Latest Salvo in Trade Tiff Hits Sorghum

Sorghum Producers CEO Says US, China Need to Start Negotiating on Trade Topics

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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U.S. farmers planted about 5.6 million acres of sorghum last year. (Photo courtesy of the National Sorghum Producers)

WASHINGTON (DTN) -- It's time countries started negotiating over agricultural tariffs, the CEO of the National Sorghum Producers Tim Lust said Tuesday after China slapped a 178.6% preliminary anti-dumping tariff on U.S. sorghum.

The tariff is characterized as a temporary "deposit" on sorghum imported from the U.S. and likely nullifies any U.S. sorghum exports to China in the near future. China claims the U.S. is hurting Chinese farmers by exporting sorghum at low prices.

The sorghum announcement comes after weeks of back-and-forth between the U.S. and China over trade, which included higher tariffs on $3 billion in U.S. agricultural products, including pork. China also indicated it is considering a 25% tariff increase on soybeans.

The sorghum antidumping tariffs go into effect on Wednesday and can remain in place for up to four months before China must make a further ruling on the duties.

While China handed down anti-dumping tariffs, Lust said China could add countervailing duties as well. That may just be adding salt to the wound because the new tariff itself will likely cut off exports.

"It's really a much bigger issue right now, government to government," Lust said. "There is a lot of tit-for-tat going on, and unfortunately we were one of the first caught up in that. Our key message is it's time for the governments to sit down and start negotiating this out. Our industry shouldn't be in the middle of this situation."

China's move on the anti-dumping tariffs "basically ignores everything we submitted" in the U.S. case against the tariffs, Lust said.

"So it's really hard to see where that comes from. Clearly, from the magnitude and size of it, this points to bigger fights. Really, sorghum farmers are in the middle of something that's bigger and don't deserve to be there in any fashion, but certainly we are now," he said.

"They are upset. I think that's very clear at the farmer level," Lust said.

Farmers planted about 5.6 million acres of sorghum last year, of which Kansas accounted for 2.45 million acres and Texas accounted for 1.6 million acres. Analysts noted China hit farmers in two states that strongly supported President Donald Trump.

While imposing the sorghum tariffs, Chinese officials also acknowledged Tuesday they were willing to lift some restrictions on foreign auto imports. That created some mixed signals for White House Economic Adviser Larry Kudlow, who was asked about autos and sorghum tariffs Tuesday.

"Whenever they're moving in our direction in a conciliatory way, whenever they're lowering barriers, that's a good thing. That's good for them, it's good for us, and it's good for growth on both sides and the rest of the world," Kudlow said. "When, however, they raise barriers, as they seem to be on the farm issue, that's not good."

Lust said it's unclear whether the tariffs would translate into farmers planting crops other than sorghum. Ground moisture and other agronomic concerns may mean the acreage changes little.

There also are other export market options besides China. Before China was the main export market for sorghum, Mexico and Japan were the main buyers. Spain also was a customer, and Lust said Spain might be in the market now for grain.

"It looks like they may be short of grain, and they have been a good customer in past years," Lust said of Spain. "So there are options. It certainly hurts to lose what has been a very good customer currently."

Lust added that more demand could come from food aid as well.

"There are some serious food challenges around the world right now, and sorghum is the food aid of choice for many of the African countries," Lust said. "There are some serious challenges in some of those countries right now so there are some opportunities for some sales and some grain going potentially to food aid."

Chris Clayton can be reached at Chris.Clayton@dtn.com

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(AG/ES)

Chris Clayton