Biden's Trade Actions Could Mirror Trump's
Published: Friday, February 19, 2021
When President Joe Biden contemplates administering agricultural policy, there's a very good chance he'll follow the trail blazed by his predecessor.
That's just one of the prognostications Aleks Schaefer made during the annual Michiana Irrigated Corn and Soybean Conference with regard to the impact the new administration will have on farming.
In the segment titled "Federal Ag Policy Crystal Ball," the Michigan State University Extension economist reflected on the tumultuous four years endured by farmers from a geopolitical standpoint with Donald Trump at the helm, and speculated on what the next four years may look like under Biden.
The conference, held virtually last week Monday instead of at its traditional venue in Shipshewana, cov-
ered a wide variety of other topics, which can be replayed online at http://bit.ly/3tSbloX, including: pivot and nutrient management in irrigated crops, irrigation scheduling tools, yield optimization in irrigated soybean production, the impact of climate change on irrigated crops, a corn tar spot update, and managing farm stress.
Nothing drove home the statement that "all politics is local" more than the events of the past year, when trade wars and the pandemic directly altered the financial landscape occupied by producers and processors in Indiana and Michigan.
Schaefer explained that Trump made a night-and-day deviation from the agricultural policies of previous Democratic and Republican administrations almost from the start of his term.
"It's useful to think where the past four years diverged," Schaefer said. "One of the major things is we saw this huge change away from a free-trade to more of a managed-trade story."
In March 2018, Trump moved to protect American manufacturing by levying import tariffs on steel and aluminum coming to the U.S. from a variety of countries, most notably China.
"Those countries responded with retaliatory tariffs of their own, primarily against agricultural products," Schaefer said. "The big story here was the China-U.S. trade war, which happened for a long time. In response to that trade war, we saw a really big shift in the way that government payments are made to agriculture."
To compensate farmers directly impacted by retaliatory tariffs, the Trump administration began making Market Facilitation Payments (MFP) in the summer of 2018, and a second round was made in the spring of '19.
Those payments were expected to cease after a trade deal with China was announced, Schaefer said. However, the COVID-19 pandemic began wreaking havoc on agricultural markets in early 2020 with the closing of schools, restaurants and other institutions dependent on food deliveries.
To keep farmers in business and families fed, Trump's USDA instituted the Coronavirus Food Assistance Program (CFAP). Between MFP and CFAP, the government paid out $46 billion, creating a "massive spike" of agricultural support unlike any since the original farm bill passed in 1933.
"This is the most support we've ever seen for agriculture," Schaefer said. "These (payments) were unique in size and the way paid. Previously, through the farm bill, these kinds of payments were negotiated in a bipartisan fashion under Congress.
"Both the MFP and CFAP were appropriated solely by the Administration —Trump didn't go through Congress to get these."
Schaefer anticipates Biden will return to the free-trade policies of the Obama administration, which he served as vice president. However, he wouldn't be surprised if Biden continues acting in a unilateral manner toward farm policy the way Trump did.
"Going forward, I think that creates a lot of uncertainty, but potentially a lot of flexibility for the current administration in terms of how to do this stuff," Schaefer said. "If we've had four years of the Trump administration kind of going around Congress to get done what he wants done, potentially that creates some precedent to allow the Biden administration to have some of that flexibility, too."
As for the trade deal itself, so far China has failed to buy goods in the amounts it agreed to purchase under Phase 1, and there's no guarantee it will in the future.
"If you looked into this, that trade deal was really, really nebulous and sort of ill-defined, so it's hard to see how that thing would be enforceable," Schaefer said.
Schaefer can see Biden trying to expand agricultural trade by removing the steel and aluminum tariffs and revisiting 12-nation Trans-Pacific Partnership Agreement (TPP), which Trump backed out of in 2017.
There could be a "focus more on global solutions as opposed to the nationalism-populism approaches under Trump," Schaefer said. "(TPP) was a big story in the 2016 election, when both Trump and (Hillary) Clinton came out against it. But all other (TPP) members went forward with it (as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership). Importantly, (it) involves a whole lot of countries, except China."
Biden has signaled he will continue a hard-ball approach to China, and one way to gain leverage is by "buddying up" with those other TPP countries, Schaefer said.
Back in America, the appointment of Tom Vilsack as USDA secretary appears to be a safe choice that appeals to members of both parties. Vilsack held the same position in the Obama administration.
With both chambers of Congress closely divided along party lines, "the current administration feels like it has to do something to make amends for the loss of that Republican farm country (voting bloc)," Schaefer said. "So we've got this traditional pick in Tom Vilsack, who signaled in his confirmation (hearing) speech that one of his major goals is going to be to kind of make amends.
"Rather than a divisive policy toward agriculture, I think we're going to see some, 'Can't we just get along' with the rural heartland."
With no clear majority in either chamber, it's unlikely the Democrats will try to pass any bills that are "too progressive, too liberal," Schaefer said.
By virtue of the slim Senate majority, however, Sen. Debbie Stabenow, a Democrat from Michigan, has been confirmed as the Committee on Agriculture, Forestry and Nutrition chairperson, replacing Pat Roberts (R-Kan.), who held the post from 2015 until he retired last month.
Schaefer said indications are that Stabenow will continue to work in a bipartisan manner—like she did as the ranking minority member with Roberts—with Sen. John Boozman (R-Ark.), who has moved into her old seat.
"She's a friend of agriculture (and) she's been on the Agriculture Committee for a long time," Schaefer said. "(She) called (Boozman) an equal. Instead of division, she signaled (they) will be working closely together."
Because of her Michigan heritage, Schaefer said Stabenow is an advocate of ensuring fair treatment for the specialty crops, the local food movement, and safety and protection for agriculture and meat-processing workers.
With the administration making the fight against the pandemic its top priority, progress against COVID-19 will determine the nature of farm legislation in the short run.
"We're neck-deep in the 2018 Farm Bill, which goes through 2022," Schaefer said. "Some of you all right now are probably figuring out whether you want to elect for the Price Loss Coverage or the Agricultural Risk Coverage schemes.
"There's no likelihood that we're going to get radically different farm payment schemes. There's no chance that we're going to get a big overhaul of these payment schemes until 2023 when we're well into this Administration. At the same time, because we've got that massive turnover in the Agricultural Committee of the Senate, it is possible that we will see, going forward, a slightly different farm bill than the one we're currently under."
Biden made addressing climate change a major campaign issue, which can't help but being carried over into agriculture. Schaefer doesn't anticipate, however, a punitive "if you don't do this you'll be punished" approach that leads to increased costs of farm production and more consolidation.
"Increased concentration is exactly what they don't want in agriculture right now," he said. "Alongside the fact that we've got that heartland going redder and redder and redder in the election maps, I don't foresee that big, scary stick option being the story that comes to fruition.
"Instead of that, I can see, and all of the signals have been, they'll use this as a way to provide additional support for agriculture (and) flexibility. One of the big signals Stabenow and Vilsack have made is the potential to use the Commodity Credit Corp. to provide additional support for agriculture in terms of electing for carbon sequestration.
"They could potentially start providing support for that without having to amend the farm bill, without having to go through Congress, like that MFP."
Schaefer doesn't expect any significant changes to farm payments over the short term, but could see future payments being tied to mandated compliance with climate-friendly production.
Biden has already suspended CFAP 3 pending a regulatory review to see if it's still needed. He has also talked about making a multi-trillion-dollar commitment to improving America's infrastructure, and Schaefer pointed out that new bridges could be good for agriculture.
The plan will also likely include the expansion of rural broadband, which has bipartisan support, along with the endorsements of the American, Michigan and Indiana Farm Bureaus.
"I think this is going to be a major initiation," Schaefer said, who also expects an energy-production shift away from fracking and shale to green energy. "The question for agriculture I guess is, 'What the heck does green energy mean?'
"Does this include ethanol? Biodiesel programs? If yes, then this could be a really good thing for agriculture."
Reforming immigration policy was a major undertaking of the Trump administration, and farmers across the nation dealt with the labor shortages that resulted.
There was a "a big crackdown in a number of ways from the Trump administration on immigration," Schaefer said. "Biden's early days plans seem to be undoing a lot of that immigration reform, potentially creating paths to citizenship for a lot of existing immigrants under the Dream Act or other programs.
"Potentially, we could see an expansion of that H-2A visa program (which), even amidst COVID and travel restrictions, H-2A visas have been going like gangbusters. My guess is that that will continue."
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