CARD Agricultural Policy Review

Global Competition Made 2018 a Bad Time to Start a Trade War

John M. Crespi and Chen-Ti Chen
The United States is one of the largest players in the international agricultural market. With the continued growth of its agricultural output, the US agricultural sector has relied heavily on export markets to maintain its competitiveness and profitability. In fact, projections show the United States will export $137 billion in agricultural commodities in 2020. However, the 2018 trade disruptions with Canada and Mexico that led to a renegotiated, but still unratified NAFTA-like treaty (the USMCA) and the presently unresolved trade dispute between the United States and China have adversely impacted US agricultural exports. Of concern is how such disruptions might affect the competitive structure of markets. Today, Iowa farmers are concerned about the long-run implications of the trade disruptions to exports of major importance, especially beef, corn, pork, and soybeans. In this article, we discuss a metric of the historical export performance of these commodities from 1980 to 2018 and show that the trade disruptions occur at a time when the United States is in a particularly precarious position. At the outset of the trade disruptions in 2018, Iowa farmers faced the most competitive markets they had ever faced for these commodities. The longer the disruptions continue, the harder it will be to regain market share in the future.

Production Projections and Trade Adjustments

Chad Hart and Lee Schulz
As the leaves change color and the temperatures fall, traders in agricultural markets concentrate on production and usage figures for crops and livestock. With the delays in crop planting and the uncertainty surrounding trade, USDA has had a more difficult time than usual estimating the supply and demand projections for the various agricultural markets. However, these estimates are under intense scrutiny as farmers enter the fields for harvest and trade representatives from China and the United States meet. Each month, USDA updates the supply and usage projections, and the October update sent mixed signals through the markets.

The Urgent Need to Address Nutrient Imbalance Problems in Iowa’s High-Density Livestock Regions

Chris Jones, Philip W. Gassman, and Keith E. Schilling
The Iowa Departments of Agriculture and Natural Resources and Iowa State University initially developed the Iowa Nutrient Reduction Strategy (INRS) in 2012 to provide a framework for mitigating point and nonpoint-source nutrient pollution across the state. A primary goal of the INRS is reducing total nitrogen and total phosphorus loads to Iowa streams by 45%. A core aspect of the INRS approach to addressing nonpoint-source TN pollution is the implementation of multiple management practices that are categorized as: nitrogen management (e.g., timing, nitrogen application rate, cover crops), land use (perennial crops, extended rotations, grazed pastures), and edge-of-field (e.g., wetlands, bioreactors, buffers). The INRS reports various statewide scenario analyses, including an assessment of 15 nitrate-N reduction practices that ranks cover crops, wetlands, bioreactors, and perennial crops as providing the strongest reductions. Adoption of these practices remains low, largely because their economic benefits in terms of crop yield and farm revenue is neutral at best. The INRS scenario finds that various in-field nitrogen management practices, which can enhance farm profitability, offer little potential to reduce statewide stream nitrogen loading.

Impact of African Swine Fever on US and World Commodity Markets

Miguel Carriquiry, Amani Elobeid, Dermot Hayes, and Wendong Zhang
Recent outbreaks of African Swine Fever in Vietnam, Cambodia, Laos, South Korea, and especially China, have generated interest in how world commodity markets will adjust in response to pig herd losses due to the disease and to panic culling to avoid the negative impacts of the disease. This adjustment is complicated by the retaliatory duties that China has placed on US soybean and pork exports and the duration of temporary exemptions on these tariffs. It is clear that a scarcity of pork will cause a reduction in pork consumption in impacted countries and a switch to alternative proteins. It is also clear that countries (such as the European Union and Brazil) who have direct access to China’s pork and chicken markets will see an increase in exports. What is less clear is the second-round impact of these adjustments. Will the United States ship more pork to markets vacated by the European Union and Brazil as these countries pursue lucrative markets in China? What is the net impact on US and world soybean and corn exports and prices? What would be the implications for the United States if China removes retaliatory duties?

E15 Demand and Small Refinery Waivers: A Battle over Long-Run Market Share

Gabriel Lade
If you follow news around the Renewable Fuel Standard, you have probably heard about small refinery exemptions and E15. E15 is a small market—just over half of one percent of gas stations in the United States sell the fuel. Meanwhile, SREs reduced the total RFS mandates by over four billion gallons from 2016 to 2018. In this article, I argue that the battle over E15 is intricately related to SREs beyond the ‘great compromise’ the Trump administration is selling to the ethanol and oil industries.