WILCOX — Axtell farmer and Nebraska Farm Bureau President Steve Nelson was back at work Monday, finishing harvest with his son Scott in a cornfield southwest of Wilcox.
He was in Omaha last Saturday to participate with Nebraska legislators and other ag leaders in a press conference to urge U.S. House of Representatives Speaker Nancy Pelosi — she was in town for a Nebraska Democrats’ fundraiser — to schedule a House vote on a new United States-Mexico-Canada trade agreement.
“We need that,” Nelson said as he drove a truckload of corn to the CPI elevator at Funk.
A face-to-face meeting with Pelosi couldn’t be scheduled, he said, but Nebraska and Iowa Farm Bureau officials have talked with her staff about USMCA.
“The indication is that there are enough votes in the House to pass it right now and definitely in the Senate,” Nelson said, noting that the agreement also is good for non-ag businesses and industries.
Wilcox farmer and American Corn Growers Foundation Chairman Gale Lush also hopes USMCA, which would replace the two-decades-old North American Free Trade Agreement, is approved soon.
“As far as agriculture, they didn’t approve many new things because when you have a zero tariff you can’t improve on that,” Lush said. “It’s so easy to send a trainload of corn or soybeans to Mexico.”
Nelson has said that more than 21 percent of Nebraska’s total agriculture exports go to Mexico and Canada. USMCA would maintain corn, soybeans, beef and pork markets and increase access for Nebraska wheat and dairy products.
“I believe that Congress will advance USMCA ... the sooner the better,” he told the Hub.
Both men said it was a hit to ag trade opportunities and competitiveness when President Trump decided early in his term to withdraw the United States from the Trans-Pacific Partnership agreement with 11 other countries.
“A lot, oh, boy,” Lush said, when asked about the effect on grain sales.
“Obviously, we lost some market share during the time we haven’t been part of that agreement,” Nelson said. “... The hope would be that by getting USMCA done and making good progress (on a new agreement) with Japan, it shows we can get trade agreements done.”
Nebraska ag products worth more than $1.1 billion, including record amounts of beef and pork, were exported to Japan in 2018, according to the Nebraska Department of Agriculture. Japan is the largest Nebraska export market for beef, pork, eggs and wheat, and second largest for corn, sorghum and pet food.
Nelson said the Japan agreement gives a bigger boost to meat products than grains, “but it all goes together because a lot of our grains feed livestock.”
What about China?
Less certain is a solution to the ongoing trade war with China, particularly tariffs put on U.S. ag products in retaliation for U.S. tariffs on many Chinese goods.
Optimism about recent announcements that China is ready to buy a significant amount of U.S. ag commodities is tempered by uncertainties.
“We don’t know when that might be,” Nelson said, or when that trade agreement or others might have positive effects on commodity prices.
“Time will tell. There hasn’t been any walk-back from either side, so I’d say I’m cautiously optimistic that progress is being made,” he added.
Lush hopes recent U.S.-China talks have at least halted further trade relationship deterioration. As for increasing ag exports, he said, “I’ll believe it when I see the agreement in writing and see ships pulling up to load soybeans.”
He said his fear is that China has been working with other countries, particularly Brazil, to develop more soybean acres and long-term trade connections, which might lead to a permanent overstock of soybeans on world markets.
Billions in trade losses
Two Nebraska Farm Bureau studies estimate the cost of the retaliatory tariffs to Nebraska ag producers.
A 2019 estimate released in September was $943 million in tariff-related losses to producers of soybeans, corn, pork, sorghum, wheat, alfalfa, dairy products and dried beans.
Nebraska Farm Bureau Senior Economist Jay Rempe, who prepared both reports, said if losses for beef, ethanol and other byproducts are included, the 2019 total could top $1 billion.
A report released last December estimated 2018 losses of $695 million to $1.026 billion in farm level income.
Neither Lush nor Nelson is convinced a recently announced deal to address Environmental Protection Agency waivers that exempt some small refineries from meeting their Renewable Fuel Standard obligations will resolve the issue,
“That hasn’t worked out real well, either,” Lush said, describing the issue as still in “limbo.”
“It’s been very frustrating,” Nelson said. “The (Trump) administration has repeatedly said they would make sure the RFS numbers would be met. Then we learned they will either calculate it differently or otherwise not meet our expectations.”
A coalition of renewable fuel and ag trade organizations filed a petition last week in the U.S. Court of Appeals in the District of Columbia that challenges the process used by the EPA to issue the waivers.
One argument, according to a National Farmers Union press release, is EPA’s two-page decision document has no details and only “bare-bones reasoning” for the waivers.
An Oct. 4 deal was reached by the White House, EPA and the U.S. Department of Agriculture to adjust how annual renewable fuel percentages are calculated.
An American Soybean Association press release says plan details have been pending and “the devil may be in those details for farmers and other biofuel industry members anxious for change.
“They need to be the RFS numbers set by Congress,” Nelson said, “and the promises made by the president.”
A solution to high property taxes is the biggest state issue for ag producers.
Nelson said the Legislature’s Revenue Committee members continue to meet, but may not have a bill or two ready at the start of the 2020 Nebraska Legislature session, which was the goal set at the end of the 2019 session.
“It doesn’t seem like the senators are coalescing around one idea, at least that 33 senators can agree on,” Nelson said, which would be a two-thirds majority of the Legislature.
He said Nebraska relies too heavily on property taxes to fund education, which places the greatest burden on farmers and ranchers.
“We’re a long ways out of balance,” Nelson said, adding that change may take several bills and several years. “Our political leaders need to get that done.”
Lush said all these issues lead to uncertainty for farmers and ranchers, which is an even greater problem at times of low prices and tight profit margins. Those conditions also affect the overall rural economy, he added, because ag producers aren’t buying machinery and other things not seen as essential.