Farm Bureau pleased with progress on Mexico trade talks

The Montana Farm Bureau, which has been extremely concerned about the effect of tariffs on farmers and ranchers, was pleased to see some movement in the renegotiation of the NAFTA agreement in regards to Mexico. “Today’s announcement that the U.S. and Mexico have come to a preliminary agreement is very encouraging,” said Nicole Rolf, Montana Farm Bureau National Affairs Director.  “Mexico has become one of our major agriculture markets since the inception of NAFTA so securing those markets for the future is of utmost importance.  We’ve been hearing for months now that an agreement was close with Mexico and that Canada would follow soon after. I certainly hope that proves true, as we’d like to see our markets to the north—Canada is our number-one trade partner—secured before harvest is completely over.” Rolf added, “We are hearing reports the agreement preserves the arrangement of zero tariffs on farm goods between the U.S. and Mexico, which is a big relief to Montana farmers and ranchers. I look forward to learning more about new provisions which will treat American farmers more fairly, especially with regard to agriculture biotechnology and modern agriculture practices.” The American Farm Bureau Federation has been closely tracking the progress of trade talks between the two countries. “This is the kind of trade news we have been waiting for. In a time when the U.S. economy is booming, our farmers have been left behind,” noted American Farm Bureau President Zippy Duvall. “Open markets and good trade agreements will give American agriculture the opportunity to be a part of this booming economy. We need negotiators to convince Canadian officials that they, too, will benefit from a revised treaty. We are hopeful that the value of a continued and improved NAFTA for all will bring everyone back to the negotiating table.” Although Farm Bureau applauds the work with Mexico, there is still a lot of work to do outside of North America. “We need to resolve our trade issues with China to create better opportunities for American farmers and ranchers there. We look forward to working with the Administration to strengthen agricultural exports in new and existing markets around the world,” Duvall concluded. 

Washington Insider: Fed Appears to Keep Cool as President Criticizes

The one thing everybody in the financial world knows is that President Donald Trump is annoyed that the Federal Reserve is slowly increasing interest rates as the economy remains strong. So, it is news this week, Bloomberg says, that Fed officials are “trying hard to ignore” President Trump, and they’re going to keep doing that even if he continues to put pressure on the central bank to slow down or stop its interest rate increases.Recently, at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming, several policy makers responded to questions about recent remarks by the President with straightforward comments that their rate decisions won’t be affected.“The job of a central bank and my job is to make decisions on monetary policy without regard to political considerations or political influence,” Dallas Fed President Robert Kaplan said in an interview. “I’m very confident we’ll do that.” The context is that observers believe that on other occasions, Fed officials have responded to politics — but it will not now.The President told a group of Republican donors earlier this month that he was disappointed with his appointee, Fed Chairman Jerome Powell, over interest-rate hikes, having expected Powell to be a cheap-money central banker. That followed complaints last month, including via Twitter, about Fed rate hikes.Pressed on whether Trump’s comments complicate their job, Kaplan and his colleagues mostly shrugged and repeated that the Federal Open Market Committee will simply carry on with its job.“This committee is very focused on the mandate given to us by Congress to try to make decisions that are in the long-run interest of a growing economy,” said Esther George, president of the Kansas City Fed and host of the event that annually draws leading central bankers and economists from around the world to Grand Teton National Park.On the sidelines, a number of the conference attendees said the Fed has very little choice but to demonstrate a thick skin and ignore the president just now. A suggestion that Fed officials should respond by raising rates more aggressively to prove their independence was roundly rejected, as was the idea that Powell should warn the president publicly against further commentary on rates.“I think he should avoid any tit-for-tat exchanges with the president,” said Alan Blinder, a former Fed vice chairman. Powell, he added, should respond mostly with actions to show the Fed will act independently and remain focused on making the right decisions for the economy.The chairman made no public response about Trump’s comments, Bloomberg said. He said in a July 12 interview with American Public Media’s “Marketplace” program that the Fed does its work “in a strictly nonpolitical way, based on detailed analysis” that doesn’t take political considerations into account.Another former Fed vice chairman, Donald Kohn, said he was confident the committee would not be distracted from following its legislative mandate, but added that Powell could help shield the Fed from pressure by better communicating to the public the rationale for its policy decisions.“The key is the Fed has to continue to explain in economic terms why it’s doing what it's doing, and how it’s related to its objectives,” he said.So, Powell forges on with gradual Fed rate hikes amid strong growth, Bloomberg said.Other attendees noted the irony that Trump is complaining about rate hikes, since Powell is widely seen by economists as having taken a very cautious approach so far to tightening policy, even as U.S. economic growth accelerates and unemployment, now at 3.9%, is at levels not seen in nearly 20 years.“I am sure that the Fed is not going to depart from its very responsible strategy,” Jacob Frenkel, chairman of JP Morgan Chase International told Kathleen Hays in an interview on Bloomberg Television. “It may be politically attractive to bash the Fed for short-term causes. But really, it will not change anything.”The Fed has raised rates five times since Trump took office in January 2017, a slower pace than during most past economic expansions.At Jackson Hole on Friday, Powell said gradual increases will remain appropriate, but he made clear that with inflation still low he was not worried about the economy overheating and would not seek a more aggressive policy unless inflation expectations jumped.So, we will see. Clearly, the president has an important stake in rapid economic growth — but the dangers of inflation are real and very important and require continuing vigilance. Chairman Powell’s current approach seems appropriate and should be applauded even as the political debates intensify, Washington Insider believes. 

U.S./China Talks Draw a Blank

The trade war between China and the U.S. seems primed to worsen as the governments failed to make progress in two days of discussions. Reuters says the two sides met last week with low expectations of progress and there are no further talks scheduled at this time. A source close to the negotiations told Reuters that Chinese officials have raised the possibility of no further talks until after the U.S. elections in November. The lack of progress adds to uncertainty for businesses who now have to weigh the risks when considering investments in the U.S. or China. A new round of tariffs could take effect as soon as early September. There’s no guarantee they’ll be the last tariffs or that there won’t be other measures taken as well. The two countries engaged in talks for the first time since last June. U.S. officials were due to meet with delegations from the European Union and Japan to discuss joint efforts to confront China at the World Trade Organization over its industrial subsidies and conduct of its state-owned enterprises.

Russia Selling 2.5 Million Acres to China for Soybean Production

Soybeans were one of the first major casualties in the ever-escalating trade war between the U.S. and China. Russia is hoping to take advantage of the situation and cut deals with Chinese agribusinesses to make up for lost supply. The Washington Post says the Kremlin will offer roughly 2.5 million acres of arable land to foreign investors. Analysts are describing it as a bid to replace the U.S. as China’s most reliable soybean supplier. China is short on filling its soybean needs after the high stakes trade war got going with the U.S. through the summer. Beijing dramatically cut purchases of U.S. soybeans in response to the tariffs imposed on Chinese products by the Trump Administration. The Post article says Chinese officials are making plans to trim around seven million soybean tons off of the nearly 33 million tons it’s been buying annually from U.S. farms. Soybeans represent U.S. farmers’ single largest agricultural export to China, which takes approximately 60 percent of the world’s supply every year. Beijing’s cut in American purchases as sent U.S. bean future prices tumbling.

Bayer CEO Says Monsanto Merger Still a Win-Win

Werner Baumann, Bayer Chief Executive Officer, tried to soothe the frayed nerves of investors after a recent jury award of $289 million during a trial regarding glyphosate. Baumann says the merger between Bayer and Monsanto still makes sense in spite of the challenges ahead. Baumann told a German newspaper that there is “no reason to break out in nervousness” in the aftermath of the verdict on August 10th. In his first public comments since the decision, Baumann says, “The fact is that absolutely nothing has changed about the compelling logic of the Monsanto takeover, the potential value creation for our shareholders, the attractiveness of the agriculture market, and the goals we communicated.” The California court awarded damages to a school groundskeeper that claimed Roundup caused his non-Hodgkin’s lymphoma because of allegations the herbicide causes cancer. Bayer has said it will appeal. The verdict shocked case observers both inside and outside of Bayer in the first of what may amount to thousands of cases. While jury verdicts are typically either overturned or reduced, financial analysts say Bayer could still face as much as $5 billion in costs linked to cases involving glyphosate, the main ingredient in Roundup.

USDA Postpones Farmer Aid Package Details

Ag Secretary Sonny Perdue said the expected announcement regarding details of the Trump Administration’s aid package for farmers was delayed over the weekend. Full details will come out on Monday. Politico says Perdue made the announcement during an appearance at a dairy farm in New York. “We acknowledge that dairy, pork, and soybeans will be the commodities most affected by the tariffs,” says Perdue. He says the Ag Department is still on track to “roll the program out right after Labor Day.” Commodity groups are unsure about how the payments will be determined. The groups are on edge after a report earlier this week saying soybeans would get $1.65 per bushel and corn will only receive a penny per bushel. If true, that will mean soybean growers get the majority of the payments. However, Perdue cast doubt on those figures last week. The Secretary made several appearances at dairy farms in upstate New York and fielded a lot of questions about the direction of the administration’s trade fight. Perdue says he’s hopeful the administration will get an agreement with Mexico on two-way NAFTA issues soon. That should pave the way for a larger agreement once Canada returns to the talks.*

Memphis Meats, NAMI Want Joint Regulation of Cell-Based Meat

The North American Meat Institute joined up with Memphis Meats, a San Francisco-based company that’s developing cell-based meat to send a letter to the Trump Administration. The Hagstrom Report says they’re asking that the Food and Drug Administration and the Ag Department’s Food Safety and Inspection Service share regulatory responsibilities for cell-based meat. The letter says in the case of new or novel food ingredients like this, the FDA should have oversight over pre-market safety evaluations for cell-based meat and poultry products. USDA has traditionally given input to the FDA as part of the regulatory process for new products, which the letter says should continue. “After pre-market safety has been established, USDA should regulate cell-based meat and poultry products, as it does with all other meat and poultry products,” the letter says. “USDA will apply relevant findings from FDA’s safety evaluation to ensure that products are safe, wholesome, and properly labeled.” The U.S. Cattlemen’s Association weighed in, saying it’s “concerned about the use of the term ‘meat,’ but the commitment to come to the table to propose solutions is a step in the right direction.”