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Letter To The Editor: Response To Serna Position Paper

on September 3, 2019 - 8:11am
By RICHARD NEBEL
Los Alamos

This is a response to one part of Marco Serna’s economic position paper, in particular to his statements on the trade war with China. The “International pressure” approach that he espouses was tried for eight years during the Obama administration and got nowhere. All that is going to do is result in a lot of talk, and no substance. 

However, there is a far more significant problem going on in China today that the public is largely unaware of. One year ago, the Chinese had about one billion hogs in their swine herd. 350 million of these hogs have died or been euthanized in the past year. It is estimated that this number will go over 500 million by the end of 2019.

The problem is that China has had an outbreak of African Swine Fever (AFS). Although this Virus does not infect humans (this isn’t swine flu) it is highly contagious in swine and it is essentially 100 percent fatal. There is no cure, and there is no vaccine. Previous attempts to develop a vaccine have been failures. Furthermore, cooking infected meat does not even kill the virus.

The only way to deal with this disease is to euthanize all of the pigs within the proximity of the outbreak. That’s why the Chinese herd has shrunk so dramatically. Unfortunately, this virus is very hard to get rid of and 80 percent of the facilities that the Chinese have decontaminated have had a recurrence. It is believed that it will take at least five or six years to fix the problem. Some American agriculture experts have said that given the hygiene in China, they think it would be a miracle if the Chinese could contain AFS, let alone eradicate it.

So how does this affect us in the US? For starters the price of pork in China has gone up 57 percent in the past year, and most of that increase occurred in just the last few weeks. Right now, pork is skyrocketing in price. Apparently, the Chinese government has run through all of their frozen pork reserves and the demand is far outstripping the dwindling supply. This is highly inflationary, and it could easily trigger a world-wide recession and possibly something a whole lot more destabilizing than a recession. Just ask Hasni Mubarak or Marie Antoinette what happens when people can't afford basic food staples.

Secondly, if the trade war with China ended tomorrow, they wouldn’t be buying any more US soybeans. They don’t have any livestock left to feed it to. Thirdly, since China produces and consumes about 50 percent of the world’s pork, they can’t fix their problem by importing pork. The supply just isn’t there. However, if they try this, they will probably end up running up the price of pork world-wide. Ironically, the fact that they have embargoed US pork in the trade war may prove to be a blessing to the US consumer.    

The real question that Americans need to ask themselves is how badly do we want to couple our economy to the Chinese? We’ve been down this road before in the 1970s when we started selling grain to the Soviets under Nixon’s policy of détente. American farmers made a lot of money, the price of farmland skyrocketed, and then Carter embargoed grain sales to the USSR after they invaded Afghanistan. Then crop prices tanked, farmland values tanked, and some farmers ended up with more debt than equity in their farmland. That was the “Farm Crisis” of the 1980s.

My family raises corn and soybeans and the lesson we took away from the Farm Crisis is that it isn’t a good idea to predicate your economic fortunes on selling products to totalitarian states. They aren't a very reliable market. Today’s situation with the Chinese has some pretty strong parallels to the early days of the farm crisis. My family didn’t have any debt during the 1980s, and we got through just fine. Last year, even with all of the tariffs in place, was an average year for us financially on the farm. The prices stunk, but we had tremendous crops. Even with the tariffs, the wet spring, and the midsummer lack of moisture this year, I think we’ll still be OK in 2019.

My own opinion is that we shouldn’t have anything to do with the Chinese. We’ve gotten by just fine without them for decades, and I don’t see why we can’t do that again. There isn’t anything that’s made in China that couldn’t be made in the US or elsewhere. The only thing that the Chinese supply to the world market is cheap slave labor. I hope that Mr. Serna will consider this fact when he formulates his China policy.


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