Progress on Multiple Trade Deals Brings Optimism for 2020

11:35AM Dec 30, 2019
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Policy Outlook 2020
( Farm Journal - Lori Hays )

The end of 2019 brought a flurry of trade activity with the House passage of the U.S.-Mexico-Canada Agreement (USMCA), completion of a Phase One trade deal with China and a trade deal with Japan. That trade success is fueling optimism for 2020 among agricultural policy leaders.

In a year-end policy series for the DC Signal to Noise podcast, five ag policy leaders were asked what makes them hopeful for 2020. Their full responses, edited only for clarity and length, are below:

Jim Wiesemeyer – Policy Analyst for Pro Farmer

“I think we've got momentum going relative to some of these thorny trade issues that should be out of the way by the time you run this: the USMCA vote in the House and we’ll have the USMCA victory vote in the Senate early in 2020. And at least we have the parameters of a Phase One agreement with China. And those purchases should begin, if they haven't already, as we unfold 2020 and that covers a number of US commodities. So, I think we've got a pretty good fundamental base and then of course, going into the implementation of the U.S.- Japan Trade Agreement, so I'm fairly upbeat on 2020.”

Senator John Hoeven – Republican from North Dakota

“[Farmers have] been suffering from low commodity prices, the challenges of the trade negotiations, and really, really tough weather right? So, I think at this point there’s still work getting them through this tough stretch. But I think the trend line is better, and I think it's better on all three. We’ve talked about the trade agreements, we've talked about the MFP [Market Facilitation Program] and the disaster assistance, and I'm hopeful that the purchases and so forth we talked about will start to help move those commodity prices back the right way. So, it's a tough stretch. We're not through it yet. But I think the trend line is going to be in the right direction. And then you also have the Farm Bill, where we've tried to make improvements to ARC and PLC and some of the other programs that hopefully will be more responsive to farmers’ needs.”

Gregg Doud – Chief Agriculture Negotiator for the U.S. Trade Representative

“Getting on an even keel and turning market access, that’s going to make a big difference right out of the chute with Japan. Obviously, the Chinese deal is a complete game changer as we get that thing up and running and the commitments that they've made, and we'll see how that goes. 

“The thing going forward to me is on the demand side. I don't think most people realize the U.S. economy has been tremendous for the last several years. But you look at South American economies, you look at the Chinese economy, you look at the European economies, they've been soft. And yet the demand, particularly on the meat side of the equation due to ASF [African Swine Fever] has been extraordinary. 

“I would argue that on the meat side of the equation, there are still a lot of developments yet to evolve and occur on that. So, I think it's going to be really Interesting next year to see what happens on the meat side of the equation. To give you some perspective, China bought, and most people don't realize this, China bought $5 billion in beef from the world last year. Through October of this year, they've already bought $6 billion. So, we're seeing there the growth in meat demand not only in China, but in Southeast Asian and so many parts of the world really exploded. And I think I think we're well positioned to take advantage of that. Most people don't realize our pork production is up at 6-7% this year, that's unbelievable, unprecedented.”

Roger Johnson – President, National Farmers Union

“Well, the main thing that gives me hope is that I've been a farmer all my life, and I don't know any farmer who isn't an optimist. That's easier to say that than it is to point to certain things. 

“I mean, certainly this last announcement on China is hopeful. But I'm really skeptical because we've been down this road so many times and it’s all fallen apart. And I think there's been a lot of damage done to our reputation around the world. 

“You know, hopefully the weather is better next year. It’d be hard for it to be a whole lot worse, although, I’d probably say that never underestimate Mother Nature's ability to throw us a curveball. 

“Listen, don't ever underestimate the ingenuity and the perseverance of U.S. family farmers. They’re always going to be looking for opportunities. They're going to do the very best that they can. 

“You know, if I look longer term, I think that we are on the verge of figuring out how to make carbon, something of value that farmers can produce. And that's a really big opportunity if and when that happens. Just for folks that may be skeptical about it., last year in Congress there was a thing that passed that's referred to as 45 Q. Now that designation is a part of the Internal Revenue Service tax code, and what it does is it gets it gives about a $50 tax credit, it varies depending upon whether industrial sources take carbon out of the air and use it for enhanced oil recovery or whether they take it out of the air and sink it deep into the earth. But in either case, they're sequestering it. Fifty dollars a ton is a lot of money, and there's an effort underway to take that same process and apply it to agriculture. There's a lot of farmers that are figuring out the use of cover crops, certain conservation practices, etc., etc. that we can demonstrate taking carbon out of the air, putting it in the soil. If we can get the protocols, right, the process right, we can get the incentives right. I think there's significant opportunity to add value to farm income as a result of this It’s not likely to happen next year, but it will happen over the long term. I'm convinced of that.”

Dale Moore – Executive Vice President, American Farm Bureau Federation

“I think when we look at where we've got things coming together, we’ve got progress on China progress on USMCA, two big trade issues, we had progress on Japan. So on the trade front, after all of the roller coaster, Chutes and Ladders, whatever game one wants to point to that we've been through on the trade front, agriculture is starting to feel like maybe there is a light at the end of the tunnel, and it's daylight, not just another train coming at us on this front. So that's one area.

“We are also seeing the process moving forward in as we go into2020, looking at where we are on Waters of the U.S. Administrator [Andrew] Wheeler and the folks at EPA, having rolled back that Waters of the U.S. rule and getting the new rule going forward. We know there’s going to be just as many legal challenges to it from the other side. As you know, we and others were charging against it, trying to slow down President Obama's rule in this regard. So that's an area where we see progress.

“We’re in an even-numbered year coming up. That always kind of changes the game table just a little bit. It gives us an opportunity, hopefully, to work on some of the regulatory reform issues. 

“And then there's the work we are doing with Farmers Union and Farm Credit on rural stress. You're talking about 2019, but when you go back to 2018, 2017, 2016, and so forth, where this farm economy has been, and then you add in the trade tariff wars, and then you add in Mother Nature, particularly in 18 and 19, this is one of those times where we recognize that the men and women I work for all across the country are facing some really tough times. It's not something that folks like to talk about, but we want to make sure that the resources that they need, that they are able to access to help them through the stressful times until we start seeing a little brighter future here in this agricultural economy.”