US ag in China’s trade war crosshairs, says former USDA chief

Despite uncertainties surrounding policy and the threat of economic strife, China remains a more attractive dairy export market than India, Tom Vilsack said at the Peoples Company’s Land Investment Expo.

Chinese trade officials have signaled that agriculture could be a key focus in any trade war with the US, according to a former US Secretary of Agriculture.

On Friday, in a keynote address at Peoples Company’s Land Investment Expo in Des Moines, Iowa, Tom Vilsack said he had recently been asked by an official from China’s Ministry of Commerce to characterize the role played by agriculture in the Sino-US bilateral relationship.

Vilsack, who served as Secretary of Agriculture from 2009 until 2017 and is currently president of the US Dairy Export Council, responded that ag represented a “solid,” if transactional, portion of that relationship. His interlocutor, however, had a different take.

“He said the words that we don’t want to hear,” Vilsack noted, hinting at recent concerns among the leadership in Beijing instigated by the Trump Administration’s rhetoric on trade. Adding: “He said: ‘If we have a trade war, we just want you to know, that we know where we need to look.’ This was a direct indication to me that if we have a trade war, then agriculture may be in the crosshairs.’”

Mitigation stragegies

In response, Vilsack suggested that the US work with other countries and regions that have also voiced concerns over China’s trade practices, such as the European Union, Oceania and Japan. Another strategy, Vilsack suggested, would be to focus on emerging export markets, such a Vietnam.

“Trade policy is becoming incredibly important to both the short-term and long-term future of US agriculture”
Tom Vilsack

After discussing the potential for opening India’s lucrative dairy market with an offer to discuss the 2018 Farm Bill – to audience laughter – Vilsack said that market-access conversations with Indian government officials had been among the most frustrating of his career. Despite presenting what he described as comprehensive evidence of the safety and provenance of US milk, he said that significant change in protectionist policies there was unlikely.

“If you talk to the Indian government about dairy, they are going to talk to you about religion, philosophy and the sacredness of this and that,” Vilsack lamented.

Vilsack suggested that exporters maintain focus on continuing to supply China’s growing dairy needs and build upon the advancements that have been made in agriculture trade between the two countries, such as China’s opening to imports of US beef last year.

“Apparently after 4,000 years, the Chinese have decided to switch from tea and they’re embracing coffee,” said Vilsack. “Coffee requires a lot of cream, it requires a lot of milk.”

Care for thy neighbor

The ongoing renegotiation of the North American Free Trade Agreement was also prominent in Vilsack’s remarks.

The renegotiation presents both a challenge and opportunity for US dairy, according to Vilsack. He criticized Canadian policies supporting producers and said these were part of the reason why US counterparts had found it difficult to capitalize on a recent worldwide increase in butter consumption. He also stressed the imperative of maintaining access to Mexico’s dairy market, which he said was still failing to keep pace with growing demand despite posting a 57 percent increase in milk production over the past decade.

“Trade policy is becoming incredibly important to both the short-term and long-term future of US agriculture,” Vilsak said.