January 16, 2020
China commits to cut trade barriers, increase ag purchases
The release of the “phase one” U.S.-China trade agreement has sparked new confidence among U.S. farm groups that producers will see major increases in exports after nearly two years of trade war conditions.
But there are some new concerns after Chinese Vice Premier Liu He said at Wednesday’s signing ceremony that Chinese purchasing of U.S. farm commodities would depend on “market conditions.” Traders also were disappointed when it turned out that the text of the agreement commits China to $36.5 billion in ag purchases for 2020, not the $40 billion that had been advertised.
Still, that $36.5 billion is $12.5 billion more than China bought in 2017 before the trade war began, and China has pledged to buy at least $43.5 billion in U.S. farm products in 2021, which would bring the two-year total to $80 billion. That’s consistent with what Ambassador Gregg Doud told us in December.
“A lot can change in 24 months, but the potential to achieve average ag exports to China of $40 billion seems obtainable,” Veronica Nigh, an economist with the American Farm Bureau Federation, writes in an analysis of the deal. “What is certain is that the U.S. will have to fight for market share in order to achieve the export goal and the product mix may be different from what the U.S. has exported in the past.
Keep in mind: China also agreed to major structural changes that are expected to tear down barriers to US ag.
U.S. farmers will also get a much bigger slice of China’s annual $850 million market for fresh fruit and vegetables thanks to new phytosanitary protocols the country has pledged to finalize.
Read the text of the agreement here.
Signed and sealed, but will it be delivered?
Chlorpyrifos roundtable is “a farce,” say ag processors
A prominent agricultural representative had a long list of frustrations following the state’s first listening session on Tuesday about replacing chlorpyrifos.
Roger Isom, the CEO and President of the Western Agricultural Processors Association (WAPA), called the workshop “an utter farce” and “a complete travesty.” He said it served only for the agencies to check a box on outreach and for environmental activists to “lambast farmers with accusations of corporate greed and spraying indiscriminately.”
The agencies discussed how they conduct outreach, carry out research and determine approaches, explained Isom in a statement yesterday. “None of these will solve the immediate problem of the loss of chlorpyrifos in the short term,” he argued.
Isom also represents the Cotton Ginners and Growers Association and the Ag Energy Consumers Association and is a member of the Ag Presidents’ Council.
The Department of Pesticide Regulation responded that it was pleased with the turnout and dialogue, with many thanking staff afterward. A DPR spokesperson said in a statement for Agri-Pulse that a list of alternatives “will be an important component of the finished product.” But the work group is currently “looking at more holistic approaches” that may be provided by public input.
The agency added that “some members of the public may not stick to the agenda” with their comments and the work group does include well-known environmental advocates, one of whom volunteered as a translator during the workshop.
Remember: DPR and CDFA are hosting a second meeting today in Sacramento, which will be live streamed beginning at 1:30 p.m.
WAPA was also disappointed with the budget proposal from Gov. Newsom. The group said in a separate statement that cuts to the program for tractor upgrades will leave the San Joaquin Valley short of meeting air quality goals set out by the state.
The group pointed to rising equipment and fuel prices and “ever-growing labor costs coupled with stagnant commodity prices.” It said meeting the mandatory regulation “will be overwhelming to the agricultural industry” without more incentive funding.
On a statewide homelessness tour, Gov. Newsom stopped in a mental and behavioral health center in Fresno yesterday.
Glim future for bottle recycling bill
A bill seeking to replace the current “Bottle Bill” program for recycling bottles and cans passed its first committee yesterday with token support from fellow Democrats and heavy industry opposition.
The measure, Senate Bill 372, proposed an Oregon model for having industry run the recycling program. The Oregon program relied on automated drop-off points for consumers to receive cash back. This confused Sen. Henry Stern of Los Angeles, a self-described millennial who only shops online.
Wine groups and beer distributors opposed the bill. Tim Schmelzer of the Wine Institute pointed out that for someone to make much money, “that’s going to be a 50-pound bag to haul around.” He urged a focus instead on better access to the current curbside pickup.
Keep in mind: The bill’s author, Sen. Bob Wieckowski of Fremont, was selling SB 372 as both a complement and a backstop to the two major bills targeting single-use packaging, AB 1080 and SB 54. Stern and Sen. Ben Allen of Santa Monica worried Wieckowski’s bill would instead disrupt tense negotiations taking place over those bills.
Allen emphasized those discussions are very close to a resolution on a broader “circular economy” framework.
Democrats downplay China deal
Democrats have been using the China trade war to try to make inroads in the rural Midwest, and some were quick on Wednesday to criticize Trump’s agreement.
In a statement issued hours before the details of the deal were released, former Vice President Joe Biden dismissed its importance. “Trump is getting precious little in return for the significant pain and uncertainty he has imposed on our economy, farmers, and workers,” Biden said.
Senate Minority Leader Chuck Schumer, D-N.Y., said “the stunning lack of substance and long-term reform achieved (by the deal) will harm American workers and industry.”
Senate set to clear USMCA
The U.S.-Mexico-Canada makes its final stop in Congress today with a pair of votes this morning on the Senate floor.
Take note: Trump indicated at Wednesday’s signing event for the China trade deal that he will have another ceremony next week for the USMCA implementing bill. If so, he could be signing the measure while the Senate is in the middle of his impeachment trial.
He said it:
“I would love to have a conversation with beer and wine!” – Sen. Wieckowski, in a witty but offhanded response to Sen. Allen’s advice to work with the industry opponents next.
Bill Tomson, Ben Nuelle and Steve Davies contributed to this report.
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