Washington Insider- Wednesday

Iowa Politics, Economics and Ethanol

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

Taiwan Election Candidate: US Pork Products Need Scrutiny

Taiwan must face and resolve issues about imports of U.S. pork products containing leanness-enhancing additives like ractopamine, and adopting strict check-ups would be a way to deal with that, Taiwan’s major opposition party presidential candidate Tsai Ing-wen said.

In a televised debate, Tsai, the Democratic Progressive Party chairwoman who is widely expected to win the presidency in mid-January, said pork imports must be scrutinized, from the pork product’s origin to its labelling for the domestic market.

Tsai said her government “will make 10 times” the effort to ensure there will be strict checkups on the products “to see if labels are honestly issued.” She added “This will be my way to deal with such issues.”

Regarding the standards for drugs like ractopamine, Tsai said Taiwan would take into account standards imposed by Japan and South Korea, where people’s dietary habits are similar to those in Taiwan.

Tsai said domestically produced pork products are not allowed to contain ractopamine. “So it is important to differentiate them from imported products. That way the superiority of our own pork products will be shown,” she said.

Responding to a local newspaper’s question about whether, if elected, she would allow imports of U.S. pork products with ractopamine in exchange for Taiwan’s inclusion in the US-led Trans-Pacific Partnership (TPP), Tsai said joining the TPP and other regional economic blocs is a serious issue for Taiwan because it inevitably will require local industries to adopt higher international standards. She said the government is obligated to boost the Taiwanese agricultural sector’s international competitiveness.

The other two candidates in the debate, Eric Chu of the ruling Chinese Nationalist Party and James Soong of the People First Party, firmly opposed the imports of U.S. pork products containing ractopamine. However, Tsai told a news conference after the debate that “it remains too early to predict” if Taiwan would open its market to U.S. pork products containing ractopamine if she is elected.

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Ethanol Exports to China a Record High in 2015

U.S. ethanol exports to China hit a record high in 2105, USDA said, attributing the increase to a trade mission to the Asian country in 2014.

“Our objective for every trade mission is to create new markets for farm products made in rural America,” USDA Under Secretary for Farm and Foreign Agricultural Services Michael Scuse said in a statement. “U.S. ethanol exports to China have jumped from $8 million to more than $86 million since our May 2014 visit. In October, we exported more ethanol to China than in the previous 10 years combined.”

According to data from FAS, U.S. exports of ethanol to China through the first 10 months of 2015 have reached $86.84 million. The previous record was 2013, when China imported $11.07 million worth of ethanol from the United States.

China is the largest customer for U.S. agricultural exports. According to USDA data, China has accounted for $15 billion of the United States’ $109 billion in agricultural product exports this year.

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Washington Insider: Iowa Politics, Economics and Ethanol

In a story credited to its Washington Bureau, the Minneapolis Star-Tribune wrote on Tuesday about the declining role of ethanol policy in Iowa’s politics. And, while there are substantial observations in the article, the demise of Iowa as an economic engine in a major farm state may have been reported a little early, critics say.

The Star-Tribune article leads with the somewhat old news that the changing economics of the motor fuels industry and attacks by environmentalists, among other things, have somewhat dimmed the luster of ethanol as a savior of U.S. agriculture. Then it asserts that, in addition, “corn-based ethanol finds itself threatened with a defection that was once unthinkable: Iowa voters.”

It bases this conclusion on the fact that Sen. Ted Cruz, the Republican presidential contender now ahead in polling in Iowa, is campaigning on an energy platform “that would have been a death wish in elections past.” Cruz is an unabashed opponent of giving ethanol any special government help. He derides it as the worst kind of central planning, the Strib says.

Then, the article introduces a somewhat startling view. It cites structural changes in farming “in a state where small family farms have given way to much bigger agribusinesses. Only a fraction of the state’s voters work in the corn industry these days.” It claims that “Voters here are just not that interested in ethanol anymore, according to Steffen Schmidt, a professor of political science at Iowa State University. "You don’t even hear the word come out the mouths of candidates much.”

It seems the view may come as a surprise to some pretty visable Iowans. For example, the Washington Post reports that Eric Branstad, the son of the popular Republican governor, is leading an industry-funded initiative called America’s Renewable Future. The group says it has hired 17 field staffers, more than some of the presidential campaigns have themselves, and already collected pledges from more than 50,000 people to make the issue a priority when they caucus. There are also radio ads, direct mail and robocalls.

And, in spite of the Star-Tribune’s view about the importance of the modern corn industry, the Post says that recognizing Cruz poses “an existential threat to the special benefits it receives from the government, the corn lobby is going all in to stop Cruz in Iowa.” And, a spokeswoman for America’s Renewable Future, Majda Sarki, told he Post that there’s still more than a month to defeat Cruz.

GOP operative Nick Ryan says he is working for both the Branstad group and is currently on TV with a separate $200,000 advertising campaign, from the so-called “Iowa Progress Project,” which attacks Cruz on the same issue. His commercial, running in the Sioux City market, slams Steve King, one of the most conservative members in the House, for endorsing Cruz. King, who represents an agriculture-heavy district, has supported the Renewable Fuels Standard.

“Cruz is the most anti-ethanol, anti-renewable fuel, of all the candidates,” the popular governor, Terry Branstad, told Bloomberg earlier this month. “They’ve got a whole army of people that are working on this … If they are able to stop the Cruz momentum, that will show the real clout of the renewables.” And, the Post says that the majority of Iowans disagree with Cruz on this issue, according to the latest Des Moines Register/Bloomberg poll. Some 61% of likely Republican caucus-goers say they support the RFS, while 34% oppose it. The numbers are even higher on the Democratic side, but the candidates all support the RFS, so the issue is moot.

This doesn’t sound like Iowans are no longer interested in renewables.

However, the Post agrees that there are other important issues at stake in Iowa, and that a Cruz win could make it “untenable for a Republican to embrace the RFS in 2020 and win over fiscal conservatives. Outside groups, and major donors, “will be able to cite Cruz’s victory and refuse to be as forgiving as they have historically of a politician breaking with free-market orthodoxy in the name of political exigency.”

The Post also notes that presidential primaries and elections are increasingly nationalized and turn less on parochial issues. National news and national talk radio hosts, not the Farm Bureau, set the agenda now. The Republican Party has become more conservative. “In this climate, with terrorism on the front burner, ethanol is less salient than it might have been.”

So, we will see. Ethanol issues have been important for a long time in Iowa, and according to polls, still are, so perhaps the Strib folks in D.C. should get back to the Corn Belt a little more often. Whether renewable fuel issues are important enough to bring down a leading candidate in the early going in the 2016 national election is a new question for Iowa, and remains to be seen. Certainly, it should be watched closely by producers as it emerges, Washington Insider believes.


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(GH/CZ)