4 years, 8 months ago AFBF
The Trump Administration’s trade war with China and the surge in small oil refinery RFS exemptions have the U.S. ethanol industry nearing the breaking point. Green Plains Ethanol CEO Todd Becker tells Reuters that the weight of those two factors is becoming almost unbearable. The U.S. ethanol industry growth has stalled in the face of President Trump’s trade war with China, a major ethanol buyer. The small refinery exemptions under the Renewable Fuels Standard handed out to small refineries by the Environmental Protection Agency has seriously cut into demand. The sustained downturn is beginning to take a significant toll. Becker tells Reuters that, “Some plants will slow down, some will shut down, and some will shut down forever.” The president did fulfill a promise to lift the summer ban on higher blends of ethanol. However, the infrastructure the industry needs to deliver it will require time to build. Becker says there are about 2,000 retail stores equipped to supply E85 gasoline, but the industry needs about 10,000 stores to boost demand. Becker did say he feels the industry has been “undisciplined,” continuing to ramp up production while facing weak demand growth and growing supplies.
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EPA Will Rule on Refinery Biofuel Waivers Soon
The Environmental Protection Agency says it will decide soon on the 2018 petitions for small refinery waivers from the Renewable Fuels Standard blending obligations. Administrator Andrew Wheeler says they hope to get through the petitions in the next few weeks. Wheeler visited the Monroe Energy Oil Refinery in Pennsylvania on Monday, telling reporters that, “We’re going through them. We hope to be processing them in the next few weeks and month at the most.” President Trump recently ordered a review of the waiver program, which has been a serious bone of contention between the ethanol and oil industries for some time. An MSN Dot Com article says sources in both the oil and biofuel industries says the waiver decisions were nearly complete before President Trump demanded a review of the program. Both the EPA and the USDA are working to come up with a solution to the problem. The sources also say that the Department of Energy has already provided its scoring results last April on the 40 outstanding 2018 petitions. Trump, looking at possible reelection next year, has struggled to find a balance between oil refiners and corn growers since taking office.
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Lighthizer Promises Ag Wins in Japan Deal
Any potential trade deal between the U.S. and Japan will include big gains for farmers and ranchers. Politico says that statement comes directly from U.S. Trade Representative Robert Lighthizer. He says in written comments to the Senate Finance Committee that ag producers will see “significant new opportunities for agricultural exports” once any agreement gets finalized. The Economic Revitalization Minister from Japan will be in Washington, D.C., for trade discussions on Thursday and Friday. Negotiators tell Politico that they’re hoping to get a mini-deal done quickly that focuses on agriculture and automobiles. They’d like to get it done within the coming weeks and months. An agreement on farm products would be a big boost for U.S. farmers and ranchers. Now that the Trans-Pacific Partnership is in effect without the United States, American producers fear losing their share of the large Japanese market to competitors like Canada and Australia. Lighthizer and Treasury Secretary Steven Mnuchin (Muh-noo-chin) will be returning this week from trade negotiations in China and be back in time to meet with Japanese officials.
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China Trying to Boost Pork Production
The Chinese government is looking to battle back against the effects of African Swine Fever. The government has mandated a boost in domestic pork production to shore up supplies and stabilize prices that have been hit hard by the disease. China has lost 13 million tons of pork, which is equal to the entire yearly production level of the U.S. That loss is pushing Chinese officials to go forward with domestic actions, which will help 13 cities in the nation’s top pork-producing province produce 34 million pigs this year. City governments will subsidize pig farms and require banks to make credit and favorable insurance policies available to pig farmers and pork processors. China will earmark a total of $111.6 million from the provincial budget for the effort. U.S. pork producers are hopeful that a new trade deal with China would get rid of the giant 62 percent tariff that the National Pork Producers Council estimates have caused its producers to miss out on $1 billion in sales.
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African Swine Fever Makes First Appearance in Slovakia
African Swine Fever has made its first appearance in Slovakia. The first confirmed infection showed up on a backyard farm in a village near the border with Hungary. The Director-General of the State Veterinary and Food Administration says it’s the very first case of ASF diagnosed in Slovakia. The disease turned up on a small farm with just four pigs located near the border of Hungary and Ukraine, two countries that have had ASF infections already confirmed. Hundreds of wild boars in Hungary have also been confirmed to have ASF infection this year. Slovakian authorities say all pigs within a three-kilometer radius of the infected farm will be culled. They will also establish a three-kilometer protection zone and a ten-mile surveillance zone. Farm Journal’s Ag Web Dot Com says only the Czech Republic has successfully kept ASF outbreaks under control and was declared free of ASF earlier this year. However, recent outbreaks in Bulgaria and Poland indicate big challenges ahead in keeping the disease from spreading.
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More Softening in Farmland Values in 2019
Farmland values slipped some during the first half of this year in Iowa, Nebraska, and South Dakota. However, Farm Credit Services of America says overall that the market for cropland values continues to make adjustments to the current agricultural economy. The value of the 64 benchmark farms that FCSA keeps track of declined an average of 0.59 percent in the first half of this year. Since the farmland market peaked back in 2013, cropland values have dropped 20 percent in Iowa, 21 percent in Nebraska, and 12 percent in South Dakota in the company’s benchmark farmland study. Tim Koch, FCSA’s Chief Credit Officer, says, “Despite continued tight commodity price margins in 2018, real estate values remained stable and were supported by favorable interest rates, market facilitation payments, and equilibrium in supply and demand for real estate.” While Iowa farmland had the biggest decline in value during the benchmark study, values are still up 2.7 percent from a year ago. The average quality of land has not changed in the past year, and buyer demand for high-quality ground remains strong.
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A cross-section of U.S. industry witnesses told a key Senate panel that the US-Mexico-Canada trade deal is an improvement over NAFTA, though not all at the hearing agreed. Former USDA Secretary Tom Vilsack, now head of the U.S. Dairy Export Council, told Senate Finance lawmakers that USMCA will boost U.S. dairy exports by 300-million dollars a year, and all ag exports by 2-point-2 billion..
“It preserves our duty-free access to our number one market, Mexico…and increases market access to our Canadian market, that has been limited for far too long, by increasing our trade quotas in cheese, skim milk powder, whey, butter, and other dairy products. It removes and reforms, key trade-distorting Canadian pricing policies, repealing Class 6 and 7 pricing policies, and imposing more trade-friendly discipline on the Canadian supply management system.”
When asked if they preferred NAFTA or USMCA, the panel was in agreement except for a labor advisor to the government…
“USMCA…great, thank you…USMCA is a significant improvement…ok…the modernization of the rules and the transparency around the regulatory process for agriculture, we would choose USMCA…yeah…USMCA…there are 2-point-2 billion reasons for saying, USMCA, Senator…USMCA, when fixed.”
Michael Wessel of the Wessel Group is Staff Chair to the Labor Advisory Committee for Trade Negotiations and Trade Policy…
“To see jobs like the bakery workers in Chicago and Philadelphia, who are making Oreos, and those jobs have now gone to Mexico, where workers are making 97-cents an hour…and, as last time I checked, the Oreo package is not being sold any cheaper here in the US.”
And while most Finance Democrats voiced concerns or opposition to USMCA, only one Republican, Pat Toomey of Pennsylvania, argued it was little better than NAFTA. Toomey ended, but not without a response from Chairman Chuck Grassley…
“So I would urge my colleagues to think hard before we endorse USMCA. I’m glad you’re so wrong.”
Grassley also told farm reporters before the hearing that House Speaker Nancy Pelosi may now be willing to take up USMCA in the chamber in early September, even if she lacks a majority of Democrats, which if true, would be a significant break for both the deal and the White House.
