Recently a friend of ours told us about the farm bill listening session he attended during the August Congressional break. He expected the bulk of the comments would focus on the problems farmers are facing as the result of nearly four years of low commodity prices. Instead, he said, the bulk of the discussion focused on three issues: decreasing regulations, increasing exports, and eliminating inheritance taxes. These three issues are a good place for us to start as we embark on a series of columns laying out our analysis of farm policy instruments that will help farmers weather extended periods of low prices and stay out of the way when prices are above the cost of production. From our perspective, these issues pale in comparison to the issue of low farm prices. Estate taxes affect fewer than 50 small farm families each year while low prices affect every crop farmer. In the 1998-2001 period, below-the-cost-of-production crop prices did not increase US exports, they hurt farmers in the US and around the world. And, while farmers grumble about environmental regulations, it is doubtful that they would want to trade their regulation regime for the environmental regulations imposed on off-farm businesses and municipal governments.
The Trump administration acted unlawfully when it froze Obama-era restrictions on greenhouse gas emissions from the oil and gas industry, a federal court ruled. According to the U.S. District Court for the Northern District of California, the Interior Department misused a provision of the Administrative Procedure Act when it stalled key provisions of a rule aimed at reducing methane venting and flaring on public and tribal lands.Just today, BLM unveiled a separate proposal to delay the standards until January 2019. However, the district court's order means that the rule will take effect now.The court's decision revives the standards, meaning any oil and gas companies not already in compliance will have to scramble to catch up.Secretary Ryan Zinke sidelined key provisions of the 2016 Bureau of Land Management regulation in June, indefinitely delaying deadlines for measuring flared gas, upgrading equipment and controlling leaks.Zinke's move followed a failed effort to kill the rule via the Congressional Review Act. Separately, the agency has launched a formal process to roll back the measure.According to the district court, BLM's approach to freezing parts of the rule violates federal law. The agency relied on APA Section 705, which allows for postponing the effective date of regulations that are facing litigation. But the BLM methane rule took effect in January, with various compliance deadlines spaced out over time.
Potential trade disputes are approaching from all directions with significant implications for American agriculture. To the north and south, the US government is renegotiating the North American Free Trade Agreement [NAFTA] with Canada and Mexico. Just last week, the three countries met in Ottawa, with many thorny issues yet to be resolved. Also last week, the US imposed a tariff of almost 220 percent on certain models of aircraft produced in Canada. West, after withdrawing from Trans-Pacific Partnership [TPP] negotiations that would have affected trade across the pacific, the government has further threatened to pull out of the US-South Korea trade agreement. The US is also considering imposing tariffs on steel imports, a move aimed at China, but which also opens up disputes to the east, specifically with Germany, Turkey, and the UK. Many of these disputes are not about agriculture, but agriculture may be affected by the fallout. In particular, even non-agricultural disputes can generate retaliatory tariffs on our agricultural exports. History provides very clear examples as to how trade disputes impact agriculture. Retaliatory tariffs are how countries respond to other countries' policies that have been found to distort trade, and that harm their domestic industry. Whenever a country enacts a new policy that may affect trade, its trading partners who are affected the most may threaten to impose tariffs in retaliation. Trade-distorting policies may include a nation deciding to pull out or rescind trade agreements (often to avoid WTO sanctions). These retaliatory tariffs, or import taxes, are meant to coerce or convince the instigating nation to reverse their policy, plus the tariffs garner income for the retaliating country. Retaliating nations can put tariffs on any export product they import from the targeted country - the products do not need to bear any relation to the industries affected by the initial trade-distorting policy. The WTO states that retaliatory measures need to stay within the same sector, defined as: Services (Business, Financial, Distribution, Educational, Communications, etc.), Intellectual Property, and Goods (the main thing we think of when it comes to trade). When it comes to the goods sector-- if a tariff on automobiles distorts trade, the retaliating nation need not target automobiles specifically, and can target any good(s)--often those targets include agriculture.Unlike other tariffs, these retaliatory tariffs can be sanctioned by the World Trade Organization [WTO] as legal penalties for trade-distorting policies. These tariffs are the last and final step in any WTO trade dispute as tariffs harm consumers in the country that imposes them as well as the country imposing the trade-distorting policy. In short, this action is often harmful to all nations in the dispute and most disputes don't reach this stage for this reason. However, when they do reach the retaliation stage, the cost of retaliation can be in the billions of dollars. This money comes both directly and indirectly out of the consumer's pocket, as markets shrink for US products and the cost of the tariff is passed to the producer. Given US agriculture's reliance on international markets, and being an industry with political clout, agricultural products are often high on the list of products targeted in retaliatory tariffs.
Louisiana leaders see great possibility – and lots of money – in potential trade with Cuba. However, a new wedge between the U.S. and the island nation has put that dream in jeopardy. “It's a little bit distressing to see that we are now de-evolving in our relationship,” said Mike Strain, commissioner of the Louisiana Department of Agriculture and Forestry.
The U.S. needs to improve trade relationships with Pacific Rim countries where competitors like Australia and the European Union have advantages over U.S. exporters, Agriculture Secretary Sonny Perdue said today. Japan is the first target for new bilateral talks, Perdue stressed.
USDA’s offices continue to fill up as two more key leadership positions were confirmed by the U.S. Senate last night. Stephen Censky was confirmed as USDA’s deputy secretary and Ted McKinney as undersecretary of trade and foreign agricultural affairs. USDA Secretary Sonny Perdue praises the Senate’s confirmations, issuing the following statement.“I commend the Senate for confirming these two experienced, prepared and capable nominees, who will provide the steady leadership we need at USDA. Steve Censky will help us be responsive to producers reeling from the effects of multiple hurricanes and also offer prudent counsel as Congress continues work on the 2018 farm bill. Ted McKinney will take charge of the newly created mission area focused on trade, and wake up every morning seeking to sell more American agricultural products in foreign markets. We eagerly await their arrival at USDA, and urge the Senate to continue to act on other nominees who are awaiting confirmation.”
Reps. John Faso (R-NY) and Michelle Lujan Grisham (D-NM) announced the introduction of the Organic Farmer and Consumer Protection Act. The bipartisan legislature provides for a modernization of organic import documentation, new technology advancements, and stricter enforcement of organic products entering the U.S.“Protecting the integrity of organic is critical for the advancement of organic, and we applaud Rep. Faso for introducing this important bill. Our farmers have to have a level playing field, and organic consumers have to be able to trust that they are getting what they pay for when they buy organic,” said Laura Batcha, Executive Director and CEO, Organic Trade Association. “We’re operating in a growing global market. It is essential that we modernize and get up to speed to prevent organic fraud and to ensure that every stakeholder in the organic chain is playing by the rules. This bill takes important steps towards making that happen.”When fraudulent organic products enter the U.S, local producers are hurt by lower prices and consumers are hurt by inauthentic products.
On Monday, Rep. Bob Goodlatte (R-VA) introduced his Agricultural Guestworker Act of 2017 Bill, which would replace H-2A with an H-2C program. Rep. Goodlatte introduced the bill to the House Judiciary Committee, which he chairs. During his address at United Fresh Produce Association’s Washington Conference in mid September, Rep. Goodlatte said he intends to move the bill through on a tight timetable. And that is exactly what he is doing. Rep. Goodlatte introduced the bill Monday night during a dinner with President Trump, House Majority Leader Kevin McCarthy, Senate Majority Whip John Cornyn and other key Republicans, according to New Food Economy.The committee vote was originally scheduled for Wednesday, Oct. 4, a mere day after most committee members had a chance to review the 49-page document. But the vote has been postponed, according the Judiary Committee page. At press time, the vote had not yet been rescheduled. Initial revisions to the bill has been posted, however, and as the bill moves forward, more may be added.
Groups on both ends of the political spectrum are plotting how to attack the farm bill when it begins to move in Congress. Representatives from about two dozen groups met yesterday near Capitol Hill to hear from an economist and then to brainstorm messages that they can agree to take to Congress. The plan is for the coalition to come up with a joint statement that most of the groups can sign. The organizations could not be more different on most issues. They range from the Heritage Foundation and Citizens Against Government Waste on the right to the Organic Consumers Association and the U.S. Public Interest Research Group on the left. The most significant proposal they are likely to get behind is the AFFIRM Act proposed by Sen. Jeff Flake, R-Ariz., and Rep. Ron Kind, D-Wis. The bill would make deep cuts in crop insurance and require disclosure of the amount of premium subsidies that individual farmers receive.
Farmers rely on foreign workers, many of whom are undocumented, to keep their operations running. But as the Trump administration cracks down on illegal immigration and fewer Americans want to work in the fields, some fear they'll lack the workers to plant and harvest the crops that feed the nation. "Americans can't do these kinds of jobs," Cordona said.The loss of foreign workers could cut harvests and push supermarket prices higher.Produce imports could increase even as fruits and vegetables rot in American fields. Farms could fail, costing jobs and damaging the economy."Migrant labor is very important to agriculture," said Steve Ammerman, a spokesman for the New York Farm Bureau, a non-governmental organization with more than 200,000 members. "The average consumer would feel (the loss of workers) in many ways."