Currently browsing posts about: Food-trade

I’m catching up on posts put on hold for quieter times.  Here’s one that’s worth a look.

The Environmental Working Group’s analysis finds that more than half of the $8.4 billion aid meant to compensate farmers for the loss of export sales went to the top 10% of farmers.  Check this for yourself in the EWG Farm Subsidy Database.

The  Farm Bill Law Enterprise points out that almost all of it went to white farmers.

Nearly 250 farms received more than $375,000 — the highest amount permitted — out of a total of more than 550,000 recipients.

Politico wrote about the second round of trade aid:

USDA last week rolled out details of the new $16 billion package, an estimated $14.5 billion of which will be sent to farmers in the form of direct payments…under trade aid 2.0, it will be easier for farmers to collect more money. USDA raised the payment limit to $500,000 per person or legal entity, and also loosened a means test that had disqualified farmers earning more than $900,000 a year in adjusted gross income from receiving assistance under the 2018 program. Those earning above that threshold can collect trade aid this year as long as 75 percent of their income comes from agriculture, a change Congress directed in recently enacted disaster-aid legislation.

The Politico article notes that farms are legally allowed to get around payment caps.  Multiple family members or business partners can receive subsidies as long as they appear to be “actively engaged” in the operation.

Politico cites one example from the EWG database: “The top recipient of 2018 trade assistance, DeLine Farms, registered three partnerships at the same address and collected $2.8 million.”

Comment: This is a rigged system that could not be better designed to put small farms out of business.

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

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.”

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.

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.

• • • Food sector slams ‘confusing and complex’ no-deal Brexit tariffs: Food makers have hit out at the tariff system the UK government has said it will adopt in the event of a no-deal Brexit as “confusing and complex”. Read more
    • No-deal Brexit threat: Gove admits ‘no absolute guarantee’ food trade with EU will continue: The UK has said it will extend the deadline on some food policy consultations as Environment Secretary Michael Gove admits a no-deal exit from the EU could see an immediate halt to food trade with the bloc. Read more
    • Concerns remain over ‘hassle and extra cost’ following UK no-deal Brexit labelling advice:  The UK has issued guidance to food businesses on what they will need to include on labels if the UK leaves the EU without a withdrawal agreement on 29 March. Read more
    •  No-deal Brexit and food prices: How much will it push up the average basket?  There is broad agreement that a no-deal Brexit will result in higher UK food prices – but what does this mean for the average family? Read more  
    • Brexit: The best and worst-case scenarios: The fresh food sector may well be the hardest hit when the UK withdraws from the EU, with a no-deal Brexit potentially costing the UK food industry €1.3bn, according to market research provider, Euromonitor International… Watch now
    • Withdrawal agreement defeat leading to catastrophic Brexit: The defeat of the Prime Minister’s withdrawal agreement in parliament last week could be leading the UK toward a catastrophic exit from the EU, warned the head of the National Farmers Union… Read
    • Meat industry issues Brexit warnings: The British Poultry Council (BPC) has called on the Government to ensure that the population continues to have access to quality food once the UK leaves the EU… Read
    • Europe is ready for food safety, post Brexit. The European Commission has said it is prepared for the impact a no deal scenario in the Brexit negotiations would have on food safety. The United Kingdom held a referendum in June 2016 and voted to leave the European Union, a move that became known as Brexit. This was supposed to happen at the end… Continue Reading

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

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?

• Brexit: ‘If the worst case scenario happens the UK will make ‘No deal’ and will have to trade on WTO terms’: If the worst case scenario happens in Brexit negotiations the UK will make ‘No deal’ and will have to trade on WTO (World Trade Organization) terms, the only global international organization dealing with the rules of trade between nations, says Baker Botts. Read more
• Have your cake and eat it: The Brexit effect on bakery and snacks: BakeryandSnacks asked exhibitors at ife 2017, held in London at the beginning of March, what effects Brexit may have on their companies. Read more
• Fewer biscuits for your buck thanks to Brexit: McVitie’s to shrink packet size: Pladis UK has announced it is reducing the size of the McVities Digestive biscuit pack, thanks to a weak sterling following Brexit. Read more
• Beyond Brexit: Five legal issues UK food firms need to protect against in 2017: The year ahead will present UK food companies with a range of major legal challenges over and above the fallout from Brexit, according to leading food industry lawyer Peter Cusick. Read more
• Brexit and its impact on businesses to take centre stage at ECMA Congress: Brexit, the Circular Economy, plastic waste and digital technology are some of the highlights at this year’s ECMA (European Carton Makers Association) Congress. Read more

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.