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Advisor

Re: Trade Disruption Insurance?

Good question.  Folks are already thinking about that, especially at the USDA.  Budgetary exposure through current programs could send the expenditures upward, above anticipated numbers without a pullout.  New farm bill legislation will likely be adjusted to reflect this reality.

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Advisor

Re: Trade Disruption Insurance?

SW, I'm not sure where you get the idea that NAFTA was not an agricultural agreement. It was and still is an integral part if it. I was involved through our commodity group during negotiations and implementation. We went from less than 10 billion in exports to these two countries to almost 40 billion. It works for ag because we actively and aggressively promoted terms favorable to us. The auto groups were multi-national in their priorities which negated labor's concerns in talks. If you don't think a loss of 30 billion is a big deal if NAFTA is killed, you have deeper pockets than anyone.

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Honored Advisor

Re: Trade Disruption Insurance?

I know that is what we are told..... And it certainly does contain an agriculture section that primarily says we agree to try to eliminate subsidies but retain the right to impose what we need to impose.  It wouldn't have been ratified without it.  The wiki page on nafta has a good discussion in the "effect on"  Mexico section ..  It names meat exports as the agriculture section most improved by NAFTA... and it expresses how Mexican subsidies for corn still remain in spite of the agreement.

 

 The only commodity actually discussed in the Mexico Agriculture section and given much consideration is Raw sugar and Liquid sweeteners...

 

Throughout the document it is quite obvious that the intent was to open up access to the American markets for Mexican production.  

The whole Agriculture section is short and worth taking the time to read..... The seperate Mexico and Canadian sections are included.

 

https://www.nafta-sec-alena.org/Home/Texts-of-the-Agreement/North-American-Free-Trade-Agreement?mvid...

 

Wiki statement--s  

The overall effect of the Mexico–U.S. agricultural agreement is disputed. Mexico did not invest in the infrastructure necessary for competition, such as efficient railroads and highways.This resulted in more difficult living conditions for the country's poor. Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period.[38]

 

The U.S. had a trade surplus with NAFTA countries of $28.3 billion for services in 2009 and a trade deficit of $94.6 billion (36.4% annual increase) for goods in 2010. This trade deficit accounted for 26.8 percent of all U.S. goods trade deficit.[57] 

 I believe corn falls into the "goods" Section... not the services.

 

IMO........Agriculture was just a footnote in this deal.  But was a necessary one to project the idea of being good for US Trade.

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Veteran Advisor

Re: Trade Disruption Insurance?

Trade disruption Insurance, interesting concept,
So you are insuring your self from you know
Who's actions (or lack thereof).....and who
Brought forth such a comment, no other than
The hairy legged cheerleader from Iowa !!

Could it be someone saw the light ? (Other than
The approaching light from an oncoming
Semi ?)

Sorry folks, but the news about the ttp deal
Putting us at a $65 per ton disadvantage to
The Aussies or our neighbors to the north
Just took out any air left for the wheat people.
As I stated, today my quote is $3.75..

When that impact hits, that makes mine $1.80 to
$1.99 a bu.
All the while smallest acres for 100 years, and
Current crop conditions not good.

289....
Straight talk phone unlimited less than $50 a month
And they use Verizon towers

Don't know if you have nextech there or not, same
Deal

Several co including straight talk and other, have
Home phone replacement plan, $20 month, unlimited.

TV, hope have high speed internet, then get Hulu or
Similar, usually $30 month or less.

You must live near an Aldi

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Honored Advisor

Re: Trade Disruption Insurance?

I`m just asking opinions on a new farmbill and trying to be pragmatic. Would a "trade disruption insurance" be something that we should talk about or continue getting ripped off in trade deals or let the chips far where they may.  Now you Liberal Kansans apparently want the United States ripped off if you can sell wheat...well okay that is your opinions.  I want to see what is good for America as a whole and that is doing the right thing on trade and either providing a safety net to the 1% (farmers) of us that doing the right thing would potentially harm or let the chips fall where they may...but that is just my desire.

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Veteran Advisor

Re: Trade Disruption Insurance?

Dont we already have a "safety net" in place?  maybe not so much with ARC, but wouldn't  PLC  cover much of any further drop in price?Subject ot pmt. limits, of course.  So would a trade disruption insurance  allow double dipping?

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Veteran Advisor

Re: Trade Disruption Insurance?

The chips have already fallen , BIG BOY PANTS time has arrived at the last election -OR extreme - opt a ''smart -business option '' modeled after some 1,2,3,4 -New York City business man example might be a role model choice ---

 

Commander in Chief seems to be lightening up on T T P in Davos Switzerland as of yesterday ---

 

Hint from your consumer customers ( they are watching) - LEAVE your  $65,000.oo vehicle - & denali attitude at home when visiting your grandstand event talking about a bale out policy - please - not good for P.R. - trust me ---        

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Advisor

Re: Trade Disruption Insurance?

Are you asking that the treasury department budget that.in?

 

Or to duplicate crop insurance? Who would underwrite that?

 

And for what it’s worth, I can’t recall the NFO or any of those more left leaning ag groups ever proposing anything quite so radical.

 

0 margin leaving raw materials/commodities, once a pipe dream,  is being looked at as a given by the people who procure and process them. Chew on that. All that is left is to work out the details.

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Honored Advisor

Re: Trade Disruption Insurance?

We used to have $60 billion or whatever farmbills and if we want to be honest with ourselves that is what will be needed to keep that <10,000 acre farmer on the land, the ethanol/well timed drought markets gave us the illusion we could get our income from the market, but pastures, groves and golf courses plowed up says the bartender can`t trust the farmer with his car keys.   I don`t care, no kids of mine want to farm, I can coast 15yrs and then draw social security, but I am nostalgic, perhaps one of my grandkids would catch the farming bug and young people that do want to farm these days have my heart, I would support my tax money going to at least have an environment that would give them a shot.

 

The crop insurance as it stands now wouldn`t be underwritten without government subsidization a "add on" of trade disruption is a 50 cent risk plenty would jump on it if the government guaranteed a portion of it....but prices where they are now "sub COP" that 50 cents potential drop[ would be a TKO hit for many.  But judging by replies, the liberals are saying "Just keep NAFTA and we should bring back TPP, sure we get screwed, but at least they buy my wheat!".  Thing is when it gets to the point that it`s labeled a "farmer bailout" it`ll be:   a. too late and b. too expensive, so if we think we would want to do something, the 2018 farmbill would be the time to have the conversation.

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Honored Advisor

Re: Trade Disruption Insurance?

Two things that are assumed here I struggle with..... 

 

The assumption that the market fails producers when it goes down.....  I don't buy that   it is just a simple equation summarizing the relationship between supply and demand.  And honestly there are way too few buyers and way too few producers to limit manipulation by either side...

The failure falls to the producer when he does not respond when the market asks him to trim supply.  This speaks loudly to the lack of diversification among producers.

 

Second,  The continued assumption that the ag. department of the federal government can actually make a difference...overall.

Mike..... Thank you so much for sharing this twitter visual.........

 

Attachmen.jpg

 

Do I have answers.............. not easy ones...... This is a struggle of survival in an environment that is not responsive to farm economics, small town economics or even votes.

This visual is the hole we are in and it is cloudy overhead. 

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