Why Chinese Amino Acids are a Threat to America's Food Supply
While most people are aware of battles over Chinese toys and electronics, trade disputes enter into all sectors of the American economy, including the very food we eat.
In the last few years, the U.S. has seen a sharp increase in imports of amino acids from China. Farmers use amino acids to supplement feed for livestock. While the resulting prices drops have allowed American farmers some money, they could also be left dangerously vulnerable should the Chinese government decide to wield amino acid exports as a strategic weapon, as it has done with other critical exports. Our government should take steps to ensure this doesn’t happen.
The influx in imports has buffeted domestic producers of amino acids. My colleague Russell Kashian, a professor at the University of Wisconsin Whitewater, and I studied the U.S. amino acid market in light of the import surge and found that it poses a threat to the entire domestic industry, which produced over $3 billion of output last year and supports nearly 30,000 jobs. Nearly all of these American jobs would be at jeopardy if present trends continue.
We believe that the surge in Chinese imports merits closer study by the U.S. Trade Representative Katherine Tai via a Section 301 investigation. The issue is that the cessation of domestic production of amino acids would be potentially problematic for U.S. farmers, especially if the remaining suppliers were all located in China: Given its critical importance to farmers and the U.S. agricultural economy, leaving U.S. farmers wholly dependent on supply from a country with a government that manipulates markets for geostrategic reasons would be highly problematic.
To fully understand the threat posed by Chinese amino acids, it is necessary to understand the basics. Most farmers in the U.S. supplement the feed they provide their animals with amino acids, which improve animals’ health, size, and productivity: for instance, it causes chickens to produce more and bigger eggs. (Bodybuilders also consume amino acids to help them grow muscle as well, but this is a distinct market.)
Until recently most amino acids consumed in the U.S. were produced domestically in the Midwest. However, three years ago a pandemic decimated the Chinese population of hogs, which in turn reduced demand for amino acids in China.
Chinese amino acid producers suddenly found themselves with a large surplus of threonine, which is the amino acid that chicken and pigs typically consume. Their response was to sell their surplus in the United States, which appears to us to be a textbook action for a Section 301 investigation.
I suspect that Washington has yet to act because lower amino acid prices benefit farmers, but the fact that the import surge is coming solely from China should induce it to give further study to the situation. The market resembles the rare earth conundrum currently facing the electric auto industry: Because lithium and other metals are produced and processed almost wholly in China, the entire industry is now dependent upon its government’s predilections, and the U.S. government has been encouraging domestic producers to quickly invest to begin production in the U.S. to lessen this problematic dependence.
It's time to use this same rationale for Chinese amino acids.
Ike Brannon is a former senior economist for the United States Treasury and U.S. Congress.