It’s a particularly acute challenge for US agriculture exporters right now. The overall demand for American farm products from China is in a free fall. Broken trade relations have resulted in canceled orders of agricultural exports and large-scale joblessness. This lack of clarity creates significant risks for the long-term sustainability of thousands of ag operations.
The drop in vessel traffic to China is striking. The US agriculture sector is now reporting a 22.15% week-over-week drop and a staggering 44% year-over-year plunge as of April 14. That continued and drastic decline in demand has equally devastated our revenue. The contract transition has equalized, causing the company to incur abrupt operational changes immediately, including laying off employees. One large hay exporter shared that they had to lay off 12 workers. This cut was one-fourth of their total staff.
“This accounts for one-fourth of our total employees,” said the hay exporter, expressing the severity of the situation.
The effect of the trade war opened up by the President Trump administration has caused an unfortunate wave across all sectors. Agriculture Transportation Coalition (AgTC) recently reported that its members are experiencing “massive” immediate financial losses. They chalk up many of these woes to the retaliatory tariffs that were slapped on US exports. In addition to the direct impact of these tariffs, these tariffs have created an atmosphere of uncertainty which has caused canceled orders and a fight to keep prices competitive.
In fact, one forage exporter suffered a harrowing 68 blanked sailings after what some called Trump’s “Liberation Day.” This has drastically restricted their ability to export forage products which only adds to already problematic transportation and logistics complications.
“Our worry is that the vessel space that remains is going to be the most expensive, and our product cannot absorb these costs without selling at a loss,” stated a concerned forage exporter.
As a crucial export gateway for the United States, the Port of Oakland has experienced the effects from the decline even more severely. It is noteworthy that China ranks as the port’s top import trading partner and third among its export partners, representing approximately 29% of Oakland’s total trade volume. The Executive Director of the Port of Oakland warned that a tariff-induced downturn in cargo volume could jeopardize job stability for many workers dependent on robust shipping operations, including dockworkers and truck operators.
“So many local, union jobs depend on the Port’s robust shipping operations,” remarked Democratic Party Congresswoman Lateefah Simon. She stressed the importance of worker-centric policies that don’t just fuel the fire of increasing trade hostility.
Some other agricultural industries have seen similar devastating drops in market value. PR products like refrigerated beef, pork, poultry, vegetables, dairy and processed foods like french fries are off by as much as 20%. This has led exporters to reconsider their approach to inventory stocking and plans to invest in new capacities for the future.
Additionally, some exporters have experienced prompt cancellations on large volumes of merchandise. One wood pulp and paperboard exporter offered up to 6,400 metric tons of product held in their warehouse on cancellation or hold basis. They similarly issued holds on 15 railcars.
The current state of NFU member policy paints a dire scenario for most farmers and ranchers. Unsurprisingly, farmers and exporters on both sides of the border expressed their exasperation with the status quo. One hay exporter stated, “We plead for those few to take a very long careful look at what can be done to keep shipments flowing while they work out the trade imbalances and perceived differences.”
The mood throughout the industry reflects both a disappointment and urgency for action from policymakers. “Hasty and reckless decision-making at the top of our country will reverse, easing deep troubles that we are facing at this time,” another hay exporter remarked.
Agricultural exporters have one eye on the past and one firmly on the future. They caution that no other markets are immediately available to rapidly backfill Chinese demand. This lack of alternative markets places tremendous downward pressure on pricing and long-term sustainability of the business.