Waterco : U.S. Faces Global Competition Under Phase 1 Agreement with China

Clements: The expected signing of a Phase 1 trade agreement with China next week includes $40 - 50 billion in purchases of U.S. ag products annually over the next two years. However, American Farm Bureau Federation Economist Veronica Nigh says many question how China will increase ag purchases.

Nigh: Given the fact that the record for U.S. ag exports to China was about $26 billion back in 2012, this large 40 to 50 billion number has caused many to wonder where that additional 14 to 24 billion dollars in U.S. ag products would come from each year.

Clements: Nigh says the U.S. will have to compete with other countries for the expected market increases.

Nigh: Chinese officials have repeatedly said that the purchases will be market-based, and a lot of analysts have interpreted that to mean that the Chinese government won't necessarily be directing purchases, but rather that the purchases will be made on their merit. That means that in order to sell more U.S. products, the U.S. is going to have to win market share away from other competitors.

Clements: In 2018, China imported over $124 billion in agricultural products from the world. Nigh says the top five products have strong global competition.

Nigh: China's top five imports from the world in order are soybeans, which of course we all know, but then it's followed by dairy products, fruit, beef and prepared foods. And, if you kind of think about those products and where other competition might lie, you start realizing there's some pretty strong competitors in other countries that are going to compete against the U.S. for additional sales of those products.

Clements: Micheal Clements, Washington.