Trump administration looks to bail out US farmers

The Trump administration is looking into ways of offsetting the financial losses American farmers have suffered from its trade battle with China. Beijing is set to raise duties by 25 percentage points on Friday on $34bn of US goods in retaliation for new American tariffs. Among the biggest targets are soyabeans, the largest agricultural export to China.

The threat has pushed the US soyabean price below $9 a bushel, an unprofitable price for many farms. Last week, futures slid a further 4 per cent.

Consideration is being given to using the Commodity Credit Corporation set up in 1935 by President Roosevelt. It has $30bn in borrowing authority from the Treasury and latitude in how its funds are spent. Congress in March broadened its authority by lifting curbs on its authority to support crop prices and remove commodity surpluses.

Farm groups have set to head off President Trump's aggressive trade tactics against China, Mexico, Canada and the EU without success. There is concern that in the lomg run tariffs could lead to more land being converted to soyabeans in Brazil.

Growing soya becomes more popular

Soya is a subtropical crop largely grown in Brazil, Argentina and the US. The UK imports £1bn worth of soya each year, 95 per cent of which goes to animal feed for chickens, sheep, pigs, cattle and farmed fish. It's also an essential ingredient in a wide range of things from bread to ice cream.

New varieties of soya can cope with the cooler, less sunny climate in England. In the past year there has been a fivefold increase in the area planted in the southern half of England, with about 4,500 acres this year.

The world price for soya has soared as growing demand for meat in China has pushed up the cost of livestock feed. Soya now sells for about £400 a tonne, compared with about £140 for wheat and £330 for oil seed rape.

It also cheaper to grow than traditional crops because it does not suffer much from pests and diseases, a key consideration when plant protection products are becoming less readily available. It fixes nitrogen from the atmosphere in its roots and can help to break up blackgrass, a growing weed problem in cereal fields. This makes soya a valuable break crop in spring rotations to help to kill off diseases, pests and weeds in the ground.

China's new line on corn imports could affect world market

Changes in supply and demand patterns for food in China can have important implications for world markets. Even a small increase in Chinese imports can influence world markets in which there is a tight balance between supply and demand, as well as offering new export opportunities for farmers. Many of these decisions are politically determined and there appears to be a significant change in the line of the central authorities on corn (maize) imports recently.

Since 2001 when China lowered its import barriers, a policy of self-sufficiency has been followed in relation to corn, rice and wheat with imports kept to a minimum. In contrast the soyabean market was opened up to imports to release land for the key staples. China has become the world's largest importer of the oilseed, representing 75 per cent of global seaborne trade.

Last year China's agriculture minister Han Changfu said that corn 'should not become the second soyabean.' Recently, he has modified his line, saying that corn imports would have to increase gradually to meet demand for animal feed which in turn reflects growing prosperity and higher levels of meat consumption. It appears that China envisages importing 20-30m tonnes of corn a year, the lower figure representing 10 per cent of consumption. While China's grain output is at record levels, there are evident strains with urbanisation using up farmland and problems with water supplies.

China does not want to be solely dependent on the US and is encouraging exports from Argentina and the Ukraine.