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READ the NAFB’s National Ag News for Tuesday, August 27th
Japan Agreement to Restore U.S. Benefits in TPP
The trade agreement announced over the weekend between the U.S. and Japan should close the tariff gap created when President Trump removed the U.S. from the Trans-Pacific Partnership. Details have yet to be announced, but agriculture groups expect the tariff levels to be comparable to those of other nations who continued the TPP negotiation without the United States. While there are details yet to be worked out, U.S. Grains Council CEO Ryan LeGrande says, “lowering market access barriers with one of our most valuable and loyal grain buyers is a critical win-win.” LeGrande says the deal will level the playing field for U.S. agriculture. The agreement is expected to be finalized and signed late next month in conjunction with the United Nations General Assembly meeting. Meanwhile, following last week’s turbulent developments in the trade war with China, President Trump Monday said the two sides would resume negotiations. China announced retaliatory tariffs Friday, including increased tariffs on U.S. ag products, prompting Trump to do the same.
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U.S. Farms Paying Cost of Retaliatory Tariffs
U.S. farmers are taking the brunt of retaliatory tariffs, according to a recent CoBank report. The report confirms what the industry has pointed out over the course of the trade war, that China is targeting U.S. farm products in retaliation. In an analysis of 11 U.S. agricultural commodities representing a cross-section of agricultural exports, U.S. producers – not the importing country or its consumers – paid much of the cost of these tariffs in all but two cases. CoBank says the impact of retaliatory tariffs placed on U.S. farm products reflects the lopsided balance of power between U.S. producers and their importing customers. The nature of agricultural products, inventories with long shelf lives, and ease of identifying and sourcing suitable substitutes are among the factors that give importing customers the upper hand. The report says that with the prospect of declining bargaining power, U.S. producers of most agricultural commodities will face pressure to absorb more of the costs of retaliatory tariffs in the future.
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Amazon Fires Could Alter Global Soy Trade
Fires in the Amazon are likely to alter global soy trade in the future. Jim Bower of Bower Trading points out in his daily newsletter that many of the fires are started by humans to clear the land for crops. More than 75,000 fires have been reported since January, an 84 percent annual increase. Bower suspects that China is behind the increase as the trade war between the U.S. and China is escalating. China, the world’s largest consumer of soybeans, is seeking alternate markets after blocking imports from the United States, even though China made small purchases of U.S. soybeans last week. The land clearing of the Amazon is seen as a way to capture soy demand previously filled by U.S. producers. If true, the increase in production area in Brazil could permanently change soybean trade. The fires had the attention of the G7 Summit in Europe, with some nations saying they would block a trade agreement between the European Union and Brazil until Brazil takes action.
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Ethanol Plant Representatives Ask Trump to Stop EPA Waivers
The ethanol industry is asking President Trump to restore biofuel demand that was damaged by small refinery waivers. The Waivers exempt refineries from the Renewable Fuel Standard, and effectively reduce the blending targets set under the RFS, according to Growth Energy. On Monday, the group, along with several workers from ethanol plants across the county, penned a letter to Trump asking the President to restore the demand. The letter points to the billions of gallons of “lost” biofuel demand, leading to ethanol plants idling production or shutting down. Each time a plant idles production, the letter states that “farmers are notified that biofuel producers can no longer accept grain deliveries, and the impact has been devastating for communities already on the edge.” Farm income is now down by half since the start of this year alone, according to the Bureau of Economic Analysis. Growth Energy CEO Emily Skor says the EPA “must immediately repair the damage from abusive refinery exemptions and get lost gallons back into the marketplace.”
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Trump Signs Family Farmer Relief Act
President Trump last week signed the Family Farmer Relief Act of 2019. The law raises the Chapter 12 debt limit from $4.1 million to $10 million. The bipartisan bill “will help family farmers reorganize after falling on hard times,” according to American Farm Bureau Federation President Zippy Duvall. The law allows more farmers the opportunity to qualify under Chapter 12 bankruptcies and gives producers and their creditors a better chance to reorganize and avoid mass liquidation. A recent AFBF analysis found the delinquency rates for commercial agricultural loans in both the real estate and non-real estate lending sectors are at a six-year high. The bill was introduced this spring and passed both chambers of Congress earlier this month. House sponsor, Representative Antonio Delgado of New York, says the changes reflect the increase in land values, as well as the growth over time in the average size of U.S. farming operations and are meant to provide farmers additional options to manage the downturn in the farm economy.
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Sorghum Checkoff Hosts International Buyers
The Sorghum checkoff Monday welcomed a group of international buyers interested in grain sorghum as part of the Export Sorghum event. The one-day expo in Dallas, Texas, included more than 65 international buyers. Sorghum Checkoff executive director Florentino Lopez says the event “serves as our opportunity to share the value of U.S. sorghum.” Export Sorghum is centered around creating networking opportunities while providing buyers with information to help them make sorghum the “smart choice” for their feed grain solutions. Attendees of the event also tour parts of the U.S. to experience sorghum production and the value chain firsthand while developing relationships with U.S. sorghum farmers and suppliers. The Sorghum Checkoff says sorghum has proven to be a reliable ingredient across several industries including swine, poultry, beef, dairy and human food, increasing export opportunity. The event was held in conjunction with the United Sorghum Checkoff Program, in coordination with the U.S. Grains Council, Kansas Grain Sorghum Commission and Texas Grain Sorghum Producers Board.
