China: A major reason we've encouraged you to become more "biological," more resilient

For many years, Renewable Farming's goal is to help growers become more biologically based, low-cost per bushel, diverse and resilient against "mega-trend" market swings. 

July 12, 2018  By Jerry Carlson — That strategy contrasts sharply with the approach of most Midwest farmers for the past 20 years: Just add acres. Weed control was easy, big equipment made large acres per farmer easy.

Result: Cash rents ratcheted up. Operating margins tightened into a longer-term average range of $25 to $50 per acre. That was survivable if you farmed 2,000 or 3,000 acres. But high fixed costs and high costs for seed, chemicals and fertilizer left big cash-crop growers financially "brittle." When the operating margin turns negative, more acres aren't the answer.

We urged lower costs and more diversity even though we didn't know where or how the next financial shock would originate. But we farmed through the 1970s and 1980s boom and bust, and endured the 2008 financial panic, and we've read enough history to anticipate financial storms.

Now, impending export trade clashes — especially with China — are shaping into a battle far more intense and prolonged than negotiators are likely to settle with a few tweaks in tariff rates. Also emerging is a clearer picture of China's global expansionism worldwide. You can read one of the most comprehensive descriptions of China's moves by downloading this report compiled by the White House Office of Trade and Manufacturing Policy: "How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World."

For a detailed overview of the coming conflict from The Jamestown Foundation's China analyst Willy Wo-Lap Lam, visit this link.  Here's an excerpt:

"... the Xi administration’s aggressive hard-power projection has raised legitimate questions about the country’s peaceful intent. Take for example, Xi’s ambitious Belt and Road Initiative (BRI), billed as a Chinese way to help the world attain a “community of common destiny.” According to an open letter written by 27 EU ambassadors in Beijing, 89% of BRI projects are controlled by Chinese conglomerates, rather than carried out in partnership with local stakeholders. The senior diplomats complained that the BRI “runs counter to the EU agenda for liberalizing trade and pushes the balance of power in favor of subsidized Chinese companies” (Handelsblatt.com, April 17).

As an American ag editor, I led one of the first farmer delegations into farming regions of China almost 40 years ago. Our Midwest growers readily connected with Chinese farm families, finding them friendly, good-humored and eager to trade goods and ideas. Our farmers sensed that U.S. and American people shared a sense of entrepreneurship. That's a really promising foundation for mutual benefits in the future. 

However, it'll take strength and resolve to achieve a truly fair and friendly trade relationship. It looks like a challenging ride ahead.