By now most farmers, including West Coast nut growers, have heard that the latest tariff increases on China by the Trump White House has solicited a response from the Chinese, and it’s not good news for U.S. farmers.
You have also probably heard the USDA announcement that additional trade mitigation funds are being made available to some U.S. farmers to help offset the latest and spiraling tariffs the Chinese will be imposing on U.S. farm products.
The Trump administration is saying the problem is being fueled in part by the Chinese government’s refusal to purchase more agricultural products it had initially said they would consider, specifically the purchase of U.S. soybeans.
The recent news of an additional round of U.S. aid for farmers is both sweet and sour for farmers who, by and large, say they are happy to receive any type of support to partially offset the damage of ongoing trade disputes, but in truth, they would prefer to hear news that all U.S. trade conflicts would be settled once-and-for-all.
Few would argue that there are generally ongoing problems associated with many U.S. trading partner agreements and there are justifiable disputes, and that older agreements are often in need of updating. But others would point out that is the very nature of international trade agreements, and there are ways and international laws in place to voice those concerns and seek litigation to resolve serious trade issues. Starting a trade war rarely is beneficial to trade partners on either side.
For California tree nut producers, who were mostly left out of the first round of market facilitation direct payments announced last September, this second round, being called MFP-2 by USDA, will be based upon the number of acres planted by county instead of by type of commodity crops planted. This second round will not use the Average Gross Income (AGI) limitations of the first round either, which excluded many nut growers.
New eligibility terms
This second round, under the new eligibility terms, means some MFP-2 direct payments should be coming to nut farmers, though the details on when and how much has yet to be worked out according to Agriculture Secretary Sonny Perdue.
Being eligible for this second round of direct payments is the sweet part of the news. But most tree nut and trade analysts agree that ending the trade conflict should be the administration’s new goal, and not making partial payments for growing farmer losses. While the payments help, they fail to end the problem.
“None of the mitigation programs will begin to offset the financial impacts, the disruptions to our relationships with commercial partners or the longer-term effect this could have on the considerable market development investments the almond industry has made over the past decades,” said Almond Alliance President Elaine Trevino.
She said she is calling for a complete end to the trade war with China as the ultimate solution.
The sentiment seems to be one commonly shared by farmers across the nation. Even before the current trade issue came about, crop prices were down, input costs had risen for several years running, but farmers had survived those lean times only to face an unexpected trade dispute not just with the Chinese, but prime trading partners in Mexico, Canada and in Europe as well.
While political analysts are boldly suggesting that as the election year is quickly approaching, they expect the White House and Congress will be more supportive of trade issue resolutions that will benefit agriculture. But nut growers in California say they are already facing a 60 percent drop in Chinese nut shipments for the first quarter of next year compared to the same time last year. Already almond shipments to China are down 33 percent this year.
Perhaps more concerning is that trade competitors are taking advantage of the U.S.-China trade war. Australia has increased their almond shipments to China by 2,000 percent this year, and they will undoubtably make an effort to hang on to as much of that nut trade as they can, even after the U.S.-China trade dispute is resolved.
In yet another trade move last week, President Donald Trump made what even U.S. trade officials are calling a surprise announcement that he was slapping a five-percent tariff on all Mexican imports to pressure that country in doing more to crack down on the surge of Central American migrants trying to cross the U.S. border.
Furthermore, the President warned Mexican officials those tariffs will increase if they do not take immediate action to stem the illegal tide of illegal crossings into the United States.
The message comes (in the form of a Twitter announcement) as the administration has been pushing for passage of the United States-Mexico-Canada Agreement (USMCA) that would update the North American Free Trade Agreement.
The White House said Trump would be using the International Emergency Economic Powers Act to implement the tariff plan.
The move serves as the latest indication that the administration may not relinquish its efforts to wager trade issues as incentives to accomplish other of his policy plans unrelated to trade. Opponents of trade disruption have expressed uncertainty over the Mexican trade tariff move and say it not only jeopardizes Mexico’s approval of the USMCA, but it will also increase pressure on U.S. farmers and ranchers if Mexico retaliates with tariffs of their own. It will almost certainly increase the price of many food items, like fruit and produce, at U.S. grocery stores.
Insult to injury, or just coincidence?
Perhaps the president’s trade woes were boosted by a casual (but serious and embarrassing) mishap earlier this year. According to published reports, the administration shelled out over $62 million of taxpayer cash, some of which was supposed to be earmarked for struggling U.S. farmers hit hard by the U.S.–China trade dispute.
The New York Daily News is reporting the administration paid the money to a Brazilian meat company, JBS USA, the largest meatpacker in the world who operates a Colorado subsidiary, after the U.S. Department of Agriculture cut a contract to purchase pork in January. A portion of that payout came from a $12 million program meant for American farmers harmed by the trade dispute with China, according to the newspaper.
To complicate the problem, JBS is owned by Brazilian brothers Joesley and Wesley Batista —who have confessed to bribing hundreds of top officials in Brazil. But it wasn’t the first payment of $22.3 million that has come under question, but an additional payment that brings the total to over $62 million.
It turns out the brothers have spent time in jail over sweeping corruption scandals in Brazil, and JBS has been under investigation by the U.S. Department of Justice for violations in the U.S. over possible violations of the Foreign Corrupt Practices Act and were questioned about those possible violations as early as December last year, perhaps one of the reasons USDA cancelled the pork purchase contracts.
In other news for nut producers
While early spring rains were problematic for many nut orchards in California, the silver lining may be that some crop consultants are saying it helped to extend the bloom season. Playing catch up isn’t easy, but early reports indicate it could still be a bumper crop for some nut orchards, and a bigger season thanks to added nut acres.
Regarding rains, it seems they haven’t exactly gone away in parts of the Golden State. May rains, some of them heavy, have damaged what appeared to the beginnings of a bumper cherry crop in San Joaquin County and much of the Central Valley region.
A few vegetable growers also complained about persistent rain showers, but a few varieties may have benefited from the showers. More on that as the vegetable season progresses.
A couple of meetings to note:
Monterey County Farm Bureau, Salinas
June 12 Central Valley Almond Day
Fresno Fairgrounds, Fresno
Have a great June!
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