Livestock

The World Trade Organization's (WTO's) 11th Ministerial Conference in Buenos Aires, Argentina, this week did not result in major outcomes that will guide the future of the global trade body, but did offer a strong statement of support for farmers' access to the best available technology. The meetings brought together all members of the WTO for a biennial session covering the range of topics facing global trade. Ahead of the meetings, the U.S. Grains Council (USGC) and other ag organizations expressed support for actions during the talks that would call for full farmer access to tools and technology, oppose regulatory barriers lacking sufficient scientific justification, and defend against attempts to weaken rules on domestic support for agriculture. On Wednesday, as the meetings concluded, the Council and others expressed support for the leadership of the U.S. Trade Representative (USTR) in opposing new attempts to weaken rules on domestic support for agriculture, specifically by creating loopholes with public stockholding programs for food security purposes. In a statement, Council President and CEO Tom Sleight said avoiding trade-distorting policies is critical to a well-functioning global trade system and achieving food security. "Without resolving the trade-distorting impacts of these policies, it is impossible to support addressing reforms in overall domestic supports," he said. "We have to establish the right trade architecture now if we are to be successful." To help farmers achieve this bounty, the Council and others strongly support their access to the best available innovations, including seed, crop protection and data technologies. At the Ministerial, ministers from 17 countries emphasized the importance of this access and opposed regulatory barriers lacking sufficient scientific justification in a first-of-its-kind joint statement. The signatories took a step forward in calling out countries that undermine farmer choice through regulatory barriers not scientifically justified. The countries signing on also said they remain committed to expanding knowledge and capacity for developing countries in pesticide maximum residue levels (MRLs). The Council and major U.S. organizations in the corn, soybean, sorghum, barley, wheat and rice industries welcomed this move, as did U.S. Department of Agriculture (USDA) Secretary Sonny Perdue and others. The leaders of MAIZALL held side meetings in Buenos Aires including a board meeting. While there, they participated in WTO sessions to urge cooperation on regulatory issues in the Western Hemisphere and emerging opportunities for partnership on the African continent. The group also got a briefing on the status of pesticide policies in the European Union and the threat to trade posed by applying hazard criteria to the setting of MRLs. The members represented in Buenos Aires committed to collaboration on trade issues related to crop protection products and agreed to support the joint statement on MRLs signed the next day. The Council and the National Corn Growers Association (NCGA) are the U.S. members of this strategic partnership, which also includes ABRAMHILO and MAIZAR, the major corn producer organizations in Brazil and Argentina. “As producers, we all rely on access to technology to sustainably produce and export our harvests," said Floyd Gaibler, USGC director of trade policy and biotechnology, on behalf of MAIZALL at an event related to the farmer access statement. "These tools are science-based and most are size neutral and should be accessible to all farmers large and small if we are to meet the challenges of global food security and eliminating poverty. However, we can meet these challenges only if we remove the regulatory barriers that are disrupting trade in food and agricultural products."

Federal police in Brazil served 14 search warrants on Dec. 11 associated with an ongoing bribery investigation involving the world's largest meatpacker JBS SA. Police shared with Reuters the warrants were served after JBS executives testified in a plea deal and suggested 160 million reais ($49 million) in bribes had been paid to speed up the release of tax credits to the meat packer. A statement from JBS claims the tax credits were "legitimately due to the company." The targets of the warrants are not affiliated with JBS or its parent company J&F. According to police a lawyer who died in 2016, along with an unnamed federal revenue service auditor, a businessman and an accountant are being investigated. Warrants were served in the following cities in the state of Sao Paulo: Caraguatatuba, Campos do Jordo, Cotia and Lins. It is alleged the tax credit scheme could actually be worth 2 billion reais ($600 million). The case is connected to brothers Wesley and Joesley Batista's admitting to authorities they bribed 1,900 politicians in Brazil which led a plea deal meeting in May. Following the plea deal the brothers were allegedly for arrested insider trading prior to the meeting. The bothers deny any insider trading occurred but they are accused of making currency trades that earned $44 million. Wesley was replaced by his father Jose Batista Sobrinho as the chief executive officer of JBS, the company Jose founded and bears his name with its initials. Both brothers resigned from the JBS board of directors and are currently in jail. Despite all of the recent bad news in Brazil, JBS want to list the U.S. subsidiary with an initial public offering for JBS Foods International BV. There are also plans to sell the company's Five Rivers Cattle Feeding LLC, the largest cattle feeder in the U.S. with a capacity near 1 million head.

Investors remain on alert over the threat of NAFTA talks failing even as negotiators meet this week in Washington and seek minor victories on less contentious issues. The latest meetings to revamp the North American Free Trade Agreement will run through Friday, largely out of the spotlight. Cabinet-level officials won’t attend for the second time since negotiations began in August, and the Trump administration is preoccupied with efforts to push through tax cuts by year-end and avoid a government shutdown. The distractions in Washington haven’t eased pressure on President Donald Trump to preserve the trade deal, which governs more than $1 trillion in annual commerce. Senators who support NAFTA warned the president last week of the economic risks of following through on his threat of withdrawal. Goldman Sachs Group Inc. said it expects Trump will ultimately announce his intention to exit from the accord and that fresh tensions will probably emerge at the next full negotiating round in January. “While we expect the rising odds of tax reform to put less pressure on the trade agenda, we do not expect passage of tax reform will raise the odds of a successful NAFTA renegotiation,” Goldman Sachs said in a note to clients. “And so a withdrawal announcement looks more likely than not, even if tax reform is enacted soon.” Currency Markets The move would cause a disruption in currency markets, driving down the peso against the dollar, even if it doesn’t immediately cut back trade, it said. Bouts of weakness in the peso this year have reflected uncertainty over NAFTA’s future. Trump is seeking all the support he can get in the Senate and House to reconcile tax bills and score his first major legislative victory, meaning he’s wooing lawmakers who’ve begun to speak out in favor of keeping NAFTA. The last round of NAFTA talks ended with U.S. Trade Representative Robert Lighthizer warning that Mexico and Canada need to make concessions, as the only acceptable deal will shift trade flows in the U.S.’s favor. Many of the U.S. proposals “are so clearly non-starters for our NAFTA partners that it doesn’t seem like they’re moving forward that much,” said Douglas Holtz-Eakin, president of the American Action Forum and a former chief economist of the Council of Economic Advisers under George W. Bush. Research published by the forum this month found a NAFTA withdrawal would jeopardize 14 million U.S. jobs and cost consumers at least $7 billion. Divisive Subjects Observers expect the Washington round to yield progress on issues such as telecommunications, while making no or slower advances on divisive subjects like U.S. proposals on increasing the local content requirements for vehicles, adding a five-year termination clause and dismantling Canada’s protected dairy sector. The negotiators will spend among the most time discussing rules of origin, which govern content requirements for goods to qualify for duty-free benefits. They’ll also hold sessions on digital trade and state-owned enterprises, among other topics, according to an agenda of the talks. Thorny issues like agriculture and dispute settlement don’t appear on the schedule. The clock is running down to secure a deal by March, to avoid running into the campaign for Mexico’s presidential election in July and the potential lapse of the U.S. administration’s fast-track negotiating authority. Any nation can announce its intent to withdraw from the accord with six months’ notice, although the U.S. Congress has authority over aspects of tariffs and trade. ‘Toxic Issues’ “We’re going to look at Nafta very seriously,” Trump told reporters on Dec. 5. “Not easy to have an election coming up. We’ll see how that plays.” Canadian Prime Minister Justin Trudeau struck a mostly upbeat tone last week when asked about the NAFTA talks during a trip to China, where Canada failed to reach a deal to launch bilateral negotiations. If NAFTA negotiations end without a deal, Canada would be receptive to considering one-on-one talks with the U.S. on trade, said Trudeau. Also last week, Canada’s chief negotiator Steve Verheul described two tracks, one with progress being made and another where Canada and Mexico are rejecting “extreme” U.S. proposals. “We will not accept U.S. proposals that would fundamentally weaken the benefits of NAFTA for Canada and undermine the competitiveness of the North American market,” Verheul said. The Mexican peso may drop to at least 20 pesos per U.S. dollar if negotiations deteriorate, while the Canadian dollar may slump to C$1.35, Goldman said. “The fact remains that the sides are far apart on issues where we struggle to see an obvious middle ground.”

U.S. pork exports remained ahead of last year's record volume pace, and beef exports are poised to break $7 billion this year for only the second time, according to October export results released by USDA and compiled by the U.S. Meat Export Federation (USMEF). October pork exports were the largest since May, totaling 211,592 metric tons (mt), up 5% from a year ago, valued at $565.4 million, up 8%. Through the first 10 months of the year, pork exports increased 8% in volume (2.005 million mt) and 10% in value ($5.28 billion) from the same period last year. Exports accounted for 25.4% of total pork production in October (steady with last year) and 21.6% for muscle cuts only (up slightly from a year ago). For January through October, these ratios increased about one percentage point from a year ago, to 26.4% of total production and 22% for muscle cuts. October export value averaged $51.41 per head slaughtered, up 9% from a year ago and the highest since July. Through the first 10 months of the year, per-head export value was $52.64, up 7%. Pork Exports Rebound to Mexico, Japan Following a modest slowdown in September, pork exports to leading volume market Mexico regained momentum at 69,529 mt, up 7% from a year ago, valued at $129.8 million (up 13%). Through October, exports to Mexico are well-positioned for a sixth consecutive annual volume record at 655,527 mt (up 14%) valued at $1.24 billion (up 17%). Mexico is an especially important destination for U.S. hams, and consumption growth in Mexico has been critically supportive of ham prices in this time of record U.S. pork production, explained USMEF President and CEO Dan Halstrom. "Although ham prices are currently below last year's level, they have been up an average of 2 percent in 2017 and predictions of ham prices plummeting have not come true," he said. "Strong demand in Mexico is absolutely a key reason for this. USMEF has focused on expanding per-capita pork consumption in Mexico, which is up by about one-third in the past 10 years. This has helped make Mexico an even more critical and more reliable trading partner for the U.S. pork industry.” Exports to leading value market Japan also trended upward in October, increasing 5% from a year ago in both volume (32,475 mt) and value ($134.5 million). January-October exports to Japan were 322,422 mt (up 1%) valued at $1.33 billion (up 3%). This included 176,609 mt of chilled pork valued at $834 million, down 2% in volume but 2% higher in value than a year ago. Record Month for South America Led by Colombia and Chile, October pork exports to South America reached a record 12,624 mt (up 31% from a year ago) valued at $32.3 million (up 29%). Through October, exports to South America were 78% ahead of last year's pace in both volume (85,175 mt) and value ($218.8 million), already surpassing the previous records set in 2014. Export volumes to Colombia and Chile have also exceeded previous highs reached in 2014 and 2013, respectively. Other January-October Results for U.S. Pork Exports Having gained further momentum in October, exports to South Korea have already exceeded their full-year 2016 totals in both volume (136,041 mt) and value ($372.7 million). Compared to the first 10 months of last year, exports were up 27% and 30%, respectively. Led by mainstay markets Honduras and Guatemala, exports to Central America are on a record pace, totaling 56,906 mt (up 7% year-over-year) valued at $138.4 million (up 9%). Exports also increased substantially to El Salvador and Nicaragua, and edged slightly higher to Costa Rica. Exports are also on a record pace to the Dominican Republic – up 26% year-over-year in volume (26,476 mt) and 32% in value ($60.6 million). Despite trending lower in October, pork exports to the ASEAN region were still 16% ahead of last year's pace in volume (39,910 mt) and 31% higher in value ($109.2 million), led by strong performances in the Philippines, Singapore and Vietnam. October exports to China/Hong Kong were below last year's volume but steady in value, reflecting the upward trajectory of China's domestic pork production. Through October, exports to the region dropped 8% from a year ago in volume (413,032 mt) but were just 1% lower in value ($872.8 million) as continued strong demand for variety meat largely offset the slowdown in muscle cut exports. Complete January-October export results for U.S. pork, beef, and lamb are available from USMEF's statistics web page. Monthly charts for U.S. pork and beef exports are also available online.

Today, the National Pork Producers Council (NPPC), the global voice for the U.S. pork industry and leader on public-policy issues for America's 60,000 pork producers, announced its support for Farmers for Free Trade. Farmers for Free Trade is a bipartisan campaign co-chaired by former Senators Max Baucus and Richard Lugar that is working to rebuild support for trade at the grassroots level. The National Pork Producers Council joins the American Farm Bureau Federation and other agriculture trade and commodity groups that are partnering with Farmers for Free Trade to strengthen support for trade in rural communities. "NPPC is proud to get behind this bipartisan effort to build a sustainable network of support for trade among our nation's farmers and ranchers," said NPPC President Ken Maschhoff, a pork producer from Carlyle, Ill. "Exports are vital to the financial livelihoods of pork producers. We need help getting the word out more broadly in rural America that trade generates jobs and prosperity. "We look forward to working with our friends in many other sectors of American agriculture as well as with Farmers for Free Trade to get out the message that rural America benefits from trade." "The support of the National Pork Producers Council is a huge boost for our bipartisan effort," said Senator Baucus. "Not only because they'll help us reach pork producers across the country, but also because they've long led the fight for smart trade policies that help American farmers. The Pork Producers understand that rebuilding bipartisan support for trade on Capitol Hill requires first reestablishing consensus at home among the American people. With the support of the Pork Producers we're going to continue to organize, educate and mobilize farmers whose livelihoods depend on trade." "Momentum behind this effort continues to grow," said Senator Lugar. "With the support of groups like the Pork Producers and the Farm Bureau, we are going to ramp up our efforts at the state and district level. This effort is more needed than ever in order to help alleviate the decline in farm incomes by opening new export markets and safeguarding access to the markets we have." Farmers for Free Trade is currently working at the grassroots level to organize and educate farmers about the importance of trade, including through work at state commodity conventions, through state proclamations, by reaching farmers through social media, and by identifying local spokespeople, among other efforts. Senators Baucus and Lugar outlined some of the key policy priorities that will help rebuild bipartisan support for trade in an op-ed earlier this year.