Protectionist View Impacts on American Agriculture VERONICA NIGH AMERICAN FARM BUREAU FEDERATION 11/13/2018

Transcription

1 Protectionist View Impacts on American Agriculture VERONICA NIGH AMERICAN FARM BUREAU FEDERATION 11/13/2018

2 What s Changed and What Hasn t Trade is Still Important FTA Renegotiation Finally Concluding KORUS NAFTA/USMCA Special Investigation Impact Ongoing Trade Mitigation Package Future is Opaque

3 More than 20% of U.S. Ag Production is Exported Exports are a critical source of income for a wide range of ag products (2017/18). 80% 79% 76% 70% 67% 60% 50% 40% 62% 59% 55% 50% 46% 36% Specialty Bulk Dairy, Livestock & Poultry 30% 20% 10% 0% 21% 21% 19% 18% 16% 15% 10% * Corn & corn embedded in ethanol, DDGS, and HFCS exports 3

4 Export or Die Government payments make up only a small share of farm gross cash income. Exports support farm prices, which generate jobs and income for rural America Farmrelated income Government payments Livestock cash receipts Crop cash receipts Note: Crop insurance net indemnities included in farm-related income. Source: Farm Income Data, Updated August Economic Research Service, USDA.

5 USMCA Agricultural Provisions Canadian Dairy Policy Changes U.S. Poultry Access to Canada Canadian Grain Policy Changes Sanitary and Phytosanitary Provisions Biotechnology Provisions Beer, Wine, and Spirits Labeling, Sales Geographical Indications and Distinctive Products Protections for Proprietary Formulas U.S. Imports of Canadian Sugar, Dairy, Peanuts, and Cotton Agricultural Trade Issues Not Addressed

6 531,748 DAIRY MARKET ACCESS BY COMPARISON (MT) CA USMCA Global Exports MILK CREAM SKIM MILK POWDER 69,639 78,408 14,867 20,911 11,570 2,539 16, ,999 CONCENTRATED MILK YOGURT 4,828 13,920 5,890 5,252 22,865 2,161 27,846 11,183 23,364 21,019 4,495 WHEY POWDER NAT'L MILK CONSTITUENTS MILK POWDERS, CREAM POWDER CREAM POWDERS CHEESE ICE CREAM 83, ,652

7 U.S. Agricultural Exports and Non-Ag Exports Affected by Retaliation China % Ag $0 $10 $20 $30 $40 $50 $60 Billions Mexico % Ag Canada % Ag China 232 EU 232 India % Ag 68% Ag 14% Ag Ag Non-Ag Turkey % Ag $0 $5 $10 $15 $20 Billions

8 U.S. Ag Exports Affected by Tariff Retaliation Sorghum Soybeans Whiskies Prepared Foods Orange Juice Apples Pork Cranberries Cherries Ginseng Tobacco Almonds Pulses Cotton Dairy Products Walnut Fresh Fruit* Wheat DDGs Processed Corn & Sweet Pears 31% 3% 93% 65% 46% 43% 26% 24% 19% 18% 9% 4% 7% 18% 3% 47% 17% 15% 37% 6% 3% 65% $0 $5 $10 $15 $20 $25 Value in Billion Dollars Value Affected Non Affected Source: USDA FAS Global Agricultural Trade System (GATS) - BICO-HS10, WTO, FATUS

9 Value of 2017 U.S. Ag Exports Subject to 232 & 301 Retaliation Billions USD Soybeans Prepared Foods (1) Pork & Pork Products $0 $5 $10 $15 Millions USD Cotton Sorghum Dairy Products & Cheese Almonds Whiskies Apples Hay Wheat Corn & Sweet Corn Tobacco Fresh Fruit (2) Processed Vegetables (3) Pistachios Cherries Pulses (4) Orange Juice Walnuts Cranberries (5) Wine Rice DDGs Forest Products Beef & Beef Products Dog & Cat Food Macadamia Nuts Ginseng $0 $200 $400 $600 $800 $1,000 Canada EU-28 Mexico China India Turkey

10 Soybean Futures The November 2016, November 2017 and November 2018 soybean futures contract volatility from January through mid-august are compared here. Between April and July, the 2018 contract, when compared to the same months in 2016 and 2017, shows significantly more downward pressure. This is likely in large part due to the escalating trade dispute with key soybean purchasers, such as China. United States Department of Agriculture Foreign Agricultural Service

11 Corn Futures The December 2016, December 2017 and December 2018 corn futures contract volatility from January through mid- August are compared here. Between April and July, the 2018 contract, when compared to the same months in 2016 and 2017, shows a similar pattern, albeit the price downturn began a few weeks earlier than in 2016 and The small price recovery in July through mid-august is unique, especially given the expected large crop. United States Department of Agriculture Foreign Agricultural Service

12 Hard Red Wheat Futures The December 2016, December 2017 and December 2018 hard red wheat futures contract volatility from January through mid-august are compared here. Between April and July, the 2018 contract, when compared to the same months in 2016 and 2017, shows a similar pattern, albeit the price downturn began a few weeks earlier than in The price recovery in July through mid-august is unique. United States Department of Agriculture Foreign Agricultural Service

13 Lean Hogs Futures The December 2016, December 2017 and December 2018 lean hogs futures contract volatility from January through mid-august are compared here. Between January and April, the 2018 contract, when compared to the same months in 2016 and 2017, shows much more severe and significant downward pressure, especially from around February onward. This is likely in large part due to the escalating trade dispute with key pork purchasers, such as China. United States Department of Agriculture Foreign Agricultural Service

14 USDA MARKET FACILITATION PROGRAM Initial Direct Payments to Growers in 2018, Payments Based on 2018 Production $4.7 Billion Source: USDA

15 TRADE AID MARKET FACILITATION PROGRAM Market Facilitation Program Payment Rates and Estimated Round One Payments Commodity Initial Payment Rate Est. Initial Payment (in $1,000s) Cotton $0.06 / lb. $276,900 Corn $0.01 / bu. $96,000 Dairy (milk) $0.12 / cwt. $127,400 Pork (hogs) $8.00 / head $290,300 Soybeans $1.65 / bu $3,629,700 Grain Sorghum $0.86 / bu $156,800 Wheat $0.14 / bu. $119,200 TOTAL $4,696,300 Source: USDA NASS, USDA OCE, Farm Bureau Calculations

16 USDA FOOD DISTRIBUTION PROGRAMS $1.2 Billion Food Purchases in 2018, $300M Unallocated Grapes, $48,200 Rice, $48,100 Oranges (Fresh), $55,600 Potatoes, $44,500 Dairy, $84,900 Pistachios, $85,200 Apples, $93,400 Pork, $558,800 Walnuts, $34,600 Cranberries, $32,800 Orange Juice, $24,000 Plums/Prunes, $18,700 Navy Beans, $18,000 Pecans, $16,000 Beef, $14,800 Kidney Beans, $14,200 Peanut Butter, $12,300 Peas, $11,800 Macadamia, $7,700 Lemons/Limes, $3,400 Sweet Corn, $2,400 Hazelnuts, $2,100 Source: USDA Figs, $15 Lentils, $1,800 Blueberries, $1,700 Strawberries, $1,500 Pears, $1,400 Grapefruit, $700 Apricots, $200

17 A Drop In the Bucket TRADE AID VS TOTAL ESTIMATED LOSSES Trade Aid Total Estimate Loss LOST U.S. FRUIT & NUT EXPORTS (PER YEAR) - $2.64 BILLION PISTACHIOS ALMONDS ,580 APPLES WALNUTS

18 Deck Chair Movement Partner Top 5 Ag Markets FY 2017 Top 5 Ag Markets FY 2018 (May) $ Billion Top 5 Ag Markets FY 2018 (Aug) Top 5 Ag Markets FY 2019 China Canada Mexico Japan EU South Korea

19 Making Brazilian and Argentinian Beans Great Again

20 The Not So Mysterious Case of Missing Sales

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24 P QD United States Department of Agriculture Foreign Agricultural Service

25 Questions? Veronica Nigh Economist Office: