The U.S. grain, feed and oilseed industries are voicing strong opposition to proposed shipping regulations, warning of severe economic consequences for American agriculture.
Multiple agricultural organizations have raised concerns about potential Section 301 actions targeting Chinese maritime sectors. These measures, they argue, could significantly impact U.S. agricultural exports, trade and international competitiveness. The industry's argues the actions would cause:
- Reduced export capacity: Potential loss of half the global bulk fleet needed for U.S. exports
- Cost increases: Proposed fees could significantly raise export costs
- Limited alternatives: Few options due to China's dominance in shipbuilding
- Competitive disadvantage: Higher costs and reduced capacity would harm U.S. agriculture in global markets
- Economic threat: Risks to jobs, economic contribution, and trade surplus from grain and oilseed exports
- Market disruptions: Uncertainty causing lost sales and contracting difficulties
- Broader impact: Potential harm to the entire U.S. agricultural sector, from exporters to farmers
Export dependence and cost increases
The National Grain and Feed Association (NGFA) emphasizes the critical role of exports in the 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 that are produced in America.”
Industry groups estimate that the proposed fees could substantially increase export costs. According to NGFA, the North American Export Grain Association (NAEGA) and the National Oilseed Processors Association (NOPA), “an additional $1 million fee on vessels carrying agricultural exports would increase costs of most shipments between $15 and $40 per metric ton, which equates to about $0.50 to $1.25 per bushel.”
Limited alternatives and competitiveness concerns
China’s dominant role in shipbuilding, particularly for dry bulk carriers, leaves U.S. exporters with few alternatives. The organizations noted, “There are approximately 21,000 vessels in the world’s bulk shipping fleet, nearly 50 percent of which were made in China. Only five ships currently operating in the global fleet were built in America, or 0.2 percent.”
Seyfert emphasized the competitive disadvantage this creates: “That puts U.S. agriculture at a considerable competitive disadvantage in global markets. We are already seeing disruptions in the marketplace since the proposal was put forward, including lost sales and difficulty contracting ships.”
Economic impact and market sensitivity
The grain and oilseed export industry significantly contributes to the U.S. economy. North American Export Grain Association (NAEGA) President and CEO Alejandra Castillo stated, “U.S. exports of grains, oilseeds and their co- and by-products support more than 450,000 American jobs, add $174 billion to the U.S. economy every year, and create a $65 billion annual U.S. trade surplus in grains and oilseeds.”
Castillo further noted the market’s sensitivity to price changes: “These markets are both highly competitive, low margin and price sensitive. We are concerned that implementation of the proposed actions would present irreversible harm to our bulk agricultural exports and erode the strong trade surplus we now enjoy.”
Proposed penalties and industry response
The U.S. Trade Representative’s (USTR) plan includes substantial fines for Chinese-made ships entering U.S. ports, Chinese operators, and operators with orders from Chinese shipyards. It also proposes minimum export requirements on U.S.-built, U.S.-flagged vessels.
In response, the grain, feed and oilseed organizations are urging the USTR to reconsider. They stress the need to address Chinese shipping dominance while supporting U.S. shipbuilding, but without harming export-dependent industries.
NGFA is proposing alternative methods to promote the U.S. maritime industry, such as shipbuilding grants, tax credits, and reduced regulations. If penalties are implemented, NGFA advocates for exempting agricultural commodities.
Seyfert warned, “Without an exemption we could see a significant drop in corn, soybean, and wheat exports. That jeopardizes the $65 billion trade surplus America enjoys on U.S. grains and oilseeds and hurts all of U.S. agriculture, from the exporters to the farmers.”
Industry concerns and future outlook
National Oilseed Processors Association (NOPA) President & CEO Devin Mogler expressed concern about the disproportionate burden on American farmers, processors and exporters. He stated, “While we support efforts to promote U.S. shipbuilding, the proposed penalties would place a disproportionate burden on American farmers, processors and exporters, limiting access to essential shipping capacity and driving up costs ultimately to be shouldered by hard-working American farmers.”
The uncertainty surrounding these proposals is already causing hesitation among overseas customers and shippers. Industry representatives report lost sales and difficulty in contracting ships since the proposal was put forward.
As the USTR considers implementing these measures, the grain, feed, and oilseed industries remain vigilant. They continue to advocate for solutions that address unfair trade practices without compromising the competitiveness of U.S. agricultural exports.
The collective voice of these industries underscores the far-reaching implications of the proposed shipping regulations on America’s agricultural sector and its global trade position. They urge the administration to explore alternative solutions that promote U.S. industry while avoiding harm to U.S. farmers, producers, exporters, and American families.
In conclusion, the industry emphasizes the need for policies that increase – not restrict – the trade of U.S. agricultural commodities, especially in increasingly competitive global markets. The outcome of this debate could have significant implications for the future of U.S. agricultural exports and the nation’s position in global trade.
