volume grew slightly to 180,000 metric tons in marketing year 2018-’19. “In addition, DDGs faced an additional 25 percent in retaliatory tariffs that has been exempted. Nonetheless, U.S. DDGS are not competitive at current market values, though opportunities exist to recover previous market shares,” the groups wrote.

ADM, Big River Resources LLC, the Biotechnology Innovation Organization, Conestoga Energy Partners, the Corn Refiners Association, Green Plains, Growth Energy, Poet, the Renewable Fuels Association, and the U.S. Grains Council are among the nearly 200 groups that signed the letter.