October 28, 2016

Agricultural Trade and TPP

Jacob Bunge reported yesterday at The Wall Street Journal Online that, “U.S. agriculture officials warned Thursday that farmers, ranchers and food companies could lose out in the long-term if lawmakers shy away from pursuing big trade deals.

“While some hold out hope that the Trans-Pacific Partnership, a wide-ranging trade bill championed by the Obama administration, could yet pass this year, concerns are growing that the U.S. elections may spur a more protectionist stance that could shrink U.S. exports of agricultural goods ranging from meat to grains and dairy.”

Darci Vetter, ambassador and chief agricultural negotiator for the Office of the U.S. Trade Representative, says the Trans-Pacific Partnership would open up growth opportunities for U.S. agriculture in Asian markets. She spoke with WSJ’s Rebecca Blumenstein at the WSJ Global Food Forum.

The Journal article noted that, “‘The issue of trade has become a political football, unfortunately,’ said Julie Maschhoff, co-owner and vice president of the Maschhoffs LLC, an Illinois pork producer.

“Ms. Maschhoff, speaking at the WSJ Global Food Forum in New York, estimated that about one-quarter of U.S. pork is exported, and trade agreements are critical to expanding those sales as U.S. pork production ramps up.”

Julie Maschhoff, co-owner and vice president of the Maschhoffs LLC, an Illinois pork producer, explains why trade agreements are critical for expanding markets for excess U.S. protein supplies. She spoke with WSJ’s Joanna Chung at the WSJ Global Food Forum in New York.

In his Journal article, Mr. Bunge noted that, “U.S. farmers and ranchers broadly have been supportive of TPP, seeing the chance to break into Japan’s lucrative rice market for the first time, and potentially securing significant reductions in tariffs for markets in Southeast Asia and Canada.”

Darci Vetter, ambassador and chief agricultural negotiator for the Office of the U.S. Trade Representative, said at the WSJ [Global Food Forum] event that she saw ‘a narrow window’ to approve the Pacific trade agreement in the lame-duck session, following the November election. ‘I’m an eternal optimist,’ Ms. Vetter said, and implementing TPP would help keep the U.S. on ‘a level playing field’ with competing countries.”


Federal Farm Safety Net Contracts- Crop Insurance Issues

DTN Executive Editor Marcia Zarley Taylor reported yesterday that, “Farmers know they must weather the lean years to benefit from the occasional fat ones. But erosion in federal crop revenue insurance guarantees since 2013 is compounding the risks for farm operators during this downturn.

“‘In times like this, we aren’t worried about making money. Our goal is to make darn sure we don’t lose too much,’ said Mark Bryant, who raises wheat, corn and soybeans with brother Mike and other family members in Washington Courthouse, Ohio.

Bryant’s problem is the crop insurance floor keeps falling with commodity prices, exposing his farm to ever bigger losses. Ohio winter wheat producers, who face a 2017 crop insurance sale closing date of Sept. 30, will be guaranteed only $4.74 per bushel next year, down 45% from the same coverage four years ago.”

Ms. Taylor noted that, “Winter wheat isn’t alone. Back in 2013, a typical non-irrigated Kansas corn grower could guarantee about $678 per acre (thanks to a $5.65 base price and 120 bpa historic yield with 80% coverage.) By 2016, that protection had dipped 32% — to a base price of $3.86 and $463 per acre coverage, observed Kansas State University economist Allen Featherstone.

“Sadly, production costs haven’t retreated nearly as far or as fast as prices, leaving farmers to self-insure those revenue gaps.”

The DTN update added that, “Based on futures prices in late September, Featherstone expects that same 80% corn coverage to shrink to only $448 per acre coverage with a $3.73 guarantee in his Kansas example. That’s an additional $230-per-acre operator risk compared to four years earlier.

“Soybeans also have suffered from a similar safety net shrinkage, although they stand to get a small bump upward come spring. Featherstone projects 2017 spring insurance prices at $9.31 for soybeans, down from $12.87 per bushel in 2013 but up from $8.85 per bushel in 2016.”

DTN Graph Courtesy of KSU

Ms. Taylor also pointed out that, “Bryant is exploring private insurance products that will help him boost the floor on coverage. University economists also continue to recommend options like Yield Exclusion (YE), Yield Adjustment (YA) and Trend Adjustment (TA), which may significantly boost a grower’s Actual Production History (APH) and ultimately, their revenue per acre.”


U.S. Trade Representative Responds to China’s Announcement to Resume U.S. Beef Trade

Kelsey Gee reported on Thursday at The Wall Street Journal Online that, “U.S. trade officials on Thursday set out steps necessary for China to resume imports of American beef after a 13-year ban, though they didn’t lay out a timetable for the resumption of trade.

The U.S. Trade Representative said the move this week by Chinese officials to drop the ban was a ‘critical first step‘ to restoring market access for U.S. producers.

“The USTR and U.S. Department of Agriculture ‘look forward to China’s final audit report on beef, and subsequent discussions between the United States and China on the specific conditions that will allow trade to resume,’ the representative said in a statement.”

Ms. Gee added that, “The U.S. and China have sparred over acceptable farming practices, including as recently as this month, when the Obama administration launched a case against China at the World Trade Organization. The U.S. alleges that Beijing is subsidizing grain and rice growers above internationally-agreed levels.

“Chinese and U.S. regulators also disagree on whether or not to permit the use of a handful of different veterinary medicines used in animal agriculture.”


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.”


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.”


Focus on Trade, and Wheat Export Issues

Recall that last week, the U.S. action took action against Chinese domestic crop subsidies at the World Trade Organization (W.T.O.).

In his weekly electronic newsletter yesterday, House Ag Committee Member Randy Neugebauer (R., Tex.) stated that, “I am very pleased the United States has initiated a new agriculture trade enforcement action against China at the [W.T.O.]. U.S. Trade Representative Michael Froman and U.S. Agriculture Secretary Tom Vilsack announced last week that the United States is bringing a case against China to challenge the support China has provided for its own wheat, corn, and rice crops. Like other countries, China agreed to limits on its domestic government support for agriculture when it joined the WTO. However, China has exceeded the limits it agreed to on corn, rice, and wheat by $100 billion in 2015 alone. Excessive government support, such as the market-price support China provides, artificially inflates the prices Chinese producers receive, causing overproduction that keeps out U.S. exports. China’s actions have created an uneven playing field for American producers who are following the rules. Moving forward, I hope U.S. trade officials also pursue enforcement action against unfair Chinese policies that impact other crops, such as cotton.”

Some agricultural observers have indicated that wheat farmers may have the most to potentially gain from the U.S. W.T.O. action against China.

Several variables are currently at play that are negatively impacting the profitability of wheat production in the U.S.

Reuters news reported yesterday that, “Farmers in Oklahoma, the No. 2 winter wheat producing state, face potential losses of roughly $55 an acre for wheat in 2017, according to Kim Anderson, an agricultural economist at Oklahoma State University.”

The Reuters article added that, “The world wheat harvest hit a record in 2016, sending nearby Chicago Board of Trade futures to 10-year lows below $4 a bushel.”

Meanwhile, Emiko Terazono and Heba Saleh reported yesterday at The Financial Times Online 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.

Wheat sales to Egypt have come to a standstill after the government announced in late August that there would be zero tolerance for any traces of ergot fungus, a naturally occurring fungus, despite internationally accepted standards which allow for levels of 0.05 per cent.”

The FT writers noted that, “The Egyptian government, which provides subsidised bread to citizens, is the top buyer of wheat, but few traders are now willing to put in their offers in the state-run wheat tenders after the country’s authorities recently rejected vessels from Romania as well as Russia.”

Yesterday’s FT article added that, “The virtual absence of the world’s largest buyer comes as wheat markets are groaning under excess supplies.

“The Australian government recently raised its wheat production forecasts for 2016-17 to the second highest on record, while the US Department of Agriculture also increased its world production estimates for the same period to a new record high of 744m tonnes due to increases in India, Kazakhstan, Brazil and Australia.”


Wheat Farmers May Have the most to Gain in U.S. W.T.O. Case Against China

Reuters writers Karl Plume and Tom Polansek reported yesterday that, “U.S. wheat farmers, struggling to make money as prices sink and global supplies swell, could be the main beneficiaries if Washington wins a case it brought last week against China over an estimated $100 billion in domestic grain market supports.

“On Tuesday, U.S. trade officials said they would file a case at the World Trade Organization (WTO) against China over allegations that aggressive pricing supports prompted Chinese farmers to overproduce corn, wheat and rice, fuelling a global crop glut and depressing world prices.”

The Reuters article noted that, “While the U.S. allegations cover corn and rice as well as wheat, China has already reformed its corn policy and rice exports were never a major part of U.S. agricultural income.

It is wheat that is now causing most pain in America’s farming heartland. U.S. wheat prices are at decade lows and some farmers could face losses next year of $55 an acre. In the coming weeks, they are likely to plant the fewest winter wheat acres in a century.”

Meanwhile, Reuters writer Julie Ingwersen reported today that, “U.S. farmers are poised to plant winter wheat on the smallest area in over a century this autumn, as tumbling global prices and fierce competition push the world’s former top supplier into retreat.

“But even that shrinkage is unlikely to dent massive global supplies or help bolster prices. The world wheat harvest hit a record in 2016, sending nearby Chicago Board of Trade futures to 10-year lows below $4 a bushel.

“The strong dollar is adding to the pain for U.S. farmers, as it makes the exports of competitors such as Russia and Ukraine more attractive. Russia is projected to overtake the United States and the European Union as the top wheat exporter for the 2016-17 season, which ends on June 1, 2017.”

Ms. Ingwersen explained that, “Farmers in Oklahoma, the No. 2 winter wheat producing state, face potential losses of roughly $55 an acre for wheat in 2017, according to Kim Anderson, an agricultural economist at Oklahoma State University.

“In the heart of Kansas, the biggest U.S. winter wheat state, mountains of harvested grain flank roadsides. Cash prices in some parts of the state have slid below $3 a bushel.”

And in a separate update regarding China, Reuters writer Paul Carsten reported yesterday that, “The Agricultural Development Bank of China, one of the country’s main policy lenders, agreed to loan at least 3 trillion yuan ($450 billion) by 2020 for the modernization of China’s agriculture industry, state media said on Sunday.

“The Ministry of Agriculture and the bank, which lends in line with government policy, signed an agreement to protect national food security, support the sector doing business overseas and develop China’s seed industry, according to the official Xinhua news agency.”


House Ag Committee Discusses Ag Trade with Cuba- H.R. 3687 Cuba Agricultural Exports Act

Categories: Trade

A House Ag Committee news release from Wednesday indicated that, “Today, the House Agriculture Committee held a hearing to examine the potential for expanded agricultural trade between the United States and Cuba. Much of the conversation centered on the Cuba Agricultural Exports Act (H.R. 3687) and the potential for removing financing restrictions that have limited agricultural exports to Cuba.”

Committee Chairman Mike Conaway (R., Tex.) indicated that, “[The stranglehold the Castro regime has had on Cuba] resulted in the United States imposing an embargo on trade with Cuba that has been in place in various forms for almost 60 years. In 2000, the Trade Sanctions Reform and Export Enhancement Act—known as TSRA, authorized certain sales of food, medicines, and medical equipment to Cuba subject to various restrictions on credit and financing. One such restriction requires Cuba to pay cash in advance for purchases, interpreted in 2005 by the Bush Administration to mean payment in cash before shipment of goods.

In December 2014, amongst a host of other changes, the Obama Administration announced its intention to modify the cash-in-advance provisions to require payment before transfer of title. While that move was generally applauded, I—and many of my colleagues—believe the U.S. secured too little in return for the litany of other concessions made to the brutal regime that continues to remain in power. The Castro regime remains one of the world’s most oppressive human rights violators. Their heavy hand is in everything—including agriculture—where ALIMPORT remains the sole entity allowed to trade in agricultural products with foreign entities.

“Against this sobering backdrop, I believe there lays an opportunity—albeit a rather narrow one—to make changes that will positively benefit both agricultural producers here at home while contributing to economic growth in Cuba. To that end, our colleague and General Farm Commodities and Risk Management Subcommittee Chairman Rick Crawford authored [H.R. 3687] which lifts the financing restrictions under TSRA while providing for both market promotion and U.S. agribusiness investment under strict safeguards. The Committee was involved in the development of that bill, and both Ranking Member [Collin Peterson (D., Minn.)] and I are co-sponsors.”

Ranking Member Peterson pointed out at last week’s hearing that, “Now, as we’re all aware, the Administration has taken steps to ease both trade and travel restrictions. This is a good step but there is still more work that we can do to open this market to American agricultural products. I would like to see the embargo lifted but am doubtful that it’s politically possible to do so now.

I do want to caution however, that with the exception of rice and possibly wheat, the potential benefits are limited – at least in the short term. Cuba is a small country with most people having very limited income. I visited Cuba in 2015 and from what I was able to learn from my discussions with Cuban officials it would seem that, without ending the embargo, there’s still a long way to go.”

Rep. Crawford spoke about his bill at the hearing (video replay below) and tweeted that, “We’ve got to change thinking with regard to #Cuba trade. Cold war has been over for many many years.”

U.S. Representative Rick Crawford explains why U.S. trade relations regarding agriculture with Cuba must change during a House Agriculture Committee hearing.

A news release Wednesday from Rep. Cheri Bustos (D., Il) indicated that, “The hearing today focused on a piece of legislation that Congresswoman Bustos strongly supports, the Cuba Agriculture Exports Act.

Rep. Bustos stated that, “Today’s Agriculture Committee hearing was a step in the right direction for Illinois farmers, and I am hopeful that we can move forward with a vote on this legislation so we can cut the red tape and barriers facing farmers and producers in our region.  By providing Cubans with access to the standard credit terms offered by virtually every other nation in the world, we can significantly grow our region’s agricultural exports, move toward normalizing relations with Cuba and strengthen our 21st century heartland.”

Meanwhile, the Washington Insider section of DTN reported on Friday that, “The U.S. lost a billion dollars in potential farm sales to Cuba over a span of a few years as result of the restriction, witnesses testified at the hearing. ‘Between 2013 and 2015, the Dominican Republic imported $1.3 billion worth of agriculture products from the United States,’ said [Matt Gibson, vice president at St. Louis, Mo.-based Bunge North America].  He noted that the two Caribbean islands have similar per capita incomes and populations. ‘During this same time, Cuba, however, imported only $262 million from the United States. That is over $1 billion to the U.S. agriculture industry left off the table due to the financing restrictions under which we must currently operate.'”

The DTN item added that, “While the legislation would be a net positive, more would need to be done before American farmers saw significant benefits, said CoBank ACB Senior Vice President of Agriculture Export Finance Karen Lowe. ‘I think in the short run there won’t be a very significant change, because many other things need to happen, particularly in terms of the creditworthiness of the importing entities in Cuba,’ she said. ‘But we have to continue to keep the ball moving so that over a period of time we will create a level playing field.'”

And McClatchy writer Sophie Ota reported on Wednesday that, “A handful of experts urged the House Committee on Agriculture on Wednesday to loosen restrictions on farm trade with Cuba, as legislators further contemplate U.S.-Cuba ties.

“Four witnesses from the agricultural industry encouraged the committee to support the Cuba Agricultural Exports Act, a bill that would repeal restrictions on export financing for agriculture shipments to Cuba.”

Ms. Ota also explained that, “Meanwhile, the only witness opposed to lifting sanctions, Mauricio Claver-Carone, the executive director of Cuba Democracy Advocates, described Cuba’s government as a ‘company’ that ‘values food over people.’

“‘Let’s debunk a myth,’ Claver-Carone said. ‘Financing agricultural transactions with Cuba isn’t about assisting small and midsize farmers on the island, but about financing the monopoly of the Castro regime.’

“Committee Chairman Mike Conaway of Texas, who presided over the hearing, spoke in favor of lifting restrictions, despite being ‘firmly opposed to lifting the embargo or restrictions on travel.'”


Sec. Vilsack Remarks on Current Issues: Bayer/Monsanto Deal, and U.S. W.T.O Trade Case

In a recent interview with Bloomberg News, U.S. Secretary of Agriculture Tom Vilsack provided perspective on recent issues impacting the agricultural economy.

Last week, Bayer and Monsanto announced that they signed a definitive agreement under which Bayer will acquire Monsanto. This proposed merger garnered attention in the front pages of The Wall Street Journal, and The Des Moines Register, and was also covered on the front pages of the business section in both The New York Times and Los Angeles Times.

Yesterday, on the “Bloomberg Markets” program, Sec. Vilsack weighed in on the proposed Bayer and Monsanto deal, video replay below.

Also last week, the U.S. announced that it would contest Chinese agricultural subsidies for domestic wheat, corn and rice; Sec. Vilsack’s remarks on Bloomberg regarding this issue can be viewed below.


U.S. Contests China Ag Subsidies in W.T.O. Case

Categories: Trade

Reuters writers David Lawder and Nathaniel Taplin reported yesterday that, “The United States on Tuesday launched a challenge to China’s price supports for domestic wheat, corn and rice at the World Trade Organization, charging that these far exceed limits that China committed to when it joined the WTO in 2001.”

The article noted that, “The U.S. Trade Representative’s office said China’s ‘market price support’ for wheat, corn and rice was estimated to be nearly $100 billion above the WTO limits and constituted an artificial government incentive for Chinese farmers to increase output, lowering prices worldwide.

“USTR said it found that China’s domestic price supports for wheat, Indica rice, Japonica rice and corn had all exceeded the 8.5 percent ‘de minimis’ level allowed under the WTO commitment for every year since 2012.

“The first step in its formal WTO complaint is to seek formal consultations with Chinese officials to try to resolve the dispute without litigation.”

Jeff Wilson reported yesterday for Bloomberg that, “China’s Ministry of Commerce responded by expressing regret at the U.S. action, saying on its website that it complied with WTO rules and would handle the complaint in accordance with established procedures.”

Mr. Wilson pointed out that, “American farmers have seen their incomes slide amid booming global supplies and lower commodity prices. But while Tuesday’s action was welcomed by some U.S. farm groups, others in the industry cautioned that there may be a backlash.

“‘The most likely impact in the next six months might be to motivate China to impose anti-dumping tariffs on U.S. products, including agricultural products,’ William Tierney, chief economist for Chicago-based research and analysis firm AgResource Co., said in a telephone interview. ‘It will have little or no impact on Chinese ag policies.'”

William Mauldin reported yesterday at The Wall Street Journal Online that, “The administration is also emphasizing compliance with existing trade rules in hopes of getting a majority of the Senate and the House to approve his signature trade agreement, the 12-nation Trans-Pacific Partnership, after the November election.”

Mr. Mauldin also reminded readers that, “The U.S. has run afoul of complicated WTO agricultural rules before, including in a cotton case Washington lost to Brazil.”

More broadly, the Journal article pointed out that, “The U.S. imported $482 billion in Chinese goods last year, compared with $116 billion in U.S. exports.”

Christopher Doering noted in today’s Des Moines Register that, “Agriculture Secretary Tom Vilsack said U.S. agricultural exports to China now exceed $20 billion a year, but the total could be more if American grains could compete ‘on a level playing field.’ China is expected to be the largest market for U.S. agricultural exports in fiscal year 2017, he said.”

Several lawmakers provided reaction, which was generally positive, to yesterday’s executive branch action against China.

– Senate Ag Committee Chairman Pat Roberts (R., Kans.)- “U.S. producers know the importance of sticking to their commitments, and they have experienced first-hand the harm caused to the agriculture industry by countries that don’t follow the rules.”

– House Ag Committee Chairman Mike Conaway (R., Tex.)- “Even as U.S. support for American farmers and ranchers declines, we have seen a tremendous and steady rise in foreign barriers to trade which is troubling. Foreign subsidies and tariffs make it very difficult for American farmers and ranchers to make a living and support their families.”

– Senate Ag Committee Member Heidi Heitkamp (D., N.D.)- “On top of challenging commodity prices, North Dakota farmers shouldn’t have to deal with China breaching trade commitments and making it tougher for us to get market value for our crops.”

– House Ways and Means Committee Member Adrian Smith (R., Neb.)- “With 96 percent of the world’s consumers living outside our country, trade agreements create opportunity for U.S. agriculture, and so long as the U.S. maintains a leadership role, I am confident American producers will continue to meet the demands of an ever-growing population around the world.”

– Senate Ag Committee Member Joe Donnelly (D, Ind.)- “Trade is important to our economy, and nobody knows that better than Hoosier farmers. We also know, however, that trade only works when everyone plays by the same rules. Whether it’s illegal subsidies for corn or steel, China continues to manipulate prices to undercut American farmers and manufacturers. That is why I support strong efforts, like today’s enforcement action, that hold the Chinese accountable, so we can ensure that Indiana’s farmers can compete on a level playing field.”

– Senate Ag Appropriations Subcommittee Chairman Jerry Moran (R., Kans.) tweeted the following yesterday:

And the House Ag Committee retweeted a previous tweet from October yesterday:


Cuba Trade and U.S. Agriculture

Financial Times writer Shawn Donnan reported today that, “Barack Obama’s historic visit to Cuba this week has been rich in symbolism, but even as the president has lifted restrictions on American companies to do business with the Caribbean nation, one key constituency remains frustrated: the powerful US agriculture lobby.

“Agriculture-related exports to the island, which sits just 90 miles off the Florida coast, have been allowed under US law since 2001 and with Cuba importing 80 per cent of its food, Washington is eager to penetrate a market officials say is worth $2bn a year.”

The FT article explained that, “But after peaking at more than $710m in 2008, US agricultural exports to the country have been steadily falling ever since. Last year they were worth just $180m, according to US trade statistics, giving the US less than 10 per cent market share and leaving it behind Brazil, the EU and Argentina as a source for food in Cuba.

“In an effort to turn that round, the US and Cuba on Monday are set to agree to increase their co-operation on agriculture and improve their technical links. The US is also due to lift restrictions on growers using special research and marketing bodies to pitch their products in Cuba.”

Today’s article pointed out that, “However, the steps do not address the financial restrictions that remain on Cuban buyers of US agricultural products and are thus unlikely to do much in the short term to increase US exports to the Caribbean island.

“Although Cuban buyers have since January been able to use US banks to finance purchases of other imports, those wanting to buy crops or meat produced in the US still have to pay cash up front or use a third-party bank.

Such restrictions are codified into US law and cannot be lifted by executive order, the tool on which Mr Obama has relied to push through his change in Cuba policy. With the Republicans who control Congress determined not to remove the longstanding US trade embargo, that has left the Obama administration’s hands tied and the US agriculture lobby frustrated.”

In conclusion, today’s article stated that: “Mr Obama is making history and US chicken, pork, wheat and soyabean farmers are eager to take advantage. But for the time being, Republicans seem distinctly unwilling to play along.”


Thursday Morning Update: Ag Economy; Trade; and, Regulations

Remember, ends tomorrow.

Agricultural Economy

Adam Nagourney reported on the front page of today’s New York Times that, “Gov. Jerry Brown on Wednesday ordered mandatory water use reductions for the first time in California’s history, saying the state’s four-year drought had reached near-crisis proportions after a winter of record-low snowfalls.

“Mr. Brown, in an executive order, directed the State Water Resources Control Board to impose a 25 percent reduction on the state’s 400 local water supply agencies, which serve 90 percent of California residents, over the coming year. The agencies will be responsible for coming up with restrictions to cut back on water use and for monitoring compliance. State officials said the order would impose varying degrees of cutbacks on water use across the board — affecting homeowners, farms and other businesses, as well as the maintenance of cemeteries and golf courses.

“While the specifics of how this will be accomplished are being left to the water agencies, it is certain that Californians across the state will have to cut back on watering gardens and lawns — which soak up a vast amount of the water this state uses every day — as well as washing cars and even taking showers.”

Today’s article explained that, “Owners of large farms, who obtain their water from sources outside the local water agencies, will not fall under the 25 percent guideline. State officials noted that many farms had already seen a cutback in their water allocations because of the drought. In addition, the owners of large farms will be required, under the governor’s executive order, to offer detailed reports to state regulators about water use, ideally as a way to highlight incidents of water diversion or waste.

Because of this system, state officials said, they did not expect the executive order to result — at least in the immediate future — in an increase in farm or food prices.”


Tuesday Morning Update: Policy; Ag Economy; Trade; Immigration; and, Regs

Note: ends publication on Friday.

Policy Issues

An interview with House Ag Committee Ranking Member Collin Peterson (D., Minn.) aired on yesterday’s AgriTalk radio program with Mike Adams.

The interview, which focused on the Farm Bill, trade, regulations, and biotech issues, was recorded last week and was conducted before a group of Farm Bureau members from Missouri, Minnesota, Iowa, and Texas.

An unofficial transcript of the AgriTalk interview is available here.


AgriTalk Transcript: House Ag Committee Ranking Member Collin Peterson

House Ag Committee Ranking Member Collin Peterson (D., Minn.) was a guest on Monday’s AgriTalk radio program; the conversation with Mike Adams focused on the Farm Bill, trade, regulations, and biotech issues.

The interview that aired on Monday’s program was recorded last week and was conducted before a group of Farm Bureau members from Missouri, Minnesota, Iowa, and Texas.

This is an unofficial transcript of that discussion.

Mr. Adams: Last week in Washington, D.C., had an opportunity to talk with Congressman Collin Peterson, Ranking Member of the House Ag Committee. We talked about a number of issues, starting off with how he feels it’s going with the new dairy program, and was he happy with the signup.

Rep. Peterson: Well, I think relatively. You know, I think we could have had a higher turnout, but—or signup—but coming off one of the best years in dairy for a long time, and I think people looking at what’s going to happen this year, kind of figuring, well, might be payments, there might not, so they decided, some people decided to forego it. I think you’re going to see a lot more people sign up, the way things are looking, for next year.

And that’s one good thing about the dairy program: you don’t have to lock in for five years, you can sign up every year. And given what’s been going on, I think I’m not as worried as I was about us not having the program in there to try to limit production, if it gets out of control. It looks like that’s not going to be necessary anyway, so that was a maybe a fight we didn’t need to have.

Mr. Adams: We’ve had a lot of talk here this afternoon about trade. You have expressed some concerns about trade deals, and making sure that we’re protected. When you see what’s happening with TPP and the ongoing debate over TPA, what are your thoughts?

Rep. Peterson: Well, you know, I opposed NAFTA vigorously, and we had it defeated for a while. We were told, at the time, that we were going to have twice as many ag exports in NAFTA as we had imports, and what I predicted ended up happening—we had twice as many imports as we had exports under NAFTA. We had a problem in sugar that we’ve somewhat resolved now, but we had to work through that.

So one of my big issues with the TPP is that we finally solved some of the problems that were caused by NAFTA, and if we don’t solve it in the TPP, we’ll never solve it. And one of the biggest problems is dairy. And it’s Canada dairy. A lot of people aren’t focused on this, and a lot of people don’t even know about it.

But in the NAFTA, we allowed the Canadians to keep their supply management system. And so if you dairy farm in Canada, you are making a lot of money, considerably more than you make in the United States. Also, when we try to sell dairy products to Canada, there’s a tariff, but when they sell to us there’s no tariff. So the result of that has been, because the Canadian system can’t grow, and they’re making all this money in these co-ops, we now have the Canadian co-ops in Quebec owning—they’re No. 1 and 3 in ownership of dairy processing in the United States. That’s the effect of what we did.

And it’s got to be fixed, or at least get on a path to be fixed, in this deal for me to support it. So that’s one of my main issues. Also it applied—poultry and eggs are also supply managed in Canada. I’m not as familiar with the economics of that as I am of dairy. But that’s the big issue.

Another big issue is getting access in the Japanese market for beef and rice. Now, Froman sat in my office and said we will get a pathway or get changes in the Canadian supply management system, and we will get access to the Canadian rice and beef market or we won’t have a deal. And I said, well, you’re saying to me that we’re not going to have a deal, because I am very skeptical that the Canadians will be able to agree to anything in the supply management area.

Mr. Adams: RFS. We’re waiting for that announcement from EPA. Are you getting any feeling one way or another where they’re going with it?

Rep. Peterson: I don’t know. I’ve had so many meetings with the White House, with the EPA. You know, we have some speculation, I guess, but it could be wildly off. I don’t know, it just looks to me like maybe they’re going to lock in for three years and around 14.4 billion, but I really don’t know. We’re going to have to wait and see what they come out with.

I hope they don’t screw up the ethanol industry. That would be…you know, we’ve finally been able to balance the marketplace in corn and get the pricing situation at a more reasonable level. But if they screw up the RFS and we lose ethanol in this country, we’ll be back to $2 corn, and that ain’t gonna work very good with the prices that we got, land and inputs right now.

Mr. Adams: Is this EPA out of control?

Rep. Peterson: Yes. [Laughter.]  [Applause.] Well, and, you know, the problem is they don’t understand a lot of these issues. They just don’t. This Waters of the U.S., I’ve had Gina McCarthy in my office three times. She thinks she’s helping you. I just want you to know. And she sincerely believes that, that she’s somehow or another clarifying the wetland determinations with what she’s doing.

And she doesn’t know enough about all the problems that we’ve been through to understand that what they’re doing is putting, actually, one more chink in the thing that we never will get this determined, you know, so I don’t know. It’s…I don’t know what you do to fix this, but it’s a big problem.

Mr. Adams: We were talking with the Chairman earlier. Is this Congress willing to step in and stop funding things like WOTUS if they keep pushing it?

Rep. Peterson: Yeah, I think so. I think the first thing we’re going to try, as I understand it, is to use the Congressional Review Act, which has never been used, but it was put in place some years ago, with my support, that says that the Congress can stop a rule within 60 days after the final rule is published. So the first thing that I think we’re going to try to do is we’re going to bring it up under the Congressional Review Act. I think we can pass…or stop it in the House. I don’t know about the Senate, but, you know, hopefully we can do it over there, too.

If we aren’t able to do that, then we’re going to try to deal with it in the Appropriations Committee, somehow or another. We have a bill, you know. We’re going to try any way we can. We’ve got to stop this. This is a bad idea.

We still haven’t—in Minnesota, I don’t know about the rest of the country—but we still haven’t resolved the blue dots and yellow dots from the ’85 Farm Bill. We’ve still got people out there that haven’t gotten determinations from that. And we’ve got four agencies deciding what a wetland is, and in Minnesota we’ve got a wetland law at the state level, so you’ve actually got five people, and you can’t ever figure out what the bottom line is. So, you know, we don’t need this. This is just going to be a big problem.

Mr. Adams: We have a major lawsuit in Iowa over runoff. Regardless of how this turns out on this particular one, is this the future, we’re looking at this type of litigation and threat of litigation moving forward for farming?

Rep. Peterson: I don’t know. I mean, we…the way we’ve set up some of the, you know, the NEPA law, National Environmental Policy Act, you know, these things that have been put in place back in the ‘70s, Endangered Species, these things need to be overhauled, because they’re basically set up to help people that want to sue and try to change the policy through lawsuits and so forth, and there just needs to be more balance put into it.

Frank Lucas and I last week passed the Science Advisory Act for the EPA, and there was another bill that Lamar Smith had on the secret science bill that we passed last Congress, too. You know, in the EPA, I mean, I had the local guy back home come to the Rotary Club and go after me because I was trying to get a balanced, scientific advisory committee at the EPA, that this was going to destroy the environment.

And I said, well, this advisory committee has no authority to do anything, they’re strictly advising the administrator; why wouldn’t you want to hear all points of view? Why would you want to limit it to a bunch of egghead professors, which is what they’ve done, and three-fourths of the people that are on this advisory committee are getting grants from the EPA to tell them what they already want to hear. And then you wonder why the thing is screwed up? You know, but anyway. [Applause.]

Mr. Adams: One more question and we’ll turn it over to the audience.

Rep. Peterson: I’m not running for President. [Laughter.]

Mr. Adams: Yeah. [Laughs.] Well, we cleared that up. Okay, all right. Biotech labeling. National standards or leave it up to the states?

Rep. Peterson: Well, we need a voluntary label, national. We need to preempt these states from setting their own, you know, own laws. The last thing we need is to have 50 different states have 50 different labels. That’s not workable. And we had a good hearing yesterday. We got some people criticized it.

But, you know, the reality is, you know, I’ve told some of these big companies that if Vermont is successful with this appeal to their lawsuit, and they are allowed to go ahead with their labeling law, I wish that these big companies would just not sell to Vermont, and let them understand what the effect of what they’re doing is.

The same thing in California. I don’t want them to fix the egg problem. If those people created that problem, and I hope they run out of eggs, and I hope eggs go to 20 bucks a dozen, you know, so people figure out what’s going on, you know, so… [Applause.]

Mr. Adams: Congressman Collin Peterson, Ranking Member of the House Agriculture Committee, speaking last week before a group of Farm Bureau members from Missouri, Minnesota, Iowa, and Texas.

[End of recording.]

AgriTalk Transcript: House Ag Committee Chairman Mike Conaway

Categories: Farm Bill /Trade

House Ag Committee Chairman Mike Conaway (R., Tex.) was a guest on Thursday’s AgriTalk radio program; the conversation with Mike Adams focused on the Farm Bill and trade.

This is an unofficial transcript of their discussion.

Mr. Adams: Welcome back to AgriTalk. Yesterday, here in Washington, D.C., had a chance to talk a number of issues with the Chairman of the House Agriculture Committee, Congressman Mike Conaway from Texas.

Let’s get right into it. Questions about the farm bill. Some have even questioned would the farm bill get reopened. Any chance of that happening?

Rep. Conaway: Well, you can never say any chance, but over my dead body. [Laughter.] No, we’re not interested in opening it. You know, the ink’s hardly dry. You producers are going through the agony of all those choices that we bragged about this time last year that we’re going to give you, that you could tailor the safety net for exactly your own farming operation, it wasn’t going to be one-size-fits all—yep, yep, yep.

And now that you got it, it’s like, oh my goodness, this is hard. But anyway, so…you’re just now in that first round of doing that, and it’s not even fully implemented yet, so we’ll fight off any attempt to do that, including attempts during the ag approps process to do anything, to do damage to our process.

You know, the whole appropriations process, it’s a pretty arrogant group that— including myself who used to come down there and do that—you come [tricky] trotting onto the floor, you’ve got a great amendment to strip something out, and it’s very disrespectful to the authorizing committees who’ve spent months or whatever trying to learn and get the policies just right, and then to come in and try to strip something out.

So we’re going to fight off all of those crop insurance issues and other things that might come up here in the ag approps process, but we won’t open the farm bill, certainly not…I’m not going to do anything that would do that, so the answer is—the short answer is no. But again, you never say never. Something might happen, but it’ll be over my dead body.

Mr. Adams: All right. Let’s go to trade. A lot of talk about Trade Promotion Authority. Where does that stand? What are the chances that’s going to get passed in Congress?

Rep. Conaway: Well, if we’re going to do a trade deal on TPP or T-TIP, either one of those, we have to have TPA. And there’s a lot of misinformation. We don’t typically be partisan in this room, but there are a lot of folks on our side of the aisle that are not interested in doing anything to help President Obama, and it’s misguided as to what Trade Promotion Authority does or doesn’t do. As you sit and talk to them and help them understand that right now the President has unfettered negotiating authority, just like he is with Iran, and Trade Promotion Authority brings him into a set playing field to say how he’s going to negotiate, how he’s going to work with Congress over that, and at the end of the day, we still get the up or down vote on the deal. So it’s vital that we get it done.

It actually hems up the President and narrows down what he could or couldn’t do, and it goes the direction folks want. We’ve just got a bad name for it. So maybe we need to name it, I don’t know, something different that—better be careful there—something different that just is not as counterintuitive to what you think they’re doing.

I sat the day before yesterday with a member who’s been here a long time, and I asked him, I said, so kind of where are you on TPA? He said oh no, I’m not going to give this President any whatever. I said, well, take a deep breath. So I walked him through the mechanics of it and he goes, oh, well I’m for that. So it’s a matter of educating. We’ve got to educate not only members, but educate their supporters and their constituents. Got a lot of folks back home who feel the same way that their member does, and so it’s going to take an educational process.

I met with the Canadians today. They’re not going to sign fully onto TPP unless we have Trade Promotion Authority. Think about the mechanics. What we’re asking them to do without TPA is to sign a deal, negotiate a deal with all these other countries, get the best deal they can, and then send it to Congress, where 535 individuals can amend the deal, can change it. Well, none of you would put yourself in that circumstance, so Canada and Japan, they’re going to wait. I mean, they’re not going to come on board until we get TPA done, and they know that once they make a deal with Froman, then he can bring that deal to Congress for an up or down vote, and that makes the most sense.

So in the mean time we’re losing trade opportunities. Bilateral deals are being done that undermine our negotiating positions with respect to the current TPP negotiations, so time is of the essence. I know in my conversations with Paul Ryan, he’s ready to go. There’s some conversations with the leadership of the Senate as to how mechanically they want to do. They’re still trying to decide does the House go first, they go first. All those kind of questions are being bandied around. But time is of the essence, because we need to get this done.

Mr. Adams: Do you get the sense there are the votes to pass TPA or not?

Rep. Conaway: Well, we’re going through the whip exercise right now. There’s a group of us that already know how we want to vote, and we’re working with our other members across. Pete Sessions is kind of heading that up, and I’ve not talked to Pete about the numbers. But the folks I’ve talked to, I’ve got great responses, and I think we’ll get there.

Mr. Adams: From what you’ve seen and heard of the TPP deal, are you satisfied that we’re being protected, especially agriculture? I know there are concerns about what is Japan willing or not willing to do. Are you happy with what you’re hearing so far?

Rep. Conaway: Well, I’m happy with what I’m hearing from you producers and your groups. Michael Froman, the trade rep, I think is doing a good job. He’s listening to you. You’re engaged with him. And so the mechanics of how that’s coming together, I don’t know any of the details of the actual trade deal itself that’s being talked about, but I do know that he’s working with the trade associations and the various producer groups and others as he negotiates the ag pieces of what’s going on, so I’ve got confidence in the process.

I’ve met multiple times with Michael Froman. In fact the first meeting that I had for the full committee was a briefing with Michael Froman on trade for all of our members, because it’s a big deal and many of our members have not voted on any trade deals yet, and I wanted them to have the facts before they’re confronted with folks who don’t know the facts, but are really sold out on their position, and try to sway them one way or the other. So actually, our first group gathering as the Ag Committee under my leadership was with Michael Froman on this deal.

So again, don’t know the specifics about what’s being traded where and when, but I am pleased with what I’m hearing, both from him saying I’m listening to those guys when I have a particular section that I’m trying to negotiate, and I’m talking to them [as going], and then on the back side, when I talk to the producer groups, they’re saying the same thing—yep, we’re talking to Froman, we’re involved. And that’s to your credit, because previous trade deals, you could argue that ag got thrown under the bus a little bit.

And almost from the start, when I began hearing from all of you is that that’s not going to happen again, we’re going to be engaged in the process, we’re going to be at the table, and we’re going to get our interests represented much better than we’ve done in the past. So that’s a real credit to collectively everybody who’s been involved in that process and making that happen over the last, you know, two or three years, whenever this TPP’s been coming together. You’ve done a better job of inserting yourself into the conversation.

Mr. Adams: On the topic of trade, are you supportive of opening up trade with Cuba?

Rep. Conaway: Not at this time. And I think we need the Castro boys to meet their maker and, you know, all the other…there’s good arguments for why you do that. I’m… But all those other countries that we’ve fought and had disagreements with, and then reestablished relationships with, we’ve done it with a new regime, at least some different face. It is inevitable that we will open up and reestablish full out diplomatic relations with Cuba.

I think where we are right now, we have some leverage. We should use that leverage to try to push on certain human rights issues and democracy issues within Cuba that’s not going to happen on its own. And we’re squandering that leverage, in my view, to get some things done that would make the lives of everyday Cubans better. What we will do in the interim is make the lives of the thugs and the folks who run that country, their lives will be improved, their cash flows will be better, etc., etc. This argument that if we just had Americans coming down there as tourists, that things would be so much better, that democracy would break out and we’d have elections and all this kind of stuff, Canadians and Europeans have been going to Cuba for a long, long time, and that hasn’t had one whit of a difference.

The last time I was there, I went to Cuba on a group with nine other members, and it was one of those wonderful experiences where we’d go to the head of the Communist Party to meet with him, and either Greg Meeks or one of the others would say, you know, so-and-so, there are nine of us on this trip who are in favor of full out open trade with Cuba, and one of them is not, and it’s Conaway. And so I got thrown under the bus at every one of those meetings.

But at the end of the deal we had a big press conference, and I was last to speak, and I said, you know, a regime that is afraid to let its people see the Major League box scores, baseball box scores each day, they restrict the amount of information that comes in, including box scores, if you’re so terrified of letting your people know that the box scores, that those Cubans who have defected that are playing good baseball, and that you might find that the folks back home might find that out, that’s a regime that I’m not sure we’re ready to deal with.

So we’ve got some leverage, it’s inevitable. I am in favor of lifting any kind of trade restrictions with respect to agricultural products. If you want to make a deal with Cuba, and you want to trust that you’ll get paid, that’s your business. I disagreed with President Bush on requiring the cash to be in your pocket before the goods could leave U.S. ports. That’s a business deal that the ag folks should be making, and so that part of it I’m good with. But overall, we need to use what little leverage we have left to try to make things a little bit better in Cuba.

Mr. Adams: We’ve got just about a minute left, but I have to ask you this question. I’ve been to Cuba, too. To me it’s hypocritical if you—I understand all the things you just said, but yet we trade with China. And it seems to me like we’re saying well, if Cuba was bigger and bought more from us, we could overlook some of those things like we do with China. What’s the difference between the two other than the size?

Rep. Conaway: Ninety miles.

Mr. Adams: I mean, they’re not a threat to us.

Rep. Conaway: Not a threat to us. But we have leverage. We have a responsibility to use that leverage where we can. It’s not likely that our leverage with China would work, but I think our leverage with Cuba would work, and we’ve got an opportunity to be a proponent of helping the lives of ordinary, everyday Cubans be better. But it’s inevitable that we’ll open up full trade with Cuba at some point in time.

Mr. Adams: Chairman of the House Agriculture Committee, Mike Conaway.

[End of recording.]

AgriTalk Transcript: Senator Marco Rubio

Senator Marco Rubio (R., Fla) was a guest on Thursday’s AgriTalk radio program with Mike Adams, where the conversation focused on immigration, trade, and regulation.

This is an unofficial transcript of their discussion.

Mr. Adams: Welcome back to AgriTalk here in Washington, D.C. Yesterday I had the opportunity to talk with Florida Senator Marco Rubio. We had an exchange back and forth, difference of opinion on Cuba. We also talked a number of ag issues. But I started off asking Senator Rubio does he have any plans, any announcements coming about possibly running for President.

I have to start off—I mean, you’ve got a great setting here, this is going to be on the radio—we keep a pretty good secret. We wouldn’t let it get out of this room. Do you want to make any announcements while you’re here?

Sen. Rubio: Yes, I do. I do. I saved a bunch of money by switching to Geico. [Laughter.] That’s actually not true, I’m still on State Farm, but I thought it was funny, you know. [Laughter.]

Mr. Adams: Be careful Brian Williams, in how you tell your stories now, okay? We don’t want you to get in trouble. Well, we’re so glad that you are with us. And let’s just talk for a little bit and then we’ll open it up to the audience. We just heard from Chairman Conaway his thoughts on how we can address the immigration issue. I know you’re very involved in this.

We look at it in this group, I think, two different ways. Obviously we want to get some kind of resolution nationally, but there’s also the ag labor component to this we’re trying to get resolved as well. How do we approach it? Does it have to be all or nothing or can it be piece by piece?

Sen. Rubio: Well, a couple points. First of all, it’s a critical issue with regards to workforce, and that’s true all over the country. Virtually, there’s no sector—there are some mechanized sectors in agriculture, but by and large agriculture is reliant upon labor. And I’ve actually met some of these folks, both in Florida and in other parts of the country, in South Carolina very recently, in a peach operation, that are dealing with labor problems.

We need a reliable system that allows us to bring to this country, on a seasonal or year-round basis, temporary workers who want to work in agriculture, but do not want to be here permanently—and those are millions of people. And there’s a recognition of that in this country. I think there is a broad recognition of that, that we need to address that. The problem is that it has been wrapped up in the broader issue of immigration, which is much more complex.

Now I would start by saying there’s a significant amount of people in this country illegally who quite frankly never want to be citizens, do not want to be permanent residents, they just want to work for nine months out of the year, or six months, or eight months, they want to go back home for a period of time, and they want to come back again next year when their labor is needed. But they’re afraid to leave because if they do, they’re going to have to sneak back in again next year, so they stay. Because again, we don’t have a cost effective program that works for every part of agriculture, and that has to be fixed.

I personally worked on negotiating the differences out there between different ag groups across the country, those who represent farm workers, on a program as part of the comprehensive approach. But the lesson of 2013 and our efforts is that you’re not going to be able to deal with something like immigration in one massive piece of legislation. And the primary reason for it is because there is the belief in this country, increasingly, rightfully so, that any massive piece of legislation will never follow through on the enforcement pieces.

And so if you do something to deal with ten million people that are here illegally, unless you enforce the law, you’re going to have ten million more a decade from now, and people aren’t prepared to do that. So I think the key to doing anything on immigration is to prove to the American people that we’re serious about enforcing our immigration laws, but as part of that, one of the things that would really relieve the pressure is to have a system that allows people to come here legally and work when their labor is necessary, and return back to their home country, and return again in the future if their labor is needed again, as it will be. And so I do have hope that we can deal with that.

And if we were only dealing with that issue, I think we could make tremendous progress. The problem has been that many advocates for immigration reform want it all or nothing, because they’re afraid that the minute agriculture gets what it wants, it will stop lobbying on behalf of immigration reform; the day technology companies get what they want, they’ll stop lobbying, and so forth, so they want to hold everyone together as a coalition, and that’s been the impediment.

Mr. Adams: The next topic—and I assume you and I are probably going to disagree on this—I just disagreed with Chairman Conaway, so…

Sen. Rubio: Yeah, okay.

Mr. Adams: Let’s talk Cuba. The President’s pushing to open up Cuba. Agriculture groups want to do more trade with Cuba. How do you feel about it?

Sen. Rubio: Well, first of all, there are agricultural goods that are allowed to be sold in Cuba, but they’re not allowed to do it on credit, and there’s a reason why: they don’t pay. And that’s a big problem. The second point I would make is the following. My interest in Cuba—this is my only interest in Cuba. I want Cubans to be free in a democracy.

I believe, in addition to my personal connection to the issue, I believe it is bad for the national security of the United States to have an anti-American dictatorship 90 miles from our shores. I’ll support any policy towards Cuba that achieves that goal.

I do not believe that a unilateral opening to Cuba will achieve that goal, for the following reason: there is no such thing as the Cuban economy. The entire Cuban economy is owned by the Cuban government, primarily the Cuban military, through a holding company by the name of GAESA, G-A-E-S-A. They own everything. They own the hotels, they own the farms, they own everything.

To do business with Cuba requires you to do business with the military dictatorship. And doing business with them is not a two-way street. It is they will pick and choose who they allow in, what they allow in on their terms, and they will not allow anything in that could provide any sort of democratic opening on the island, which is what I primarily care about in terms of the future of the Cuban people.

And that’s my concern, that you’re going to have a leadership transition, because the actuarial tables tell you that the current leaders, who are all over 80 something years of age, will not be there forever. And I want us to have leverage to be able to say if you want a better relationship with the United States, we need to see these things: we need to see independent political parties, we need to see the ability of people to organize themselves and speak openly, and have freedom of the press, and so forth. If you give these things away without any of those openings, what leverage do you have in the future for that?

And here’s one more point I would make. Every single piece of farmland in Cuba today, every major agricultural property in Cuba today was once owned by a private owner, including American companies. They were stolen. They were confiscated. There’s $7 billion worth of American claims on the island of Cuba that we were never compensated for.

If you allow the import—this is the reverse of perhaps what the farm bureaus around the country want—if you allow the import of agricultural goods from Cuba to the United States, you are allowing them to traffic in stolen goods. They stole someone’s farm, they stole someone’s equipment, and they’re now going to make a profit off what they stole without compensating, including American companies—United Fruit Company—but also individuals.

You know, my family comes from a farming background in Cuba. They weren’t landowners, they were sharecroppers. They grew tobacco. But that property today is completely in the control of the Cuban government. There’s no profit motive. That’s why Cuban cigars are no longer any good. But the point being that that’s a factor that no one’s talking about. There are $7 billion worth of claims that are completely uncompensated.

Imagine if someone came in and stole your farm and 15 years later, they are growing crops on that farm and selling it to the country you went to for a profit, using the things you…your land, your equipment, what you invested in. That’s another part of it we haven’t discussed.

Mr. Adams: In case you do have aspirations for another job somewhere down the line, what would you say to agriculture? Many in agriculture and other parts of the country not really familiar with you or your policies or what you would push for if you got that new job. What can you tell this group about your ag positions?

Sen. Rubio: Well, first of all, as I said, I have a family connection. My grandfather was the single greatest influence on my life growing up, and it all entailed…you know, he was one of 17 children. Was a labor program, I guess, that they were undergoing, but… [Laughter.]  He was the only one that couldn’t work on the [field]. He had polio when he was six years old, so he actually went out and learned how to read and write, and struggled because he was disabled from polio.

But nevertheless, Florida is an enormous agriculture state. People associate Florida with real estate, no income tax, and Walt Disney World. All are great—and beaches. But we have an enormous ag component. And it’s one that’s endangered by a number of things.

First of all, by unfair trade practices that we see, whether it’s dumping of tomatoes from Mexico or some of the other issues. But the other issue we’ve really begun to face is both environmental regulations from the EPA—we had a [numeric] nutrient content fight a year ago where they basically tried to come in and impose standards that would make the water even cleaner than what comes out of your tap, in some instances, on agriculture.

And the other threat we face is invasive species. And in particular we’re having a problem now—we’ve got a [canker] problem in Florida that almost wiped out the citrus industry, and now we have a greening problem that actually—the canker ruined the fruit, the greening destroys the trees.

And the problem with losing agriculture is when you lose agricultural land and it becomes developable now because it becomes the highest, best use, you can never get it back. Once someone builds a multifamily housing complex on a piece of agricultural land, you can never come back ten years later and turn it back into farming. And that’s a major problem. You lose the capacity to grow food and to feed your people.

We take that for granted in the United States. We have a lot of people in this country that, when you ask them where does food come from, they’ll say the supermarket. They don’t realize that someone had to grow it. And we take for granted that we have a plethora of food and that we have it in what’s basically still affordable in comparison to the rest of the world, although prices have gone up a little bit, but not necessarily because of agriculture’s fault. And we take that for granted. Food security is even more important than energy security in terms of the future of our country. And if you lose the capacity to feed your people, not to mention export and provide products to others, you lose a major component of your economy.

So what are the threats from government in that regard? The first, of course, is these environmental regulations. The second, for example, is the interpretation of existing law from regulatory agencies like the Waters of the United States issue that we’re trying to address in the budget.

And the third role government can play is with basic research. This greening issue, as I pointed out, is something that the University of Florida, through a program called [IFAS], has been doing round the clock research to try to fix. If we don’t fix that issue, it is not unforeseeable that in less than a decade we will have no Florida citrus left. That, to me, is unimaginable for a state so identified with oranges and grapefruits.

And last is I think it’s important for us to open up free and fair trade with allies and partners around the world. It has to be on terms that are fair. So I believe in the Trans-Pacific Partnership, but that means that we need to have a deal with Japan that allows us to sell beef and other products into their markets. I think it’s important for these deals. It’s good for us to have millions of people around the world that can afford to buy what we grow, millions of people in the consumer class.

But it has to be on terms that are fair to the American agriculture sector, because I can tell you many of our agricultural products have to compete against other nations that heavily subsidize their industries and have zero environmental or labor regulations over their head compared to ours. And if they can undercut our growers, wipe them out, put them out of business, they then control the global market and can charge us anything they want, and as I said, we lose the growing capacity.

Mr. Adams: See, he can talk ag. There we go. All right. [Applause.]

[End of recording.]

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