Northey sees light at end of trade tunnel
CENTREVILLE, Md. — With foreign trade headlining the speaker program at the 20th Annual Maryland Commodity Classic, Bill Northey, USDA undersecretary of farm production and conservation, outlined the agency’s role in helping farmers through trade issues.
Northey spoke to Maryland grain farmers just days after the Trump Administration announced USDA will authorize up to $12 billion in payments and programs to help offset the impact of retaliatory tariffs on U.S. farm products. In the same week, U.S. and the European Union agreed to tear down trade barriers which included the EU increasing soybean imports.
Northey repeated to the crowd that the measure was a short term move to allow negotiators time to work out trade deals with existing foreign markets and develop new trading opportunities.
“It’s designed to be a short term address to be able to get us past this challenging situation,” he said. “Hopefully there will be some more announcements and other announcements like the EU that will follow through and actually create trade opportunities and reestablish themselves and allow us to get back to that place where we don’t need support we need trade, not programs that replace that but certainly when we lose the trade opportunities we have a long term impact.”
“This is not going to make anybody whole, this is not going to make markets whole…but this is an effort to soften some of that blow that agriculture’s having to go through right now,” Northey added.
Northey and Kimberly Atkins, vice president and chief operating officer for the U.S. Grains Council extolled the importance of trade on the nation’s farm economy.
Atkins said the 20 countries that the United States has free trade agreements with account for half of U.S. exported corn.
“It takes strong policy and market development to have long term success,” Atkins said.
Export of feed grains in all forms represents 28 percent of U.S. production, Atkins said and the grains council projects that to increase to 33 percent in the next five years.
The grains council sees huge potential in expanding markets with the Asian pacific and Africa, which are projected to account for 97 percent of the next billion people to move into the middle class.
“The international marketplace really offers a lot of opportunities and it is an exciting challenge for U.S. farmers to meet,” Atkins said. “The world is your marketplace and it’s a growing world.”
North Africa especially represents a good opportunity for Mid-Atlantic growers with grain shipped from East Coast terminals.
“That part of the world is somewhere where we’re paying a lot of attention and we’re continuing to amp up our program and again seize those opportunities for increase exports,” Atkins said.
From a USGC-commissioned study by Informa Economics, export of grain and grain products added $118.5 million in value to Maryland’s economy along with 882 jobs.
Atkins also cheered past USGC chairman and Maryland farmer Chip Councell for bringing several foreign trade delegations to his and other farms in recent years.
“He’s having a real impact showing the benefits of technology and showing how U.S. farmers can continue to be a reliable source for their grain supply,” she said of Councell.
While soybeans now appear on the “front edge” of agriculture trade issues now due to retaliatory tariffs from China, Northey said prior to the tariffs being set, trade issues were not changing for the better.
China imports very little U.S. corn and it’s doors have been closed to U.S. poultry since a 2015 avian influenza outbreak even though other countries have opened back up to importing U.S. poultry.
“We have several other issues in trying to ship some products to China and that then has caused folks to say we need to be able to have them follow some rules,” Northey said. “There’s intellectual property, there’s steel and aluminum and a lot of other pieces to this but certainly agriculture has some pieces when you look at some of the trade issues out there that are worth talking about how do we get our trading partners to comply with the rules they typically agree to.”
The relief program will be set up in three parts: a Market Facilitation Program with payments to farmers impacted by tariffs, a Food Purchase and Distribution Program to manage unexpected surpluses and a Trade Promotion Program to develop new markets for trade.
With more details to work out, Northey said payment rates are expected to be released near the end of August and the program open to farmers on Sept. 4.
“The design here is to be fairly simple: Have a rate that’s based on the loss to the market that allows you maybe to store, maybe to pay off some loans on some those crops and hold off on selling in the hope that we get back to a more even trading situation where the price can reflect the true value of commodities, Northey said. “Of course we hope that those rates don’t even need to be there. At that time maybe we can have some healing up on some of these disagreements out there.”
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