Cargill CEO Warns of Risk to U.S. Farmers

September 25, 2018 10:27 AM
 
The U.S trade feud with China may have a lasting impact on American agriculture if it drags on, with the Asian nation already halting U.S. soybean purchases, according to the head of Cargill Inc.

(Bloomberg) --

President Donald Trump’s trade war with China may have a lasting impact on American agriculture if it drags on, with the Asian nation already halting U.S. soybean purchases, according to the head of Cargill Inc.

A long-term dispute could shift perception of the U.S. as a reliable trade partner and prompt China, the world’s largest importer of soybeans and the biggest buyer from the U.S, to turn to other sources of protein to feed its chickens, pork and other livestock, Chief Executive Officer David MacLennan said. That could squeeze U.S. growers out of the industry.

“Maybe if it were fixed quickly, we might go back to the way it was, but long term I’m concerned it has a detrimental effect on the U.S. agricultural economy,” he said in an interview with Bloomberg Television on Tuesday.

Soybean prices are near the lowest levels in a decade as China slapped tariffs on U.S. supplies in retaliation to U.S. taxes on Chinese goods. On top of that, there have been good growing conditions in North America and Brazil.

China has committed not to buy American soybeans because of the trade war, but also because of pride, MacLennan said. The head of the largest privately-held U.S. company was among a group of leaders that met with Xi Jinping before the trade war deepened over the summer and the Chinese President said his country wouldn’t back down, he said.

“He was very clear: ‘we’re not going to stand down, this is a matter of pride for my country and we’re not going to be bullied’,” MacLennan said. “So you can speculate from that remark they’re going to stay and find alternative sources of supply. But again, price can drive a lot of different decisions.”

While Cargill hasn’t built in a long-lasting spat into its books, the company is concerned that the dispute could turn the center of gravity away from U.S. farmers.

China may look to other grains such as corn to feed its animals and the nation probably will invest in agriculture outside the U.S., the CEO said. The trade war has already boosted soybean premiums in Brazil and Argentina.

China’s state-owned Cofco Corp., the nation’s largest food company, bought Dutch grains trader Nidera and the agriculture arm of Noble Group in recent years, a sign of their ambitions, MacLennan said.

Cargill is spending more time talking to lawmakers including the secretaries of commerce and agriculture, who are sympathetic, according to the CEO.

“We recognize what they are pursing is a tactic to make trade more fair and balanced and ultimately we are an American company, we understand the reasons behind some of the moves," MacLennan said. "But we just think there are other tactics that can be pursued to improve trade relations."

 

Copyright 2018, Bloomberg

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Comments

 
Spell Check

RJohn
NE Ill, IL
9/25/2018 12:39 PM
 

  "While Cargill hasn’t built in a long-lasting spat into its books, the company is concerned that the dispute could turn the center of gravity away from U.S. farmers." Is it time for farmers to march on the streets of DC against the tariffs that Trump has implemented against numerous countries - including China. We're losing our established markets in months that took decades to build. Personally, I'm not sure how much more we can take. Inputs continue to rise, while prices are at prices not seen in over a decade. We're talking $6 beans in ND! We can't wait. We must demand a change of course. If not, I will be voting Democrat in the November midterms. The Republicans are doing nothing to correct this egregious attack on American Agriculture.

 
 
Kevin
Montfort, WI
9/27/2018 05:10 AM
 

  Sorry Bob but John is right. Long term demand is getting killed by the day and that tariff relief package will only be a temporary fix. All the 82 cents is gonna do is pay for the basis erosion that we have since tariff action was implemented. It will not pay for the 20 percent reduction in futures price. The demand reduction this will create will be similar to the embargo that Carter put on Russian wheat. It destroyed the domestic market for decades. Trump's relief payment was only implemented to buy votes for the mid terms. If Trump loves us so much as he claims, why didn't he approve the E15 vapor waiver as he claimed he would do in may? Still don't have it and the summer is over. Let's not forget the Trump love when he allowed 2 billion gallons of ethanol demand to get squashed when he allowed those ILLEGAL Rin waivers! Your right Bob, Trump has our back. He stuck a knife in it!

 
 
Bob
cooper, IA
9/25/2018 06:28 PM
 

  So Trump proposed economic relief for farmers affected by tariffs but that isn't enough for John. Sorry but this is not just an ag issue it is national security at issue. The intellectual property stolen by China allowed them to build the worlds fastest computer capable of breaking all missile codes. Does that bother you John? How about the fact that the steel tariffs allow us to save our lone remaining heavy steel plant capable of building millitary vehicles? Don't you think that is worth a few cents John?

 
 
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