(Repeats Sunday story with no changes)
By Karl Plume and Tom Polansek
CHICAGO, Sept 18 U.S. wheat farmers, struggling
to make money as prices sink and global supplies swell, could be
the main beneficiaries if Washington wins a case it brought last
week against China over an estimated $100 billion in domestic
grain market supports.
On Tuesday, U.S. trade officials said they would file a case
at the World Trade Organization (WTO) against China over
allegations that aggressive pricing supports prompted Chinese
farmers to overproduce corn, wheat and rice, fueling a global
crop glut and depressing world prices.
This is the latest salvo in fraught trade relationships
between the world's leading agricultural producers.
More than half of the Obama administration's 23 complaints
to the WTO have been against China and the two countries are
also embroiled in bilateral trade deal discussions and a Chinese
investigation into alleged dumping of animal feed grains by U.S.
The U.S. Trade Representative's (USTR) announcement comes
less than two months before a presidential election in the
United States and with a debate over the Trans Pacific
Partnership trade agreement looming.
China came under scrutiny last year from consultants
commissioned by U.S. farm and trade groups in 2011 to look into
exporting issues. Subsidies in China were "the biggest problem,
even though there were serious problems with some of the other
countries," said Craig Thorn, a partner at the consulting firm,
With that conclusion in hand, U.S. farm groups began to push
the USTR more actively to open a case into trade with China,
Thorn said. DTB provided U.S. officials with its analysis.
The trade groups that funded DTB's research included U.S.
Wheat Associates, an industry group that promotes exports, along
with the U.S. Grains Council and USA Rice.
WHEAT IN FOCUS
U.S. Wheat Associates then funded an additional study from
Iowa State University to look at the economic impact of China's
subsidies. That estimated that if the subsidies were removed,
the United States would produce nearly 1 million tonnes more
wheat by 2022 and export almost 1.5 million tonnes more to
China. Beijing's program led to at least $650 million in lost
revenue for U.S. farmers last year, the study found.
"China is huge in everything and Chinese policy has enormous
impacts for the U.S. The potential benefits to the U.S. of minor
policy changes in China are enormous," said Iowa State
University economist Dermot Hayes, who conducted the analysis.
While the U.S. allegations cover corn and rice as well as
wheat, China has already reformed its corn policy and rice
exports were never a major part of U.S. agricultural income.
It is wheat that is now causing most pain in America's
farming heartland. U.S. wheat prices are at decade lows and some
farmers could face losses next year of $55 an acre. In the
coming weeks, they are likely to plant the fewest winter wheat
acres in a century..
The USTR's case at the WTO could take 18 months to resolve,
Thorn said. But while there will be no short-term fix, it could
help turn the tide for those farmers who survive, said Dalton
Henry, vice president of policy at U.S. Wheat Associates.
"By starting to take action now, it ensures that in 12 or 18
months when we finally have a ruling and some resolution to
these policies, it will make a difference then," he said.
Traders and industry analysts, however, question how the
United States, which has ceded its dominance in wheat over the
past two decades to Russia and the European Union, would
recapture market share.
"I do not think it makes any difference. The wheat market
... is all about price," said Dan Basse, president of AgResource
(Writing by P.J. Huffstutter; Editing by Jo Winterbottom and