In an unexpected sign of goodwill ahead of trade talks with the United States, China announced in May that its Ministry of Commerce had terminated its anti-dumping and countervailing duty cases related to US sorghum and revoked preliminary duties on imports of the grain.
This critical good news for US sorghum producers and exporters – and US agriculture as a whole – has led to increased prices for sorghum farmers nearing harvest and caused at least some shipments of US sorghum on the water to turn back to China.
Still, the episode highlights the risk trade policy poses to the grains marketplace, particularly but not exclusively as it relates to China.
“The re-opening of the sorghum market in China, with removal of the 178.6 percent duties initially imposed, is undoubtedly good for sorghum farmers, and all grain market participants,” said US Grains Council President and CEO Tom Sleight.
The shift in China’s approach to sorghum came following significant efforts by the US sorghum industry to respond to the investigations China brought earlier this year. The Chinese announcement indicated that a review of the evidence in the cases showed the duties would harm the Chinese feed industry and consumers, an argument made by the US sorghum industry in its extensive defense as part of the pending cases.
Urged by the industry and the Council, the White House, US Department of Agriculture and the Office of the US Trade Representative also intervened with the Chinese on sorghum’s behalf. The Council, working with USDA’s Foreign Agricultural Service (FAS), rapidly ramped up marketing programs for US sorghum in countries with the potential for new purchases or purchases of the product for the first time.
“We are confident that markets that already know US sorghum, like Japan, Mexico and Morocco, will continue to look at it, while others that haven’t bought it frequently, like Saudi Arabia, countries in South America and more, will look at it now,” Sleight said. “Sorghum has many attributes, and one upside of the issues with China could be that more buyers become aware of the product.”
That diversification is important as there remains an outstanding threat of a 25 percent tariff from China on sorghum, corn and other products, in retaliation for potential US tariffs. US feed grains and their related products also face a plethora of other concerns in China: US corn exports have been challenged by systemic issues with biotech trait approvals; US distiller’s dried grains with solubles (DDGS) face duties from anti-dumping and countervailing duty investigations; and US ethanol is limited by a 45 percent tariff.
The quick application and removal of preliminary duties on sorghum also has caused significant issues for grain traders who had sorghum en route as well as buyers of the grain in China.
“The development from China on US sorghum is a step in the right direction for US-China trade relations, and we hope it is a platform for further lessening of tensions and challenges facing US grains exports to China,” Sleight said.