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Thank You, USTR Ron Kirk, For Kicking American Dairy Farmers While They Are Down

by: Jill Richardson

Sun May 02, 2010 at 00:15:01 AM PDT

The dairy industry is still weathering the worst crisis for their industry since the Great Depression. Although milk prices aren't at their lowest right now, credit has run out for many. Throughout the crisis, the government has given a few bits of help here and there to dairy but they haven't done anything substantial to address the corporate consolidation or the price manipulation that is hurting farmers. So in the midst of this, guess what they are doing now? How about a new trade agreement that will really screw dairy, even more than they are already hurting.

US Trade Rep Ron Kirk just made news by rejecting calls by Senators Feingold, Crapo, Specter and 27 other Senators to leave dairy out of the deal. FYI, Kirk served on the board of Dean Foods, one of the largest and most powerful corporations in the dairy industry, until he was appointed USTR last year.

In their letter to Kirk, the Senators wrote, "We have been informed that losses to U.S. dairy producers may total up to $20 billion over the first decade of the agreement if U.S. dairy restrictions on exports from New Zealand are fully phased out in the TPP."

Jill Richardson :: Thank You, USTR Ron Kirk, For Kicking American Dairy Farmers While They Are Down

Tags: trade, dairy, New Zealand, TPP, USTR, Ron Kirk, (All Tags)

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Thank You, USTR Ron Kirk, For Kicking American Dairy Farmers While They Are Down | 5 comments

The main issue is imported milk solids (4.00 / 2)

Much of conventional milk products available today are made from imported milk solids. If there was a import tax or quota the low milk prices would rebound.

by: OrganicGeorge @ Sun May 02, 2010 at 09:30:43 AM UTC

TPP (4.00 / 1)

USTR FACT SHEET: Trans-Pacific Partnership
The Trans-Pacific Partnership is a potential platform for economic integration across the Asia Pacific region. The United States will engage with an initial group of seven like-minded countries, Singapore, Chile, New Zealand, Brunei, Australia, Peru, and Vietnam, to craft a platform for a high-standard, comprehensive agreement - one that reflects U.S. priorities and values - with these and additional Asia-Pacific partners.

by: count @ Sun May 02, 2010 at 14:14:33 PM UTC

from Radio NZ link (4.00 / 1)

...Mr Kirk says...improving access to overseas markets as a result of the deal could be a boost for American farmers.
Meanwhile, New Zealand Prime Minister John Key has expressed unease at the inclusion of Canada in the Trans Pacific Partnership.
Canada, which has a strong local dairy lobby, is not currently part of the talks but is believed to be pressing to join.

I wonder how strong Canada's local dairy lobby is. My understanding has been that Canada's dairy industry has been severely hurt by imported milk solids, but I don't remember what restrictions (if any) the imports are subject to.

by: count @ Sun May 02, 2010 at 14:18:37 PM UTC

credit (4.00 / 1)

2010 Farm Sector Income Forecast (Updated 02/11/10)
Credit will be available, but farmers will likely have to meet higher standards in demonstrating that their business is a good credit risk. Lenders will want evidence of a good credit history, a sound business plan, sufficient capital to ward off insolvency in the event of adverse production or market conditions, and collateral.
...
The earnings accruing to hired and land owners are expected to improve in 2010{,} but not for lenders for whom interest income is expect to decline. Their decline in interest income is due to both a price and quantity effect as interest rates are expected to remain low and the total volume of loans are expected to decline as fewer farmers are likely to meet the higher standards imposed for creditworthiness.

The quote is for the entire farm sector. For the dairy sector, how would a TPP agreement help farmers demonstrate that their business is a good credit risk?

Without regard to the TPP negotiations,

Dairy cash receipts are predicted to increase over $7 billion in 2010. The number of milk cows is forecast to decline 228,000 from 2009, and milk per cow is forecast to increase 379 pounds, resulting in an anticipated decline of 1.3 billion pounds of milk sold to plants. However, USDA anticipates a $4-per-cwt increase in the annual average price of milk in 2010, aided by the continued recovery in dairy product exports.

Interesting note from the forecast:

Receipts from vegetable and melon sales are expected to be down almost $0.7 billion in 2010. Dry bean receipts are anticipated to be up slightly in 2010 as an increase in quantities sold more than offsets an expected decline of more than $2 per cwt. Potato receipts are expected to decline by about $0.3 billion, reflecting price declines (67 cents per cwt) and a slight decline (0.2 percent) in quantity sold. A decline of about 3 percent in cash receipts from sales of other vegetables and melons is expected, mostly due to declines in sales of processed vegetables. In 2010, acreage of vegetables used for processing is expected to decline, especially for tomatoes, which face continued weak domestic demand. The 2010 outlook for fresh vegetables is for reduced acreage and supplies as consumer purchases of away-from-home food products such as hothouse and organic vegetables remains depressed. The U.S. market is transitioning to imported melons, largely from Central America. The weak U.S. dollar and strong world demand are expected to result in increased exports of U.S. dry peas and lentils in 2010.

by: count @ Sun May 02, 2010 at 14:31:16 PM UTC

USTR (4.00 / 2)

I worked in Washington for the International Trade Administration (a rival/partner to USTR) in the early 90s and it was a bastion of free-market-as-solution-to-all-things kind of thinking. I have to admit that I, too, was brainwashed to think that way. There's a huge cadre of well-meaning, highly educated, but naive trade officials and staffers who believe they are doing the right thing. When idealogically suspect leaders like Ron Kirk take the helm, you can bet that small farmers are going to get the shaft.

It's hard to describe the mindset inside USTR, but it's all about positioning, prestige, influence and brokering. Ultimately, people who work there seriously believe that by "opening up overseas markets" they are going to help U.S. businesses and consumers. But the cultural politics of Washington in general, and the agency in particular, lead to less than optimal outcomes for small businesses and individuals with no clout.

by: JPStreeter @ Mon May 03, 2010 at 13:59:50 PM UTC