FarmPolicy

February 25, 2017

China to Begin Importing U.S. Beef- Ban Has Been in Place Since 2003

Wall Street Journal writer Rebecca Blumenstein reported this week that, “China’s premier promised to resume Chinese imports of U.S. beef soon, calling it a sign of Beijing’s sincerity to improve commercial ties with the U.S.

“Speaking to U.S. business groups in New York on Tuesday night, Premier Li Keqiang said China would soon allow imports of U.S. beef.”

The Journal article explained that, “Though the premier didn’t give a specific timetable, trade groups have previously said imports may resume before the end of the year. China has had a ban in place on most U.S. beef imports since 2003, partly due to concerns over the spread of bovine spongiform encephalopathy, or ‘mad cow’ disease, after a cow with the disease was found in Washington state.”

Meanwhile, Kelsey Gee, Lucy Craymer and Rebecca Blumenstein reported today at The Wall Street Journal Online that, “U.S. beef producers on Wednesday reacted cautiously to a pledge by China’s premier to lift a ban on U.S. beef imports that has restricted access to the market for more than a decade.

“Industry officials said the lack of a clear timeline for lifting the de facto import ban in place since 2003 limited the potential upside for an industry reeling from rising supplies and a sharp drop in prices.”

Today’s Journal article also included this helpful perspective: “With U.S. freezers heaving with beef as the domestic herd expands, China offers a potential outlet. The country consumes around 13% of the world’s beef, with Brazil and Australia the top overseas suppliers…[U.]S. beef accounted for 70% of the 11,000 tons imported into China in 2002, and with the growth of the market there were significant opportunities for producers, said Angus Gidley-Baird, an analyst at Rabobank.”

For U.S. hog producers, access to Chinese buyers has been a double-edged sword, as U.S. prices have risen and fallen in line with adjustments in demand from the world’s largest pork market,” the Journal writers said.

Additional background statistics regarding this issue can be found in this USDA news item from today.

In a news release today, Rep. Kevin Cramer (R., N.D.) stated that, “This is great news, both for our cattle producers and consumers worldwide. It presents another opportunity for our livestock producers to help feed a hungry world. China’s 1.4 billion people have a growing appetite for meat consumption, and North Dakota producers have premium product to export. Technical negotiations on lifting this ban are underway, and I will work with the USDA and other agencies to see this large and ever-expanding market opens as soon as practical.”

kg

Egypt Repeals its Ban on Imports of Grains Tainted with Ergot

Recall that earlier this week, The Financial Times reported that, “For the world’s wheat farmers already reeling from decade-low prices due to bumper crops around the world, it is the last thing they wanted.

Confusion surrounding quarantine rules in Egypt has effectively taken the world’s largest wheat importer out of the international market, depressing prices, which are already weak from plentiful harvests.”

Yesterday, Ed Ballard and Dahlia Kholaif reported at The Wall Street Journal Online that, “Egypt has repealed its ban on imports of grains tainted with ergot, a fungus found in wheat, backing down after a face-off with the international grain trade that was threatening the food security of the import-dependent country.

“The ban had led to the rejection of hundreds of thousands of tons of grain found to contain ergot.”

The Journal writers explained that, “The government said Egypt would abandon its zero-tolerance approach and fall into line with United Nations-backed international standards that tolerate grain containing up to 0.05% ergot. The blight is dangerous in large doses but widely tolerated in trace amounts. Traders said that it is nearly impossible to guarantee a shipment is entirely ergot-free.

“The zero-tolerance policy resulted in 540,000 tons of wheat imports being suspended, according to the government.

“Shipments that had been rejected are now expected to be approved for import, a spokesman for Egypt’s supply ministry said.”

kg

Sec. Vilsack Discusses Farm Economy at Senate Ag Committee Hearing

Yesterday, Secretary of Agriculture Tom Vilsack testified before the Senate Ag Committee at a hearing titled, “The U.S. Department of Agriculture and the Current State of the Farm Economy.”

In his prepared testimony, Sec. Vilsack pointed out that, “Even as commodity prices have weakened and farm incomes have decreased, the rural economy remains strong. Our work to increase trade, grow the bioeconomy, strengthen local and regional food systems, and expand conservation have resulted in a more resilient rural economy. Rural and urban areas continue to recover from the Great Recession. Median income for farm households remains near the historic high of 2014 — 35 percent higher than median US household income in 2015.”

(Click here for a closer look at “Rural” growth and “Farm” income).

In his opening remarks, Chairman Pat Roberts (R., Kans.) pointed out that, “Eleven days ago, I and Chairman Conaway attended the Kansas State Fair, a great opportunity to hear first-hand what folks had on their minds.  Plain and simple, farmers and ranchers are worried. The downturn in the agricultural economy is taking a toll on their pocketbooks and the health of many family operations.”

Chairman Roberts added that, “In Kansas and across the Midwest, we have had a bountiful wheat harvest, and now there are expectations for potentially record-setting corn and soybean crops.

“Most years this would be great news, however these high yields come at a time when we are experiencing large inventories worldwide. At the farm gate, the drop in commodity prices and farm income are felt first hand…and their magnitude is foremost on everyone’s minds around this table.”

Ag Committee Ranking Member, Debbie Stabenow (D., Mich.) indicated in her opening remarks that, “As we know, there has been a dramatic slowdown in the farm economy since the passage of the Farm Bill. Farm income has dropped by over 50 percent—the steepest drop in farm income since the Great Depression. Our farm safety net keeps producers in business when disaster strikes. The 2014 Farm Bill made historic reforms by shifting away from direct payments to a focus on the risk management tools farmers requested to support producers during the bad years like we are seeing today.

“New and beginning farmers are especially vulnerable to financial stress during these times, making access to credit an especially important tool. I applaud USDA for taking action earlier this month to provide additional funding for farm loans. I am hopeful Congress can provide additional flexibility for USDA to extend credit to all farmers in need.”

To listen to an exchange between Chairman Roberts and Sec. Vilsack that highlighted “farm household” income in greater detail, click on the link below.

A news release today from Sen. John Hoeven (R., N.D.) stated that, “Hoeven thanked Vilsack for joining the Office of the United States Trade Representative (USTR) in launching a new trade enforcement challenge against China at the World Trade Organization (WTO). USTR is challenging the country’s excessive subsidies of wheat, rice and corn.”  (A portion of the Sec. Vilsack’s remarks on this issue can be heard on the link below).

Sen. Hoeven’s news release added that, “The senator also requested Vilsack’s support for his Capital for Farmers and Ranchers Act, bipartisan legislation Hoeven introduced with Senator Amy Klobuchar (D-Minn.) to increase the maximum loan amount that an individual farmer or rancher is able to receive under FSA’s loan and loan guarantee programs.”

Sen. David Perdue (R., Ga.) also participated in yesterday’s Senate Ag Committee hearing, a replay of his discussion with the agriculture Secretary is available below.

In part, Sen. Perdue noted that, “I’m concerned about regulation. Everywhere that I go, I talk to our farmers. Regulation is the number one topic [of concern], then comes labor.”

Iowa GOP Senator Joni Ernst (R-Iowa) also highlighted regulatory concerns at yesterday’s hearing, noting that, “And what I’m hearing mostly from our Iowans, especially the farmers, the ranchers, and our land owners, is that it really feels like the federal government is out to get them, and I see that a lot with a number of the rules and regulations that are coming forward.”

The full discussion Sen. Ernst had with Sec. Vilack can be viewed below.

A news release yesterday from Sen. John Thune (R., S.D.) stated in part that, “Thune discussed the lack of common-sense guidance and policy for the Conservation Reserve Program (CRP), which is critical to South Dakota agriculture as an economic alternative to farming marginal and fragile lands. Additionally, CRP provides most of the brood-rearing habitat for South Dakota’s pheasant population, which brings in more than $250 million to the state’s economy.”

A replay of Sen. Thune’s discussion from yesterday’s hearing is available below.

Former Committee Chairman Pat Leahy (D., Vt.) highlighted dairy issues at yesterday’s hearing, a portion of his remarks on this issue can be seen below.

DTN writer Todd Neeley reported yesterday that, “What’s more, as debate on the next farm bill will commence next year, the ability to maintain a strong safety net is expected to be front and center.

“‘This administration has proposed cuts to crop insurance programs each and every year,’ Roberts said. ‘We fought hard to stop a $3 billion cut. The crop insurance program is not a bank. In regard to these proposed cuts — not in this room, not on my watch.'”

The DTN article added that, “Demand for farm loans has been increasing, [Sec. Vilsack] he said, ‘driven in part by the need to cover operating expenses as commodity prices have fallen more quickly than costs.

“‘As a result, the debt-to-asset ratio for U.S. producers has increased over the past two years, but in aggregate is still near historic lows,’ Vilsack said.”

And an update yesterday from WHO radio (Des Moines, Iowa) stated in part that, “In fact, Vilsack told lawmakers that in his opinion, a common factor between essentially every hot spot in the world is the fact that none have a functioning agricultural economy, and all of them have a lot of hungry people.

“‘So if we’re serious about protecting our own people, if we’re serious about making sure the world is a safer and better place for our kids and grandkids, then we have to understand the role that agriculture in this country, and agriculture around the world, will play in providing that level of security,’ he said, ‘and I think, frankly, that there is a lack of appreciation, at times, not certainly in this committee, but in other parts of this town, on the significant role that agriculture plays.'”

And Ken Anderson reported yesterday at Brownfield that, “As the USDA works to implement the GMO labeling law, Senate Agriculture Committee chair Pat Roberts cautions the agency to stay within the limits of what Congress intended.

“During a committee hearing Wednesday, Roberts asked Ag Secretary Tom Vilsack about a proposed USDA study on whether consumers will actually use electronic or digital devices when making food purchasing decisions. Roberts said that question goes beyond the scope of the GMO labeling law.”

The Brownfield update added that, “Vilsack disagreed with Roberts’ assessment. He said the study will provide valuable information as USDA develops the framework for GMO labeling.”

kg