5 years, 6 months ago AFBF
The farm bill and the North American Free Trade Agreement seem certain not to meet the weekend deadline, leaving more uncertain times for agriculture. Negotiators were trying to reach an agreement on the farm bill this week, but the clock is all but out of time as the current bill expires Sunday. Monday means critical trade programs will not have funding, including the Market Access Program and the Foreign Market Development program, seen as key units of USDA given the current trade climate. Leaders of the farm bill conference committee met Wednesday and are not ready to offer an extension on the current farm bill. House Agriculture Committee chairman Mike Conaway says “the world didn’t stop turning” when previous farm bills expired without a new law in place. Conaway told Politico “putting this off makes no sense whatsoever,” adding “the decisions to be made are on the table.” Adding further uncertainty, the U.S. is likely to forge ahead with its handshake agreement with Mexico on NAFTA, leaving Canada behind, for now. Regarding NAFTA, dairy is one of the main holdups, as the U.S. wants better market access.
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U.S. Says Canada Not Making Needed NAFTA Concessions
U.S. Trade Representative Robert Lighthizer charges Canada is not making needed concessions to strike a deal on the North American Free Trade Agreement. As the U.S. ideal deadline will pass this weekend, the U.S. is gearing up to move forward with a Mexico-only agreement. Lighthizer said there was “some distance” between the two sides on issues such as access to Canada’s dairy market and how best to settle trade disputes, according to AgCanada. Lighthizer says the U.S. believes the concessions are “essential” to reaching an agreement. President Trump has demanded changes in NAFTA, including making dairy a top priority, asking for more market access to Canada, and an end to the Class 7 product dumping on the global market. The Trump administration says the text of a deal is needed by Saturday to allow the Mexican government to sign it before leaving office on November 30th.
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U.S., Japan, Agree to Negotiate Trade Agreement
The United States and Japan announced Wednesday the two nations would seek a free trade agreement. President Donald Trump and Japan’s Prime Minister Shinzo Abe (Sheen-zoh-ah bay) announced the two nations will soon begin negotiations. Japan has previously feared a bilateral agreement, and instead urged the U.S. to rejoin the Trans-Pacific Partnership. Japan is thought to block opening of its agricultural markets to the U.S. through a two-nation pact, and instead opt for TPP. Following the announcement, Agriculture Secretary Sonny Perdue stated the talks are “welcome news since we know that export income is critical to the financial health of agriculture and is a key contributor to rural prosperity.” Perdue called Japan an important customer for U.S. farmers and ranchers. Perdue also called the announcement “proof” that President Trump’s approach to trade will “benefit our entire economy, including the agricultural sector.”
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China Passing on U.S. Soybeans, Purchasing from Brazil
China soybean processors are purchasing record volumes of Brazilian soybeans and cutting purchases of U.S. soybeans. U.S. soybeans face steep tariffs in China thanks to the ongoing tit-for-tat trade war between the U.S. and China. A Singapore-based trader told Reuters that China is “willing to pay higher prices for Brazilian beans than what domestic crushers are paying.” Brazil’s typical soybean export season ends in September, and the U.S. provides to the market through March. However, China is importing a record 14 million metric tons of Brazilian soybeans for arrival in October and November. In 2017, Brazil shipped just under nine million metric tons of soybeans to China in the final quarter, which was the previous record. Brazil is the world's top soybean exporter and the United States is the second top exporter. U.S. farmers are harvesting an estimated record soybean crop this year, but China has purchased just a fraction of soybeans from the U.S. compared to its long-term average.
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Cargill CEO Concerned with Long-Term Health of Ag in Trade Dispute
The CEO of Cargill says he is concerned with the long-term health of U.S. agriculture due to impacts from the U.S.-China trade dispute. Cargill CEO David McLennan told Bloomberg News a long-term dispute with China could squeeze the U.S. out as China turns to other sellers of soybeans, as the nation is doing now. Soybean prices are near the lowest levels in a decade as a result of the trade war and an expected record crop in the U.S. this fall. MacLennan of Cargill spoke with Chinese leaders over the summer who told him the country “wouldn’t back down.” He says speculatively, that means China will find alternative sources of supply, but concedes “price can drive a lot of different decisions.” Cargill is spending more time with lawmakers and government officials expressing desire to see a swift end to the trade war. MacLennan says Cargill recognizes the goal of the Trump administration to make trade more fair and balanced, but says “we just think there are other tactics that can be pursued to improve trade relations."
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Kansas Representative Exploring Ways to Trade with Cuba
A U.S. representative is seeking ways to open markets with Cuba. Roger Marshall, a Republican from Kansas, spoke with Cuba’s President earlier this week. The two discussed trade opportunities between Cuba and the U.S., a priority over the last few years for U.S. agriculture and more-so given the current trade climate. Marshall says the U.S. “can and should be Cuba's number one supplier of commodities like sorghum, soy, wheat, and corn." Currently, Cuba imports roughly 80 percent of its food from Europe, Latin America and Asia. Marshall says Cuba represent a "significant opportunity" that the U.S. is missing because of "outdated and unnecessary restrictions, at a time when farm country needs new markets the most.” Marshall supports eliminating outdated restrictions between the U.S. and Cuba, and cosponsored the Cuba Trade Act, Americans Freedom to Travel to Cuba Act, and the Cuba Agricultural Exports Act.
