World Grain - May 2019 - 6

FROM THE EDITOR

Grain industry a casualty
of trade wars

ncertainty and protectionism are
the arch-enemies of prosperity, so
it is no surprise that in these uncertain times, with long-standing trade
alliances strained and, in some cases,
severed, much of the global agricultural
economy is faltering.
The International Monetary Fund
in April cut its global growth outlook
for the third time in six months, to the
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crisis in 2009, pointing to trade tensions
throughout the world as the impetus for
its downgrade.
While it is wise for trade partners to
periodically examine and renegotiate
trade deals, a protracted trade war, such
as the one taking place between the United States and China, is in no one's best
interest. There are few, if any, winners, in
this standoff, which is nearly a year old
now. Perhaps no group has lost more in
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U.S. farm incomes already were declining prior to the trade war because
of an extended period of low commodity prices. Having tariffs slapped on
their products by their largest customer,
China, effectively halting imports, only
adds to the misery. Producers aren't the
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A look at recent earnings reports from
large multinational agribusiness companies reveals reduced revenue in their
grain divisions.
But while the China-U.S. dispute receives the most media attention, several
other longtime trade agreements and alliances are fraying under the weight of
the recent global wave of nationalism/
protectionism. The Brexit debate continues as Britain tries to ascertain the
best way to (or whether it even wants to)
execute its divorce from the E.U. The
impact of this 2018 decision by British
voters on the grain and milling industries in England, Ireland and throughout
6

Europe is, to say the least, unsettling.
The latest anti-trade salvo involves
China halting canola imports from Canada, ostensibly due to grain inspection
issues, although most observers say the
dispute is rooted in politics. Even the
newly renegotiated NAFTA agreement
between the United States, Mexico and
Canada, now called USMCA, is stalled
in the U.S. Congress, with some specuODWLQJWKDWLWPD\QRWEHUDWL¿HGEHIRUH
the 2020 U.S. presidential election.
Perhaps some industries can survive
and even thrive in a protectionist environment where tariffs and embargoes
rule the day. Agriculture is certainly not
one of them. In a world where natural resources and commodities aren't distributed evenly among nations, free trade is
a necessity, not a luxury. In places like
the Middle East, where the climate is
suboptimal for grain production, people
are dependent on grain from foreign
lands. Countries like Japan, which have
a huge population and little arable land,
count on wheat and other grain products
coming from the U.S., Canada and other
countries. Conversely, farmers in countries like the U.S., Canada, Brazil and
Russia, who produce more grain than
their own populations can consume, deSHQG RQ JUDLQGH¿FLW FRXQWULHV WR EX\
their products.
How much longer will these misJXLGHG WUDGH FRQÀLFWV
last and what toll will
it take on the global
grain industry? The
answers are unclear,
but we must hope that
wisdom will triumph
over ego and pride and the nations inYROYHGLQWKHVHGLVSXWHVZLOO¿QGFRPmon ground, sooner rather than later.
Arvin Donley
Editor

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WORLD GRAIN (ISSN 0745-8991) Volume 37, issue 5,

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World Grain - May 2019

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