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How Bad Will The Coronavirus Impact US Ag Before It Gets Better?
SARA WYANT
WASHINGTON, D.C.
World Health Organization Director-General Dr Tedros Adhanom Ghebreyesus briefed reporters this week about the spread of the Coronavirus, or COVID-19.
“The threat of pandemic has become very real," he said. “But this would be the first pandemic that could be controlled.
“We're not at the mercy of the virus,” noted the organization on its website.
The WHO says it has been reluctant to use the word “pandemic” and the briefing added clarification regarding why the term isn't yet appropriate.
A "pandemic," said Dr Michael Ryan, WHO Executive Director, means the “disease has reached a point where it spreads uncontrolled from country to country.” The WHO is now seeing real success in some countries at turning the disease around, Ryan said in a release.
As this article was written, there were already over 114,000 confirmed cases of the disease, with over 4,000 deaths globally. Those numbers are expected to grow.
However, in places like Wuhan, China – which was the original epicenter for the outbreak – the number of cases has slowed substantially – giving hope that the spread can be controlled and that trade relations can resume under more normal conditions later this year.
China is still battling to contain coronavirus infections, but the U.S. ag sector is taking heart in signs that industry there is coming back to life in time for trade to resume under the “phase one” deal announced in December.
More Chinese truckers are taking to the road as stevedores return to the ports and workers go back to their jobs at feed mills, but the virus is still feeding uncertainty, curbing marketing efforts and threatening wider disruption beyond China.
“Manufacturing plants are starting back up and transportation bottlenecks are clearing up,” says one U.S. government official monitoring the situation in China.
Starbucks announced that 90 percent of its stores had reopened.
President Xi Jinping visited Wuhan to celebrate the turnaround.
All of this is good news for U.S. farmers and ranchers who are hoping to take advantage of China’s recent decision to exempt some importers from tariffs on U.S. farm commodities. March 2 was the first day that Chinese importers of a wide variety of farm goods could begin applying to avoid the country’s steep retaliatory tariffs on products such as soybeans, pork, corn, wheat, whey, oranges, cherries, sorghum, soyoil and beef.
The U.S.-China trade war has been particularly tough for U.S. sorghum farmers, who became reliant on Chinese imports before both countries began levying punitive tariffs. That’s starting to change, though. China quietly began exempting importers from tariffs on the grain in recent months, spurring sales in February of as much as 443,200 metric tons, according to U.S. industry and government officials. Tim Lust, CEO of National Sorghum Producers, tells Agri-Pulse he expects those sales to increase further now that China is broadening the tariff exemptions and extending them through the rest of the year.
But Chinese ports, processors and interior transportation companies have to be open for business for those tariff exemptions to facilitate the expansion of trade China promised under the “phase one” trade pact signed in December before the coronavirus outbreaks.
On that front, there is good news, says Jim Sutter, CEO of the U.S. Soybean Export Council.
“I was just talking … with our team on the ground in China and they tell me from their perspective soybeans are getting unloaded,” Sutter told Agri-Pulse. “Soybean crushing plants are generally running.”
And there are other signs of recovery. Xinhua News, a state-run media outlet, is reporting on business returning to normal with a spotlight on the Wellhope Agri-Tech Stock Company in Shenyang as it churns out poultry and swine feed. Wellhope had returned to 90 percent production capacity as of early March, Xinhua says.
One of the reasons behind the government push to return operations to normal is that China isn’t just fighting coronavirus, or COVID-19 as it is now officially called. It’s also fighting African swine fever and food price inflation.
“Feed mills are operating and the Chinese government is really pushing livestock producers to get more meat in the marketplace,” Sutter said. “They’re also importing meat because they want to get prices down. … They’ve given special dispensation to trucks carrying feed or livestock. They’ve waived tolls on roads to try to make it easy for people to move feed around to be able to produce livestock.”
The situation in China may be looking brighter for grain and oilseed shippers that send their commodities in bulk on Panamax-sized ships, but container transportation is still snarled. U.S. poultry producers and Chinese importers eager to buy the meat continue to be hit hard by the lack of workers available to load and unload ships and individual containers.
Greg Tyler, a senior vice president for the USA Poultry and Egg Export Council, says several hundred containers full of refrigerated poultry – mostly chicken paws that fetch high prices in China – are stuck in ports, waiting to be unloaded and taken to the market.
China only just reopened its market to U.S. poultry after a five-year ban, and USAPEEC had been predicting the new trade would translate into an additional $1 billion in profits for producers this year.
“I’m just really hoping that the coronavirus will peter out pretty soon,” Tyler said. As of early March, he was not optimistic.”
New infections are on the decline in China, according to the World Health Organization, but the country is still besieged by the virus that has already spread to other Asian countries, Europe, North America and elsewhere. Last week, WHO Director General Tedros Ghebreyesus said China had reported 129 cases – the lowest rate since Jan. 20.
“Outside China, 1848 cases were reported in 48 countries,” he told reporters in a press briefing. “Eighty percent of those cases are from just three countries – the Republic of Korea, the Islamic Republic of Iran and Italy.”
Since that time, Italy has quarantined all of its 60 million citizens in an effort to control the virus.
The U.S. Grains Council is monitoring other key markets in Asia, said Kimberly Atkins, the group’s vice president and chief operating officer.
Meanwhile, U.S. commodity groups are canceling or postponing trade shows and missions in China and elsewhere. The U.S. Meat Export Federation canceled its Korea Spring Market Seminar last month. Stops this month on the 2020 Prune Growers Tour of Asia were canceled, and Sunkist canceled in-store promotions in six Chinese cities that were planned for May.
Many of these marketing events are supported by USDA funds in programs such as the Agricultural Trade Promotion (ATP) program, said Lorena Alfaro, executive director of the U.S. Agricultural Development Council, which conducts weekly meetings with the Foreign Agricultural Service.
“Every day there’s something new,” said Alfaro. “Every other day something gets canceled. China is looking more optimistic – starting to normalize – but that’s not the case in other parts of the world.” ∆
Editor’s Note: Agri-Pulse Trade Editor Bill Tomson contributed to this article.
SARA WYANT: Editor of Agri-Pulse, a weekly e-newsletter covering farm and rural policy. To contact her, go to: http://www.agri-pulse.com/
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