READ the NAFB’s National Ag News for Friday, April 28th

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READ the NAFB’s National Ag News for Friday, April 28th

Trump to Renegotiate NAFTA, For Now

President Donald Trump says he has agreed to renegotiate the North American Free Trade Agreement, rather than terminate the agreement. Following news that the White House was preparing an executive order to terminate NAFTA, the President said on Twitter Thursday that leaders called from Mexico and Canada “asking to renegotiate rather than terminate,” adding he agreed to do so. But, only if the U.S. receives a fair deal in renegotiations. Word of an executive order to terminate NAFTA angered agriculture groups. The National Corn Growers Association denounced the reports, and NCGA President Wesley Spurlock said withdrawing from NAFTA “would be disastrous,” while urging the President not to remove the U.S. from the trade agreement. Mexico is the top buyer of U.S. exported corn. U.S. Grains Council President and CEO Tom Sleight said the council was “shocked and distressed” by the news, adding there is strong support to update and modernize NAFTA. Following the outcry, President Trump said in a statement: “It is my privilege to bring NAFTA up to date through renegotiation.” He told reporters Thursday afternoon that he had been planning to terminate NAFTA “as of two or three days from now.” But now, he says: “We’re going to give renegotiation a good, strong shot,” and says renegotiation begins today.

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Former USTR Says Future NAFTA Renegotiations Unpredictable

A former U.S. trade representative warned Canada that trade negotiations with the U.S. would be much less predictable with the Donald Trump administration. Obama-era USTR Michael Froman told Canada-based CBC News much of the North American Free Trade Agreement renegotiations with the Trump administration will likely be familiar ground, albeit with a less predictable partner. Froman helped lead the Obama administration to reach an agreement on the Trans-Pacific Partnership, a trade agreement President Trump removed the United States from upon taking office. Froman says: “We already have renegotiated NAFTA, it was called TPP.” Included in the TPP, Froman says Canada and Mexico agreed to a number of revisions that were not in NAFTA that helped make NAFTA a 21st-century agreement. He says it’s unclear what the new administration will seek that goes beyond the scope of the TPP agreement. Froman, now a distinguished fellow at the Council of Foreign Relations, said it can be reasonably expected that the White House will want to address supply management in the dairy industry, and seek changes to softwood lumber, among the vocal criticisms of the Trump administration of late.

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U.S. Milk Exports to Mexico at Risk

$1.2 billion of milk exports from the U.S. to Mexico are at risk as Mexico appears to be seeking new trading partners. Mexico is America’s top dairy exporter, and as the Donald Trump administration makes trade relations uneasy with its North American Free Trade Agreement counterparts, Mexico is in talks to export dairy products from New Zealand. In the first two months of 2017, Mexico increased its imports of skim milk powder from the European Union by 122 percent over last year. Mexico has also been exploring talks with dairy powerhouse New Zealand. That country’s trade minister visited Mexico in February to discuss a potential trade deal, according to Bloomberg news. University of Missouri agricultural economist Scott Brown says Mexico is “looking to make sure they have market alternatives because of the rhetoric from the U.S. on renegotiating NAFTA.” But, CoBank economist Ben Laine says “it’s not just the NAFTA talk.” He says demanding that Mexico pay for a border wall and taking a hard line on immigration likely have an impact, as well.

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Farm Bureau Responds to President’s Tax Plan

American Farm Bureau Federation President Zippy Duvall welcomed the inclusion of eliminating the estate tax in President Donald Trump’s tax plan unveiled this week. However, Duvall says tax reform must treat all businesses fairly, noting that “most farm and ranch businesses don’t operate like large corporations.” Duvall says most farms are family-run and depend on deductions and provisions that give them the flexibility they need to keep their businesses running in all seasons. Duvall says farmers and ranchers have already benefitted from congressional action to reduce the burden of the estate tax, known as the death tax, and that AFBF is “ready to bury the death tax once and for all.” Duvall also says lower tax rates will go a long way in helping farmers and ranchers. But the future of other important provisions for agriculture, like immediate expensing, the deduction for interest expense, cash accounting and like-kind exchanges, is still unclear. He says the tax code “should not add to the challenges” to farmers, and that AFBF is ready to work with the administration and Congress to address all of agriculture’s needs in tax reform.

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Cargill Exiting U.S. Cattle Feeding Business

Cargill has announced it will exit from its U.S. cattle feeding business. The move means that in the last year, the company has gone for the fourth-largest feeder in the U.S., to completely leaving the sector. Cargill has reached an agreement to sell its last two feed yards to Green Plains Inc., which will purchase the feed yards for $36.7 million. Cargill’s withdrawal from the feeding business highlights a change in priorities at the company, which says it is the world’s largest supplier of ground beef, according to Reuters. Cargill is seeking to expand its North America-based protein business by exploring plant-based protein, fish and insects, along with other opportunities linked to livestock and poultry. The Green Plains Cattle Company, a subsidiary of the ethanol producer Green Plains Inc, will supply cattle to Cargill for processing through a multi-year agreement, according to the companies. By buying the feed yards, Green Plains gains markets for its distiller’s dried grains, an ethanol byproduct used to feed livestock.

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Brazil meat Companies Lost $1.5 Billion after Investigation

Meat companies in Brazil lost the U.S. equivalent of $1.52 billion after the nation’s federal police announced an investigation into a tainted meat scandal. Meat industry publication Meatingplace reports an economic measure of the losses discovered the declines that followed an investigation which stopped virtually all exports from Brazil for a brief time. The bulk of the losses were attributed to JBS, SA, which lost the U.S. equivalent of $1.4 billion in market share in the month following the investigation. Federal police in Brazil say meat inspectors were bribed to allow tainted meat to pass inspection for export. Brazil’s Federal Police has charged 63 people for participation in the scheme. The United States, while saying no tainted meat from Brazil reached U.S. borders, announced stepped-up inspection at the time, as well.

SOURCE: NAFB News Service

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