John Block: Uncertain Times

By former USDA Secretary John R. Block

Farmers and ranchers across the U.S. are under a lot of stress as we enter planting season. Farm income has been cut in half and uncertainty fills the air as we move into the 2018 year.

Trade war - we are already being hurt, but there are some encouraging developments since President Trump imposed tariffs on aluminum and steel. Chinese President Xi’s response was strong and aggressive. But now he says he is committed to strengthening protection of intellectual property and he could mount a drive to increase our imports to China. That should reduce China’s trade surplus with the U.S.  Trump responded to President Xi: “Very thankful to President Xi for his kind words on tariffs, and automobile barriers, also his enlightenment on intellectual property.  We will make great progress together.”

Anyway, there is hope. Wait and see.

Ethanol – EPA has been giving refineries “hardship” exemptions from renewable-fuel requirements – which decrease the use of ethanol. Farm state leaders and Midwest Members of Congress are up in arms.

The Ag industry does have powerful influence. President Trump is siding with his farmer supporters. The gasoline you put in your car is 10% ethanol today. President Trump says he will increase that percentage to 15%. That could create big demand for corn. Ethanol is already very popular because it is higher octane and less expensive than gasoline. Although EPA in 2011 approved E15 for 2001 and newer cars, it is sold in less than 1% of gas stations. Not surprisingly, the oil industry doesn’t want to expand the market for corn fuel. However, I am confident it is going to happen.

Bob Dinneen, President of the Renewable Fuels Association, said, “this will have a meaningful and positive impact on an important value added market that corn growers have developed.” Does President Trump have the authority to just raise the requirement from 10% to 15%? We’re not sure. It is possible that could require Congressional action. Hope we can get it done.

Will we be able to conclude our (NAFTA) negotiations with Mexico and Canada? We are getting positive feedback, which is encouraging. Currently, however, there are more questions than answers for our farmers and ranchers.

Stay tuned –

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.  If you would like to review his radio shows going back more than 20 years, visit johnblockreports.com.

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