October 28, 2016
CapitalPress.com
15
Dairy/Livestock
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USDA predicts TPP would be net positive for U.S. dairy
Changes in U.S. dairy annual balance
sheet with TPP participation
By CAROL RYAN DUMAS
Capital Press
A new USDA analysis
shows the Trans-Pacific Part-
nership would initially in-
crease U.S. dairy exports by
up to $275 million annually
and by as much as $1.8 billion
when fully implemented.
Full implementation of
TPP — a trade treaty involv-
ing the U.S. and 11 other Pa-
cific Rim countries — would
come in 2032.
USDA economists ana-
lyzed four models aimed at
determining the outcome for
U.S. dairy producers if Con-
gress adopts TPP.
The U.S. International
Trade Commission’s long-
term model includes high-
er-value processed dairy
products, such as ice cream
and infant formula, and econ-
omy-wide and cross-com-
modity effects not included
(Millions of dollars)
U.S.
U.S.
exports imports
Economic model
University of Missouri, (2024) all countries*
Virginia Tech, (2026) TPP countries only**
Virginia Tech, (2026) all countries
American Farm Bureau Federation
(2032 – full implementation, net exports)
U.S. International Trade Commission
(2032 – full implementation)
*Does not include bilateral trade flows.
$150.4
275.3
262.5
131.2
$97.3
38
42.3
N/A
1,845.5
348.6
**Includes bilateral trade flows.
To view the entire report from the Office of the Chief Economist, go to:
www.fas.usda.gov/data/why-trade-agreements-matter-case-us-dairy
Source: USDA Office of the Chief Economist
in the other economic models
analyzed by USDA.
All four models — by Vir-
ginia Tech, the University of
Missouri, American Farm Bu-
reau and the trade commission
— show a net increase in U.S.
dairy exports that underscores
Capital Press graphic
the importance of TPP, accord-
ing to USDA’s office of the
chief economist in its report,
“Why Trade Agreements Mat-
ter: The Case for U.S. Dairy.”
If the U.S. rejects TPP,
Virginia Tech’s Center for
Agricultural Trade projects
an annual loss of nearly $31
million in U.S. dairy exports
and $11.5 million in producer
welfare, reflecting the prefer-
ential access competitors such
as New Zealand and Australia
would gain in TPP countries.
USDA’s analysis points out
U.S. dairy exports have grown
more than fivefold during the
last 15 years, reaching a re-
cord $7.1 billion in 2014 and
tripling the share of domestic
milk production exported to
as much as 15 percent. It also
found that continued growth of
the U.S. dairy sector is largely
contingent on trade.
“The U.S. market is fairly
mature and per-capita con-
sumption is not expected to
expand significantly, which
makes overseas markets in-
creasingly important to pro-
ducers’ returns,” the econo-
mists stated.
Free trade agreements have
contributed to export growth
and have helped address tariff
and nontariff barriers, accord-
ing to the report. U.S. dairy
exports to FTA partners grew
from $690 million before the
agreements to $2.8 billion in
2015.
The International Dairy
Foods Association, U.S. Dairy
Export Council and Nation-
al Milk Producers Federation
all support TPP, said Beth
Hughes, IDFA director of in-
ternational affairs.
“We think it’s critical for
our industry and for our export
markets,” she said.
Exports are part of IDFA’s
processing members’ long-
term plans for growing their
businesses, and the Asian Pa-
cific region is a natural place
for the U.S. to increase ex-
ports, she said.
Other countries are already
looking at trade agreements,
and some are underway. If
Congress doesn’t implement
TPP, the U.S. will give the up-
per hand to other countries and
be subject to higher tariffs that
will make the U.S. unable to
compete, she said.
“We’ll be pushed out and
lose market share,” she said.
The U.S. share of global
dairy markets has grown from
4 percent in 2000 to 14 percent
in 2014.
Asia offers new opportu-
nities due to a substantial in-
crease in per-capita income,
which is expected to far sur-
pass the world rate, USDA
reported.
In addition to providing
market-access gains to key
countries — such as Japan,
Malaysia, Vietnam and Can-
ada — TPP also breaks new
ground with rules on nontariff
barriers, including sanitary
and phytosanitary measures,
geographic indicators, bio-
technology and organics,
USDA reported.
USDA moves ahead with new GIPSA rules
Cash dairy prices continue mixed
By CAROL RYAN DUMAS
By LEE MIELKE
Capital Press
For the Capital Press
USDA’s advancement of
its rules regarding competi-
tive injury and undue prefer-
ence under the Grain Inspec-
tion, Packers and Stockyards
Act has met with renewed op-
position from some livestock
groups and renewed enthusi-
asm from others.
The Farmer Fair Practices
Rules are a product of flawed
2010 rulemaking that was
finalized in 2011 and repeat-
edly defunded in congressio-
nal appropriations bills, said
Colin Woodall, National Cat-
tlemen’s Beef Association’s
vice president of governmen-
tal affairs.
The rules have not yet seen
the light of day, but NCBA
suspects not much will change
in USDA’s newest attempt
to address “fairness” with a
subjective definition that will
open the door to litigation and
limit producers’ marketing
options, he said.
The rules would not re-
quire a showing of injury (to
overall market competition)
to claim a violation under
GIPSA.
That means if a producer
thinks his price is unfair, he
can report it and sue the pack-
er, the feedlot and even other
producers, Woodall said.
For instance, if a producer
thinks it is unfair for another
producer to receive a premium
based on genetics and that he
should have the same oppor-
tunity even though he didn’t
invest in genetics, he can sue
that producer claiming he was
complicit in the arrangement,
Woodall said.
It’s going to threaten mar-
keting arrangements and val-
ue-added programs and push
the industry back toward more
commodity cattle, he said.
Agriculture Secretary Tom
Vilsack has said the agency is
C
Capital Press file
ash cheese prices
strengthened last week
but then backed down.
Block cheddar jumped to
$1.68 per pound on Tuesday
but closed Friday at $1.65,
up a dime on the week and
3 3/4-cents above a year
ago.
The barrels got to $1.61
but ended at $1.57, up 11
cents on the week and 2 cents
above a year ago.
Monday’s trading took the
blocks down a penny and they
lost a quarter-cent Tuesday,
slipping to $1.6375.
The barrels also lost a
Dairy
Markets
Lee Mielke
penny Monday but were un-
changed Tuesday, holding at
$1.56.
Midwest
cheesemakers
tell Dairy Market News that
cheese production has in-
creased slightly. Milk is read-
ily available and components
are on the rise, but so are or-
ders.
Butter continued the melt-
down that started in August,
slipping to $1.7550 per pound
last Wednesday, the lowest
price since April 2015, but
it inched up a half-cent Fri-
day to close at $1.76, down 2
1/2-cents on the week and 71
cents below a year ago.
It added 2 cents Monday
and in heavy trading Tuesday
— 20 cars — jumped a nickel
to $1.83.
Butter output is active
as moderate to heavy cream
supplies continue clearing to
churns.
Grade A nonfat dry milk
closed last week at 88 cents
per pound, up a penny, and 3
1/2-cents above a year ago.
The powder inched a
quarter-cent lower Monday
and three-quarters Tues-
day, slipping to 87 cents per
pound.
Cattlemen’s groups differ in their reaction to new marketing rules
under consideration by the USDA.
considering excluding certain
provisions from the earlier
rules, including marketing
arrangements, but that’s no
guarantee, Woodall said.
National Pork Produc-
ers Council is also con-
cerned by the resurrected
rules, saying they will cre-
ate legal uncertainty in the
industry.
The concern is that pro-
ducers will no longer need
to prove that a meatpacker’s
action injured or diminished
competition in a “market-
place.” They will only need
to show that a practice was
“unfair” to them or that an
“undue” or “unreasonable”
preference or advantage was
given to another producer or
producers, NPPC stated in a
press release.
The organization points
out the Senate rejected a “no
competitive injury” provision
in the 2008 Farm Bill and
eight federal appeals courts
have held that an action must
have harmed marketplace
competition to be a violation
of GIPSA.
R-CALF USA and the U.S.
Cattlemen’s Association are in
full support of USDA moving
forward with the rules, saying
producers would no longer
have to show harm or compet-
itive injury to the entire indus-
try to file a complaint.
“The rules will facilitate
competition by defining the
legal framework within which
our markets can begin to func-
tion properly,” said Bill Bull-
ard, R-CALF’s CEO.
“With clear delinea-
tions between which market
practices are allowed and
which are not, producers can
self-monitor and self-enforce
industry competition without
having to wait on the govern-
ment to act on their behalf,”
he said.
In a statement commend-
ing USDA, USCA President
Kenny Graner said, “These
common sense clarifications
protect U.S. ranchers and
feeders from anti-competitive
buying practices and help to
advance true price discov-
ery in a competitive market-
place.”
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