Keith Good: Russia’s Import Ban ‘Insignificant’ to U.S. Economy

    Trade Issues

    Paul Sonne and Anton Troianovski reported in today’s Wall Street Journal that, “Russia banned imports of a wide range of U.S. and European foods on Thursday in response to Western sanctions, confronting Russians with a type of economic isolation largely unseen since the Soviet era.

    “Prime Minister Dmitry Medvedev outlined the products subject to the one-year ban–beef, pork, poultry, fish, fruit, vegetables, cheese, milk and other dairy products from the U.S., Canada, the European Union, Norway and Australia–in a radical response to penalties imposed on Russia over the crisis in Ukraine.”

    The Journal writers explained that, “Obama administration officials said the impact of the ban on the U.S. economy would likely be insignificant.

    “Poultry represents the largest share of U.S. agriculture exports to Russia, accounting for more than $300 million last year. But Russia had already banned U.S. poultry imports early this year, citing food-safety concerns. Tyson Foods Inc., the largest U.S. poultry producer by sales, expressed disappointment at the new measures, but spokesman Worth Sparkman said other countries could pick up the slack.”

    Today’s article added that, “Russian officials say they have already spoken to alternative suppliers outside the list of targeted countries. In that sense, the ban helps Russia accelerate its push for closer trade ties with non-Western countries. ‘Our trade partners from other countries remain with us,’ Mr. Medvedev said.

    One of the winners is likely to be Brazil, whose beef, pork and poultry products could serve as substitutes. New Zealand could help make up for the banned cheese, while Turkey could ship more produce and dairy goods.

    “For the U.S., the foodstuffs banned Thursday accounted for $441.5 million in exports to Russia last year, according to Russian customs data.

    “U.S. agricultural exports to Russia totaled $1.2 billion in 2013, according to U.S. figures. That is less than 1% of total U.S. agricultural exports” [see also this graphic illustration from today’s article].

    And Reuters writer Ben Walsh noted yesterday that, “Reuters charts the degree to which different countries will be affected by the ban” [see graph here].”

    AP writer Vladimir Isachenkov reported yesterday that, “Washington dismissed Moscow’s ban as trivial to the U.S. but destructive to Russia’s own population.

    “‘What the Russians have done here is limit the Russian people’s access to food,’ said David Cohen, the U.S. Treasury undersecretary in charge of economic sanctions.”

    The New York Times editorial board indicated today that, “The sad truth of the tit-for-tat sanctions that Russia has imposed against the West is that they will hurt Russians far more than they will hurt Westerners.”

    Meanwhile, Reuters news pointed out yesterday that, “Russian bans on various food imports from the United States and the European Union will have no impact on the country’s massive grains exports, agriculture minister Nikolai Fyodorov said on Thursday.

    “U.S. wheat eased for the first time in seven sessions on Thursday as the market took a breather after climbing to its highest in more than a month in the last session on concerns over potential supply disruptions in the Black Sea region.”

    Crop Watch

    Bloomberg writer Whitney McFerron reported yesterday that, “Global food prices fell to a six-month low in July as costs for grain tumbled on prospects for ample harvests, the United Nations said.”

    The article stated that, “Prices for corn, soybeans and wheat on the Chicago Board of Trade, the global benchmark, slid in recent weeks to the lowest levels since 2010 as U.S. crops developed in good condition and outlook improved for harvests in Russia and Ukraine. The U.S. Department of Agriculture may forecast next week that corn and soybean production in the U.S., the top grower, will climb to a record, according to a Bloomberg News survey.”

    And with respect to weather variables, a news release yesterday from University of Missouri Extension stated that, “August rains, after a dry July, came just in time to fill corn ears and set soybean pods, says a University of Missouri agronomist.

    “‘Timing of these rains could not be better,’ says Bill Wiebold with MU Extension plant science. ‘These rains set the table for excellent possibilities.'”

    Joseph Serna reported yesterday at the Los Angeles Times Online that, “A series of thunderstorms that have hit California in recent weeks may have delivered devastating torrents of rain in some areas, but on the whole they were ‘inconsequential’ in terms of easing the state’s worsening drought, according to a report issued Thursday.”

    And Tom Steever reported yesterday at Brownfield that, “Drought is forcing the closure of another meat packing plant. The L&H Packing Company will close its San Antonio beef plant on August 15th. Company officials blame the exceptional drought in Texas and shrinking cattle supplies.”

    Mr. Steever noted that, “L&H joins the growing list of packers to close plants because of the drought. Last week Cargill announced the closure of its Milwaukee beef plant, and in early 2013 closed its Plainview, Texas, facility. National Beef closed its Brawley, California plant. Other drought-related closures included San Angelo Beef Packing in Texas, and Martin’s Abattoir and Wholesale Meats’ in North Carolina.”

    And more broadly on weather issues, Reuters news reported yesterday that, “A U.S. weather forecaster scaled down its estimate for the chances of the El Nino weather phenomenon occurring during autumn and early winter in the Northern Hemisphere to 65 percent, from an earlier estimate of 80 percent.”

    Also yesterday, Bloomberg writer Lydia Mulvany reported that, “Hog futures fell by the exchange limit to the lowest since February on signs that the spread of the deadly pig virus that boosted U.S. pork costs is slowing…[T]he 2014 rally was driven by the spread of theporcine epidemic diarrhea virus that may have killed as many as 8 million hogs. New cases of the disease have slowed as temperatures warmed in the U.S., according to government data.”

    In transportation developments, a news release yesterday from Sen. Heidi Heitkamp (D., N.D.) indicated that, “[Sen. Heitkamp] today pressed Burlington Northern Santa Fe (BNSF) Executive Chairman Matt Rose about the need to quickly resolve agriculture shipment delays that are seriously hurting farmers and shippers across North Dakota. Heitkamp noted that BNSF has made serious progress in addressing the backlog, but more must be done.”

    Also, Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Key leaders of the House Agriculture Committee question Agriculture Secretary Tom Vilsack’s assertion that there could be security concerns sending grain inspectors to the Port of Vancouver in Washington State.

    “House Agriculture Committee Chairman Frank Lucas, R-Okla., and Rep. Michael Conaway, chair of the subcommittee on commodities, wrote a letter to Vilsack on Thursday asking him to ‘immediately restore Federal grain inspection services’ to the port.”

    Farm Bill

    Alexandra Wexler reported in toady’s Wall Street Journal that, “A closely watched international price for cotton has fallen to just above a threshold that triggers U.S. government loan-repayment assistance to farmers.

    “Lower demand from top-importer China and bigger production in the U.S., the No. 1 exporter, are expected to lead to the largest global glut of the fiber in history at the end of this season, which has recently pressured futures to the lowest levels since late 2009. The cotton season began Aug. 1.

    “To help farmers with operating expenses, the federal government offers cotton growers nine-month loans at a rate of 52 cents a pound, which are secured with the fiber. Late Thursday, the U.S. Department of Agriculture calculated its adjusted world-price-a proxy for the physical price of the fiber-for the week beginning Friday at 52.61 cents a pound.”

    Also, a news release yesterday from USDA’s Farm Service Agency (FSA) stated that, “[USDA- FSA] Administrator Juan M. Garcia today announced that farmers can enroll in the Cotton Transition Assistance Program (CTAP) from Aug. 11, 2014 through Oct. 7, 2014.

    “The program, created by the 2014 Farm Bill, provides interim payments to cotton producers during the 2014 crop year until the Stacked Income Protection Plan, a new insurance product also created by the legislation, is available. Details on the plan will be released by mid-August.”

    Note also that Sec. of Ag. Tom Vilsack issued a statement yesterday with respect to the retirement of Mr. Garcia.

    Regarding nutrition issues, Kaveh Waddell reported yesterday at National Journal Online that, “As the U.S. economic recovery accelerates, states are beginning to wind down special allowances for food assistance that were put in place during the recession. Some states no longer qualify for allowances because their economies have recovered, while others reject them for political reasons.”

    And a news release yesterday from Sen. Kirsten Gillibrand (D., N.Y.) stated that, “Today, U.S. Senators Bob Casey (D-PA) and [Sen. Gillibrand] along with a bipartisan group of 26 other senators sent a letter to U.S. Department of Agriculture Secretary Tom Vilsack urging him to make emergency purchases during this fiscal year to assist The Emergency Food Assistance Program (TEFAP). TEFAP provides funding for food banks to purchase nutritious foods and to help transport and deliver that food to Americans in need. Federal support for TEFAP is estimated to drop off by over $100 million this fiscal year, if USDA does not make emergency purchases.”

    The Government Accountability Office released an update yesterday (“Implications of Adjusting Income Eligibility Thresholds and Reimbursement Rates by Geographic Differences“) which noted in part that, “There are a number of measures by which income thresholds for the [USDA] school meal programs could be adjusted to account for geographic differences in the cost of living; doing so would likely lead to shifts in eligibility and program costs. For example, the Supplemental Poverty Measure or Regional Price Parities could be used to adjust for geographic price differences; each could result in fewer children qualifying for assistance in the South and Midwest and more children qualifying in the Northeast (see figure). In general, the effects of any such cost-of-living adjustment are difficult to predict and would vary depending on their implementation, such as whether they were applied state-wide or at the sub-state level, or whether children were kept from losing eligibility. Overall program costs could increase if more children participated.”


    Annie Gasparro reported in today’s Wall Street Journal that, “Two years ago, Ben & Jerry’s Homemade Inc. initiated a plan to eliminate genetically modified ingredients from its ice cream, an effort to address a nascent consumer backlash and to fulfill its own environmental goals.

    “This fall, nearly a year behind schedule, it expects to finish phase one, affecting its flavorful ‘chunks and swirls’ like cookie dough and caramel. The only part left to convert: the milk that makes ice cream itself. Thanks to the complexities of sourcing milk deemed free of genetically modified material, that could take five to 10 more years.”

    The Journal article noted that, “‘Non-GMO’ is one of the fastest-growing label trends on U.S. food packages, with sales of such items growing 28% last year to about $3 billion, according to market-research firm Nielsen. In a poll of nearly 1,200 U.S. consumers for The Wall Street Journal, Nielsen found that 61% of consumers had heard of GMOs and nearly half of those people said they avoid eating them. The biggest reason was because it ‘doesn’t sound like something I should eat.'”

    Rural America

    In an article posted yesterday at The Washington Post Online (“How rural poverty is changing: Your fate is increasingly tied to your town“), Lydia DePillis noted in part that: “That’s the story of the new rural poverty in America: If your hometown went south, you probably did with it, unless you managed to get out and had the wherewithal to not come back.

    “The poverty of Las Animas [Colo.] isn’t the poverty of Appalachia or the Mississippi Delta or an Indian reservation, entrenched and intergenerational, enforced by age-old hierarchies of race and class. It’s the kind of poverty that can affect anyone who finds themselves in a place when the native industries disappear, as they have in Southeast Colorado and other rural areas across America.”


    Todd Neeley reported yesterday at DTN that, “Fifteen state attorneys general have asked EPA Administrator Gina McCarthy to withdraw a rule that even agency officials have said created confusion in the agriculture community.

    “The so-called interpretive rule identified 56 conservation practices that are exempt from Clean Water Act regulations, so long as they meet Natural Resources Conservation Service specifications. Many agriculture interest groups and farmers have expressed concern that the interpretive rule would turn the NRCS into an enforcer of the Clean Water Act (CWA).”

    Meanwhile, Laura Barron-Lopez reported yesterday at The Hill Online that, “The Environmental Protection Agency (EPA) named Lisa Feldt as acting deputy administrator on Tuesday, replacing the outgoing second in command.

    “Feldt will step in for Bob Perciasepe, who served as the second-highest official at the agency since 2009, as he starts his gig as director of the advocacy group Center for Climate and Energy Solutions next week.”

    The Hill update added that, “Ken Kopocis, whom the president nominated in 2011 to head the agency’s water office but was never confirmed, will take over as deputy assistant administrator for that office.

    “Also, current acting head of the agency’s water office, Nancy Stoner will be leaving, although in his prepared remarks Perciasepe did not mention where Stoner would go.

    “It raises the question of whether Kopocis will be leading the office of water from his new position without having to go through a Senate confirmation.”

    Separately, a news release yesterday from Sen. Chuck Grassley (R., Iowa) stated that, “[Sen. Grassley] is pressing the Justice Department to heavily scrutinize the proposed acquisition by Tyson Foods of Hillshire Brands.

    “In a letter sent late yesterday, Grassley said he was concerned about how the merger could increase concentration and decrease competition in the U.S. pork industry. He also said he was concerned about the impact on consumer choice and the price of pork.”

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