Illegal immigrants, the Trump administration budget and Mexican sugar dumpingIllegal immigrants, the Trump administration budget and Mexican sugar dumping
Letters and Commentary: Déjà vu for budget; Mexico has until June 5 to comply with U.S. trade laws or get slapped with an antidumping fine of 80%.
June 2, 2017
Illegal immigrants are breaking the law
My husband and I were very frustrated by an article you wrote in the April 2017 edition of The Farmer entitled "The Value of Minn. Immigration."
When you used the phrase, "...conducting undocumented immigrant raids," we knew the direction the article would take us and that's exactly what it did!
You said 60% of U.S. farm workers are undocumented and then vilified the current administration for raids and arrests of this segment of workers. You then went on to say how this would have a negative effect on agriculture. We all know this, but you are also saying that because undocumented workers are so important to the ag economy, we should just let them be.
When we raised our children, we told them all rules needed to be obeyed. They couldn't just pick and choose what rules they wished to follow.
You contend that because undocumented workers provide a valuable service, we should ignore that they are breaking the law by being here illegally. We don't agree!
Picking and choosing what rules or laws we obey in society will result in anarchy.
Shame on you for writing an article that encourages that!
David and Kathy Rupprecht,
Déjà vu all over again
By Dave Ladd
It has become an article of faith amongst policy wonks that an administration’s budget proposal is considered “dead on arrival” before it hits the Halls of Congress.
Every year the White House delivers a proposed budget to Capitol Hill and, every year, there is a hue and cry from affected stakeholders. The release of the Trump Administration’s fiscal year 2018 budget is no exception.
While it is true that an administration’s budget is the first step in an intricate dance with 535 members of Congress, it does provide insight as to the priorities of the Executive Branch. The budget recently released by the White House would cut the federal crop insurance program by $28.5 billion — or roughly 36%— by capping the premium subsidy and eliminating the harvest price option.
As producers continue to face low commodity prices and weather-related challenges, risk management tools such as crop insurance continue to be a critical component of their marketing plan. Crop insurance protects a producer’s yield and price, as well as providing collateral and a repayment source for operating loans, term loans for machinery, livestock, facilities and real estate loans.
The enhanced coverage provided by higher levels of revenue policy coverage means significantly greater protection for the producer’s revenue stream, as producers have shifted to protecting income rather than yield.
A review of recent history related to the crop insurance program is illustrative. Deliberations related to the 2008 Farm Bill included reductions to the crop insurance program of approximately $6 billion over a 10-year period.
The 2011 Standard Reinsurance Agreement that went into effect July 1, 2010, included an additional $6 billion in estimated funding reductions to the crop insurance program over 10 years.
Another part of the equation is the delivery mechanism for crop insurance — crop insurance companies. The two primary revenue sources for a crop insurance company are Administrative and Operating reimbursement and underwriting of gains and/or losses.
During consideration of the 2014 Farm Bill, amendments in the U.S. House related to crop insurance would have reduced the cap of government funding for crop insurance companies from $1.3 billion to $900 million per year; another would reduce the guaranteed rate of return for crop insurers from 14% to 12%.
A wide range of strong risk management tools for producers, including a viable crop insurance program, is more important than at any time in recent memory. As such, proposed reductions in the crop insurance program would adversely impact producers and hinder their ability to manage risk.
The proposed reductions hold the potential to reduce the number of companies offering risk-management tools such as crop insurance. Without a viable program, it is likely that lending standards would need to be much more stringent in order to maintain sound credit quality.
It is unclear as to what the aggregate national impact of reductions to producer premium subsidies and A & O reimbursements would be on producers and those entities that currently serve the crop insurance marketplace. It is likely, however, that lower producer premium subsidies would stifle producer utilization of crop insurance as a risk-management tool.
Likewise, lower reimbursement rates would most likely be passed along to producers in the form of higher premiums or diminished service.
It is important to remember that most producers cannot afford not to have some type of protection. Therefore, their profit margins would be further reduced if premiums are raised.
In addition, many young and beginning producers (who traditionally have less collateral and equity) would face additional challenges in obtaining financing.
Crop insurance is not immune to the vagaries of the budget process, and the issues deserve renewed scrutiny. Over the course of the past few years the program has emerged as a continuing policy issue for policy and philosophical reasons. In the end, Congress passes the budget and agriculture has generally been successful in making the case for crop insurance and mitigating proposed reductions. Each battle, however, expends political capital and emboldens critics — including members of Congress.
Ladd, president of RDL & Associates, Apple Valley, writes about public policy and the political environment. Contact him at [email protected].
Don’t forget about America’s responsible foreign sugar suppliers
By Phillip Hayes
Mexico has until June 5 to comply with U.S. trade laws, or antidumping and countervailing duties of 80% will be imposed to stop the damage being caused by dumped and subsidized Mexican sugar.
If that were to happen, the United States has plenty of options for sourcing needed sugar from abroad.
There are dozens of foreign producers who responsibly and fairly supplied the U.S. market for the decades before Mexico began gaming the system. And those nations are justifiably angry about Mexico’s bad acts.
“The quota holders, although lacking legal standing, were equally harmed by Mexico’s unfair trade practices, as both the volume of access and market prices received were depressed,” the International Sugar Trade Coalition recently wrote in a letter to the U.S. Secretaries of Commerce and Agriculture about the harm done to their industries in 2013 and 2014.
The ISTC represents producers from Barbados, Belize, the Dominican Republic, Fiji, Guyana, Jamaica, Malawi, Mauritius, Panama, the Philippines, Swaziland and Zimbabwe.
In addition to that impressive list, there are other partners who are part of America’s tariff-rate quota system. Among them: Argentina, Australia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, India, Mozambique, Nicaragua, Paraguay, Peru, South Africa and Thailand.
And every one of them was harmed when Mexico started dumping mountains of subsidized sugar onto the U.S. market in 2013. That’s on top of the job loss and $4 billion in lost revenue that Mexico’s behavior inflicted on U.S. producers.
Despite being found guilty of violating U.S. trade laws, little has changed. Agreements put in place to stop Mexico’s trade abuses have been ineffective. Mexico continues to dump subsidized sugar, and producers from the United States and elsewhere continue to shoulder the consequences.
In other words, the people who have acted lawfully and responsibly all along have been punished, while Mexico has been rewarded for breaking the rules with coveted market share. And that has distorted the U.S. market and starved U.S. refineries of needed raw sugar supplies.
“The long history of the U.S. sugar program offers ample evidence of the reliability and readiness of quota holders to supply U.S. raw sugar requirements,” the ISTC letter concluded.
It’s good to know that America still has reliable trading partners on which it can depend.
Hayes is the director of media relations for the American Sugar Alliance.
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