READ the NAFB’s National Ag News for Monday, December 3rd
Sponsored by the American Farm Bureau Federation
BREAKING AG NEWS OVER THE WEEKEND
Flurry of Action Holds Major Ag Implications
A flurry of activity over the last week could bode well for agriculture. Over the weekend, President Trump met on the sidelines of the G20 Summit with China, which has since agreed to purchase more U.S. ag products. Trump also agreed to not increase tariffs on China in January. Meanwhile, following the signing of the U.S.-Mexico-Canada Trade Agreement, Trump said he wants to terminate the North American Free Trade Agreement in six months, which will be replaced by the USMCA. The move to terminate NAFTA is an effort to pressure the next Congress to approve the USMCA. Lawmakers could also soon take up the farm bill, which some thought could come this week, though the schedule of Congress is muddied by the passing of President George H.W. Bush, who will lie in state in the U.S. Capitol Rotunda for a portion of this week. Trump also said he may also be willing to allow an extension to appropriation bills that are needed by Friday, which include funding to the Agriculture Department, because of the expected limited schedule this week for Congress. All this comes as a fresh farm economic forecast predicts that farm income could drop another 12 percent in the next year.
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USMCA Agreement Officially Signed at G20
U.S. President Donald Trump joined leaders from Mexico and Canda in signing the new U.S.-Mexico-Canada Free Trade Agreement. Trump gathered together with Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique (ehn-REE-kay) Pena (PAIN-yah) Nieto (nee-EH-toh) on the sidelines of the G20 meeting going on in Buenos Aires. The revised agreement will replace the North American Free Trade Agreement. At the signing, Trump says the new agreement will “change the trade landscape forever.” Now comes the challenging part: lawmakers in each country still need to ratify the agreement. That may prove to be extra difficult in the U.S. because Democrats are taking control of the House of Representatives in January. Several Democrats have already been very vocal in wanting changes to the agreement. The CBC news website says the final vote could even be close in the U.S. Senate. Some Republican Senators have been critical of Trump’s trade policies. However, under the rules of fast-track authority, changes are not supposed to be made after a legal document has been officially signed.
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Ag Reacts to USMCA Signing
Ag groups responded to the U.S., Mexico, and Canada signing the updated North American Free Trade Agreement, called the USMCA. Kevin Kester, President of the National Cattlemen’s Beef Association, says “U.S. beef producers are one step closer to “unrestricted, science-based trade continuing in North America.” Kester says the agreement brings the trading relationship with U.S. neighbors into the 21st-century. The National Association of Wheat Growers and U.S. Wheat Associates say this is good news for wheat producers. Most notably, the USMCA gives tariff-free access to imported U.S. wheat for long-time flour-milling customers in Mexico. Senate Ag Committee Chair Pat Roberts says the signing marks an important step toward Congress considering the new agreement, which he’s looking forward to in the new year. U.S. Ag Secretary Sonny Perdue says the agreement secures greater access to the Mexican and Canadian markets and lowered barriers for many American products. At the other end of the spectrum, the National Farmers Union says the USMCA does make important improvements over NAFTA. However, it doesn’t go far enough to institute a fair-trade framework that benefits family farmers and ranchers and restores U.S. sovereignty. NFU president Roger Johnson wants changes before Congress ratifies the agreement.
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EPA Releases Biofuel Targets for 2019
The Environmental Protection Agency released its 2019 renewable volume obligations under the Renewable Fuels Standard. EPA boosted final RFS volumes slightly from its earlier proposal to nearly 20-billion gallons next year. That includes up to 15 billion gallons of mostly corn ethanol, nearly 5 billion gallons of advanced biofuel, over 2 billion gallons of biodiesel, and 418 million cellulosic gallons. Overall levels next year will be three percent higher than in 2018. Reaction to the news was mixed from various Ag groups. Growth Energy CEO Emily Skor says, “The latest EPA rule is also a missed opportunity to correctly account for billions of gallons of ethanol lost to refinery exemptions.” Until those lost gallons are taken into account, she said it’s “two steps back for every step forward.” The National Biodiesel Board says EPA sets the advanced biofuel and biomass-based diesel volumes lower than what the agency acknowledges will be produced. The NBB also says the rule leaves open a backdoor to retroactively reduce required volumes through hardship waivers. Iowa Senator Chuck Grassley says the total approaches 20 billion gallons. “The biofuel blending levels for 2019 are good news for farmers, biofuels producers, and all Americans,” he said. “The increased levels are an encouraging development after a year of often disappointing news from the EPA,” Grassley says.
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China Buys U.S. Pork Despite Tariffs
The African Swine Fever outbreak is forcing China to buy more U.S. pork in spite of high tariffs imposed during the trade war between the two countries. China, the world’s biggest pork producer and consumer, placed its largest order for U.S. pork since the trade war began. A Reuters article says the purchase seems to signal that China has serious concerns about supply shortages due to the disease outbreak. Brokers and traders both say that could be potentially superseding trade tensions. During the tit-for-tat trade war, China has imposed a tariff of 62 percent on imports of American pork. U.S. President Donald Trump and Chinese President Xi Jinping were scheduled to meet and discuss trade tensions during the G20 meeting over the weekend in Buenos Aires. For the week ending November 22nd, China bought more than 3,200 tons of pork to be shipped this year. USDA data shows that’s the biggest purchase of the season since February. China also bought close to 4,000 tons of pork to be delivered in 2019. Brett Stuart, President of Global AgriTrends, says pork is abundant in China right now and prices are low. However, he adds “that doesn’t mean there will be plenty of pork in China next year.”
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White House Won’t Stop Farm Bill over Forestry
President Donald Trump won’t stop the farm bill over forestry concerns. An inside source told the Hagstrom Report that he’ll direct Ag Secretary Sonny Perdue to use all the tools at his discretion to suppress forest fires. Perdue and Interior Secretary Ryan Zinke said the final farm bill should include provisions in the House-passed version that would increase government agencies’ authority to clear forest floors and thin trees. The White House says it won’t insist on those additions because Senate Majority Leader Mitch McConnell doesn’t want to make forestry the defining issue of the new farm bill. The Hagstrom Report was made aware of the White House position hours after the chairs and ranking members from the Senate and House Ag Committees announced an agreement in principle on the new bill. Several steps still remain before the bill gets to President Trump for his signature. The joint statement from the Ag Committee leaders says they’re committed to getting a new farm bill delivered to America as quickly as possible.
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NFU Unhappy with GIPSA Agency Elimination
The U.S. Department of Agriculture announced it will eliminate the Grain Inspection, Packers and Stockyards Administration as a standalone agency. USDA will consolidate the GIPSA functions into the Agricultural Marketing Service. National Farmers Union President Roger Johnson said the timing of this announcement doesn’t benefit family farmers. “At a time when just a handful of companies control all of the markets that supply and buy from family farmers and ranchers, the elimination of GIPSA is a big step in the wrong direction,” says Johnson. “The agency’s statutory duty is to ensure fair and competitive markets for family farmers.” Johnson adds that this decision comes on top of USDA’s decision to withdraw the Farmer Fair Practices Rules, which would have given American family farmers the most basic protections against abusive and undue practices levied against them by companies that hold substantial market power. “Farmers Union strongly encourages USDA to reconsider both of these decisions that undermine competition and place family farmers and ranchers at a significant disadvantage in the marketplace,” says Johnson.
