Senate Republican Conference Chairman John Thune, R-S.D., told agricultural trade officials on Thursday that he is “really frustrated” with the state of the United States’ agricultural industry, including the fact that the Trump administration hasn’t negotiated bilateral trade deals amid a weak domestic agricultural economy.
“I’ve heard that now for the last couple of years, since we decided to pull out of TPP, that we’re working on bilateral trade agreements, but I don’t see any evidence that we are,” Thune said during a Senate Agriculture Committee trade hearing. “Now maybe there are discussions going on in a back-channel way that are not visible to the rest of us, but this strikes me, at least, these are huge missed opportunities from an economic standpoint and a trading standpoint.”
Members of the Trump administration, including within the Office of the U.S. Trade Representative, continue to have conversations about a potential bilateral trade deal with Japan, USTR Chief Agricultural Negotiator Gregg Doud said during the hearing.
“Other countries have beat us to the punch, and we’ve got to get busy,” Doud said.
A few days ago Thune was in a grain elevator in South Dakota, where soybeans were priced at $7.05 per bushel and where those prices were much higher in June, he said.
According to Macrotrends, U.S. soybean prices averaged $10.21 per bushel on June 1 and $8.33 per bushel on Thursday.
Several countries have retaliated against global Section 232 tariffs on steel and aluminum rolled out starting March 23, and China has additionally retaliated against Section 301 tariffs imposed in tranches starting July 6 and Aug. 23.
Countries have heavily targeted U.S. agriculture products in their retaliation, and China is the biggest buyer of U.S. soybeans.
With rising transportation costs, farmers told Thune they need prices of at least $8 per bushel in order to not incur losses, and several farmers face the prospect of having to put their soybeans in storage, “because this market is just shot for the moment,” he said.
“The economy in farm country continues to deteriorate,” Thune said. “There will be more and more producers who are not going to be able to get operationally involved next year and who are going to be at risk of losing their operations. And it doesn’t seem to me, at least, that that message — as hard as we try — seems to be getting across to the administration.”
Starting in January, the U.S. Department of Agriculture will start dispersing funds from a $12 billion trade mitigation package aimed at assisting farmers suffering from the effects of foreign trade retaliation, USDA Under Secretary for Trade and Foreign Agricultural Affairs Ted McKinney.
USDA will administer the Market Facilitation Program (MFP) to provide payments to corn, cotton, dairy, pork, sorghum, soybean, and wheat producers, as well as a separate $1.2 billion food purchase and distribution program for products retaliated against, USDA said in a Sept. 4 press release.
USDA on Thursday released a detailed accounting of how it calculated estimated damage from trade disruptions, noting in an announcement that it employed the same approach often used in adjudicating World Trade Organization cases.
Sen. Amy Klobuchar, D-Minn., asked whether USDA had considered regional shipping disparities within each agricultural commodity when it was preparing the methodology for payments.
USDA Chief Economist Robert Johansson said the agency didn’t consider regional effects when putting the current methodology together, but said USDA is “actively examining” and continuing to provide Agriculture Secretary Sonny Perdue with information about market factors including rail shipment capacity in the Pacific Northwest relative to barge capacity in the Gulf of Mexico region, for example.
Doud and McKinney defended the Trump administration’s trade policy amid several questions from senators who criticized tariffs and wondered why the U.S. isn’t negotiating more free trade agreements.
Sen. Mike Bennet, D-Colo., juxtaposed the Trump administration’s trade policy with the fact that 11 free trade agreements have been entered into by countries outside the U.S. during the timespan of the Trump administration, and asked how the current situation won’t end up without the U.S. backsliding.
Doud responded that China inflicted tariffs on U.S. agricultural products because Beijing viewed it as a politically powerful move that would influence public opinion on President Donald Trump’s tariffs.
“But I don’t think U.S. farmers are swayed,” Doud said.
He said China doesn’t buy the amount of wheat and corn that it said it would buy when it joined the World Trade Organization (WTO) in 2001, buys no rice or poultry from the U.S., has an 80 percent tariff on distiller’s grain, and a 70 percent tariff on ethanol.
“We finally got a thimble-full of beef in there,” Doud said, referring to a recent agreement between the U.S. and China to start allowing U.S. beef shipments to China.
Doud said Trump is trying to improve China’s behavior with regard to trade in agriculture and several other industries.
Sen. Joe Donnelly, D-Ind., said he has friends who expect to lose their farm as a result of retaliatory tariffs on U.S. agriculture, and noted that Indiana pork farmers and lumber companies are getting “crushed” because of tariffs.
“We’re trying to make some corrections that will fix many of the trade issues that we’ve been suffering from for a long time,” McKinney said.
McKinney related a story where his twin brother recently had to put in extra work with his soybean crop because of China’s strict biotechnology approval regime, which often takes awhile to approve biotechnology applications, he said.
Donnelly said, “We’ve heard in the last week that the administration has said … that they’re about to implement another $200 billion in [China] tariffs, and then there’s a third tranche that’s coming from $267 billion when farmers keep coming in and asking about as valid a question as you could ever get: ‘When does it end?’”