Trade- Agricultural Economy
Doug Palmer reported yesterday at Politico that, “President Barack Obama’s abilities as negotiator-in-chief for the United States will be put to the test this week on a trip to Asia that could set the stage for the conclusion of a huge new free-trade agreement. But the deal faces even more hurdles at home because of opposition from fellow Democrats.
“The trip comes at a critical time for talks on the proposed Trans-Pacific Partnership, a regional free-trade deal that companies hope will boost exports by billions of dollars but labor groups and other opponents fear will move jobs overseas and weaken consumer protections.
“The TPP pact is a key part of the White House’s economic ‘rebalance’ toward Asia. A main goal of the trip is to show that Obama remains committed to that vision, despite his decision last October to cancel a visit to the region because of the U.S. government shutdown.”
Mr. Palmer noted that, “The talks between Obama and Japanese Prime Minister Shinzo Abe on Thursday are the most important of the trip from a trade perspective, with the two countries locked in a tough negotiation over longtime Japanese barriers to U.S. agriculture and automotive exports. U.S. officials said the two leaders won’t announce an agreement but will review the overall status of the talks and prod negotiators to work harder to bridge remaining gaps.”
The Politico article explained that, “Despite Japan’s promise to put all sectors on the table in the talks, powerful domestic farm groups have made it difficult for Abe to agree to eliminate tariffs in five ‘sacred’ categories: rice, dairy, sugar, wheat, and pork and beef.
“The United States has its own sensitivities, including automobiles, as Detroit automakers fear the removal of a 2.5 percent tariff on cars and a 25 percent tariff on trucks could lead to more competition from Japan.”
Colleen McCain Nelson reported in today’s Wall Street Journal that, “The president’s goal in traveling to Asia is to reinvigorate his administration’s effort to rebalance its relationship with the fast-growing region and to reinforce pledges to strengthen both economic and security ties.
“This trip will be short on tangible deals. U.S. officials said that the focus is more building momentum than on making major policy announcements.”
The Journal article pointed out that, “U.S. officials sought to tamp down expectations for the Trans-Pacific Partnership, the key economic component of the pivot to Asia.
“Senior administration officials have reported that talks with Japan have yielded progress in recent days, but said that this week’s meeting with Prime Minister Shinzo Abe is aimed at building momentum—not to produce a breakthrough.
“Significant differences remain on issues such as increasing U.S. access to Japan’s automobile and agricultural markets, an official said.”
Also, Mitsuru Obe reported yesterday at the Japan Real Time Blog (Wall Street Journal) that, “Two days before U.S. President Barack Obama arrives in Tokyo, a U.S. congressional delegation visited Japanese Prime Minister Shinzo Abe, urging him to take the bold steps necessary to reach a broad free-trade deal and revitalize Japan’s economy.
“‘We want to underscore how important the [Trans-Pacific Partnership] is for us in areas such as agriculture and autos,’ said U.S. House Budget Committee Chairman Paul Ryan, the 2012 Republican vice presidential candidate and an outspoken critic of Mr. Obama.”
The update noted that, “Talks between the U.S. and Japan have bogged down, due mainly to Japan’s resistance to opening up its small but politically influential agriculture sector. U.S. Trade Representative Michael Froman and Japanese Economy Minister Akira Amari last week met for the second time in as many weeks, but failed to achieve a breakthrough.”
A news release yesterday from the National Pork Producers Council (NPPC) indicated that, “Ahead of President Obama’s April 24 meeting with Japanese Prime Minister Abe, more than 60 members of the House urged the administration to press Japan to eliminate tariff and non-tariff trade barriers for U.S. agricultural products as part of the ongoing Trans-Pacific Partnership (TPP) trade talks. The [NPPC] praised the lawmakers and reiterated that its support for the TPP is contingent on Japan removing those obstacles to free trade.”
The news update stated that, “In a letter sent last night to U.S. Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack, 63 House members, led by Reps. Adrian Smith, R-Neb., Ron Kind, D-Wis., Vicky Hartzler, R-Mo., and Jim Costa, D-Calif., said they are concerned that Japan has not made a comprehensive offer on market access for agricultural goods.”
And Sen. Bob Corker (R., Tenn.), the ranking member on the Committee on Foreign Relations, indicated this week in a column at The Wall Street Journal Online that, “[T]he president should articulate unwavering U.S. support for a rules-based economic order in the region. To that end, he must assure our allies and partners of his personal commitment to seeing TPP negotiations cross the finish line, including pursuing timely U.S. congressional approval. After many years of negotiations, the time is long past due to finalize a high-standard TPP agreement so that the United States along with the other 11 TPP members can begin to reap the economic benefits of this historic free-trade framework and firmly entrench free trade principles in the Asia-Pacific.”
The Washington Post editorial board indicated in today’s paper that, “Trade specialists from the respective countries can haggle forever about how many U.S. pork bellies get to enter Tokyo. And they might do just that, unless their leaders make it crystal clear that the time has come for compromise in both countries’ higher economic and strategic interest. This week’s meeting is a golden opportunity to send that message.”
In domestic developments, Cheri Zagurski reported yesterday at DTN (link requires subscription) that, “Winter wheat conditions worsened slightly in the week ended April 20, according to USDA’s latest weekly Crop Progress report Twenty-three percent of the crop is now rated very poor to poor, compared to 22% last week.”
The DTN update noted that, “Corn planting reached 6% complete, compared to 3% last week and a 14% five-year average;” and, “Cotton planting reached 9% complete, compared to 8% last week and a 12% five-year average. Rice planting was reported at 32%, compared to 25% last week and a 44% five-year average. Rice was 16% emerged, compared to 9% last week and a 24% five-year average.”
Also yesterday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Milk Production report, which stated that; “Milk production in the 23 major States during March totaled 16.7 billion pounds, up 1.1 percent from March 2013 [related graph].”
The NASS update added that, “Milk production in the United States during the January – March quarter totaled 51.1 billion pounds, up 1.0 percent from the January – March quarter last year.
“The average number of milk cows in the United States during the quarter was 9.22 million head.”
Purdue University agricultural economist Chris Hurt was a guest on yesterday’s AgriTalk radio program with Mike Adams where he discussed a variety of issues relating to the livestock sector. A replay of yesterday’s conversation is available here, while a portion of the AgriTalk discussion that focused on the porcine epidemic diarrhea virus (PEDv) and the pork sector can be heard here (MP3- 2:08).
University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“How Many Acres of Soybeans Are Needed?”) that, “The USDA’s survey of U.S. crop producers last month revealed intentions to plant 81.493 million acres of soybeans this year. That is 3.765 million more than reported as planted or intended to be planted in June of last year, 4.96 million more than actually planted in 2013, and 4.042 million more than the previous record acreage in 2009. Planting intentions exceed last year’s acreage in every major soybean state except Missouri, with the largest increases reported for Minnesota, Nebraska, and North Dakota. A slightly smaller percentage of plantings will likely be double-cropped acreage since soft red-winter wheat acreage was reported to be down by 16 percent from acreage of a year ago.”
After additional analysis, yesterday’s farmdoc update stated that, “Over the past 10 years, planted acreage of soybeans in the U.S. has differed by as much as 3.3 million acres from March intentions and the market still has some time to influence the magnitude of acreage in 2014. Unless conditions change dramatically, however, it appears that planting intentions reported last month are fully adequate to meet consumption needs at more modest price levels than experienced during the past three marketing years.”
AP writer David Pitt reported yesterday that, “The U.S. Department of Agriculture announced Monday a new $150 million program designed to provide investment capital to help small agriculture-related business in rural areas with cash needed to expand.
“Secretary of Agriculture Tom Vilsack announced in Cedar Rapids the formation of the first Rural Business Investment Company, a for-profit firm licensed by the USDA to invest in businesses that otherwise might not have the capital to increase business opportunities.
“The USDA traditionally has offered guaranteed loans or direct loans for rural businesses. The creation of the Rural Business Investment Company is a new way for USDA to establish a licensing procedure that makes Farm Credit bank funds available as investment capital. The banks cannot directly hold ownership stakes in companies through capital investment.”
Regulations, Food Labels
Mr. Clayton noted that, “The proposal comes after two earlier U.S. Supreme Court cases left open the question of what constitutes a ‘waters of the U.S.’ that would then place a body of water under federal regulations in the Clean Water Act.
“EPA and the Corps state that the goal of the new rule is to ‘result in more effective and efficient CWA permit evaluations with increased certainty and less litigation.’”
The DTN update added that, “The proposal noted ‘significant nexus’ is not a scientific term. It was a statement made by Justice Anthony Kennedy in the two Supreme Court decisions that led EPA and the Corps to create this rule. The proposal asks for comments on how exactly to define ‘significant nexus.’ A connection from one waterway to another has to be determined on a case-by-case basis regarding what constitutes a significant nexus.”
Cristina Marcos reported yesterday at The Hill’s Floor Action Blog that, “Sen. Charles Schumer (D-N.Y.) on Monday urged the Food and Drug Administration to backtrack on a proposed rule requiring breweries to inspect spent grain used for cattle feed.
“In a letter to FDA Commissioner Margaret Hamburg, Schumer said the regulation would reduce breweries’ profits and waste grain.”
Meanwhile, AP writer Mark Stevenson reported yesterday that, “Mexico’s new food labeling rules were supposed to help fight an obesity epidemic, but activists and experts said Monday they may actually encourage the public to consume high levels of sugar.
“The debate over sugar has grown bitter, in a country with one of the highest obesity rates in the Western Hemisphere.”
The article noted that, “Seven out of 10 Mexicans are overweight and the country has surpassed the U.S. in obesity rates, according to a United Nations report, mostly due to a diet of fatty foods and sugary sodas.”
“Former Speaker J. Dennis Hastert, R-Ill., is slated to join a number of prominent Illinois Republicans and CEOs on Tuesday to call on GOP leaders to pass a national immigration overhaul. Republican Reps. Aaron Schock and Adam Kinzinger are also scheduled to give video testimonials on the subject.
“The event is hosted by the Illinois Business Immigration Coalition, and it’s being held at the prestigious Chicago Club in the heart of the Windy City.”