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Issues and Opportunities

By former USDA Secretary John R. Block.

When President Trump announced a new trade agreement with Canada and Mexico, he said: “It is a very big deal for farmers. The new NAFTA, which is USMCA, has a very good ring. The ag industry across the country applauds the deal.”

The deal is not done yet. Congress must approve. There would be a lot of disappointment if we could not get that done. The U.S. Trade Office says the agreement will provide new access for U.S. products, including fluid milk, cream, butter, cheese, and other dairy products; also, chickens and eggs. All tariffs on Ag products between the U.S. and Canada will be set at Zero. American Farm Bureau President Zippy Duvall called USMCA “a clear victory for our farmers.”

Another victory for U.S. farmers last week was President Trump’s announcement to allow 15% ethanol in our fuel the year-round. Pull into the gas station now and all the pumps say 10% ethanol. It’s easy to imagine the increase in sales if those pumps said 15% ethanol. Today, 20 states don’t have any gas stations that sell E-15. However, if they could sell it year-round, there might be a lot more gas pumps with 15% ethanol. After all, it would be cheaper than 10% ethanol fuel.

President Trump wants to move fast so we can make E-15 available next summer. It is no surprise but big oil and environmental groups are already planning their legal challenges. The oil industry certainly would not want to see corn ethanol stealing another 5% of their gasoline market.

Here is another corn issue I just read about this week. In Mexico, there is a giant corn that grows 16 feet tall and is able to fix nitrogen. We spend a fortune on nitrogen to feed our corn crop. Our corn will not pull in nitrogen from the air so we have to buy it. Soybeans are able to fix nitrogen, which means we don’t have to apply nitrogen to our soybean fields. Needless to say, it will take a long time to breed and develop this Mexican corn to compete with the hybrids we plant today.

But if we could develop a corn that would provide its own nitrogen, that would be worth spending time and money.

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, just go on-line to www.johnblockreports.com.

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