Currently browsing posts about: Food-trade

I find the details of trade policy almost impossible to understand (so many arcane rules, so many countries), and am grateful whenever I read something crystal clear.

Politico explains (behind a paywall, alas) how our trade war with China is hurting US soybean farmers, beginning with:

The good news: The European Union is buying lots more US soybeans than it used to.  Purchases are up 133% over last year, and now account for 52% of EU soybean imports.

The bad news: The EU is buying US soybeans because they are cheap.  Because China is not buying US soybeans, there is a glut; prices have fallen by 20%.

Estimates are that the EU will buy $2.5 billion this year.  But last year, China bought $12.3 billion in soybeans.  That’s nearly a $10 billion loss unless other buyers can be found (the estimate is a $7 billion loss).

China is now buying soybeans from Brazil, and at premium prices.

Here’s what the American Soybean Association has to say about all this.

One more indicator:  Politico also mentions an article in the Milwaukee Journal Sentinal detailing how more than 2,500 US dairy farmers have resorted to GoFundMe campaigns to save their farms.

I wish we grew more food for people instead of food for animals or fuel for cars, and that our agricultural policy linked to health policy.

Maybe if we did that, we wouldn’t be in this situation.  But GoFundMe campaigns?

Maybe we just need real agricultural policies.

Recall that to mitigate the damage to U.S. agriculture caused by our current tariff disputes, President Trump promised to give affected farmers $12 billion.

The USDA has now set up its Trade Mitigation Programs.  As seems invariably to be the case, these are not simple; they involve three separate programs:

• The Food Purchase and Distribution Program
• The Market Facilitation Program
• The Agricultural Trade Promotion Program

Food Purchase and Distribution Program

The government (taxpayers) will purchase up to $1.2 billion in commodities and then distribute them to food assistance programs.

USDA issued a list.  Here are some selected examples, to which you must add three zeros (amounts are in $1000s):

The big winner here is pork, hit badly by the trade disputes.

The Market Facilitation Program

This one gets a bigger slice—$4.7 billion.

Here, the big winner is soybeans — $3.6 of the $4.7 billion in payments.  Corn producers are lpretty much left out.  I can’t imagine tht they are pleased.

The Agricultural Trade Promotion Program

All I’ve seen about it is that USDA will spend $200 million on foreign market development.

What are we to make of this?

Whether trade groups are for or against this depends on how much of this pie they get.  Overall agricultural losses will be greater than $12 billion, so everyone loses, but some more than others.  The Environmental Working Group has filed a FOIA request for information about how USDA made these decisions.  Can’t wait to see what they get.

Only half of that has been distributed so far.

Let’s hope the lobbying is transparent so we can see who is doing what.

The Documents 

• USDA’s Announcement
• Market Facilitation Program: Final rule
• Market Facilitation Program Payments to Producers
• Agricultural Trade Promotion Program

President Trump says he will fix the retaliation damage his trade policy has caused for agriculture with $12 billion added to USDA programs.

The New York Times quote of the day:  “This trade war is cutting the legs out from under farmers and the White House’s “plan” is to spend $12 billion on gold crutches.”  –Sen. Ben Sasse, R-Nebraska

The USDA explains that

These programs will assist agricultural producers to meet the costs of disrupted markets. This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy.

Politico (behind paywall) quotes USDA Secretary Perdue: “”The programs we are announcing today are a firm statement that other nations cannot bully our agricultural producers to force the United States to cave in.”  It explains that the 3-part plan will:

1. Provide direct payments to growers and producers of soybeans, sorghum, corn, wheat, cotton, pork and dairy.
2. Purchase fruit, nuts, rice, beef, pork and dairy products from U.S. producers for redistribution to federal nutrition assistance programs.
3. Put resources toward finding new markets for U.S. farmers to sell their products abroad.

Not everyone loves this idea.  Politico quotes Senator Ron Johnson (R-Wisconsin):

This is becoming more and more like a Soviet-type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits…I’m very exasperated. This is serious.

It also quotes Rep. Dave Reichert (R-Wash.) observing that the bailout does nothing to preserve market access lost as a result of the tariff policies.

Some in the ag community, they say, ‘That’s great, thank you for the help’ — except that the problem then becomes we’ve lost the market, so how do we get the market back?…That’s the question.

In general, agricultural groups view this as an inadequate short-term fix for a problem that won’t go away until Trump ends the trade war.

Former USDA Secretary Dan Glickman tweeted a link to a longer statement:

Rep. Chellie Pingree (D-Maine) is introducing legislation to ensure a fairer distribution of the bailouts.  How about some trade relief for fishermen?

In the meantime, The Street reports the effect of this plan on the market: Soybean futures for November delivery settled more than 1% higher; Deere & Co. and other farm equipment stocks also went up.  CBS News also notes the rise in ag stock prices.

Analysts generally view this as a move to maintain Trump’s base of support among soy and corn producers in the lead up to the midterm elections.  It solves a short-term political problem, but does nothing to protect US agricultural markets.  See, for example, accounts from

• The New York Times editorial board
• Jerry Hagstrom “The Trade War’s High Costs.”
• Global Meat News
• Associated Press
• Washington Post 
• Colbert: Don’t even try to out stupid Donald Trump

The NAFTA agreement meant that the US, Canada, and Mexico would not impose tariffs on each other’s products.

But the Trump Administration has announced tariffs on steel and aluminum imported from Canada and Mexico.

Canada is retaliating.  Here is its list of US products subject to new tariffs.  Table 2 lists agricultural products, among them,

• Yogurt
• Coffee
• Prepared meals
• Maple sugar
• Pizza and quiche
• Chocolate
• Waters
• Whiskies

Mexico also is retaliating.  Its list (in Spanish) includes, among others,

• Cheeses
• Apples
• Ham
• Pork
• Potatoes
• Whisky

This means that these products will be more expensive—a lot more expensive—in Canada and Mexico and, therefore, will not sell as well.

Pork producers are particularly distressed.

Last week, the New York Times published an article about how the US was inserting provisions in NAFTA negotiations to restrict the ability of Mexico to put warning labels—similar to those in Chile and other countries—on ultraprocessed “junk” foods.

Urged on by big American food and soft-drink companies, the Trump administration is using the trade talks with Mexico and Canada to try to limit the ability of the pact’s three members — including the United States — to warn consumers about the dangers of junk food, according to confidential documents outlining the American position.

The American stance reflects an intensifying battle among trade officials, the food industry and governments across the hemisphere. The administration’s position could help insulate American manufacturers from pressure to include more explicit labels on their products, both abroad and in the United States. But health officials worry that it would also impede international efforts to contain a growing health crisis.

In response to questions by Rep. Lloyd Doggett (Dem-Texas), US Trade Representative Robert Lighthizer argues that front-of-package labels are a form of protectionism.

Really?

A more compelling reason is that food companies are worried about the possible spread of front-of-package warning labels like those in Chile, Ecuador, and other countries.

I have a long-standing interest in front-of-package labels and wrote about opposition to the warning-label movement recently in a commentary in the American Journal of Public Health.

The Center for Science in the Public Interest (CSPI) issued a statement:

More countries, and certainly the United States, Canada, and Mexico, should give consumers easy-to-read front-of-package labeling that quickly communicates the information they need to avoid diet-related diseases…This is not an “America First” policy; it is an “Industry First” policy, conducted at the expense of the health of consumers in the U.S. and abroad.

Julia Belluz (Vox) describes the effects of a provision like this on Canada’s front-of-package labeling proposals.

Mexico’s outstanding food advocacy coalition, the Nutritional Health Alliance, argues that this pro-industry effort to block warning labels poses a serious threat to consumer rights and public health.

It held a press conference last week on this issue and has produced background documents (in Spanish, but it’s always fun to try Google Translate):

• Descarga anexo de etiquetados de advertencia aquí (examples of FOP labeling from the Americas region)
• Descarga nota jurídica en torno a la homologación de etiquetados EU-México aquí (legal commentary on how such treaties violate health and consumer rights and are illegal in Mexico)
• Descarga comunicado de prensa respectivo aquí (press release)

The USDA has a new report out on global trade.  

It’s full of facts and figures about what foods we export and import, how the trade agreements and tariffs work, and how food aid works.  Here’s who we gets worldwide food aid:

And here’s why our food safety system is so important to protect:

If your eyes glaze over whenever you read anything about NAFTA or any other trade agreement, this is a good place to start understanding the issues.

The US, Canada, and Mexico have just finished the first round of NAFTA (North American Free Trade Agreement) negotiations.  Like all trade agreements, participants are looking for terms that will benefit them.

The U.S. objectives are on record (there are lots):

For agriculture, we want:

• Duty-free market access for agricultural products
• Reduced or eliminated tariffs for our products.
• Elimination of non-tariff barriers—quotas, subsidies, price discrimination and undercutting.
• Reasonable adjustment periods for regulatory changes
• Reduction in burdens caused by regulatory differences.

For “Sanitary and Phytosanitary”—food safety—measures, we want:

• Enforceable science-based measures
• Allowing countries to set their own levels of food-safety protection
• Expeditious resolution of unwarranted barriers to US food products
• Enforceable rules to ensure non-discriminatory implementation of science-based measures.
• Transparency in negotiations

Politico Pro Morning Agriculture has a truly wonderful summary of the positions of the three trading partners (if it’s behind a paywall, try this).

Timeline

• Round #1: ended on Sunday (Here’s the bland trilateral statement about it)
• Round #2: September 1-5 in Mexico City
• Round #3: September 23-27 in Canada
• Finish: before Mexico’s next election early in 2018

Want to know more?  Begin with the Institute for Agriculture and Trade Policy (IATP).

• IATP summary of the issues.
• IATP’s portal site devoted to keeping up with the issues

Want to figure it out for yourself?

• The North American Free Trade Agreement, current version
• US Trade Representative’s home page on NAFTA gives an overview of its history
• US Trade Representative’s 2001 summary of early history
• Announcement of key dates in the runup to the negotiations
• Request for comments in the Federal Register
• Comments submitted on NAFTA
• Transcripts of hearing on NAFTA

The FERN’s Ag Insider summarizes its recent NAFTA coverage , and makes it available outside its usual paywall—a gift:

• On NAFTA, Mexicans will try to give Trump a ‘win’ without losing, 8/14/17
• Meet the farmers who say NAFTA hasn’t helped them, 8/7/17
• Perdue: New NAFTA mantra must be ‘Do no harm to agriculture’, 8/7/17
• Hand-wringing and hand-holding ahead of NAFTA talks, 7/30/17
• The ‘new NAFTA’ inspires anxiety on both sides of the border, 7/26/17
• White House says it will knock down NAFTA barriers, 7/18/17
• Trump meets with his ‘friend,’ Mexican President Nieto, for the first time, 7/9/17
• Is a slowdown in U.S. soy, corn, and poultry sales to Mexico a signal of the future?, 6/29/17
• NAFTA is mutually beneficial, say ag ministers, but needs to be ‘modernized’, 6/20/17
• With NAFTA on the horizon, U.S. deals with Canada and Mexico ag issues, 6/5/17

Enjoy!

Trade rules are not easy to understand because they are so remote from most people’s lives.  But Public Citizen is keeping an eye out on what’s happening in the trade world, and making its meaning clear.

It reports that the Office of the United States Trade Representative (USTR) has just released its latest National Trade Estimate.  This reviews our trading partners’ actions that we think constitute “significant trade barriers” and want to eliminate.

What might these be?

This may be hard to believe but high on the list are other countries’ policies to promote breastfeeding, of all things.

The Trump administration wants to get rid of these “technical trade barriers:”

• Hong Kong draft code designed to “protect breastfeeding and contribute to the provision of safe and adequate nutrition for infants and young children.” This, according to USTR, could reduce sales of food products for infants and young children.
• Indonesia: USTR wants to get rid of a draft regulation to ban advertising or promotion of milk products for children up to two years of age.
• Malaysia: USTR doesn’t like its code restricting corporate marketing practices aimed at toddlers and young children.
• Thailand: USTR wants to eliminate penalties for corporations that violate laws restricting the promotional, and marketing activities for modified milk for infants, follow-up formula for infants and young children, and supplemental foods for infants.