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IFB: China deal, ‘NAFTA 2.0’ & 2019 MFP payments uncertain

 

PEORIA, Ill. — Farmers who packed the Peoria County Farm Bureau auditorium on Feb. 6 for a talk on trade with the Illinois Farm Bureau’s (IFB) legislative director were looking for encouraging news regarding tariffs involving the United States, China, Canada and Mexico.

But with time running short for farmers deciding their final planting and marketing plans, they learned they would have to wait a little longer for answers.

They also learned that there will likely not be another round of Market Facilitation Program (MFP) payments issued by the government in 2019, regardless of whether trilateral ratification of the United States-Mexico-Canada Agreement (USMCA, or “NAFTA 2.0”) is achieved or tariff talks with China bear fruit.

These were the observations of Adam Nielsen, director of national legislation and policy development in the governmental affairs division of the IFB, who told the group of more than 50 producers the Bureau is actively engaging with the Trump administration to impart the urgency farmers are feeling as the trade war lingers on.

“Most of what we grow in Illinois goes right onto the river or rail and into the export market. In Illinois, exports are even more meaningful,” Nielsen told the farmers, some of whom jumped into his 40-minute presentation with questions and observations of their own.

Canada and Mexico cannot be underestimated in terms of their market significance as importers of Midwest farm products, according to Nielsen, who will lead an IFB delegation to Capitol Hill on March 12 to voice concerns about trade and other issues.

“At the start of NAFTA, Mexico was a market for 5.6 percent of our agricultural exports. Today, it is 12.7 percent, so we have doubled the Mexican market under NAFTA,” he said. “We have a lot of trade back and forth between the U.S. and Canada on the livestock side. Right now, around one-sixth of our agricultural products are sold to Canada; before NAFTA, it was about half of that.”

The American Farm Bureau Federation (AFBF) hopes to see a vote in Congress by July on the proposed USMCA, he said. The trade agreement, which was reportedly verbally approved by the country’s leaders at the G20 Trade Summit, is currently before the congressional bodies of each government.

In the U.S., the trade agreement is under study by an ethics committee and has not yet been released for discussion by Congress.

As for the trade dispute with China, the AFBF is closely monitoring any developments in talks between the White House and the administration of China’s President Xi. President Trump has imposed a March 1 deadline on China to reach an agreement to end the trade dispute.

“Last week (end of January) China agreed to purchase about 5 million metric tons of soybeans from the U.S. to kind of get the ball rolling, which is about one-third of Illinois’ annual production, give or take,” Nielsen said. “I’m not sure if the boats are sailing to China yet, but it was a positive sign of goodwill before they get down to brass tacks and have a sit-down meeting.

“But if (discussions get) bogged down again, the President has already threatened to increase the tariffs on Chinese imports, and who knows what would happen after that.”

The Trump administration used the 1974 Trade Expansion Act, sections 232 and 301, to impose import tariffs on Chinese goods. These are sections of the Act that allow the U.S. president to adjust tariffs and quotas on imported steel and aluminum (232) and technological products (301). Tariff-free trade is the ultimate goal of the Farm Bureau, Nielsen explained.

He praised the administration for coming to the aid of farmers with the MFP. When he asked for a show of hands from MFP participants, about half of the Peoria County farmers in attendance responded. “MFP was a godsend,” said Nielsen, adding that signup ends on Feb. 15.

However, “we asked (USDA) Secretary (Sonny) Perdue when he was in Champaign for a meeting with (Illinois) Congressman (Rodney) Davis what the prospects would be in 2019 for a MFP. The answer was that there will not be one, because in 2018 you had no idea when you were planting that this was coming, that 232 and 301 were right around the corner. But in 2019 you have full knowledge of (U.S.) trade policy.”

Farmers should not feel angry or betrayed if a 2019 MFP is not announced, Nielsen opined. “No other industry received anything like the MFP. There was a lot of jealousy from manufacturers,” he said.

“The administration has bent over backwards to take care of our industry over the last several months with the MFP and the offices of (Farm Service Agency) being opened before the end of the government shutdown so farmers could get loans and do business.”

After answering several questions from farmers, Nielsen allowed that many are justified for being fed up with the ongoing trade disputes occurring at their expense. “We cannot keep going on like this. At what point do you see people exiting the industry and demand for our product destroyed? We are in a very important time. I am praying for a quick resolution.”

Meanwhile, he assured members that IFB and AFBF leaders are putting all of their energy into delivering the proper messages to the key players in the administration on behalf of farmers. “(IFB) President (Richard) Guebert has met with the President twice and with the Vice President. We’ve had five visits with Secretary Perdue.

“We joined the group ‘Farmers for Free Trade,’ which is an umbrella group of agricultural interests, and we have biweekly conference calls and a fly-in. We are doing media interviews and communicating the impacts. We are putting everything we have into this,” he said.

2/13/2019