Pork Could See Adverse Affects from Devaluation of Chinese Currency

China’s sharp devaluation of its currency to prop up its economy is sure to raise prices for U.S. farm exports to China—and is already raising hackles from U.S. lawmakers. The move followed years of resistance by Beijing to let the Yuan adjust to market forces…and reflects weakness in China’s economy.

But American Farm Bureau economist Veronica Nigh says China’s nearly 2-percent currency cut could take a bite out of the U.S. farm economy…

“It could be seen as a negative as the lower Yuan makes resources more expensive to Chinese buyers. Also, this devaluation could trigger copycat devaluations by central banks in the region as they attempt to maintain competitiveness against China.”

Nigh cited major U.S. agriculture export markets like Taiwan, Singapore, and South Korea—but China is the big one…

“China has overtaken Canada as the largest export destination for US ag exports at 16%. It’s an important market for us. The good news is that even in the face of this devaluation, the Chinese really rely on some US products to grow some of their own industry.”

That rings especially true for pork and poultry. But China’s latest move also plays into the hands of U.S. lawmakers like Iowa’s Chuck Grassley, long fighting Chinese currency manipulation…

“We have been raising the point of currency manipulation and its urging the administration to take action instead of pussy footing. If that action is duty related, then take it but if there is something lesser that still makes the point that China is a currency manipulator then do that, but do something.”

Grassley rejects the idea that the U.S. should worry its own exports could be further damaged if China’s economy continues to slide. He says the U.S. needs to make sure Beijing abides by the rules of international trade.

 


A native of the Texas Panhandle, Rhonda was born and raised on a cotton farm where she saw cotton farming evolve from ditch irrigation to center pivot irrigation and harvest trailers to modules. After graduating from Texas Tech University, she got her start in radio with KGNC News Talk 710 in Amarillo, Texas.