November 20, 2017

NAFTA Debate Holds Up Another Agriculture Nominee

The contentious NAFTA re-negotiations are holding up another agriculture nominee in the Senate.  Arizona Republican Jeff Flake has put a hold on the confirmation of Gregg Doud, President Trump’s nominee to be the U.S. Trade Representative’s Chief Agricultural Negotiator.  Sources say the hold involves concerns surrounding a controversial produce proposal that the United States has introduced into the North American Free Trade Agreement Negotiations. The seasonal produce proposal is aimed at protecting U.S. farmers from cheaper Mexican imports.

Growers in the southeastern U.S. support the proposal. Flake argues that the move would raise the cost of production, reduce the selection of fruits and vegetables for consumers, and hurt growers in western states like Flake’s home-state of Arizona. The largest U.S. port of entry for produce is located in Arizona. Flake hasn’t said what it would take to get him to lift the hold. Flake wrote a letter to U.S. Trade Representative Robert Lighthizer asking him to commit to withdrawing the proposal at the next round of NAFTA talks in Mexico City. Flake wrote, “Efforts that lead to unnecessary restrictions on trade with our North American partners will have devastating economic consequences both in Arizona and nationwide.”

On the wholeDoud has been viewed as a favorable and non-controversial candidate.  He served for eight years as the Chief Economist for the National Cattlemen’s Beef Association before moving on to serve as an economist for the Senate Ag Committee.  There, he worked under both Thad Cochran and Pat Roberts and was instrumental in crafting the 2014 Farm Bill.

Doud isn’t the only candidate held up as President Trump tries to fill positions during first year of office.  Iowa Ag Secretary Bill Northey, who flew through the confirmation process in October has a hold placed on him by Republican Senator Ted Cruz of Texas, reportedly in response the Iowa and other Midwestern states ability to reverse a series of incoming regulations many viewed as anti-renewable fuels.

Major Economic Groups Acknowledge Headwinds in Agriculture

There’s no doubt that the nation’s food  producers are struggling to make ends meet.  Years of above trend yields in grains and expanding livestock herds have made price improvements hard to come by.  Now two groups, CoBank and the Kansas City Federal Reserve have acknowledged those struggles but say they also don’t expect things to get much worse


The first of these reports was issued by CoBank, a segment of the Farm Credit System. Analysis by their Knowledge Exchange Division suggested that minus a major weather disruption, they anticipate surpluses of grains and oilseeds will continue over the next three years.  CoBank says the key to price improvement will be growing demand, which isn’t impossible given rising global incomes.  However, division manager Tanner Ehmke said that in order to take advantage of that, the US will need to be aggressive in securing free trade agreements.  He continued, saying “Acreage expansions and improvements to yields in competing export markets will be the headwinds for U.S. exports. . . The bright spot will be the continuing growth in demand. As the global middle class grows, so will the opportunities for U.S. exports.”  Relative currency strength will also be an issue as US wheat farmers compete against skyrocketing Russian production.  The same is true for US soybean farmers, now that Brazil has taken over as the world top supplier.

Kansas City Federal Reserve

In a shorter term outlook, the Kansas City Federal Reserve, which covers seven major agricultural states, says agriculture is showing signs of stabilizing although they remain poor. The Bank’s quarterly survey of Agricultural Credit Conditions says that as financial stress continues to build, income has continued to decline.  Farm income in the third quarter of 2017 was lower than last year, although declining at a slower rate.  Farmland values are somewhat lower than a year ago with irrigated crop land down three percent and non-irrigated acres down six percent.  The Fed’s assessment cautioned that while the duration of farm land value decline is rivaling that of the 1980’s, the magnitude of the decline is much less.

Somewhat troubling, however, was that farm loan repayment rated declined for the 16th straight quarter.  Bankers expectations of future declines in farm income have improve and most bankers indicated a sharp increase in the sale of farm assets is unlikely.





Restoring Profitability Through Biofuels – A Visit With Poet

Rusty Halvorson had a chance to visit with Matt Merritt, PR Director at the 74th Annual National Association of Farm Broadcasters convention in Kansas City.  Merritt says the very foundation of the company is built on helping farmers make more money:

A Visit With Poet – Matt Merritt



To learn more, visit POET at their website