2017 ag policy watch list: issues bigger than the Farm Bill

As you will see from our list, ag policy makers will likely spend most of 2017 on issues much bigger than the Farm Bill.  Trade:The three largest buyers of U.S agricultural exports are Canada, China, and Mexico. Collectively, they accounted for 44% of total ag exports in 2015. These three countries– for better or worse- have been at the epicenter of recent trade discussions. In fact, Mexico suggested last week they would use the U.S. corn market as their front-line defense (or retaliation) in the event of any ”trade war” breaking out. Border Adjustment Tax: A Border Adjustment Tax (or BAT) has been suggested in recent months. There are several details to the proposed tax, but the basics of the plan is to tax all imports at 20% (a short video explanation here). On the surface, this seems to support the U.S. economy, but the devil lies in the indirect impacts the tax would have. Economists who research tax and trade – again, not Brent and David-  estimate the 20% tax would result in the U.S. dollar appreciating.  Many estimates we have seen suggest that it would be roughly a one-to-one relationship, thus the dollar would increase 20%. Renewable Fuels Standard:The RFS has been law since 2005. While many have campaigned against the RFS, a congressional repeal of the RFS seems unlikely. However, the implementation of the RFS is subject to rules from several government agencies, including the EPA. To date, the interpretation of the RFS has been favorable. The new administration could take a critical look at the RFS and relax some of the mandates or change how the law is implemented.