Trade War tactics: US farmers should divest from soybean production.

Trade War tactics: US farmers should divest from soybean production.

by tonytran2015 (Melbourne, Australia).

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(Blog No. 3.. ).

USA is in a trade war against China. China reduced its purchase of American soybeans and agricultural products in retaliation.
China now offers to buy American soy beans again [1] and American farmers are happy. They have to know that for the time being China needs to buy their soybeans more than they need to sell [2,3] but their advantage may not last long.

1. Why USA should not direct all its agricultural exports to China.

American export of soybeans to China is very similar to unlicensed export of Australian formula milk to China [4]. America should avoid being a soybean producer for only China,

a/- Exporting them is helping to increase Chinese population and this is NOT ecologically RESPONSIBLE. China should reduce its population with something like “one child policy” [5].

b/- Chinese food consumption is many times that of America. Any change of mind or change of fashions in China may cause severe shortage or severe over-production in America and consequential wild price fluctuations.

c/- American farmers cannot handle wild price fluctuations driven by Chinese government and may have to depend on federal subsidies or may have to sell their farms to China.

d/- With its food production controlled by China. America will lose its food security.

e/- Mono-cultural plantation have scale advantage but also has its risk of total crop loss. US farmers should avoid this risk.

f/- If America relies on China as its importer of crops it will fare no better than Australia, a country already under partial economic control by China [6].

2. A cautious economic defense for America.

a/- America should divest from soybean production to avoid over-reliance on China soybean market.

b/- The remaining American soybean producers have also to export to non-Chinese destinations to have a global cushion for their soybeans price.

3. Criticism by advocates of unconditional free market.

There are critics who advocated unconditional free trade. They said that the soybeans producers should have specialized into soybean production to maximize their profits and the US government should not advise them to divest from soybeans production.

4. The fallacies of unconditional free markets.

Should all grain producers specialize in soybean production then they would all have China as their only consumer. What would happen if China then decide to ban its import of American soybeans? American farmers would then go bankrupt or would have to rely on subsidies from American government.

If American soybean producers go bankrupt they may have to sell their farms to Chinese owners. After that a steady sustainable market will be maintained by China for the new owners!

5. Can China be that nasty?

In 2010, Chinese grain and food traders had bought nearly all coconut fruits from Vietnamese farmers, pushing the price from 6000 VND (0.30 USD) to over 20000 VND (1.00 USD). Vietnamese farmers then abandoned many other crops to plant coconut trees (for example in Ben Tre region of Southern Vietnam). Three years later, when the trees start producing coconut fruits, Chinese grain and food traders disappeared, leaving the farmers with massively unsold stock. Those lucky farmers who could sell their coconut fruits got only 2000 VND (0.10 USD) for each fruit [8,9].

This pattern of tricking producers into producing into a glut market has been repeated many times in Vietnam (with rambutan fruits, lychee fruits, dragon fruits, in various provinces of Vietnam etc…). Greedy Vietnamese farmers in a lawless areas have also been tricked into producing leeches !

5. Conclusions

a. The US government should advise US farmers to divest from soybean production to avoid sending American soybeans to a buyer market controlled by China.

b/- Divesting from soybean production sends a signal to the Chinese government that exponential population growth is unsustainable and is NOT GREEN !

References.

[1]. https://www.bbc.com/news/av/world-us-canada-49693235/china-is-rolling-back-tariffs-on-us-pork-and-soybeans

[2]. https://theconservativetreehouse.com/2019/09/13/panda-hungry-china-buys-soybeans-exempts-pork-and-beans-from-additional-tariffs/

[3]. https://farmdocdaily.illinois.edu/2015/03/footprint-of-chinese-demand-for-us-soybeans.html

Using the average U.S. soybean yield of 47.8 bushels per acre, China’s import demand for soybeans is equivalent to 57 million acres worldwide. For comparative purposes, U.S. farmers harvested 83 million acres in 2014. Put simply, as the world’s largest importer, China’s massive appetitive for soybeans is a significant driver of global, and domestic, soybean markets.

[4]. https://survivaltricks.wordpress.com/2018/06/06/trade-war-traps-australia-has-to-ban-unlicensed-export-of-its-formula-milk/

[5]. http://www.ipsnews.net/2013/01/chinas-rising-soybean-consumption-reshaping-western-agriculture/

In the United States there is now more land in soybeans than in wheat. In Brazil, the area in soybeans exceeds that of all grains combined. Argentina’s soybean area is now close to double that of all grains combined, putting the country dangerously close to becoming a soybean monoculture…

…Put simply, saving the Amazon rainforest now depends on curbing the growth in demand for soybeans by stabilizing population worldwide as soon as possible.

[6]. https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook45p/SouthChinaSea

As Australia’s largest trade partner since 2007, China’s rise and pursuit of its ‘legitimate interests’ have been supported by successive Australian governments…where do these ‘legitimate interests’ begin and end—do they include the establishment of ‘spheres of influence’, the revision of existing regional and global norms, and the right to resort to unilateral action to achieve these ends?

[7]. https://mobile.abc.net.au/news/2018-02-22/book-reveals-extent-of-chinese-influence-in-australia/9464692?pfmredir=sm

The book also details a list of Chinese-Australian academics whom Professor Hamilton says are allowing the transfer of potentially national security-significant research — in sensitive areas such as space, artificial intelligence and computer engineering — from Australian universities to the Chinese military.

[8]. http://www.snnptnt.bentre.gov.vn/Pages/TrongTrot.aspx?ID=229&InitialTabId=Ribbon.Read&PageIndex=16

[9]. http://baodatviet.vn/kinh-te/dua-ben-tre-un-un-do-ra-nuoc-ngoai-2260515

[10]. https://baomoi.com/ben-tre-diu-hiu-cho-dua/c/7609198.epi

[11]. https://news.zing.vn/20000-dong-12-trai-dua-xiem-ben-tre-post582651.html

[12]. https://news.zing.vn/manh-khoe-thuong-lai-trung-quoc-thu-mua-nong-san-viet-post548933.html

[13]. http://m.dantri.com.vn/kinh-doanh/nong-dan-van-mac-bay-thuong-lai-trung-quoc-1380891003.htm

[14]. https://www.bbc.com/vietnamese/forum/2014/04/140403_lyphi_agriculture_development

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Trade war tactics, Part 9: Taxing remittances to make effective tariffs.

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