by Marion Nestle

Currently browsing posts about: Food-trade

Jun 5 2019

Trump’s trade war with China: not going well for US farmers or citizens

As I may have mentioned previously, I have trouble understanding the ins and outs of trade policy.  Fortunately, I subscribe to Politico Morning Agriculture, whose writers are diligent in sorting out the complexities of what our government is doing with respect to trade and what it means.

Here’s what Politico is saying about our current trade dispute with the People’s Republic of China.

In a recent article,  Politico  reports a steady decline in American agricultural exports to China.  The figures are startling:

  • 2019: $6.5 billion
  • 2018: $16.8 billion
  • 2017: $21.8 billion

These figures are from USDA’s latest Outlook for Agricultural trade.

Much of the drop is in soybean exports:  US farmers shipped $17 billion worth of soybeans worldwide in 2019, down from $21.6 billion last year.  Shipments to China accounted for much of the difference.

The US usually runs an agricultural trade surplus (we sell more abroad than we import).  The USDA says the trade surplus is $8 billion in 2019, down from $15.8 billion in fiscal 2018 and $21.1 billion in fiscal 2017.

Politico also reports that the Trump Administration is doing what it can to relieve the pain experienced by US soybean producers [pain that the administration’s policies caused in the first place].  It has promised between $15 billion and $20 billion in bailouts.

The real burden will fall on taxpayers and heartland farmers.

If the president moves ahead with 25 percent tariffs on everything China exports to the United States, it could amount to a tax hike of more than $2,000 on the average American family, swamping the reduction they won from Trump’s signature legislative achievement — the 2017 tax law.

The pain will be felt most acutely by lower-income voters who rely on cheap imports and Midwestern farmers who make up critical slices of Trump’s political base and will help decide the outcome of the 2020 election.

As to who is responsible for this mess?  According to Politico again, “China says U.S. ‘solely to blame’ for collapse of trade talks.”

How will this end?  Badly for U.S. agriculture, I’m guessing.

We need a rational food policy in this country, big time.

Reference: Agricultural Economic Insights on implications of the trade war with China

May 29 2019

Trade mitigation payments are no substitute for effective agricultural policy

One of the daily newsletters I subscribe to is Chuck Abbott’s Ag Insider, sponsored by the Food and Environment Reporting Network (FERN), which covers and analyzes agricultural policies otherwise unknown or incomprehensible to readers like me.  You can subscribe to it here.

The particular article that caught my eye is about how Trump’s program of compensating farmers for the losses caused by his trade war with China has gotten the government much deeper into supporting Big Ag than some congressional representatives think is appropriate.

The USDA has stated that it will spend $15 to $20 billion on trade mitigation payments this year.  This will pay $2 a bushel for soybeans, 63 cents a bushel for wheat, and 4 cents a bushel for corn.

If you were a farmer, which would you plant?

The promised new payments will

double the $8.5 billion that has been paid so far on 2018 production of almonds, cotton, corn, dairy, pork, soybeans, sorghum, sweet cherries, and wheat. And the $15-$20 billion would be on top of $11.5 billion previously forecast for federal payments this year. Last year, direct farm payments totaled $13.8 billion, largest in 12 years, because of trade mitigation aid.

This is big money, at taxpayers’ expense.

Abbott’s point is that the “Freedom to farm” act of 1996 encouraged farmers to make planting decisions based on market prices rather than expectation of subsidies, and to reserve part of their land for conservation purposes.  Farmers were able to sell their crops for market prices rather than have the government buy them.

But the USDA says

Farmers should continue to make their planting and production decisions with the current market signals in mind, rather than some expectation of what a farming support program might or might not look like, based on inaccurate media stories.

And guess what: The National Corn Growers Association wants higher payments.

In other articles in this series, Abbott reports that “more than a third of net farm income for Kansas farmers comes from Trump tariff payments, but that won’t make up for lost export sales.”

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Apr 26 2019

Weekend reading: two books about the effects of NAFTA

I was invited to review two books about NAFTA’s effects on foods systems for The Lancet Diabetes & Endocrinology:

  • Gerardo Otero’s The Neoliberal Diet: Healthy Profits, Unhealthy People
  • Alyshia Gálvez’s Eating NAFTA: Trade, Food Policies, and the Destruction of Mexico (noted earlier on this site).

The journal titled the review “How neoliberalism ruins traditional diets and health.”  You can read it here.

Apr 11 2019

No-deal Brexit: Effects on the food industry

The British Parliament has just rejected the plan for Brexit for the third time, and the EU has just extended the exit deadline until October 31.i

The British food industry is understandably worried about what Brexit, whenever it happens, will mean for supply chains and sales.  Large percentages of British food are imported from the EU, something likely to become more difficult and expensive after Britain’s withdrawal.

I’ve been collecting items on the topic from Food-Navigator.com and other sources.

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Feb 27 2019

The tragedy of Brexit: not enough Pringles

At last, an explanation of the effects of Brexit on the British economy that I can understand: a Pringle shortage!

The New York Times helpfully reports

As Brexit looms, Kellogg Co and Mondelez International Inc are taking measures to protect Britons from a potential shortage of Pringles chips, BelVita biscuits and Milka chocolate.

With Britain at risk of leaving the European Union on March 29 without a divorce deal – known as a ‘hard’ Brexit – several big companies have begun to prepare for the disruption that could ensue.

Kellogg is opening new warehouses and stocking up on its snacks and cereals, hoping to mitigate damage from friction at the UK border and tariffs on imports, Chief Executive Steve Cahillane said in a recent interview…Cahillane said Kellogg’s supply chain left it exposed. For instance, Pringles, the UK’s No. 2 chips (crisps) brand after PepsiCo Inc’s Walkers, are made in Belgium.

I guess the British should have thought of that.  Alas.

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Dec 13 2018

Bakery & Snacks looks at Brexit

While Brexit—Britain’s leaving of the European Union—is in turmoil, the industry newsletter, BakeryAndSnacks.com has a few articles on its effects on this industry.  Complicated, no?

Dec 5 2018

The effects of our trade war with China

President Trump has just announced a truce in our trade war with China.  We need one.

In August, the Trump Administration said it would provide $12 billion to farmers to make up for the losses in income caused by the dispute.

I’ve been collecting items about what’s actually happening with the bailout payments.

  • Not much has been paid out: The New York Times reports that the USDA has paid out just $838 million of the $6 billion that became available in September. Another pool of up to $6 billion is expected to become available next month.
  • They are not helping Wisconsin dairy farmers: According to the Milwaukee Sentinal Journal, about 4,800 dairy farms are collectively getting about 80 percent of the $10.4 million coming to the state, with an average payment of $2,390.  But the Wisconsin Farmers Union says a 55-cow dairy farm would receive a one-time payment of $725 from the Trump bailout program, but would lose between $36,000 and $48,000 this year due to low milk prices.
  • They are not doing much for Iowa farmers either:  According to the Des Moines Register, the 4300 payments total nearly $31 million, with an average payment of $7,236.  But 100 payments are less than $25, 24 are less than $10, and 11 are $5 or less.
  • Payments are going to 1,100 city residents; these average $881.  According to the Environmental Working Group, the recipients may or may not actually be involved in farming.  The EWG got the data from the USDA.
  • The National Corn Growers Association wants more money for corn farmers.  Its letter to USDA says the agency does not understand the how badly the trade disruptions are affecting its members. Its own study estimates corn growers losses at $6.3 billion.
  • North Dakota soybean growers have a storage problem, says the New York Times,  because they can’t sell the beans to China.
  • Kansas soybean farmers are also in trouble, writes the New York Times.
  • Overall farm income is declining, says USDA.

I think it’s fair to conclude at this point that current trade policies are tough on US agribusiness.

Oct 23 2018

Trump’s trade policies hurt the heartland

I am ever surprised by the extent to which Trump Administration’s policies directly harm its core supporters.  Two recent reports tell the story.

One comes from a group called Tariffs Hurt the Heartland, which has produced an accounting of the losses to businesses in Texas as a result of Republican trade policies—$424 million gone, just in August. 

Some of this affects farmers:

Scott Frazier, a south Texas farmer and Secretary-Treasurer of the Texas Farm Bureau, warned that tariffs will have long-term consequences for agriculture by shuttering the foreign markets that farmers in Texas and across the country depend on.  One quarter of our agricultural products grown in the U.S. are exported to other countries. The economic well-being of American agriculture depends on maintaining and strengthening our export markets, and farm and ranch families depend on this to survive.

This group also has produced an interactive, searchable map at TariffsHurt.com that let’s you find stories of how tariffs are affecting local communities, state by state, and you can learn more about the campaign here.

The second report comes from the Brookings Institute.  It analyzes the effects of Trump’s trade wars on his base.

The report comes with a spreadsheet where you can look up the data for yourself.

Trade wars have consequences, in this case for U.S. agriculture, which according to this report accounts for 15% of the retaliatory tariff burden:

The retaliatory tariffs differ by trading partner, but there are some commonly targeted industries. All four markets focused tariffs on agricultural products. Agriculture cuts a very specific geography across the United States, particularly implicating metro areas in California’s Central Valley as well as rural areas and small towns in states like Illinois, Iowa, and Nebraska.

Ouch.

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