US grain industry warns of economic fallout from proposed

The U.S. grain, feed, and oilseed sectors are sounding alarms over proposed shipping regulations that they warn could devastate American agriculture. Industry leaders are particularly concerned about potential Section 301 actions targeting Chinese maritime sectors, which they believe could severely hinder U.S. agricultural exports and competitiveness. The proposed measures could lead to reduced export capacity, increased costs, and broader economic repercussions for the agricultural community.

Export Dependence and Rising Costs

The National Grain and Feed Association (NGFA) has highlighted the vital role of exports in the agricultural industry. NGFA President and CEO Mike Seyfert stated, “If enacted, this proposal would effectively eliminate half of the global bulk fleet that we need to export almost one-third of grains and oilseeds produced in America.” Industry estimates suggest that the proposed fees could significantly inflate export costs. According to NGFA, the North American Export Grain Association (NAEGA), and the National Oilseed Processors Association (NOPA), an additional fee of $1 million on vessels carrying agricultural exports could raise shipment costs by $15 to $40 per metric ton, translating to an increase of approximately $0.50 to $1.25 per bushel.

This potential rise in costs poses a serious threat to the competitiveness of U.S. agriculture in global markets. Seyfert noted that the proposal has already begun to disrupt the marketplace, resulting in lost sales and difficulties in contracting ships. The agricultural sector, which relies heavily on exports, is bracing for the economic fallout if these regulations are implemented.

Limited Alternatives and Competitive Disadvantages

China’s dominance in shipbuilding, especially for dry bulk carriers, leaves U.S. exporters with few viable alternatives. Industry organizations report that nearly 50% of the world’s bulk shipping fleet, approximately 21,000 vessels, were built in China, while only five ships in operation were constructed in the U.S., accounting for a mere 0.2% of the global fleet. This lack of options creates a significant competitive disadvantage for U.S. agriculture.

NAEGA President and CEO Alejandra Castillo emphasized the economic importance of the grain and oilseed export industry, stating that it supports over 450,000 American jobs and contributes $174 billion to the U.S. economy annually, along with a $65 billion trade surplus. Castillo warned that the proposed actions could inflict irreversible damage on bulk agricultural exports and erode the trade surplus that the industry currently enjoys.

Industry Response and Future Outlook

The U.S. Trade Representative (USTR) has proposed substantial fines for Chinese-made ships entering U.S. ports and minimum export requirements for U.S.-built vessels. In response, agricultural organizations are urging the USTR to reconsider these measures. They advocate for addressing Chinese shipping dominance while supporting U.S. shipbuilding without harming export-dependent industries. NGFA has suggested alternative methods to bolster the U.S. maritime industry, such as shipbuilding grants and tax credits, while calling for exemptions for agricultural commodities from any penalties.

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Industry leaders express concern that without such exemptions, U.S. exports of corn, soybeans, and wheat could plummet, jeopardizing the $65 billion trade surplus and adversely affecting all sectors of U.S. agriculture. National Oilseed Processors Association (NOPA) President & CEO Devin Mogler highlighted the disproportionate burden these penalties would place on American farmers and exporters, driving up costs and limiting access to essential shipping capacity.

The uncertainty surrounding these proposed regulations is already causing hesitation among international customers and shippers, leading to lost sales and difficulties in securing contracts. As the USTR deliberates on these measures, the grain, feed, and oilseed industries remain vigilant, advocating for solutions that address unfair trade practices without compromising the competitiveness of U.S. agricultural exports.

The collective concerns of these industries underscore the potential far-reaching implications of the proposed shipping regulations on America’s agricultural sector and its global trade standing. They urge the administration to explore alternative solutions that promote U.S. industry while safeguarding the interests of farmers, producers, exporters, and American families. The outcome of this debate could significantly shape the future of U.S. agricultural exports and the nation’s position in global trade.