Tag Archives: tariffs

Which came first, the chicken or the trade war?

Well before President Donald Trump began slapping tariffs on steel, aluminum and other imported goods, there was a deal with South Africa that gave U.S. chicken producers duty-free access to a market that had effectively been shut to them for years.

But that trade deal, worth tens of millions of dollars to American businesses, now is being threatened by Trump’s metal tariffs.

A group of senators from chicken-producing states — Democrat Chris Coons of Delaware and Republicans Johnny Isakson of Georgia and Roger Wicker of Mississippi — have detailed their concerns in a recent letter to Commerce Secretary Wilbur Ross. They cite a lawsuit in South Africa that aims to end duty-free imports of American chicken unless South Africa is exempted from Trump’s metal tariffs.

The dispute illustrates the risk Trump runs by employing tariffs so aggressively. The president has wielded the import taxes — real and threatened — as part of a campaign to force countries like Mexico and Canada into trade pacts with terms he considers more favorable to the United States. But along with Trump’s confrontational approach is the potential fallout for American companies and consumers, as countries take retaliatory action.

And it’s also a reminder of how much clout the poultry industry has in certain states. In Delaware, where industry titans Mountaire Farms and Perdue Farms operate processing plants, chicken accounts for 70 percent of the state’s cash farm income, according to the Delmarva Poultry Industry, a trade association in Georgetown, Delaware.

U.S. Agriculture Department data show that Georgia leads all states in the production of chickens raised specifically for meat production; 1.3 billion “broilers” were produced there in 2017. And in Mississippi, where there are more than 1,400 poultry farms, the industry contributed $2.5 billion to the state’s economy last year, according to the Mississippi Farm Bureau.

The U.S. used to be the largest supplier of bone-in chicken parts to South Africa. But in the late 1990s, South Africa’s influential poultry industry grew alarmed over the growing amount of imports. Poultry is South Africa’s largest individual agricultural industry and chicken farmers flexed their muscle by successfully pushing the South African government to impose antidumping duties on American chicken. Exports fell to almost zero.

Then, in 2015, the two countries partly resolved their differences through the renewal of a U.S. trade law intended to stoke economic growth in sub-Saharan Africa. Under the terms of the arrangement, South Africa agreed to permit an annual import quota of 65,000 tons of bone-in chicken parts from the United States.

Coons and Isakson, co-chairmen of the Senate Chicken Caucus , played a central role in securing the agreement by pressuring South Africa to end the duties.

South Africa has become the eighth largest export market for U.S. chicken producers since the agreement was finalized. Between January and July, exports to South Africa totaled $55 million, according to Tom Super, spokesman for the National Chicken Council, a Washington lobbying group. Mexico is by far the No. 1 overseas market for American chicken, with $300 million in exports during the same period.

Still, the sales to South Africa have helped to offset a portion of the overseas market for chicken lost over the last four years. China has since 2015 been closed to American poultry and eggs after outbreaks of avian influenza. And Russia banned U.S. poultry after the U.S. imposed sanctions for Moscow’s 2014 annexation of Crimea and military intervention in Ukraine.

“Every bit is important,” said Jim Sumner, president of the USA Poultry and Egg Export Council, a trade association outside Atlanta.

The senators, in their Sept. 21 letter to Ross, warned the deal could be in peril because of a lawsuit filed in August by the South African Poultry Association that aims to force government officials in Pretoria to end the deal. The lawsuit contends duty-free imports of U.S. chicken shouldn’t be allowed if Washington is going to force South Africa to pay the 25 percent tariff on steel and the 10 percent tariff on aluminum.

Coons, Isakson and Wicker urged Ross to exempt South Africa from the metal tariffs in order to preserve the chicken deal. If the tariffs are off the table, the thinking goes, then there’s no basis for the lawsuit.

A Commerce Department spokesman said the agency would address the senators’ concerns in a response but declined to comment further.

South African officials have been pushing for months to be excluded from the metal tariffs. They’ve argued that only a fraction of the steel and aluminum that the U.S. imports comes from South African mills, which means they’re no threat to American industry.

Malose Letsoalo, chief of the economic and commercial section at the Embassy of South Africa in Washington, said the Trump administration hasn’t given them an answer.

As for the lawsuit, Letsoalo said “the matter is before the courts.”

WASHINGTON (AP) — Farmers across the United States will soon begin receiving government checks as part of a billion-dollar bailout to buoy growers experiencing financial strain from President Donald Trump’s trade disputes with China.

But even those poised for big payouts worry it won’t be enough. And while support for Trump is near unwavering in the heartland, some growers say that with the November election nearing, such disappointing aid outcomes could potentially affect their vote.

“It’s pretty obvious that the rural agriculture communities helped elect this administration, but the way things are going I believe farmers are going to have to vote with their checkbook when it comes time,” said Kevin Skunes, a corn and soybean grower from Arthur, North Dakota and president of the National Corn Growers Association.

Corn farmers get the smallest slice of the aid pie. Corn groups estimate a loss of 44 cents per bushel, but they’re poised to receive just a single penny per bushel.

“If these issues haven’t been resolved, there could be a change in the way farmers vote,” Skunes said. “A person has to consider all things.”

Farmers are already feeling the impact of Trump’s trade tiffs with China and other countries. China has hit back hard, responding with its own set of tariffs on U.S. agricultural products and other goods.

The Trump administration is providing up to $12 billion in emergency relief funds for American farmers, with roughly $6 billion in an initial round. The three-pronged plan includes $4.7 billion in payments to corn, cotton, soybean, dairy, pork and sorghum farmers. The rest is for developing new foreign markets for American-grown commodities and purchasing more than two dozen select products, including certain fresh fruits and vegetables, nuts, meat and dairy.

Agriculture Secretary Sonny Perdue announced last month that soybean growers will get the largest checks, at $1.65 per bushel for a total of $3.6 billion. China is the world’s leading buyer of American soybeans, purchasing roughly 60 percent of the U.S. crop. But since Beijing imposed a 25 percent tariff on soybean, imports prices have plunged.

The lack of initial detail about how the calculations were made left farmers scratching their heads.

Asked about the confusion, Rob Johansson, the Agriculture Department’s chief economist, responded that the USDA took into account a number of factors “including the share of production that is exported and the value of trade directly affected by the retaliatory tariffs.”

“The level of damage is not the same for each commodity,” he said in a written response to questions submitted by The Associated Press.

He estimated that there would be more than 784,000 applications for relief.

The USDA has since released a detailed analysis of how the department made its calculations.

The breakdown has stunned corn and wheat farmers who say the payments are uneven and won’t do much of anything to help keep struggling farms afloat.

A lobbying group that represents wheat growers is challenging the way the administration determined payments for wheat farmers, who are set to receive 14 cents a bushel. Chandler Goule, CEO of the National Association of Wheat Growers, said the USDA assumed U.S. wheat would be sold to China this year when it made its calculations. But the assumption was flawed, he said.

China typically makes its requests for American wheat between March and June. U.S. wheat farmers have sold, on average, 20 million bushels of wheat to China over the past three years. But none came this year, Goule said, as Trump escalated his threatening rhetoric on trade with Beijing. He hopes the per-bushel rate for wheat goes up if there’s a second round of payments.

“I am very certain that we will not sell any wheat to China this year,” Goule said. “The window we sell in has come and gone.”

The response among farmers has been mixed. While some are grateful for the help, most are eager for the trade disputes to be quickly resolved.

“Nobody wants to have an aid package. I mean, if you’re a farmer you’re in the business of producing a crop. We just want a fair price for it,” said Joel Schreurs, a soybean and corn producer near Tyler in southwestern Minnesota who sits on the board of both the American Soybean Association and the Minnesota Soybean Growers Association.

His personal operation is about 1,000 acres. He farms an additional 500 acres with his son-in-law and other relatives. He estimates that the tariffs would cost him $40,000 to $50,000 in lost income and that he would get $16,000 to $20,000 in emergency aid.

Schreurs worries that it will be hard for farmers to get back the buyers they’ll lose as a result of the trade wars. “And in the short term we have to find another home for those beans, otherwise they’re going to pile up and it will keep prices depressed,” he said.

In the Midwest, growers typically farm both corn and soybeans. Those farmers would get payments for both under the program, which began sign-ups Sept. 4.

Perdue said checks could start going out as soon as the end of September for crops that have already been harvested; payouts are based on yield.

In a recent C-SPAN interview, Perdue said he understands growers’ frustrations.

“Farmers always live in unpredictable times,” he said. “They’re very resilient, but obviously the longer trade issues go on the longer it bears on them regarding what is the future.”

Jack Maloney says corn farmers will be getting so little in bailout aid that for roughly 200,000 bushels of corn a farmer would get only about $2,000 for their losses.

“That’s not even beer money,” said the Brownsburg, Indiana, corn and soybean grower.

Maloney, 62, began farming full time in 1978 and now has two employees. He said some fellow farmers are angry and upset.

“Agriculture has always been the butt of all the trade wars,” he said, adding that this isn’t the first time he’s seen trade disruptions affect the agricultural markets.

Maloney said he had already cut back on expenses during the past three years and hasn’t taken a paycheck from his farm for more than a year because of tough times before the trade war began. He said the recent tumult has dashed hopes for stabilizing agricultural markets anytime soon.

“We were seeing a little light at the end of the tunnel — the markets were improving a little,” he said, “and then this tariff thing happened and this trade war.”

Daniel Weinand worries the market downturn could be the death knell for his farm. Weinand, 30, grows corn, canola and yellow peas on 900 acres of rented land near Hazen, North Dakota. He said he expects to reap about 30,000 bushels of corn, and to receive about $300 in aid.

“A penny a bushel on corn, it’s not that it’s entirely worthless. But it almost is,” he said. “I don’t know how many more years I can weather.”