Washington Insider-- Monday

Label Wars Widen

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

China to Decide on Antidumping Tax on DDGs Imports After Obama Visit

China will likely decide on whether to impose antidumping duties (ADD) on U.S. dried distiller grains (DDGs) imports only after the visit of President Barack Obama in early September, said Hanver Li, general manager and chief consultant at Shanghai JC Intelligence, at an industry conference in Cebu in the Philippines over July 31-Aug. 3.

If China and the U.S. sign a Bilateral Investment Treaty during the visit, it was unlikely that any antidumping tariffs would be imposed, he added.

If the treaty was not signed, however, Li said he estimated a 20-40% tariff on U.S. DDGs.

On Aug. 2, the Ministry of Commerce called for a public hearing on the antidumping investigation that was launched on January 12 after Chinese ethanol producers raised concerns over high imports of U.S. dried distiller grains at low prices.

Chinese imports of U.S. DDGs were down 60% by volume in the first six months of the year, according to U.S. Census Bureau data. China has been importing a large quantity of DDGs from the U.S. since 2009. In 2016, 99.97% of China's DDGS imports came from the U.S., according to the Chinese Customs Information Center. This is the second time the Chinese government has investigated the pricing of U.S. DDGS since 2010. The previous investigation concluded in 2012 with no tariffs.

US Ag Exports Register Surplus for June

The value of U.S. ag exports rose to $10.014 billion in June while imports slipped to $9.252 billion, leaving a trade surplus of $762 million, according to USDA's U.S. Ag Trade Update.

The surplus for the month reversed what had been three consecutive months of trade deficits, the first time that happened since at least the 1960s, according to USDA data, if not longer. June exports valued over $10 billion marked the first time in three months that has happened.

The value of U.S. ag imports declined for a third consecutive month, falling to their second lowest point of Fiscal 2016. October imports were valued at $91.47 billion. U.S. ag imports have been at $10 billion or more only one month so far in Fiscal 2016.

Until June, U.S. agriculture had registered deficits in the March-May period that totaled just over $512 million as imports outpace the value of ag exports.

So far in Fiscal 2016, U.S. ag exports are valued at $96.721 billion, down from $110.6 billion in the same period during Fiscal 2015. Imports over that time have totaled $85.918 billion, behind the pace seen at this point in Fiscal 2015 of $85.782 billion. The cumulative trade surplus stands at $10.803 billion, down sharply from $23.819 billion at this point in Fiscal 2015.

Washington Insider: Label Wars Widen

Almost everybody has an opinion about food labels, and many have become openly cynical. For example, the Wall Street Journal recently wrote that the labeling effort for genetically modified organisms (GMOs) is a "farce" and that the organic food lobby simply "wants to raise the cost of your groceries."

The Journal poked a little fun at the Congress, too, noting that before it headed home for the summer, it zeroed in on a "national" problem of "what's in Doritos." It said that the congressional purpose of the labeling legislation was to "rescue manufacturers from organic food groups that dress up rent-seeking in phony virtue."

While food produced with genetic engineering "on all evidence is as safe as home-grown tomatoes," the congress has told the Agriculture Secretary to develop a program that forces producers to add a symbol or notice about GMOs on packages, or a QR code, which consumers could scan with smart phones, and small companies can opt for a website or a 1-800 number. The House passed and the President signed the bill recently. The Journal wasn't much impressed.

It noted that Congress spent months haggling over pre-empting Vermont's new GMO-labeling law, which mandates direct package labels for food sold or produced in the state—and which led some companies to say they will stop selling in the state rather than absorb the expense. Still, about 15 states are considering labeling schemes, and the Senate earlier this year failed to prevent a patchwork mess with a voluntary labeling program, the Journal said."

Organic interest groups, such as Just Label It, the Center for Food Safety, aren't satisfied now, the Journal says and are complaining that "the Agriculture Department was given discretion to decide what the label will cover." The bill excludes meat from animals who consume genetically engineered feed and more dispensations may follow. "The irony is." the Journal says, "that the groups howling about arbitrary standards invented the false GMO distinction: Everything humans eat has been genetically modified through breeding."

The groups that have for years said they simply want consumers to "know what they're eating" also object to bar code labeling on the grounds that poor and rural consumers don't have smartphones. The Journal ridicules that notion with the observation that folks "affluent enough to pay a 50% mark-up for organic kale are suddenly concerned about low-income families who benefit from biotechnological advances that make food less expensive."

The Journal thinks that the Center for Food Safety and others "want to eliminate genetically engineered crops," and sees that as the risk of a bill that "wrongly concedes that GMOs warrant disclosure." The same groups will return to Congress and demand more stringent labels, if not crop bans like those in Europe, it says.

The Journal also says that while the legislation likely was necessary to prevent food manufacturers from dealing with 50 different laws in a national supply, "it won't add to the sum of consumer knowledge." That's because genetic modification is not an ingredient, but an innovation—one that has made farming more sustainable and food more affordable. It thinks this bill is a "loss for that human progress."

There's another irony. Labeling advocates bitterly oppose use of QR codes, which the bill would allow and which Secretary of Agriculture Tom Vilsack has advocated. These "Quick Response" codes are machine-readable optical labels that contains information about an item. The technology is widely used in other industries.

The codes have the advantage of including large amounts of information. So, it seems cynical for the label supporters to advocate labels as essential, but yet oppose the approach which could include the largest amount of information on technologies used on the grounds that access is just too difficult—even though it seem readily accessible to any consumer who has the intense interest the activists claim, Washington Insider believes.

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