China has approved imports of DowDuPont’s genetically modified (GM) soybeans clearing the way for US farmers to expand planting the pesticide resistant Enlist E soybeans. The approval for the soybeans not only poses a challenge to competitor Bayer but also signals that the US and China may be beginning to reconcile trade tensions that have seriously impacted various commodities on both sides for months, including severely damaging the US soybean sector.
The Enlist E3 soybeans were among a batch of GM crops approved by China recently. It is also among reignited hopes that US President Trump and China’s President Xi Jinping are finally closing in on a trade resolution.
“We are aware that the China Ministry of Agriculture and Rural Affairs (MARA) published on their website the intent to issue safety certificates for the DP 4114 trait and Enlist E3 soybean trait,” Gregg M. Schmidt, External Communications, Agriculture Division of DowDuPont, tells.
“We are pleased with this and look forward to receiving the official safety certificates. Enlist E3 soybean was jointly developed by Dow AgroSciences and MS Technologies.”
As the trade war between the two countries intensified last year, China upped the severity of its sanctions against the US by targeting soybeans for 25 percent retaliatory tariffs, after initially not including the commodity on its list of items impacted. The impact of this has been rippling through the US soybean sector for six months now as the soybean tariff initially took effect on July 6, 2018.
The trade tensions have rocked the foundation of a decades-old trade relationship US soybean farmers built with China, the largest market for American beans, according to the American Soybean Association (ASA). As a result, sales have been halted, crop prices have plummeted and there has been a lack of security for farmers seeking funding for the 2019 season.
US soybean exports to China have fallen sharply. Through the first seven weeks of the 2018/19 marketing year, 7.4 million bushels of new-crop US soybeans have been shipped to China, down 97 percent from the previous year, according to the United States Department of Agriculture’s (USDA) Federal Grain Inspection Service data. Over the same period in the previous marketing year, the US shipped 239 million bushels of soybeans to China and during the same period in 2016/17, it exported 211 million bushels.
Before the so-called “trade war” began between the world’s two largest economies, China imported the bulk of its soybeans from the US. The soybean industry has been badly shaken by the US-China tensions which escalated when Beijing slapped tariffs on US soybean imports last year as part of the tit-for-tat trade disputes that have been going on for some time.
However, this could be a turning point with the latest round of meetings between the two sides wrapping up in Beijing. A US delegation has just returned from several days of trade talks in China and President Trump recently tweeted: “Talks with China are going very well!”
ASA President, Davie Stephens says: “We are anxious to see real progress to end this trade war quickly. With Ambassador Gregg Doud of the Office of US Trade Representative (USTR) and Under Secretary Ted McKinney of the USDA among the delegation in China to discuss trade, we are hopeful that real progress is forthcoming.”
“This has been a long and costly half year for farmers and we need stability returned to this market. We cannot withstand another six months,” Stephens adds.
The value of US soybean exports to China has grown 26-fold in the last decade, says the ASA, from US$414 million in 1996 to US$14 billion in 2017. China imported 31 percent of US production in 2017, equal to 60 percent of total US exports and nearly one in every three rows of harvested beans. Over the next ten years, Chinese demand for soybeans is expected to account for most of the growth in global soybean trade, making it a prime market for the US and other countries.
US soybean growers have realized a nearly 20 percent drop in soy prices since the threat of tariffs began last summer and the future of soy growers’ relationship with China remains in jeopardy until both sides call an official end to the long-running tensions.
China has pursued new means to procure soybeans and other protein crops, including maximizing soybean imports from other exporting countries, particularly Brazil.
Growers have also taken to Twitter and other social platforms with the hashtag #185DaysStillNeedTrade, along with the popular #RescindtheTariffs hashtag to continue demanding that the Administration bring an end to its lingering trade war with China and help restore certainty and stability to the soy industry.
Meanwhile, imports of US soybeans by the European Union (EU) have increased by 112 percent in the second half of 2018 (July-December 2018), compared to the same period in the previous year. With a share of 75 percent of EU soybeans imports, the US is Europe’s number one supplier, according to new statistics released by the European Commission yesterday. Conversely, Europe remains by far the top destination of US soybeans exports (28 percent), followed by Argentina (10 percent) and Mexico (9 percent).