READ the NAFB’s National Ag News for Tuesday, August 28th

READ the NAFB’s National Ag News for Tuesday, August 28th

Sponsored by the American Farm Bureau Federation

USDA Announces Farm Trade Relief Package

Agriculture Secretary Sonny Perdue Monday announced details of the trade assistance package for farmers hurt by the President’s trade agenda. The $12 billion package will provide payments to producers as part of a “short-term relief strategy” to protect agriculture. The Department of Agriculture’s Farm Service Agency will administer the Market Facilitation Program to provide payments to corn, cotton, dairy, hog, sorghum, soybean and wheat producers starting September 4th, 2018. It’s important to note that payments will be based on actual production. Producers must harvest a crop and provide their production numbers to USDA before payment can be sent. The payments to producers will total $4.7 billion. Also included in the relief package, USDA’s Agricultural Marketing Service will administer a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities targeted by “unjustified” retaliation. And, through the Foreign Agricultural Service’s Agricultural Trade Promotion Program, $200 million will be made available to develop foreign markets for U.S. agricultural products.

Payments include:

Soybeans             1.65 per bushel for 50 percent of production

Corn                    One cent per bushel for 50 percent of production

Pork                    50 percent of the total number of pigs on hand as of August 1, $8 per pig.

Cotton                 Six cents per pound of 50 percent production.

Sorghum             86 cents per bushel of 50 percent production

Dairy                  The margin protection historic number at 12 cents per hundredweight times that production number. USDA has a number for 21,000 producers but for&; those who don’t have it can be calculated by USDA.

Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income for tax years 2014, 2015, and 2016 of less than $900,000. Applicants must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations. On September 4, 2018, the first MFP payment periods will begin. The second payment period, if warranted, will be determined by the USDA.

The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate. If the Commodity Credit Corporation announces a second payment period, the remaining 50 percent of the producer’s total 2018 actual production will be subject to the second MFP payment rate. Payments are capped per person or legal entity at a combined $125,000 for dairy production or hogs. Payment for dairy production is based off the historical production reported for the Margin Protection Program for Dairy. Payment for hog operations will be based off the total number of head of live hogs owned on August 1, 2018.

Agriculture Welcomes USDA Help, Urges End to Trade Disputes

Agriculture groups welcomed the aid offered by a Department of Agriculture relief package announced Monday, but urged the administration to end trade disputes. Pork exports are one of the hardest-hit export categories, as U.S. pork exports to China are down significantly for the year, with the value falling nine percent through June. The drop has come mostly because of the 50 percent additional tariff from China. The package will provide producers $8 per hog based on 50 percent of the number of animals they owned on August first. National Pork Producers Council President Jim Heimerl (Hi’-merle) stated that the U.S. pork sector was “grateful” for the relief package, “what pork producers really want is to export more pork, and that means ending these trade disputes soon.” Iowa Senator Chuck Grassley said the relief package was “welcome news” for farmers, but added “what they really want are long-term markets, not handouts.”

NCGA: USDA Trade Aid Won’t Make Up for Lost Markets

In response to the Department of Agriculture’s tariff mitigation package, the National Corn Growers Association says the plan “won’t make up for lost markets.” The organization reiterated its call for the Administration to rescind tariffs, secure trade agreements and allow for year-round sales of higher blends of ethanol; “no-cost actions that would allow for the marketplace to drive demand.” NCGA President Kevin Skunes says that corn farmers appreciate the help from USDA, but adds that the plan “provides virtually no relief to corn farmers.” According to an NCGA-commissioned analysis, which NCGA provided to USDA and the Office of Management and Budget, trade disputes are estimated to have lowered corn prices by 44 cents per bushel for crop produced in 2018. This amounts to $6.3 billion in lost value on the 81.8 million acres projected to be harvested in 2018. USDA’s plan sets the payment rate for corn at just one cent per bushel.

Trump Terminating Current NAFTA

The U.S. and Mexico have agreed to a new North American Free Trade Agreement framework, prompting President Trump to announce his intent to terminate the current agreement. That means Trump is seeking to replace NAFTA with an agreement that for now does not include Canada. The expected agreement between the U.S. paves the way for the U.S. to shift its negotiating efforts towards getting Canada to agree to the deal. Although, Trump said he preferred to rename the trade pact to the “United States-Mexico trade agreement.” There are still issues to work out with Canada, but administration officials a hopeful the issues can be resolved quickly. Trump Monday told reports Canada could have a separate deal or be included in the U.S.-Mexico deal. However, authority over his moves resides with Congress. U.S. Trade Representative Robert Lighthizer indicated he would send a notification letter to Congress later this week to withdraw from the current NAFTA and sign a new agreement with Mexico.

Farm Groups Respond to NAFTA Announcement

Farm country overall shows reserved optimism regarding the North American Free Trade Agreement announcement Monday. The announcement marks a step forward, as Mexico and the U.S. have a basic agreement in place. However, with Canada yet to be included, many questions remain. Farmers for Free Trade director Brian Kuehl says there is “significant work that remains” in delivering on trade priorities for agriculture.” The organization maintains that farmers will ultimately be judging any new NAFTA deal by two crucial measures: will it provide any new market access for American ag exports and will it do anything that erodes the gains the original NAFTA provided. Kuehl says U.S. farmers are looking for certainty and a “de-escalating” of the trade war that is putting U.S. agriculture “in the crosshairs.”  Meanwhile, the U.S. Grains Council noted the importance of Mexico to U.S. farmers in a statement by CEO Tom Sleight. Mexico is a top export market for U.S. corn and other products. However, Sleight says Canada is the second largest ethanol market and a top ten corn market for the United States. While hopeful Canada will soon re-engage in the talks, Sleight says “we continue to oppose withdrawal from the existing NAFTA under any circumstances except the adoption of a new, beneficial and trilateral pact.”

China Grain Imports Plunge Amidst Tariffs

Imports of grain to China plunged in July after rounds of heavy tariffs between the U.S. and China were enacted. Data reviewed by Reuters shows China imported 220,000 metric tons of sorghum in July, down 62.5 percent from 588,300 metric tons a year ago. The imports were also below June’s 450,000 metric tons, when buyers scooped up U.S. shipments of sorghum. The customs figures do not give a country by country breakdown, but China imports almost all its sorghum from the United States. In July, China imported 330,000 metric tons of corn, down 63 percent from last year, and wheat imports declined 43 percent from a year earlier. Customs data from China shows that the nation imports one-third of its corn and wheat from the United States. Market experts from China blame the ongoing trade war between the U.S. and China as the likely culprit for lower imports of grains. The trade war has targeted agricultural products from the U.S., including staple imports of pork and soybeans. Meanwhile, China has begun importing pork from Chili and the European Union.

SOURCE: NAFB News Service