The farm economy crunch remained a primary focus for ag leaders and U.S. Rep. Dusty Johnson, R-S.D., on Wednesday.
Johnson, of Mitchell, said he's spent most of his August recess hearing from ag producers about tough prices, difficult market conditions, planting and harvesting concerns, all amid trade and tariff talks. But he said even in Washington, there's not a day that goes by where it's not at the forefront of the conversation
"Producers are telling me that the balance sheets are looking tougher and tougher," he said. "It's clear to me that psychologically, there's a change on their side. It's been tough for three or four years and this year sure feels different, in part because it's one thing after another. There's some good news but so much of the good news has been overwhelmed by the bad news. “
Johnson said he was concerned that the five-week August recess would slow any momentum toward legislative progress. But he is convinced that the United States will ratify the United States-Mexico-Canada Agreement, or USMCA, for trade in North America. To describe it, he used the terms "win-win," a "layup," and a “home run.”
"It's in front of us right now," he said in his opening comments in a trade and tariffs forum Wednesday afternoon sponsored by the South Dakota Farm Bureau. "We're going to talk about difficult situations where we don't know the way forward but don't let that obscure the one way in front of us that is forward. Simply, if we don't pass USMCA, we are not doing our job."
The other members of the forum — office representatives of U.S. Sen. Mike Rounds and John Thune, both R-S.D., and members of South Dakota farm organizations, agreed that USMCA needs to be the next step and as soon as possible. Johnson hoped it could be done by October.
Ryan Wagner, a member of the South Dakota Corn Growers Association's Board of Directors who farms near Roslyn, was asked about frustration setting in for farmers.
"Frustrated almost seems like too weak of a word to me,” Wagner said. “It's time to make something happen on these deals.”
Wagner also lamented the loss of the Trans-Pacific Partnership, or TPP, because since the United States has backed out of Asian markets.
“China has stepped into that void,” he said. “The U.S. seems to be losing our reputation as a stable provider. It scares a lot of guys that policy can change on a whim. It’s harder to sell our product overseas and there’s a price premium.”
Lynn Tjeerdsma, the Platte area native and senior policy advisor on agriculture issues for Thune, said senators and representatives tried to send a message to the Trump administration about these China trade talks from the start. He said Trump would have been better off by leaving agriculture out of the trade and tariff talks.
“Of course, that hasn’t been heeded,” Tjeerdsma said. “We know that China is smart enough to know where the (president’s) support is and we know what’s happened to our Chinese markets.”
The panel also agreed that it has not been healthy for the United States to have counted on China to be purchasing 50 percent of its soybeans, as has been the case in the past. Johnson said his conversations with White House Chief of Staff Mick Mulvaney indicated about 80 percent of the things needed in the China deal were agreed to in the spring, before the Chinese “reneged on half of the items.”
“They have frankly too much market power,” Johnson said. “We do need to get the China negotiations done and done well but we need to make progress with new markets.”
Logan Penfield, an advisor for Rounds, said the senator believes a corner has been turned for USMCA as a substantial win for the economy, especially regarding dairy and wheat. House Speaker Nancy Pelosi, D-Calif., has been reluctant to move forward on USMCA in her standoff with Trump.
Ethanol, beef industries in crunch
Johnson, who was also quizzed by a couple dozen people at the First Dakota National Bank booth on Wednesday morning, was asked about the number of Renewable Fuel Standard waivers that have been granted by the Environmental Protection Agency to oil refineries to skirt ethanol regulations. The first-term congressman said he expected that would stop when former Administrator, Scott Pruitt left the job last year, but those waivers haven't slowed under EPA Administrator Andrew Wheeler.
"It's impossible to defend where we're at right now. … A continuation of this policy is not in the American interest," said Johnson, who has partnered with U.S. Rep. Collin Peterson, D-Minn. to introduce the Renewable Fuel Standard Integrity Act.
Johnson said it would bring accountability and transparency to prevent the EPA from recklessly granting waivers to oil refineries and undermining the market for ethanol. Thirty-one new waivers were announced earlier this year, which the nation’s largest ethanol producer Poet said has damaged demand for biofuels.
On Tuesday, Poet announced it would stop production at its Cloverdale, Indiana plant due to the number of Small Refineries Exemption, and would drop corn processing by an additional 100 million bushels at its 28 plants across the country, which includes the plant outside Mitchell which uses about 24 million bushels of corn a year. Some jobs could be consolidated, as well.
“Ethanol margins are extremely short right now,” Wagner said. “When one of the largest ethanol producers in the country cuts back because margins are poor, that gets your attention … It’s a serious problem right now, the demand structure in corn right now. That demand destruction is going to hang over us for a long time.”
Also on the trade and tariff panel were Jeffrey Gatzke, a farmer from Hitchcock who is vice president of the South Dakota Farm Bureau and South Dakota Soybean Association President Jeff Thompson, who farms near Colton.
Another key topic on Wednesday centered around the cattle industry. There was frustration about not having country of origin labeling, and also with the nation’s largest beef production companies, which are making more than $300 per head, while cattle ranchers are struggling. Some questioners called for the enforcement of the 1921 Packers and Stockyards Act, which was meant to assure fair competition and to safeguard farmers and ranchers.
“It is not a good time to be in the beef industry, and we need to find some fundamental approaches to improve the environment,” Johnson said.