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China to Make Countermeasures to U.S. Tariffs, Despite Announced Delay

4 years, 7 months ago AFBF

China plans to retaliate against the latest round of U.S. tariffs, despite Trump's announced delay of implementation. Originally planned for September 1, the ten percent tariffs are delayed until December 15, to avoid impacting holiday shoppers, according to Trump. China vows to counter the latest round of tariffs that will total $300 billion once fully implemented. The Chinese finance ministry says the tariffs “violated a consensus reached between Trump and Chinese President Xi Jinping (Shee Jihn’-ping)" reached in June, according to Reuters. Negotiators spoke over the phone this week and still plan to meet in September in Washington. However, the tariff threat from Trump and China's vowed retaliation, along with developing unrest between China and Hong Kong, have sparked fear in financial markets the talks may again fail. Financial analysts have predicted that the trade war would lead to a U.S. recession in the next year, if escalated. Agriculture is facing the brunt of China's retaliation with China recently stopping the purchases of U.S. agricultural products.

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ASF Yet to Impact Pork Pricing

African swine fever has yet to inflate pork prices. As a result, an industry analyst has lowered the earnings estimate for Hormel Foods in the third quarter of 2019. Stephens Inc predicts any “protein inflation” among U.S. producers has shifted to fiscal 2020 from 2019. Meat industry publication Meatingplace reports that has left Hormel to contend with price increases it launched to offset inflation that never occurred. Hormel risks losing volume share to competitors if it doesn’t walk back the current price increases for pork. However, such a move would conflict with the ability to raise prices once the inflation arrives next year. African swine fever seems destined to cut China’s hog production in half, according to researchers at Rabobank. That would equate to roughly 300-350 million pigs, or a quarter of the world’s pork supply. China still has an ample amount of pork supplies, but supplies are starting to run short, leaving China to consider imports of pork, which would, in turn, increase global prices.

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USDA Defers Interest on Insurance Premiums

The Department of Agriculture will defer accrual of interest for all producers’ spring 2019 crop year insurance premiums. USDA says the move will help farmers impacted by extreme weather this year. USDA will defer the accrual of interest on spring 2019 crop year insurance premiums to the earlier of the applicable termination date or for two months, until November 30, for all policies with a premium billing date of August 15, 2019. For any premium that is not paid by one of those new deadlines, interest will accrue consistent with the terms of the policy. One of the largest operating costs for producers is crop insurance premiums paid to their Approved Insurance Provider. Many spring crop insurance premiums are due before October 1. Without the interest deferral, policies with an August 15 premium billing date would have interest attached starting October 1 if premiums were not paid by September 30. Now, policies that do not have the premium paid by November 30 will have interest attached on December 1, calculated from the date of the premium billing notice.

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Drought Expands to Half of Midwest I-States

Roughly half of the Midwest “I states" are experiencing some form of drought. The weekly Drought Monitor reports drought conditions in 44 percent of Illinois, 51 percent of Indiana and 52 percent of Iowa. The total area enduring abnormal dryness and drought increased this week, most noticeably in the Ohio Valley, the Midwest, and Texas. The Drought Monitor reports the last 30 days brought only 0.5 to 2.0 inches of rain to a broad strip from central Iowa through western Indiana, in addition to east-central Michigan and the eastern half of the Upper Peninsula. The drought follows the wettest twelve-month period on record, followed by the hottest two months around the globe on record. The National Oceanic and Atmospheric Administration reports the period from January through July produced a global temperature that was 1.71 degrees Fahrenheit above the 20th-century average of 56.9 degrees, tying with 2017 as the second-hottest year to date on record. July 2019 was recorded as the hottest month ever on record, followed by June.

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NCGA: Following Labels Remains Critical Through Entire Growing Season

The National Corn Growers Association says following pesticide labels is critical through the end of the season. As harvest season slowly begins, NCGA says it’s important to pay close attention to preharvest interval requirements. These requirements are designed to ensure that any potential traces of the product left behind are at levels that will not cause disruptions in trade. Every pesticide has a maximum residue level specific to each crop for which it is labeled. The levels are a measurement of acceptable pesticide residues, set far below toxicological safety limits, for every product treated with pesticides. Those limits provide a standard to help ensure that food treated with pesticides is safe for consumption and ultimately verify that farmers have used crop protection products correctly. Especially in international markets, if shipments are tested and the level for one or more pesticides is exceeded that delivery may be rejected. While the instances are rare, NCGA encourages farmers to continue to use responsible application practices to avoid rejected exports.

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Agricultural Retailers Association Supports Hours of Service Reforms

The Agricultural Retailers Association supports the proposed reform to hours of service published this week by the U.S. Department of Transportation. The DOT’s Federal Motor Carrier Safety Administration says the proposed changes will improve safety and flexibility for commercial drivers. ARA says the reforms, including the short haul exemption expansion for CDL drivers to 150 air miles, and the expansion of duty hours from 12 to 14 hours, “will provide necessary flexibility” for ARA members to meet the needs of their customers, and do so safely. The proposed rule offers five key revisions to existing hours of service rules such as requiring a minimum 30-minute break for each eight hours of consecutive driving and allowing drivers to use the "on duty, not driving" status rather than the "off duty" status during breaks. It’s estimated the proposal will save consumers and the U.S. economy an estimated $274 million and improve safety for all drivers on the Nation's roadways, according to the Department of Transportation.

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The GOP Chair of the Senate Finance Committee which oversees trade, says Democrats should support the U.S. Mexico-Canada trade deal, especially since one of their own, and a top name in the party and the first presidential caucus state, backs it.

Finance Chair Chuck Grassley says former USDA Secretary and past Iowa Governor Tom Vilsack is a top reason Congressional Democrats and those running for president, should vote to ratify USMCA…

“Vilsack, the number one Democrat in the state of Iowa, has had several statements, including a news conference, of how important it is to get the USMCA done. So, if the number one Democrat, whose been Governor and Secretary of Agriculture, knows the value of it for agriculture, why would they have any questions about supporting it.”

Now-Export Dairy Council chief Vilsack told Grassley’s Senate Finance Committee just a couple of weeks ago…

“I have a simple message for the committee—exports matter to (the) American food and agriculture industry. Thirty percent of all agriculture production, and 20-percent of all agricultural income, is directly related to exports. It helps to support, with 140-billion dollars of activity, nearly a million good-paying jobs.” 

As for exports to Mexico and Canada…

 “28 percent of all food and agriculture exports go to Mexico and Canada. Between 40 and 45-billion dollars, five-times what it was when NAFTA was first enacted. For many commodities, Canada and Mexico represent their top markets.”

The U.S. International Trade Commission projects 2.2 billion in added ag and food income from USMCA, whose fate now rests with House Speaker Nancy Pelosi and her veto power over whether to move ahead with ratification.

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