Coronavirus impact on ag trade mixed

Published 4:15 pm Thursday, March 12, 2020

The severity and length of trade disruptions caused by the coronavirus won’t be clear for several weeks, but there are signs that logistical problems caused by the disease may have already peaked, according to port and trade group representatives.

Few official figures are currently available to document how the coronavirus disease COVID-19 affected agricultural exports in February. Because of curtailed manufacturing in China, however, ship traffic between Asia and West Coast ports decreased, reducing the capacity to export American farm goods.

Mark Anderson, president and CEO of Anderson Hay and Grain in Washington, said Thursday the company missed sales goals, but hopes to make up for it in the next few months.

“The demand side of things is not a big problem,” he said. “Right now the biggest thing we’re dealing with is complete chaos on our shipping side. … I’d say we’re right in the middle of it.”

The global pandemic has not affected the supply or demand for staples such as wheat, rice, corn and soybeans, the USDA reported Tuesday. U.S. Wheat spokesman Steve Mercer said he hasn’t heard of trade or price disruptions caused by the coronavirus.

The nature of agriculture has shielded it from some of the trade disruptions seen by other industries, said Peter Friedmann, executive director of the Agriculture Transportation Coalition.

“People overseas still have to eat, and you can’t stop hogs from growing, cows from giving milk and crops from growing, and when they’re grown they have to be harvested,” he said. “It’s disruptive, it’s costly, but ultimately it gets rectified and back in balance.”

Friedmann said he expects the trade flow to improve as the spread of the coronavirus slows in China and factories reopen and fill empty shipping containers.

“The situation will rectify itself when production ramps up of consumer goods for the U.S. market,” Friedmann said. “It’s happening, but gradually.”

Container traffic at the Northwest Seaport Alliance, a partnership of the Seattle and Tacoma ports, was down 19.1% in January from a year before, a decline the port attributed mostly to a rush of exports in 2019 to beat the imposition of tariffs.

A cargo report for February has not been released, though the ports have seen an increase in ship cancellations in recent weeks because of coronavirus, according to an alliance spokeswoman.

“As a result, there’s temporarily been a limited vessel capacity for export goods, including agricultural products,” she said in an email.

The alliance expects ship traffic to pick up, she said. “As North America’s second-largest agricultural export gateway, we are pleased to see vessels returning to service starting next week, which we hope will improve freight mobility through our gateway.”

Mark Powers, president of the Northwest Horticultural Council, said the disruption caused by the coronavirus does not yet resemble backups at West Coast ports in 2015 during a labor dispute.

“I don’t think we can put it in that category yet. That was obviously a huge impact,” he said. “The verdict is still out on coronavirus.”

Even before the disease outbreak, retaliatory tariffs from China were working against apple, pear and cherry exports. “Movement could be better, but we’re having a hard time separating out tariffs versus coronavirus,” Powers said.

The coronavirus outbreak came just as the U.S poultry industry was re-entering China after a five-year ban caused by the 2014-15 bird flu outbreak in the U.S. When China lifted the ban, U.S. Trade Representative Peter Lighthizer estimated the newly opened market represented more than $1 billion in sales annually for U.S. producers.

“You talk about timing,” said Jim Sumner, president of the USA Poultry and Eggs Export Council.

He said the coronavirus was “still somewhat problematic,” but that he was more worried three weeks ago.

“Business is picking up,” Sumner said. “I think the worst of that is over, and we’re looking at the situation as improving.”

If shipping capacity is available, U.S. poultry exporters should still have an opening in China as African swine fever continues to reduce the pork supply, Sumner said.

Nearly 1.2 million pigs have been culled in China since August 2018, the World Organization for Animal Health reported March 6.

“We’re trying to take, I guess you would have to say, advantage of that situation,” Sumner said. “People still have to eat.”

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