A play-by-play breakdown of the day that affected sorghum for all of 2018 and NSP’s continuing response to the China tarrifs.
It was an early, quiet Sunday morning. National Sorghum Producers staff was ready to welcome our legislative committee members and other affiliated producers to Washington, D.C., for our annual legislative fly-in. It is always a busy few days, packed with briefings, training sessions, meetings and networking opportunities where sorghum producers take part in advocacy efforts on behalf of the industry. A few final touches and some extra copies, and we were ready—until the news came.
NSP staff was informed China self-initiated anti-dumping (AD) and countervailing duty (CVD) investigations on imports of U.S. sorghum into China. U.S. sorghum had never been investigated in international trade up until this point. Our day suddenly looked very different.
The case language found on the Ministry of Commerce of the People’s Republic of China (MOFCOM) website was sent to the United Sorghum Checkoff Program’s legal counsel and NSP’s counsel and Washington representatives, who were also preparing for the week’s legislative fly-in. Our talking points for the week, which were already prepared and distributed, needed to change immediately.
Both the NSP and USCP board of directors were notified on the action taken by MOFCOM. The email began, “I hate to bring this news to you on a Sunday morning, but unfortunately our concerns have come true.”
The facts of the case were gathered, and staff went to work putting together a list of contacts to set up meetings with the following day—law firms that specialized in international trade and have experience with China topped the list.
An initial general press statement was formalized and distributed to key staff spokespeople between NSP and the U.S. Grains Council (USGC). It was only a matter of time before the press began calling.
NSP and USCP had a board and staff-wide briefing call. Then we prepared for what Monday would inevitably bring.
The first press inquiry came at 4:30 a.m. Monday, Feb. 5, followed by the Wall Street Journal, Bloomberg News and the Washington Post, to name a few, plus countless farm media.
It was clear U.S. sorghum was a small, initial part of a much larger picture. As word about the investigations spread, the market quickly reacted, dropping substantially. Even though it began to stabilize by Thursday (Feb. 8) and bids were re-established, the price to the farmer and export premiums decreased significantly, creating an untold financial impact on producers across the Sorghum Belt.
NSP, working closely with the USGC, set in motion a strategy to respond to the announcement of AD and CVD investigations into imports of U.S. sorghum by the Chinese government. NSP released a statement announcing NSP will participate fully in the investigations to demonstrate U.S. sorghum farmers do not dump products into China or elsewhere and that U.S. sorghum is not unfairly subsidized. NSP also pointed to the industry’s long-standing relationships with valued Chinese partners.
NSP’s fly-in strategy quickly adapted to the issue at-hand, and the approximate 100 meetings slated with the White House, USDA officials, Members of Congress and their staffs were utilized to explain the action being taken by the Chinese government and the value of the markets U.S. sorghum producers have established in China.
NSP hired Hogan Lovells, an international law firm headquartered in Washington, D.C., which specializes in international trade cases, including two distillers grain cases and an airline case—all with China. NSP and Hogan Lovells have diligently stepped through the different phases of the case, working closely together with sorghum farmers, the grain trade, USGC, U.S. Department of Agriculture and U.S. Trade Representative.
The past two months have been demanding. Sorghum staff has spent countless hours in the office and on the road, collecting farmer data from a representative sample of growers to develop a defense on behalf of U.S. sorghum producers.
NSP was advised the entire process typically takes 12-18 months. At press time, NSP stands at an April 4 deadline with a response more than 2,000 pages in length. This was vigorously compiled in the last 60 days. Also at press time, additional potential future tariffs were announced by the Chinese government further escalating this trade situation. Although we continually find ourselves in unchartered territory, Hogan Lovells’ experience and collaboration with our partners in the sorghum industry have been instrumental in getting us to this point. Hopefully there is resolve to this situation sooner rather than later.
Please know NSP is working hard on your behalf as we walk through this difficult situation together. There is a tremendously long list of people to thank for the accomplishments of the last 60 days, and we expressly show our gratitude to the growers who answered the call to be a part of this case on behalf of their fellow producers.