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April 2015, Volume 21, Number 2

US: Corn, Catfish, Trade

Corn. Net farm income for 2015 is projected to be $74 billion, down from $108 billion in 2014. One reason is the falling price of corn, the most valuable US crop, which dropped from over $8 a bushel in 2012 to less than $4 a bushel in 2015. US corn farmers harvested record crops in 2013 and 2014, giving the US its largest corn stockpiles in three decades. US farmers are expected to plant 89 million acres of corn and 85 million acres of soybeans in 2015.

Global soybean production was at record levels in 2014, and inventories of wheat and sugar are also at high levels. There are also large inventories of most raw materials, explaining why prices for farm goods and minerals have fallen by an average 25 percent between spring 2014 and 2015.

The US and many other industrial countries have renewable fuel mandates that require gasoline to include a share of ethanol derived from corn or sugar. The World Resources Institute in January 2015 criticized biofuel mandates, concluding that turning plant matter into liquid fuel or electricity is so inefficient that it can never compete with fossil fuels but can raise food prices for the poor.

The US diverts at least a third of its corn crop to ethanol, which provides about six percent of US gasoline. The consensus is that US ethanol policy has not reduced emissions of carbon dioxide but has raised food prices, and that biofuels are an inefficient way to convert sunlight to fuel.

Bees. There are about 2.5 million honey-producing bee colonies in the US, down from six million in the 1940s. The number is dropping in part because of colony collapse disorder, which involves adult bees disappearing from their hives, leaving behind juvenile bees, the queen and honey. It is not yet clear what causes CCD, but most likely the causes are a combination of parasites, pesticides and poor nutrition.

California depends on bees to pollinate crops such as almonds and cherries. Most of the state's beekeepers are in their late 50s, the same age as the state's farmers, and some are quitting because many are losing 30 percent of their bees each winter, significantly above the usual 20 percent die-off rate.

Catfish. US catfish farmers, in a bid to reduce competition from Chinese and Vietnamese catfish imports, persuaded Congress to move inspections of catfish processors from the Food and Drug Administration, which inspects sporadically, to USDA, which inspects meat and poultry processing plants daily. US catfish production has fallen by half since 2008 due to low-cost imports and the rising price of corn, the major feed.

Imported catfish are 75 percent of US consumption, and the USDA hoped that more rigorous USDA inspections would raise costs for foreign competitors. However, foreign catfish are produced under relatively modern methods, so that USDA inspections may have the unintended effect of raising costs for US producers and driving some out of business.

Vietnamese catfish, known as pangasius and often sold in restaurants as basa or swai, cannot be called catfish in the US. Most pangasius is from the Mekong River Delta, where it is raised in fresh water and shipped frozen to the US.

Americans consumed an average 3.6 pounds of shrimp in 2013, followed by 2.7 pounds of canned tuna; 2.3 pounds of salmon; 1.4 pounds of Pollock; 1.2 pounds of tilapia; and 0.8 pounds of pangasius, compared to 0.6 pounds of US catfish.

Trade. The US is a net food exporter, so farmers generally welcome freer trade. The Trans-Pacific Partnership would lower trade barriers between 12 Pacific Rim countries that account for 40 percent of global trade, including the US and Japan.

Republicans generally support freer trade, while many Congressional Democrats oppose free-trade agreements (FTAs) that they believe may speed growth but at the expense of more inequality. FTAs are often oversold by their supporters as cures for poverty, slow job growth, and other problems and, when they do not accomplish as much, are blamed for economic woes.

Congressional Republicans are trying to secure fast-track negotiating authority for President Obama so that the 12-nation Trans-Pacific Partnership can be completed in 2015. Fast track means that the trade agreement presented to Congress must be approved or rejected; it cannot be amended. The House last approved fast track in 2002, and by a vote of 215-212.

US unions oppose TPP, arguing that freer trade displaces US workers in manufacturing and other industries that offer good jobs. Just as President Clinton added labor and environmental side agreements to NAFTA to win the support of some Democrats, President Obama is promising tough labor standards to win support for TPP. However, US labor protections are sometimes weaker than those of its trading partners, so that bringing them "up" to US standards may not have much effect.

A bipartisan group of 230 in the House was trying in winter 2015 to require fast-track negotiating authority to include enforcement mechanisms to penalize foreign governments that reduce the value of their currency to spur exports, a frequent criticism of China. Some say that currency manipulation may be far more effective in distorting trade than the import tariffs and export subsidies.

The global currency market is biased toward a strong dollar, the world's reserve currency, which can make US goods more expensive abroad and foreign goods cheaper in the US. If those in Congress win, US firms would be able to petition for relief from foreign competitors that benefit from currency manipulation, setting off mandatory Commerce Department investigations and possibly extra duties to compensate for artificially depressed currencies.