Seshadri Ramkumar, Texas Tech University, USA
With United States and China engaged in tariff battles, cotton and grain sectors are nervous and are watching carefully, as the situations around proposed tariffs are uncertain. More importantly, in the High Plains of Texas, which is the ground zero for the U.S. cotton industry, where planting of cotton is around the corner, it may affect the planting intentions and hence influence the broader economy of the region.
On April 6, speaking at the 61st annual meeting of Plains Cotton Growers, Inc., in Lubbock Honorable Jodey Arrington, the United States’ congressman representing Lubbock and the cotton growing regions surrounding this epic center of cotton production, emphasized the importance of level playing field for U.S. trade. Arrington while supporting the proposed tariffs by the United States to safeguard America’s interest, stressed that executing those policies are more important. Outlining some of the recent successes to protect the cotton industry, such as the recognition of seed cotton in the Title 1 of the current Farm Bill and the ginning assistance program, Arrington stated free and fair trade are linked and more free trade agreements are needed to open-up new markets.
With the recent announcement from China about the proposed 25% tariff on 106 products from the United States, key agricultural commodities like soybean, sorghum, cotton may be impacted.
Sorghum industry, which is an important agricultural commodity grown in the High Plains of Texas may feel the impact, if the tariff proposal becomes reality. “trade must be fixed, but farmers should be protected”, stated John Duff, strategic business director of Lubbock-based National Sorghum Producers. Last year, United States exported 189 million bushels of sorghum to China, which is about 78% of total exports from the United States. China is a significant market and there is demand for protein and quality cotton as it is a growing consumer society.
Steve Verett, with 21-years of experience as the executive vice president of Plains Cotton Growers, Inc., stated, “export markets are extremely important to U.S. cotton producers and up to 80 percent of U.S. cotton is sold into export markets around the world, including China.” “The potential for current or future trade disputes to impact or redirect the flow of U.S. cotton is very real and it is a situation that we are monitoring closely,” added Verett.
The tariff issue clearly highlights the point that one size fits all does not work, as it evident with the impact it may have on the U.S. agriculture sector unlike its manufacturing sector.