With a flurry of activity on the international trade front in recent weeks, the agriculture industry in the U.S. has received a welcome bit of good news.
On Jan. 29, President Donald Trump signed the U.S.-Mexico-Canada Agreement replacing the North American Free Trade Agreement. That came on the heels of Trump’s Jan. 15 signing of a preliminary trade deal with China.
Phase 1 of the U.S.-China trade deal commits Beijing to boosting its imports of U.S. manufacturing, energy and farm goods by $200 billion over the next two years. That includes larger purchases of soybeans and other farm goods expected to reach $40 billion a year, according to the U.S. Department of Agriculture.
“This agreement finally levels the playing field for U.S. agriculture and will be a bonanza for America’s farmers, ranchers, and producers,” U.S. Department of Agriculture Secretary Sonny Perdue said in a Jan. 15 news release.
According to the American Farm Bureau Federation, the U.S. exported $19.5 billion of agricultural products to China in 2017. These exports were reduced to $9.1 billion in 2018 as a result of retaliatory tariffs.
Wisconsin Farm Bureau President Joe Bragger had a front-row seat to Trump’s Jan. 15 signing of Phase 1 of the trade deal with China at the White House.
“Signing this agreement has been a long-awaited moment for many farmers,” Bragger said. “The agriculture community was hit with a double whammy as we battled low commodity prices that were exacerbated by trade issues with China.”
According to the most recent available statistics from the Wisconsin Department of Agriculture, Trade and Consumer Protection’s International Agribusiness Center, Wisconsin exported more than $2.5 billion in agricultural and food products to 146 countries as of the end of the third quarter of 2019, a decrease of 5.5%, or nearly $148 million in value, compared to the same period of 2018.
Food and agriculture exports made up 15.4% of Wisconsin’s overall exports of nearly $16.3 billion through the end of the third quarter of 2019, which were also down 4.8% from the same period of 2018.
The top three export markets — Canada, China and Mexico — make up over 55.2% of total exports and contributed nearly $139 million to the loss compared to the same period in 2018. As of the end of the third quarter of 2019, total exports to China were down to $166 million from $293 million in 2018, according to the Wisconsin International Agribusiness Center.
Phase 1 of the U.S.-China Agreement requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial service, and currency and foreign exchange. The agreement includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years. The agreement also establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement.
The agreement signifies China’s imports of U.S. agricultural products, such as soybeans, grains, meats, ethanol and the full range of other agricultural products will total at least $80 billion during the next two years. China will also strive to purchase an additional $5 billion of agricultural products annually.
“That is big for us, with China being a huge market already,” Bragger said. “There is a huge amount of soybeans exported to China, so you would expect that to react the quickest. But time will tell.”
China has committed to streamline the timelines and procedures for registering U.S. dairy and infant formula facilities and products and to provide regulatory certainty and market stability for products like fluid milk and dairy permeate powder.
Bragger said there are estimates showing as much as half of China’s hog population has been decimated by Asian Swine Fever. That has not only had an impact on the U.S. hog industry, but on the dairy and grain industries as well, because of what those hogs would have been eating.
DATCP interim Secretary Randy Romanski said whey exports to China in 2019 were down 49% from 2019.
“That could have had as much effect on our exports of dairy to China as the tariffs, when you consider the amount of whey powder those hogs were fed,” Bragger said.
Bragger said that during the signing of the trade agreement, Chinese Vice Premier Liu He talked about his country going from a growth economy to a high-quality economy, a progression that could further benefit the dairy industry, particularly in Wisconsin.
“That tells you things are changing and they’ll be looking for high-quality products,” Bragger said. “For dairy, we’ve had a lot of whey powder sales to China. If we can move into high-quality products, that’s what our farmers need. And it positions Wisconsin particularly well because we’re known for cheese and those higher-end things.”
At the Phase 1 signing, Trump said the agreement does not remove tariffs on major U.S. farm exports.
Will Hsu of Hsu Ginseng in Wausau said his industry has been hit particularly hard by the trade war with China. Tariffs on ginseng have climbed from about 8% before the trade war to 48% today.
“These are tariffs that are higher than before China entered the (World Trade Organization), so we’ve basically gone backwards in terms of being able to legally import ginseng into China,” Hsu said. “When you take a 20 year step backwards in 18 months, it doesn’t change overnight because you sign a Phase 1 deal where all the sudden tariffs get lowered to pre-trade war levels.”
Hsu said the number of farmers growing ginseng in Wisconsin has been in decline, dropping from more than 1,000 farmers generating 2.5 million pounds of ginseng to fewer than 200 farmers producing 1 million pounds.
“The price farmers receive has gone down two consecutive price years,” Hsu said. “The customer that’s buying the ginseng in China doesn’t want to pay more, so they’ve asked the farmer here in Wisconsin to reduce the price commensurate with the tariff increase, so the farmer receives less money locally for their crop.
“That’s really been tough on our industry.”
Liu’s comment at the signing that Chinese agriculture purchases would be “based on market conditions,” raised some concerns about the deal.
U.S. Rep. Ron Kind, D-La Crosse, said in a news release his preference would have been for Congress to have input in making sure this agreement was the best deal possible for Wisconsin. Kind said he plans on “reviewing the text of this deal closely and monitoring the results of the trade deal in the coming months to see if this deal holds up.
“While this deal is welcomed relief for our farmers, I’m concerned that this deal is not fully binding like a traditional trade agreement and will lack the transparency and enforceability needed to ensure China will uphold their end of the deal,” Kind said.
The USMCA will create new market access opportunities for United States exports to Canada of dairy, poultry, and eggs, and in exchange the U.S. will provide new access to Canada for some dairy, peanut, and a limited amount of sugar and sugar-containing products. Under the USMCA, Canada agreed to eliminate the Class 6 and 7 milk pricing programs that allowed their farmers to undersell U.S. producers.
“Wisconsin farmers face many challenges and we don’t anticipate this agreement will fix all these hardships, but it is a step in the right direction to help us overcome some of the obstacles we face,” Bragger said.
Canada and Mexico are the first and second largest export markets for United States food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018. These exports support more than 325,000 American jobs, according to the USDA.
“USMCA is critical for America’s farmers and ranchers, who will now have even more market access to our neighbors to the north and the south,” Perdue said. “I am excited to see the economic benefits of this agreement increase the prosperity of all Americans, especially those living in rural America.”
Congress signed off on the USMCA late last year. Mexico’s legislature has approved the agreement and Canada’s lawmakers are expected to do so soon, which is necessary for the agreement to take effect.
According to the American Farm Bureau Federation, the USMCA is expected to increase agricultural exports from the U.S. by $2 billion and result in an overall increase of $65 billion in gross domestic product. Canada will increase quotas on U.S. dairy products, benefiting American dairy farmers by $242 million.
Dairy Business Association Vice President Amy Penterman, a dairy farmer from Thorp, was an invited guest at the signing ceremony.
“The relationships our country has developed with Mexico and Canada have greatly benefited the U.S. dairy community during that past 25 years under NAFTA,” Penterman said in a news release. “We need our neighbors and they need us.
“Trade is a key to farmers and processors succeeding in the long term. Farms of all sizes and business models benefit when we have opportunities for free and fair trading. That success extends to all of the other businesses tied to dairy also and keeps our rural communities strong.”
Oconto farmers Philip and Laura Finger were named the 2020 Wisconsin Outstanding Young Farmers on Jan. 26 during the organization’s 66th annual awards weekend in Chippewa Falls.
Happy just to be nominated, let alone named a finalist, the couple was “shocked” when they were named the winner, Philip said.
“We had no expectations going in,” he added, commending the others who were also named finalists. “It was a great experience.”
Philip is the fifth generation of Finger Family Farm, which has been operating since 1872. Laura bought into the family farm upon their marriage.
Philips’s parents continue to work on the farm, and Philip and Laura’s four children — Alana, PJ, Alisa and Alivia — get to be involved as well. Alana is going to Fox Valley Technical College and has the option to return to the farm if she chooses to after graduation, Philip said.
The Fingers’ farm consists of 1,400 crop acres and 540 cows. Among the crops they raise are corn for silage, corn for grain, alfalfa, winter wheat and cover crops.
Like all farmers, Philip said, “We’re very passionate about what we do.”
Philip is general manager on the farm, overseeing herd health and breeding. Laura is in charge of the calves and oversees the parlor and parlor maintenance.
“We’re a really good team,” Philip said, noting that his strengths were her weaknesses and vice versa.
Philip, a UW-Madison graduate, said that he’s always loved farming and has been interested in genetics since he was a kid. Laura, who grew up in Hawaii, had experience with dairy goats before attending Iowa State University for dairy science.
Their success also depends on their willingness to be fully involved with the farm, taking on any job that’s needed of them.
“We’re not above any job here,” Philip said. “We like to work with our employees.”
They also enjoy being able to work with animals and getting to be stewards of the land, Philip said.
“We like seeing our outcomes,” he added.
Philip said that they’re “very proud of all farmers” and are happy any time they can be out there and promoting agriculture.
The Fingers are slated to host their county’s Breakfast on the Farm in 2022 during the farm’s 150th anniversary year.
Judging criteria for the Outstanding Young Farmer award are based 50% on progress in agricultural career, 25% on extent of soil and water conservation practices and 25% on contribution to community, state and nation.
Runners-up for the Outstanding Young Farmer award were Katy Schultz of Fox Lake and Jeremy and Heather Natzke of Green Leaf.
Schultz is a partner in Tri-Fecta Farms, and the Natzkes are the fifth generation farming at Jeremy’s family’s farm, Wayside Dairy.
In addition to being first runner-up, Schultz was presented with the “Speak Up for Agriculture” award for her travels abroad that allowed her to immerse herself in the culture of many countries while also educating on the diverse agriculture of the U.S. The “Speak Up for Agriculture” award is sponsored by The Country Today.
Also among the state finalists were Kelly Fruit of Viola; John “JJ” and Chase Pagel of Kewaunee; and Laura and Tyler Raatz of Oconto Falls.
Last year’s recipients, Adam and Chrissy Seibel of Bloomer, are slated to be recognized as one of the top 10 finalists nationwide, with the potential to be named National Outstanding Young Farmers, later this week in Connecticut.
The Fingers will be nominated to attend the national conference next February, when the national awards are scheduled to be announced in Appleton.
Wisconsin has boasted several national winners since the Outstanding Young Farmer program began in 1954 as a National Priority program for the U.S. Jaycees. Wisconsin named its first winner in 1952.
During the awards weekend, an ag forum training session was held for the candidates, and candidates also toured area businesses including previous winner Seibel’s Organic Dairy as well as Leinenkugel’s Brewery.
MADISON — Hemp was the theme of this year’s Wisconsin Agricultural Outlook Forum, with Kate VandenBosch, Dean of the College of Agricultural and Life Sciences at UW-Madison, commenting on the timeliness of the topic during her opening statement at the event on Jan. 28.
Just one day before, Shelby Ellison, a faculty associate in the Department of Horticulture at UW-Madison, began teaching the first course ever on campus related directly to hemp. Fifty students showed up for “Science of Hemp,” which is a big size for a class in the horticulture department, Ellison said.
And it may be a sign of the times ahead.
“Everywhere I go across the country, the crowds get bigger and bigger as the interest in hemp continues to grow,” said Tyler Mark, assistant professor of Agricultural Economics at the University of Kentucky.
Similar to Wisconsin, Kentucky saw a boom of interest in hemp, particularly in CBD production after the first few years of their state’s hemp pilot program. This enormous explosion of interest put a lot of pressure on the state’s department of agriculture and their research institutions as they hurried to provide accurate information to those wanting to grow hemp.
It’s likely this scenario isn’t unique to just Kentucky or Wisconsin; 47 U.S. states are now in the “hemp game” in 2020, Mark said. Issues relating to hemp are also likely to be similar as well, including the lack of processing capacity, confusing contracts, economic misunderstandings, oversupply and financing.
“The hype machine will continue,” he said. “Every state is getting into this game and they think they’ll be ‘it.’ But I think there will be pockets of production around the country.”
Five years ago, Colorado became a national leader in industrial hemp when it launched its pilot hemp program. Stakeholders are now in the final stages of a year-long project of submitting a state management plan to the U.S. Department of Agriculture outlining how various aspects of hemp cultivation and processing will be managed by the state.
The Colorado Hemp Advancement and Management Plan, also known as the CHAMP Initiative, engaged 191 expert stakeholders, 10 state agencies, two tribes, three colleges and universities, and 38 executive committee and board members, with the end product a “blueprint” for Colorado’s hemp industry.
Dawn Thilmany, a professor of Agricultural Resource Economics at Colorado State University, was heavily involved in the creation of this blueprint over the past year. With broad expertise in the areas of agribusiness management, agricultural marketing and regional economics, hemp was something Thilmany wasn’t extremely familiar with but took special interest in as she recognized the potential for Colorado to be active in this area due to its cannabis history.
She sees the report, which encompasses 35 pages, not only as a blueprint for administrative rules and procedures, department resources and industry guidelines, but also as an opportunity for economic development.
“We expect the 2020 and 2021 legislative sessions to serve as a catalyst for implementing the CHAMP blueprint,” she added.
While there are opportunities for Wisconsin to learn from Colorado and Kentucky’s hemp initiatives, the dairy state can also learn from its northern neighbor, Canada. Canada legalized hemp in 1997, allowing the country to take a different track than the U.S.
There are multiple marketing opportunities for hemp in Canada, said Ted Haney, executive director of the Canadian Hemp Trade Alliance. He referred to them as the four “pillars” or “faces” of hemp — food, fiber, feed and fractions (which includes the sale of the head and leaves of the plant).
The biggest market is for hemp seed for food, with products such as de-hulled hemp seed, hemp seed oil and protein concentrate being sold. The processing capacity for fiber in Canada continues to increase but there isn’t much of a functioning market for it yet; animal feed is also on the horizon, with CHTA currently seeking the registration of hemp seed and its derivatives for all major livestock species in Canada.
Licensed hemp growers in Canada are also allowed to sell fractions to licensed cannabis processors in Canada. These licensed cannabis processors can then extract the CBD for sale into three markets: the Canadian medical marijuana program; international medical marijuana programs that have been recognized by Health Canada; and provincial government regulated retail buyers within the country. Only about 5% of hemp growers in Canada are growing for this market, compared to Wisconsin, where more than 90% of hemp growers are growing with CBD in mind.
When hemp was legalized in Canada in the late ‘90s, there were a few years where things “went kind of crazy,” Haney said. Hemp cultivated in 1999 remained in the country’s inventory for two years, but from 2010 and on, there has been very specific growth as more food processors come into the industry.
Interestingly, about two-thirds of hemp production leaves Canada, with 80% of that export heading to the U.S., primarily in the forms of hemp seed, hemp oil and hemp concentrate.
It’s also been 15 years since there has been a “hot” crop of hemp in Canada, or hemp that goes above the U.S.’s federally mandated 0.3% THC level. Haney said this is because seeds must be certified to be sold, ultimately allowing genetics to eliminate the issue of a “hot” crop.
“It is so unfair to producers to burn a crop,” he said, garnering a few claps from members in the audience. “Hot crops should be gone from this industry.”
Haney expects hemp to become a $1 billion industry for Canada by 2023 as the country continues to innovate in the areas of livestock feed, fiber and fractions.
“Wisconsin is behind — way behind,” said Paul Mitchell, a professor in the Department of Agricultural and Applied Economics at UW-Madison and director of the Renk Agribusiness Institute. “But we have comparative advantages and can catch up.”
Wisconsin farmers have diversity on their side and experience planting a lot of different types of crops; they also have support systems and infrastructure, along with experiences with on-farm value added products. Wisconsin also has a history of growing hemp and strong food processing and manufacturing industries.
“Processing and marketing is where the economic impact will be,” Mitchell said. “It’s where our creative class will enter as we need entrepreneurs to develop and market new hemp products.”
He expects small companies to develop successful products in local and regional markets, like Wisconsin has done in the areas of dairy, cheese, meat, vegetables and fermented products, catching the eye of larger food companies looking to buy those successful products in the future.