The U.S. Grains Council received initial reports that Friday’s earthquake and the subsequent tsunami may have caused significant damage to many of Japan’s agricultural facilities and production areas. While the extent of the damage is not yet known, it will likely impact grain trade.
“Some ports in northern Japan, Kushiro, Hachinohe, Ishinomaki and Kashima, were hit by the tsunami. We’ve heard some feed mills and livestock operations have also been damaged by the tsunami. Those facilities were not severely damaged by the earthquake itself but were affected by the tsunami,” said Tommy Hamamoto, USGC director in Japan. “It is too early to tell what effect this will have on Japan’s agricultural sector, but it could be of significance.”
Alistair Polson (center right) and Terry Meikle (far right) met with CFB leadership this week to discuss trade.
Yesterday, Don Shawcroft and Troy Bredenkamp met with Alistair Polson, New Zealand’s Special Agricultural Trade Envoy and Terry Meikle, the New Zealand Embassy’s Secretary for Trade and Agriculture. The meeting was an informal way to share about agriculture issues from two countries across the Pacific Ocean from each other. Mr. Shawcroft and Mr. Bredenkamp provided a survey of Colorado agriculture and the issues we face. Mr. Polson was particularly interested in Colorado’s water administration system and how water is balanced between ag and urban needs.
Mr. Polson, himself a sheep and cattle rancher in New Zealand, spoke about his countries support for the Trans Pacific Partnership (TPP) and asked that Colorado farmers and ranchers support the effort. The TPP is a trade agreement between 9 Pacific Rim nations. Is is currently in the negotiation stage and the 6th round will take place at the end of this month.
The TPP could open up many Pacific nations to U.S. goods, services and agricultural products.
Mr. Polson met with the Commissioner John Stulp, Leprino Cheese, JBS Swift, and other ag groups during his two day tour of Colorado.
President Obama meets with Mexican President Felipe Calderon last week.
President Barack Obama and Mexican President Felipe Calderon on Thursday reached an agreement to resolve the long-running dispute over cross-border trucking between the two countries. The agreement may be finalized as soon as June.
“This agreement has been a long time coming and, with half of the $2.4 billion in Mexican retaliatory tariffs to be lifted as soon as the agreement is finalized, this will have an immediate positive impact on U.S. agricultural exports,” said AFBF President Bob Stallman. The remainder of the tariffs will be lifted when the necessary safety tests are completed and the first Mexican truck rolls across the U.S. border.
Mexico is the third-largest agricultural export market for U.S. farm goods. Farm Bureau is urging the administration to finalize the agreement quickly.
The world is consuming grains faster than farmers are growing them, draining reserves and pushing prices to the levels that fueled food riots in poor countries three years ago. A big U.S. crop will be needed to meet the demand, according to the Wall Street Journal.
“The stage is set for very serious disruptions, should weather disasters happen,” said Keith Collins, the former chief economist of the Agriculture Department. “It seems clear to me that the chance of a more widespread global food crisis has increased.”
The rise in prices also has economists urging caution among policy makers.
Economists with the World Bank and the International Food Policy Research Institute are urging President Barack Obama not to overreact to recent spikes in food prices by imposing export bans on U.S. agricultural products.
“We should expect fluctuations, but we shouldn’t exacerbate these fluctuations by imposing obstructions to the market that could make things worse,” said Manuel Hernandez, a postdoctoral fellow at IFPRI. “The situation is not the same as in 2007 and 2008. So there is no major concern that we should worry about another food crisis.”
Colorado is one of 10 new states that can now ship seed potatoes to Thailand, Agriculture Secretary Tom Vilsack announced Tuesday.
The newly eligible states are Colorado, Maine, Michigan, Minnesota, Montana, Nebraska, New York, North Dakota, Wisconsin and Wyoming. In 2009, Thailand announced it would accept seed potatoes from California, Idaho, Oregon and Washington.
“This is a promising development for U.S. seed potato producers who will now be able to compete in Thailand, the largest potato growing country in Southeast Asia,” Vilsack said. “Southeast Asia is one of the fastest growing markets for U.S. agricultural products, and exports there are expected to grow by more than 25 percent this year. This action by the government of Thailand will provide buyers with additional supplies of high-quality seed potatoes.”
U.S Trade Representative, Ron Kirk
In testimony today before the House Ways and Means Committee, U.S. Trade Representative Ron Kirk said the Obama administration will pursue trade agreements with South Korea, Colombia and Panama this year, but will not sacrifice concerns over labor and human rights.
In the meantime, eight former agriculture secretaries wrote to Congress on Tuesday urging fast passage of the Korea-U.S. Free Trade Agreement. In the letter, former secretaries Bob Bergland, John Block, Mike Espy, Dan Glickman, Mike Johanns, John Knebel, Ed Schafer and Clayton Yeutter said the agreement “will offer enormous new opportunities for our products in a market that is large and growing.
The Transportation Department has released a concept paper to Mexico in an attempt to begin negotiations to resolve the U.S.-Mexico trucking dispute. Contents of the concept paper can be found here.
This concept paper is the first attempt by the Obama administration to resolve a two-year trade dispute between Mexico and the United States. The dispute halted arose when Congress the cross-border trucking pilot program. The pilot program was developed and implemented to address Mexico’s concerns that the United States was not fulfilling its obligations under the North American Free Trade Agreement.
After more than a year, the Obama administration has moved on its promise to help fix the trade dispute with Mexico over the cross-border trucking program, a provision contained in the NAFTA agreement. The dispute centers around the nixing of a bush-era program that allowed Mexican trucks to operate north of the border.
Since the cancellation of the program, the Mexican government has slapped the U.S. with over $2 billion in punitive tariffs.
Transportation Sec. Ray LaHood delivered a concept plan to congress last week that announced the administrations intention to end the trucking ban. The transportation secretary said a formal proposal could emerge in coming months, and another U.S. official said the goal was to have the nearly two-year-old ban lifted “as soon as possible.”
The American Farm Bureau Federation is pleased the U.S. and Korean governments have come to an agreement that will allow the U.S.-Korea Free Trade Agreement to move forward, AFBF President Bob Stallman said Friday, following the announcement of the agreement.
“We are optimistic that what has been agreed to will allow the FTA to reach the steps of Congress for passage. Farm Bureau has been a strong advocate for passage of the agreement and urges President Obama to send the implementing language to Capitol Hill as soon as possible,” Stallman said.
“While we are disappointed that there have been changes to the agreement in regard to U.S. pork access to the Korean market, our pork producers will retain better access than our competitors because of the FTA. It is critical that the U.S. and Korean governments continue consultations to improve access for U.S. beef into the market. Regardless, it cannot be overlooked that this agreement presents a great opportunity for U.S. agriculture and warrants the support of all members of Congress,” Stallman said.
According to the NPPC, U.S. pork exports to Mexico have fallen by a whopping 20 percent since the Mexican government added pork to the list of U.S. products against which it is retaliating for the failure of the United States to live up to a trade obligation.
According to recent data from the U.S. Department of Commerce and the Canadian government, U.S. pork exports to Mexico dropped by nearly 5,000 metric tons from August to September – a loss of about $9 million – while Canadian pork exports increased by almost 2,000 metric tons.
“The trucking issue needs to be resolved now, before the U.S. pork industry loses even more of its market share in Mexico,” said NPPC President Sam Carney, a pork producer from Adair, Iowa. “We’re talking about the livelihoods of American hog farmers; we’re talking about lost U.S. jobs. And it isn’t just the pork industry; this is happening to the producers of the other 98 products on the retaliation list.”
The Obama Administration has been assuring exporters for the better part of a year that a resolution to the trucking dispute is near.
Planting in the state of Paraná, Brazil
Brazil’s success in turning its savannah Cerrado into fertile farmland with the help of U.S.-educated Brazilian scientists should be a wake-up call to the U.S., according to Dave Salmonsen, American Farm Bureau Federation trade specialist.
“I think we’ve been watching Brazil for the last several decades grow their agriculture, grow their presence on the world stage and bring new lands into production,” Salmonsen said. “They are putting more investment into their transportation system, which has been a weakness for them. They are starting to harness the Amazon.”
Record U.S. agricultural exports are providing an unexpected boost to President Barack Obama’s goal of doubling U.S. exports by 2015. Farm exports from the U.S., the world’s largest grain shipper, may top the 2008 record of $115.3 billion in 2011, according to Joe Glauber, the Agriculture Department’s chief economist.
The boom is expected to continue through 2011, with wheat prices predicted to average $7.28 per bushel and corn prices forecast to be $5.83 per bushel, according to a Bloomberg News survey.
“It’s going to be the best year American farmers have had in two and a half decades,” said Dennis Gartman, an economist and editor of the Gartman Letter in Suffolk, Va. The next big winners are obviously the fertilizer companies and farm-equipment manufacturers. The winner no one seems to be talking about is small banks in the Midwest.”
No country has disrupted grain markets over the years more dramatically than Russia — perpetrator of the infamous “great grain robbery,” when the Soviet Union secretly bought up a quarter of U.S. wheat stocks after a poor harvest in 1971.
Even with the embargo, USDA estimates food prices will rise 15 percent in Russia over the next year. Clayton Yeutter, who served as secretary of agriculture in the first Bush administration, calls the embargo “singularly unhelpful” in a period of economic uncertainty.
Even as prices rise, China and India are sitting on very large wheat stocks — a reflection of policies heavily tilted toward protecting domestic consumers. India’s surplus stocks are twice the government’s desired level and China’s amount to 43 percent of its total yearly grain production, according to USDA estimates. China has discouraged exports since 2008 and imported some wheat this year. Indian exports are negligible because the government has been supporting the price of wheat paid to farmers at above the world price.
Colorado agricultural exports in the first half of the year rose 27 percent from the same period last year, to $508.9 million, state officials said Wednesday. This success exceeds the national ag export increase of 15 percent.
Colorado exports of meat, hides and skins; animal products such as milk, eggs and honey; miscellaneous food; and miscellaneous grains, seeds and fruit were all up.
“With continued efforts to open more global markets to Colorado and U.S. beef, we look forward to further increases in our beef exports,” Colorado Agriculture Commissioner John Stulp said in a written statement.
Mexico’s Economy Ministry announced Monday it would add 26 U.S. products to it tariff list while removing 16 others. Included in the tariffs are pork, applies, California oranges and pistachios. The levies would affect 54 agricultural products and 45 manufactured ones.
The move by Mexico is seen as a push to get the Obama administration to end the long-running cross-border trucking ban. The Administration has continued to delay a decision on the program despite telling congress in March that a decision on the program would be made “very soon.”
The move is expected to increase friction between the White House that wants to expand trade and many congressional Democrats aligned with unions that support the trucking ban.
A very solid June performance allowed U.S. pork and beef exports to finish the first half of 2010 with strong momentum. According to statistics released by USDA and compiled by USMEF, pork exports of 361.6 million pounds were 24 percent higher than June 2009. Pork export value was $316.4 million, up 34 percent. June beef exports were 25 percent above year-ago volumes, totaling 212.9 million pounds while the value in June was up 37 percent to $377.6 million.
Beef export volume reached 1.09 billion pounds – up 14 percent over the first half of 2009. Export value has fared even better, rising 22 percent to $1.83 billion. Export value per steer and heifer slaughtered was $139, compared to less than $115 last year. The percentage of total production exported increased from 10 percent to 11 percent.
One drag on U.S. export markets in the first half of the year is Cuba. U.S. exports to Cuba dropped 28 percent for the first six months of 2010, to roughly $220 million, due to severe economic problems on the island nation, according to the New York-based U.S.-Cuba Economic Trade Council.
USDA announced today that Colorado winter wheat production broke a record in 2010, with an average yield of 45 bushels per acre. This is the highest ever yield per acre for Colorado and raises the total production in 2010 to 103.5 million bushels. The 10-year average for winter wheat production is 63.3 million bushels, or 30 bushels per acre.
This is the largest winter wheat crop harvested in Colorado since 1985, when 134.5 million bushels were harvested. The following year, a large percentage of land was taken out of production and put into the Conservation Reserve Program (CRP). In 1985, there were 3.7 million acres planted and 3.45 million acres harvested. This year, 2.45 million acres were planted and 2.3 million acres were harvested.
The United States stands to gain a good share of the wheat export market that Russia is forfeiting due to the Russian government’s decision to halt grain exports until the end of the year, according to John Anderson, an economist with the American Farm Bureau Federation.
The Agriculture Department today released its August World Agricultural Supply and Demand estimates or WASDE report. In the report, USDA projected a huge drop in Russian wheat exports for the 2010-2011 marketing year: 3 million metric tons, compared to 18.5 million metric tons, in the 2009-2010 marketing year. Russia decided to exit the grain export market this year because of a serious drought that is reducing crop prospects.
“This is a jaw dropping reduction in exports for Russia,” Anderson said. “And because the United States is expecting a good wheat crop with good stock levels, our farmers stand to take up a big share of wheat exports that would have gone to Russia.”
Congress isn’t expected to take action on Rep. Collin Peterson’s Cuba trade bill until September, when lawmakers return from the August recess.
“It’s great policy,” said AFBF trade specialist Chris Garza. Unfortunately the bill is caught up in the politics of the issue. There are still many members out there, particularly those from Florida, who see any easing of the embargo as a gift to the Castros. This is not the case. This bill is about increasing U.S. agricultural exports.
“This bill is not about opening up the U.S. market to Cuba. This bill is about [re]moving the restrictions that we have placed on our own farmers to be able to export to Cuba. This is a gain-gain situation, a gain for U.S. farmers and a gain for the people of Cuba to be able to have quality food on their tables that comes from U.S. farmers,” Garza said.
The American Farm Bureau Federation (AFBF), the Coalition of Service Industries (CSI) and the National Association of Manufacturers (NAM) put forth a comprehensive approach today to double U.S. exports in five years – a key goal of President Obama’s. Under this approach, the three organizations outline policy changes needed to improve market access and level the playing field in a competitive global market. Doubling exports in five years is an ambitious but achievable goal if major changes are enacted.
South Korea is currently the largest growth market for U.S. beef exports, according to statistics released last week. South Korea moved ahead of Japan and Egypt to become the No. 3 market (by volume) for U.S. beef, a 66 percent increase over last year.
Joel Haggard of the U.S. Meat Export Federation’s Asia Pacific region told Brownfield Ag News a multimedia imaging campaign that kicked off with focus group interviews with South Korean consumers is responsible for the increase in exports.
“A couple of points that came out after talking to a number of consumers and a number of focus groups: we need to abolish the negative image of BSE and the factory farm, we need to show the U.S. industry commitment preferably from the producer,” Haggard told Brownfield. South Korean consumers appear to be responding to producer-focused messages by buying more U.S. beef.
Senate Majority Leader Harry Reid (D-Nev.) has ended efforts to include cap-and-trade provisions in energy legislation the Senate is expected to consider. Instead, Reid plans to pass a watered down bill that will address offshore oil drilling and energy efficient buildings, natural gas vehicles and funding for the Land and Water Conservation Fund.
Reid plans to have the Senate consider the bill before the August recess. The decision to exclude a cap on greenhouse gases is seen as a major setback for the climate change bill passed by the House last year. Obama made “cap and trade” a significant element of his environmental legislative agenda but this does not mean the efforts were good legislation.
The science behind the theory of climate change, which was the driving force behind cap and trade, is facing fundamental challenges. The credibility of researchers and institutions are in question.
The House bill includes cap-and-trade provisions strongly opposed by Farm Bureau.
American Farm Bureau Federation President, Bob Stallman, encourages lawmakers to lift the last ban on travel to Cuba. Lifting the bad would bring “enhanced agriculture trade,” Stallman states.
Travel to Cuba by Americans, barred for more than four decades, has a direct and indisputable connection to increasing the sale of U.S.-grown food to Cuba. If more Americans can travel to Cuba, more American products will be demanded there and that means increased trade for U.S. agriculture.
Restrictions on Japanese livestock transportation will remain in place until July 27 as a result of another foot-and-mouth disease suspect according to Meatingplace.
In the city of Miyazaki another cow displays symptoms of the highly contagious disease according to The Japan Times. Drooling and other FMD symptoms alerted officials on a follow up after some blood tests. Although all 16 cows at the affected farm were slaughtered and buried, this cow with symptoms appears only 800 meters from the original June 18 site.
The new discover will push back plans to declare the outbreak’s end to at least July 27. Officials had hoped to lift the bans as soon as July 16. However, restrictions will remain until the outbreak’s declared end.
On Monday, Brazil’s Ministry of Agriculture was hopeful to restart exports of Beef to US in the very near future. The Ministry will meet with the U.S. this week about finalizing an action plan for testing meat shipments. Upon acceptance, processed beef shipments could quickly restart according to Brazil’s secretary of agricultural defense department Francisco Jardim.
Brazil voluntarily suspended beef exports to the U.S. in May after authorities rejected a shipment of beef from Brazil’s JBS SA – the world’s largest beef producer. The U.S.’s standards for clean safe beef would not allow the high residue of Ivermectin beef enter the U.S. markets. Brazil’s Agriculture Ministry immediately set out to review health standards and find a common ground to meet U.S. standards.
Some $50 million in lost processed beef exports is the result of the suspension according to Otavio Cancado, president of Brazil’s beef export association.Brazil is the world’s No. 1 esporter of beef and about 6% of export sales go to the U.S.
The House Agriculture Committee ended June on a positive vote. Approval of the Cuban trade bill is sure to stimulate the US agriculture industry and put American ag products on the front of the Cuban market.
The American Farm Bureau Federation is pleased with the committee’s vote. “We are hopeful the House will expedite consideration of this bill so we can take advantage of our competitive position in the Cuban market” remarks AFBF President Bob Stallman.
Last week, Stallman expressed AFBF’s strong support for the measure, H.R. 4645, the Travel Restriction Reform and Export Enhancement Act, sponsored by House Agriculture Committee Chairman Collin Peterson (D-Minn.) and Rep. Jerry Moran (R-Kan.). The bill eliminates many restrictions on exports of U.S. agricultural commodities to Cuba, as well as modifies other U.S. policies that hinder U.S. exports to the island nation.
A U.S. Grains Council official says the opportunity exists for China to import what he describes as a “huge” amount of U.S. corn to meet current demand, before the 2010 crop enters the market.
The Grains Council’s assistant director in China made his observation following a recent tour of the corn growing area in northeast China. He says China’s 2010 corn planting acreage is lower than expected due to abnormal rains, snow and temperatures this spring.
China’s current supplies show significant signs of degradation. Some corn storage facilities are reportedly showing a 20 to 30 percent mold problem.
The Grains Council reported earlier in May that China had booked over 1 million tons of corn imports this year. The recent news of planting and storage trouble within the county will only help to boost that number.
Pending Free Trade Agreements with South Korea, Colombia and Panama represent immediate growth opportunities in both revenue and jobs for the meat and poultry sector. The third largest beef exporter in the world, the United States exports more than 897,000 metric tons valuing more than $3.1 billion in 2009. Pork and poultry exports are equally as competitive.
Free Trade Agreements with South Korea, Colombia and Panama could create an additional $2.3 billion in exports and create nearly 30,000 new jobs. The jobs resulting from this growth, both in the commodity groups and downstream, would include an estimated 18,000 jobs in the beef industry, 10,300 jobs in the pork industry and 1,200 jobs in the poultry industry. Trade numbers are based on projections from the respective commodity groups. Job creation data is based on employment multiplier projections from U.S.D.A.’s Economic Research Service (E.R.S.) and industry groups, which estimate:
- For every $1 billion in beef exports, 12,700 jobs are created.
- For every $1 billion in pork exports, 13,333 jobs are created.
- For every $1 billion in poultry exports, 11,853 jobs are created.
Over the course of the next decade, the Economic Research Service estimates meat exports to rise over twenty percent. However, for this potential to be realized, access to key growth markets must be secured now.
U.S. exports for fiscal 2010 are poised to achieve a value of $104.5 billion in sales—an $8 billion increase over last year and the second highest level in history, according to Outlook for U.S. Agricultural Trade released Thursday.
The trade surplus in agriculture is now forecast to reach $28 billion, the second highest ever achieved.
The report comes on the heels of a historic six-month pace of U.S. agricultural exports, which shattered records with $59 billion in sales in the first half of the fiscal year and generated a 14 percent increase over the same period last year.
U.S. agricultural exports to China grew by nearly $3 billion during the first half of the fiscal year to $10.6 billion, making China the United States’ top market for this period.