By Kunal Bose
President Donald Trump in his pursuit of making America great again (MAGA) has launched a fusillade of indefensible tariff measures upsetting the multilateral trading system. While this Trump campaign will prove hurtful for countries across the board – allies and those perceived as not friendly – the revised tariff has enhanced further the resolve of China to achieve food security whatever the cost, progressively reduce dependence on imports of agricultural products and diversify sources of imports, meaning actually buying less and less from the US. The aggressive pursuit of these goals will perforce negatively impact the US farm sector, for China is a significant buyer of a number of agricultural products from soybean to coarse grains, excluding corn, to cotton to tree nuts. China is also a major market for the US origin beef, pork and dairy products.
When in February the Trump administration notified that starting March 4, all Chinese goods would invite doubling of tariff to 20%, a reciprocal response from Beijing was on the cards. But instead of subjecting all imports from the US to an additional tariff of 10% or 15%, Beijing carefully chose those agricultural and horticultural products for extra impost to inflict maximum pain on the Midwestern soybean-corn-wheat growing states and also the cotton belt in southern US. As the tariff revision on aluminium and steel products will lead to price increases of all products made of these metals and therefore, causing distress to consumers, US growers and traders will bear the brunt of the quick and clever Chinese answer to the US extra tariff burden.
For commerce between two countries to prosper, stability in tariff is essential. In the case of agri trade between the US and China, the world’s two leading economies, political tensions and tariff uncertainties led to shrinkage in Chinese imports of US agricultural products in 2023 and 2024. Last year, Chinese imports of US farm items were down 14% to $27.29bn following a bigger drop of 20% in 2023. The principal Chinese imports from the US in 2024 were: soybeans worth $12.76bn, beef $1.58bn, cotton $1.48bn, and other coarse grains $1.26bn, pork $1.11bn, seafood $1.02bn, dairy items $584m, poultry meat $490.1m, wheat $556.9m and corn $327.9m.Not only did imports from the US fell last year, but the total value of China’s farm imports dropped 8% to $215bn.
Even while Beijing remains committed to developing alternative sources of supplies of farm products away from the US and succeeding, still nearly half of American soybean exports are shipped to China. Such exports, according to the US Census Bureau, totaled nearly $12.8bn in 2024. As Chinese soybean imports from the US were down 5.7% last year, the compensatory imports came from Brazil and Argentina. China’s General Administration of Customs says while total soybean shipments from the US fell to 22.13m tonnes, arrivals from Brazil were up 6.7% to 74.65m tonnes.
For strategic reasons and benefits to be derived from a diversified supply sources, Beijing has so far enabled Brazil to raise its share of Chinese soybean imports to 71%. At the same time, the US share has shrunk to 21%. Argentina too is making good progress in the Chinese market where it more than doubled supply of soybean from 1.95m tonnes in 2023 to over 4m tonnes last year.
Of the major farm items where Beijing has a lot of work to do, soybean remains at the top. The reason being China is an importer of nearly 80% of the soybeans it consumes. Beijing strategy for this oilseed is twofold: First, expand the coverage of “full cost and production income insurance” for soybeans, which will encourage farmers to grow the oilseed. Second, steps will be taken to bring down the use of soybean meal in livestock feed. Instead, China will stay engaged in the use of low-protein animal feed or alternative meals such as rapeseed and cotton.
While it makes sense for China to vigorously pursue expansion of oilseeds cultivation since the country remains highly dependent on edible oils imports – foreign origin oils imports during 2022-23 and 2023-24 were 8.63m tonnes and 8.43m tonnes, respectively – Beijing continues to see positive outcome of pursuing the policy of food security, backed by grain stockpiling. One reason for the country making heavy imports of grain on a continuing basis is to keep the grains buffer sufficiently large. The practice of buying grains in the world market for the purpose of domestic stockpiling has, however, drawn criticism from NGOs and social activists but with no effect on China. Many believe that Chinese big imports of some grains are keeping their world prices high.
In 2024, China’s total grain output reached a record high of 706.5m tonnes, an increase of 1.6% compared to 2023, marking it the tenth consecutive year with a harvest exceeding 650 million tons. (Incidentally 650m tonnes happened to be the production target for last year.) Remember when it comes to Chinese agriculture, production target is a bottom line goal, not ambitious in any way. Commenting on China’s new grain production record, Indian farm economy expert Om Dhanuka says, it is the “result of expanded acreage, use of technology and quality inputs and yield improvement.”
Encouraged by sustained grain production rises, Beijing has raised 2025 output target by 50m tonnes to 700m tonnes, though this happens to be 6.5m tonne less than last year’s production. In this context, China’s National Development and Reform Commission says: “With the implementation of the food crop production strategy of improving farmland management and increasing the application of technology as well as the improvement of our ability to guarantee food security, we have the foundation and support necessary to attain the goal.” China’s 2030 grain production target is 745m tonnes, which looks achievable considering the present rate of progress in farm management. (IPA Service)
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