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READ the NAFB’s National Ag News for Monday, February 4th
Trump Optimistic on Trade Deal With China
U.S. President Donald Trump expressed some optimism on Thursday about potentially reaching a trade deal with China. However, in the same breath, the New York Times says the president may consider leaving some tariffs in place even if the two sides eventually come to a landmark deal. “Without the tariffs, we wouldn’t even be talking,” Trump says in an interview with the Times, conducted after two days of trade talks wrapped up. “And I made that point very clear to them.” Trump says he plans on meeting with Chinese President Xi Jinping next month, and the U.S. President says China was prepared to make “some significant changes” to Beijing’s economic policies. Some of the changes include better market access for American companies, as well as buying more American products. The president had a letter from President Xi read aloud for reporters, and it included a commitment to buy five million tons of soybeans. That caught administration officials a little off guard. U.S. Trade Representative Robert Lighthizer was more guarded in his tone, saying the two sides haven’t put together the framework of an agreement yet. He did say the main achievement so far was, “that the two sides are still talking. It didn’t come off the rails.”
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USDA Gives $200 Million To Help Promote Overseas Trade
Ag Secretary Sonny Perdue announced that his department awarded $200 million to 57 organizations through the Agricultural Trade Promotion Program. The Hagstrom Report says the goal is to help U.S. farmers and ranchers find and get into new export markets around the globe. The promotion funds are part of the package that also included the Market Facilitation Program payments to farmers hurt be retaliatory tariffs, as well as a food distribution program to assist producers of targeted commodities. In making the announcement, Perdue made a thinly-veiled reference to China by saying, “This infusion will help us develop other markets and move us away from being dependent on one large customer for our agricultural products. This is seed money, leveraged by hundreds of millions of dollars from the private sector that will help to increase our agricultural exports.” Every sector of U.S. agriculture was allowed to apply for cost-share assistance under the program. The Foreign Agricultural Service looked at all the applications in terms of the potential for export growth in the target market, direct injury from the imposed retaliatory tariffs, and the likelihood that the proposed project will have a direct impact on agricultural exports. The Trade Promotion Program provides assistance to eligible groups for things like consumer advertising, public relations, point-of-sale demonstrations, trade fair participation, and market research.
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Ag Groups Pleased With Trade Promotion Funding
The U.S. Meat Export Federation was one of the 57 groups to receive trade promotion funding from the USDA’s Foreign Agricultural Service. USMEF President and CEO Dan Halstrom says they appreciate the Trump Administration’s recognition of the extremely competitive environment U.S. agricultural products face in the global marketplace. “The administration also appreciates how changes in trading partners’ tariff rates can put these products at a significant disadvantage,” Halstrom says. “This funding will help us defend existing market share and develop new destinations for U.S. agricultural produtcs.” U.S. Wheat Associates (USW) and the National Association of Wheat Growers are also pleased that the nation’s wheat growers now have an opportunity to increase efforts to expand export market access, thanks to the $200 million in funding given to the 57 organizations. “U.S. wheat growers are facing tough times right now with the impact of retaliatory tariffs putting a strain on the export market and threatening many decades worth of market development,” says USW Chair Chris Kolstad. The United States exports half the wheat crop it grows so programs like the Agricultural Trade Promotion Program are crucial. “The program helps our farmers to remain competitive in the global market,” says NAWG President Jimmie Musick. “We are pleased that our sister organization, U.S. Wheat Associates, was awarded significant funding for trade mitigation activities.”
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Better Days Coming for Chicken Producers
Chicken, pork, and beef producers should all see better days over the next 12 months in spite of specific challenges in each segment. The industry website Meating Place Dot Com notes one industry analyst, Jeremy Scott of Mizuho Securities, who says the worst is behind us in the chicken market. That specific market segment had one of its most difficult stretches in the last five years during December and January. Scott says a “substantial improvement” in U.S. chicken profit margins will be powered by better exports and a less-than-expected ramp up in new capacity. He says poultry margins are starting to move higher during a faster-than-expected price recovery and a boost in chicken products featured in both restaurants and retail establishments. Looking at other protein sectors, Scott sees beef packer margins continuing to trend favorably this year. That’s in spite of being off their seasonal highs and featured support at the retail level is beginning to shift away from beef and to chicken. A healthy animal supply and solid exports should continue to support the higher-than-normal packer margins over the next six months. As for the pork sector, the African Swine Fever virus will put a healthy dent in China’s hog population. However, he says there likely won’t be a significant jump in Chinese pork imports until ASF is under control and the transportation and trade restrictions are ended.
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“Fake Meat” and Trade Are Two of NCBA’s 2019 Policy Priorities
The National Cattlemen’s Beef Association went public with its new list of policy priorities in the year ahead. The announcement was made during the annual NCBA convention and trade show. It includes some familiar issues and some new priorities as well. The NCBA policy book will focus on four main areas. The first is fake meat. Last year, NCBA was successful in arguing that USDA should have jurisdiction over lab-produced and plant-based meats. This year, they’ll work to ensure the proper regulatory framework is in place to protect the health of consumers, prevent deceptive marketing, and ensures a level playing field for traditional beef. The second priority is trade and market access. Among the biggest priorities for NCBA, the organization wants a bilateral trade deal with Japan, as well as rapid Congressional passage of the USMCA agreement. The third priority is dietary guidelines, which the government updates every five years and will do so again in 2019. NCBA wants accurate information in place about the nutritional advantages of beef. The fourth priority is regulatory reform and implementation. This includes full implementation of the new farm bill, as well as getting a permanent solution in place for the overly-restrictive Hours of Service rule for livestock haulers and a new water rule to replace the 2015 WOTUS rule.
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Brazil Restarting High-Level Trade Talks with China
Brazil and China are looking to hold the first high-level political and economic talks they’ve had since 2015. A Reuters article says Brazil’s agricultural trade secretary expects the move will boost farm trade between the two countries. Reuters says the first meeting of the China-Brazil High-Level Coordination and Cooperation Committee is expected during the second half of this year. The meeting will likely move talks forward on permitting more Brazilian meatpackers to export to China. It should also accelerate Chinese approval of genetically modified products. China is Brazil’s largest trading partner and the top importer of Brazilian soybeans. Brazil exports to China totaled $64.2 billion last year, a 35 percent jump year-over-year, thanks in large part to the trade war between China and the U.S. China recently sent a delegation to Brazil to visit factories that produce beef, poultry, and donkey. The visual inspection is the first step in the process of allowing more Brazilian plants to export to China. Brazil has products that have been waiting two years for Chinese officials to approve them for importing.
