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READ the NAFB’s National Ag News for Thursday, August 22nd
USDA Mailing Trade Aid Checks
Farmers are seeing payments from the first round of the latest trade aid in the mailbox. Farm Service Agency director Richard Fordyce says the first payments are being mailed out now, and farmers are reporting receiving the checks. Round one of the three potential payments is 50 percent of the overall amount farmers may receive. USDA expects up to $14.5 billion of payments will be sent to farmers, pending on the trade negotiation progress. Another 25 percent of the total would go out later this fall, if the Department of Agriculture deems the payments necessary. The final round, if needed, is planned for some time around January. The payments are meant to offset the losses stemmed from the Trump trade agenda and trade war with China. Payments range from $15 to $150 per acre, depending on location. Payments are also available for dairy and hog producers, under certain reporting parameters. This is the second time the Trump administration has used the Market Facilitation Program since the trade war with China began.
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CBO: Trade War to Slow Economic Growth
The bipartisan Congressional Budget Office says the trade war will slow economic growth, adding more fears of a possible recession. The CBO says tariffs, which reduce U.S. gross domestic product through higher prices, reduces consumer purchasing power. The report predicts the economy will grow at 1.8 percent per year over the next decade, below historical average growth rates. Agriculture has already seen the impact of tariffs stemming from the trade war. Agricultural sales to China dropped more than 50 percent since the trade war began, and China recently announced it would no longer buy U.S. ag products. However, a range of developments, such as unexpected changes in international conditions, could make economic outcomes differ significantly. For example, if new trade agreements lowered trade barriers, economic growth could be faster than projected. Conversely, if trade barriers rose higher, domestic investment and output could be slower than projected. Previous private firm reports have suggested the U.S. will enter a recession within the next year if the trade war escalates.
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Canada-China Relations Strain over Politics, Trade
While the U.S. continues its trade war negotiations with China, Canada’s relations with China are straining, as well. Canadian Prime Minister Justin Trudeau says Canada’ won’t back down’ to various disputes with China. Meanwhile, China, which has made a similar warning to the U.S., tells Canada comments regarding the unrest in Hong Kong are not welcome. Specifically, China says, “Hong Kong affairs are purely China’s internal affairs.” China hopes Canada can “reflect on its wrongdoing,” regarding Hong Kong and other issues, including those that now impact agricultural trade. China has detained two Canadian citizens and halted imports of canola seed and meat products from Canada. The move was in response to Vancouver police detaining a senior Huawei (Wah-Way) executive on a U.S. arrest warrant in December. China imported 4.8 million metric tons of Canadian canola in 2018, and 1.1 million metric tons of canola oil, supporting more than 16,000 Canadian jobs. China is typically the largest market for Canadian canola, and Canada is the world’s largest producer of canola.
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U.S. Wheat: Trade Deal with Japan Would Ensure Competitiveness
U.S. Wheat Associates says a trade deal with Japan would allow U.S. wheat to fairly compete with wheat from other nations exported to Japan. Currently, under the Comprehensive and Progressive Trans-Pacific Partnership, Japan’s effective tariffs on Canadian and Australian wheat imports are discounted and will continue being discounted to the tariff on U.S. wheat imports. Japanese flour mills prefer and choose to source 50 percent of their annual needs, almost three million metric tons per year on average, of wheat from the United States. However, the CPTPP will grant preferential access to Canada and Australia by reducing the effective tariff on their wheat, eventually a reduction of about $70 per metric ton, or 45 percent below the current tariff on U.S. wheat. A bilateral trade agreement with Japan, which the Trump administration is working on, could reduce the tariff level on U.S. wheat, according to the organization. The U.S. lost the opportunity to level tariffs with other markets when the U.S. left the then-called Trans-Pacific Partnership.
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Soy Groups Seek Meeting with Trump on Waivers
The National Biodiesel Board and American Soybean Association have requested a meeting with President Donald Trump to discuss small refinery exemptions. In a letter to the President, NBB CEO Donnell Rehagen (don-NELL Ray-HAY-gen) and ASA President Davie Stephens detail the damage the waivers have dealt the biofuels industry and farmers. The letter, noting the conditions in farm country, says that while many fear an economic recession within the next year, farmers are “already facing a severe economic downturn.” The two groups conclude the letter with a request to meet with the President: “We would appreciate an opportunity to discuss how the administration can repair the uncertainty.” President Trump held a meeting earlier this week to find ways to smooth over farmer anger, specifically related to the small refinery waivers. Biodiesel and ethanol groups start with asking for a reallocation of waived volumes, now estimated at more than four billion gallons. More than 15 ethanol plants have shut down, blaming the demand destruction caused by the waivers.
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Senators Request USDA IT Review from GOA
As farmers report information technology problems with Department of Agriculture programs, two farm-state senators are asking the Government Accountability Office to investigate. Senate Democrats Debbie Stabenow and Gary Peters, both of Michigan, penned a letter to the GAO this week seeking the review. In 2017, Agriculture Secretary Sonny Perdue announced a major IT modernization at USDA to ensure better customer service to America’s farmers and ranchers. Part of the modernization was the combination of and modernization of the IT systems of three agencies which impact farmers and ranchers most directly. The letter states, “we are particularly interested in whether the changes have improved, interfered with, or added risks for the successful and timely implementation of the 2018 Farm Bill.” Michigan dairy farmers have reported to the Senators that IT problems made signing up for the new Dairy Margin Coverage program a challenge. Some farmers even report enrollment took multiple trips to Farm Service Agency offices complete because of IT challenges.
