Removing roadblocks to ag markets

Historic controversy between the U.S. and Cuba has limited the potential for American agriculture to experience optimum economic trade opportunities.

Proposed legislation currently residing in the Senate would remove crucial U.S.-imposed restrictions on trade with Cuba to provide an increased market outlet for significant trade with the island country that is only 100 miles from the Florida keys.

The Travel Reform and Export Enhancement Act (H.R. 4645) would:

• End impeding trade requirements, such as the requirement that payment processes from Cuba to U.S. farmers must use a third-country bank and abide by its policies
• End the requirement that transactions be cash only
• Require that exports meet the same payment requirements as exports to other countries (payment required when the title of the shipment changes hands, not in advance)
• Permit U.S. citizens to travel to Cuba (allows for ag-sale facilitation)

In his State of the Union Address, President Obama announced his plans to double America’s exports throughout the next five years to strengthen the economy. H.R. 4645’s passage would help the country meet the administration’s goal.

“Cuba used to be one of our big markets,” said Collin Peterson, chairman of the House Agriculture Committee and the bill’s sponsor. “The bill “would help us get those markets back.”

According to a Bloomberg article that cites The U.S. International Trade Commission, the U.S. has the potential to supply two-thirds of Cuba’s agricultural imports if legislation is passed. This number increases its current 30-percent import volume to the country.

The U.S. exported $528.5 million in food and agricultural products to Cuba in 2009, according to the U.S.-Cuba Trade and Economic Council. The U.S. has exported almost $52 million in food and agricultural products so far this year. The U.S. supplied 27 percent of the Republic of Cuba’s food and agricultural product imports in 2008.

The American Soybean Association, the U.S.A. Rice Federation, the National Corn Growers Association and other agricultural groups are referring to the legislation as “renewing normalized trade.”

However, not everyone promotes H.R. 4645. In a letter published at Forbes.com, Roger Noriega, a visiting fellow at the American Enterprise Institute, said:

“So what do agriculture sales and tourism to Cuba have in common, anyway? Not much. But hard-left Castro apologists are offering a quid pro quo to well-meaning farm state legislators, hoping that they will ignore the brutality of the Cuban regime and vote to loosen sanctions in exchange for meager sales to a bankrupt economy. The argument they make is that the 50-year-old embargo is only hurting U.S. farmers.”

AgriMedia Publications offered its stance about the legislation in an editorial posted at the Web sites of its numerous publications, “Restrictions and stipulations have made trade with Cuba very difficult, practically pushing Cuba to look for products elsewhere. If we're not the supplier, there are many who would like to step in, like the European Union, Canada, Brazil or Argentina.”

The bill has significant bi-partisan support (more than 30 co-sponsors) and farm-organization support, which promises to help its transition to the Senate for further deliberation.

Activating direct banking, the elimination of the cash-in-advance rule and unrestricted travel will improve access to this foreign market; creating an opportunity that benefits ag-industry members and the national economy.

*Photo obtained from The Center for International Policy’s Cuba Program










Program supports development of U.S. producers

Earlier this month, the United States Department of Agriculture (USDA) implemented a new support program to help America’s farmers hurt by the recent economic crisis. USDA Sec. Tom Vilsack introduced the Trade Adjustment Assistance for Farmers Program, also known as the TAA for Farmers Program.

"As we work to help rural America recover from the worst economic crisis since the Great Depression, the Trade Adjustment Assistance for Farmers Program will create new opportunities for producers hurt by import competition," said Vilsack. "Eligible producers will receive much-needed technical assistance and cash benefits to help them adjust to the current economic environment."

Farmers receive financial assistance after meeting eligibility requirements and upon completion of stringent training and education courses that can last up to three years.

According to USDA, the TAA for Farmers Program helps producers of raw agricultural commodities and fishermen adjust to a changing economic environment associated with import competition by means of technical assistance and cash benefits.

It’s not another subsidy, said Kevin Klair, extension economist at the Center for Farm Financial Management at the University of Minnesota.

“Congress was very intentional when structuring this program. Important management and competition issues were considered to make it most effective,” said Klair.

The American Recovery and Reinvestment Act of 2009 (ARRA) reauthorized and modified the TAA. The Act includes measures to modernize the nation's infrastructure, enhance energy independence, expand educational opportunities, preserve and improve affordable health care, provide tax relief and protect those in greatest need, according to the Obama administration.

Eligibility

• The commodity on which the farmer claims losses must qualify for the program as determined by the USDA (notifications issued in Federal Register notices).
• Farmers must have experienced a greater than 15-percent decrease in the national average price, the quantity of production, value of production or cash receipts of the commodity compared to the average of the three preceding marketing years, and imports contributed importantly to this decline.
• Applicants must complete a series of workshops/education sessions.
• Farmers can apply until April 14.

The public had the opportunity to weigh-in about program procedures and eligibility criteria in August. Most public commentary centered on payment limitations with consideration to adjusted gross income and specialty crops, a well as consideration to the length of intensive training about how to use the program. There is an additional 30-day period for public comment commencing March 1.

Farmers may receive $4,000 in assistance after an initial series of free technical-training classes. Klair said farmers are eligible to receive an additional $8,000 after writing an approved long-term business-adjustment plan to aid them in their future operations.

“It teaches farmers how to be more-efficient U.S. producers,” said Klair, who said the program has received numerous inquiry calls.

Klair said the “downside” to the program is its strict qualification requirements.

“It would be great if everyone could qualify,” said Klair.

Farmers can appeal a denied application.

To learn more about the intricacies of the program, visit http://www.fas.usda.gov/ITP/TAA/taa.asp or http://www.taaforfarmers.org/.

Should the federal government take more or less of a role in financially assisting farmers? How can farmers relay the significance of this program to media/the public if criticized?

Trade surplus has agriculture sitting pretty in 2010

“We need to export more of our goods,” said President Barack Obama in the State of the Union Address, stating his plans to double America’s exports throughout the next five years to strengthen the economy. This includes agricultural efforts.

According to the Outlook for U.S. Agricultural Trade, issued Nov. 30 by the USDA Economic Research Service, we are well on our way.

It’s a big year for the U.S. in terms of agricultural trade. 2010 exports are forecast to be the second highest on record, increased $1 billion from the August 2009 forecast alone. Our country will also experience resumed import growth.

A reviving global economy is a factor in this surplus. Demand for U.S. high value-products, such as corn, soybeans and cotton, is also influencing the predictions.

Increased demand in oilseed, cotton and dairy markets is also important to note. The USDA says the recent decision by the European Union to sharply reduce its export subsidies has provided a significant boost to global dairy prices.

Since the August 2009 Forecast

• Exports raised $1 billion to $98 billion
• Imports lowered $4.5 billion to $77.5 billion
• Surplus raised $5.5 billion to $20.5 billion

Grain Export Forecasts in Summary

• Corn exports will increase
• Soybean exports will increase

So what does this mean to American farmers and consumers?

Farmers in highly affected industries – corn, soybeans – should sell stored grain to take advantage of the strong export demand. Farmers in industries in which exports are predicted to decrease should carefully measure future-production planning.

Consumers can take comfort in a healthier national economy. "Retail food-price inflation in 2010 will rebound from the 2009 level toward a moderate level, slightly above the long-term historical average," the USDA stated.

Food-price inflation will not be as strong as in 2008, when corn, wheat, soybean and fuel prices were much greater.

Forecasted Exports in billions by Commodity Group







The financial gains of bountiful exports should be reflected in our nation’s GDP. When the dollar appreciates against foreign currencies, U.S. exports cost more in foreign local currencies and thus demand for them declines. Conversely, a depreciation of the dollar increases U.S. agricultural competitiveness by lowering prices of U.S. products in foreign markets, as explained by the U.S. Department of Economic Analysis.

America is exporting more goods than ever to East Asia but exporting less to North America. Though export figures to Canada have decreased, Canada and Mexico will remain our country’s top export markets in 2010.

In regards to our country’s imports, though the volume of U.S. farm imports fell by 3 percent in 2009, which is the first volume drop since 1995, USDA said that a further retreat is not forecasted in 2010.

2010 agricultural imports are forecast up $4.1 billion since August to $77.5 billion. The increase consists of an additional $400 million in livestock and meats, $200 million in dairy products, $200 million in grains and feeds, $650 million in oilseed products and $1.2 billion in sugar and tropical products.

High domestic unemployment, weak disposable income, and lower purchasing power of the dollar contributed to our country’s need for increased imports.

America’s balance of trade is welcoming to consumers and the agricultural industry and is beneficial to our national economy.