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Chairman Ren Jianxin takes part in a press conference on June 27, 2017 in Basel, Switzerland. Shareholders in Swiss pesticide and seed giant Syngenta have accepted last May the company's takeover by state-owned ChemChina. (Photo: SEBASTIEN BOZON/AFP/Getty Images)

Trump’s Action Plan With China Puts Global Agribusiness First

Ben Lilliston

Politicians and headline writers often tout new trade announcements as big wins for U.S. farmers and ranchers. Almost never do they declare plainly, and more accurately: this deal is a big win for global agribusiness! Conflating the interests of global agribusiness operating in multiple countries and U.S.  farmers’ is a misleading spin that helps serve corporate interests over the rest of us. The Trump administration’s boasts about the U.S.-China 100-day action plan concluded last weekend continues this false narrative.

Upon announcing the deal, Department of Agriculture Secretary Sonny Perdue bragged that the China action plan would give U.S. ranchers long denied access to the Chinese beef market and represents “a great day for the United States and particularly our cattle producers.” Perdue neglected to mention how it was a much better day for global agribusiness firms that operate in China and the U.S., like Tyson, Cargill, JBS and ChemChina/Syngenta.

The agriculture sections of the U.S.-China action plan have three main components. One, the re-opening of China’s growing market to U.S. beef – initially agreed to under the Obama administration. Two, the opening of the U.S. market for Chinese raised and processed chicken. Three, the quick review of eight new genetically engineered traits for seeds in China. All three outcomes substantially benefit global agribusiness firms.

For example, Tyson Foods, the U.S. largest poultry producer, also has extensive investments in China. Exporting poultry from China to the U.S. will give Tyson Foods additional leverage in setting contracts with its U.S. poultry growers. Tyson Foods is also one of the top three U.S. beef packers in the U.S. The company is positioned to win on both sides of the Pacific – exporting U.S. beef to China and exporting Chinese chicken to the U.S.

Cargill is similarly positioned. A global leader in grain and beef, much of Cargill’s Asia investments, including China, are in poultry. With the new deal, the company adds its U.S. operations to its Australian and New Zealand assets that already supply China’s growing beef demand. At the same time, Cargill’s poultry operations in China stand to gain from new exports into the U.S. – a double-win.

The largest meat company in the U.S. and the world, Brazilian-based JBS, will also benefit. The company has been embroiled in a series of scandals in Brazil, including food safety violations that have led to a Brazilian beef import ban by the U.S. and heightened inspection in China. But fortunately for JBS, it has multiple locations around the world to sell beef to China – including major investments in Australia. The U.S.-China plan will add U.S. beef to the company’s options in exporting to China.

Seed giant ChemChina - which recently received the Trump Administration’s regulatory approval to purchase the global seed powerhouse Syngenta – will benefit from China’s commitment to expedite the evaluation of genetically engineered seed traits including for corn and cotton. Though the Chinese population heavily opposes the commercialization of GE crops, the country plans to allow the planting of GE corn and soybeans by 2020.

Will the gains for these global agribusiness giants trickle down to U.S. farmers and ranchers? The details of the deal, combined with an expected rise in poultry imports, raise doubts. While China did agree to open its market to U.S. beef, it set important conditions largely for food safety reasons. Those conditions require beef coming from cattle less than 30 months old (a precautionary measure to limit mad cow disease), clear documentation on where the cow was born, raised and processed – and bans on common U.S. feed additives to promote growth like hormones and ractopamine. The U.S. Meat Export Federation, which represents the industry, says these requirements could create logistical problems as the industry sets up segregated production lines to meet China’s requirements.

China’s conditions to import U.S. beef raise other questions. China’s documentation requirements essentially mirror Country of Origin Labeling (COOL) – a longstanding demand of U.S. consumers and independent ranchers. COOL has been vigorously opposed by the big meat packers and exporters for more than a decade through aggressive lobbying and legal actions. Why would the Trump Administration acquiesce to China’s demand for COOL, but not support COOL as demanded by U.S. consumers (90 percent consistently support) and independent ranchers?

The expected rise in chicken imports from China will clearly affect U.S. producers who are already dealing with restrictive, unfair contracts from the big poultry companies. China is the second largest poultry producing nation in the world, following the U.S. The USDA estimates China will export 324 million pounds per year of cooked chicken to the United States over the next five years. The agency says, “Some domestic producers may lose market share, and would have to make the necessary investment to be more efficient and stay competitive.” This is another way of saying that some U.S. poultry growers will be pushed out of business through lower prices. Consumers may also pay a price. U.S. consumer groups like Food and Water Watch have long criticized China’s loose food safety standards, which have resulted in a series of food contamination incidents over the last decade.

Like many pronouncements by the Trump Administration, the U.S.-China deal on agriculture includes a lot of smoke and mirrors. But when the smoke clears, it’s an almost identical approach taken by past Administrations on trade deals: Global Agribusiness First.

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