Washington Insider-- Friday

Food System Pressures

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

Trump Says DOJ Has Been Asked To Examine Antitrust Issues In Meat Industry

The Department of Justice has been asked to examine antitrust issues in the meat industry, according to President Donald Trump. "I have asked the Justice Department to look into it," Trump said in remarks during a meeting with Iowa Governor Kim Reynolds Wednesday. "I have asked them to take a very serious look into it because it should not be happening that way."

He specifically noted the exam will look at the divergence between cash cattle prices and prices consumers pay in stores for beef. "Why is there disparity? What's going on? Are they dealing with each other? What's going on? Okay? Because it shouldn't be that way. Supply and demand should not allow that to happen, by normal supply and demand," Trump stated.

A Justice Department spokeswoman confirmed that Trump has asked DOJ to probe antitrust issues in the meat industry.

The statement from Trump comes as attorneys general from Iowa, North Dakota, Colorado, Missouri, Montana, Arizona, Idaho, Minnesota, Nebraska, South Dakota and Wyoming made a similar plea to DOJ relative cattle producers.

USDA’s Perdue Says Corner Turned on Meat Plants Resuming Operations

U.S. meat plants are starting to reopen, USDA Secretary Sonny Perdue said in remarks at the White House Wednesday.

“The plants are reopening in Iowa and other places. We may have still a few closed, but we are working,” Perdue said during a meeting between President Donald Trump and Iowa Governor Kim Reynolds.

“They are opening this week. And I think we have turned the corner, based on that commonality of uniform standards there.” He noted that “we have turned the corner. We see these plants coming back on line. Obviously, because of some infected employees, they will not be full force for a while, but we think the stores will be… you will see more variety and more meat cases fully supplied.”

Asked for a timeline for that to happen, Perdue predicted “probably a week to 10 days where it is fully back up.”

Washington Insider: Food System Pressures

Bloomberg is reporting this week that the Trump administration is considering action against the China trade deal, and that top Chinese and U.S. trade negotiators will speak as soon as next week on progress in implementing the first phase. The administration says it will “terminate” the agreement if Beijing doesn’t adhere to its terms.

Chinese Vice Premier Liu He will be on the call, Bloomberg said while the U.S. will be represented by USTR Robert Lighthizer.

The planned phone call will be the first time Liu and Lighthizer have spoken officially about the agreement since it was signed in January, just before the global coronavirus pandemic erupted.

The president also seemed to suggest a “development” was on the horizon when he told reporters at the White House on Wednesday that he’d be able to report in the next week or two “if he’s happy” with how the trade deal is progressing.

On Sunday, in response to a question at a town hall from a business owner who said he was losing money on the tariffs, the president noted that the duties “prompted” China to promise to buy $250 billion worth of U.S. goods. “Now they have to buy,” he said. “And if they don’t buy, we’ll terminate the deal, very simple.”

Relations between the U.S. and China have deteriorated further since America became one of the countries hardest hit by the coronavirus. The president has blamed China for misleading the world about the scale and risk of the disease, and even threatened more tariffs as punishment. China’s foreign ministry has in turn accused some U.S. officials of trying “to shift their own responsibility for their poor handling of the epidemic to others.”

In addition, the coronavirus pandemic’s economic toll is leading to fresh criticism for the World Trade Organization from Washington, this time from a Midwestern lawmaker who sees the pandemic as an opportunity “to rebuild America’s standing in the global economy.” Sen. Josh Hawley, R-Mo., wrote on the New York Times op-ed page this week that the WTO “should be abolished on the grounds that it has failed American workers.”

He called for the U.S. to stop Chinese imperialism and renegotiate trade deals with allies, he wrote, saying that “abandoning the WTO is a start.”

While the U.S. government lacks authority to close down the WTO single-handedly, the missive from Hawley echoes many of the complaints the Trump administration brought to office in 2017. It also reflects the hardening of some Americans’ views about China and the growing list of “scapegoats” sought for the economic calamity the country now faces, Bloomberg said.

In the meantime, Agriculture Secretary Sonny Perdue said he expects that U.S. meatpacking plants will “fully resume operations within a week to 10 days.” The comment came during a meeting with Iowa Gov. Kim Reynolds and President Trump, who said that the U.S. has “plenty of supply” of meat and argued that “within a week and a half, we’ll be in great shape. Maybe sooner,” he said.

So, we will see. There are strong notes of skepticism emerging in the press now, especially following news reports that highlighted the destruction of significant amounts of food products including hogs and milk. There also are stories of states and others pushing back on price gouging for eggs and other products.

Certainly, the U.S. food system is resilient as well as efficient as the President and Secretary noted, but the current tensions and threats are enormous and far reaching and should be watched closely by producers as the system accommodates, Washington Insider believes.

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