Ag Insight

BY JIM ERICKSON

Trade war costs continue to mount

U.S. trade policies implemented five years ago continue today and their cost in the form of retaliatory tariffs that have sharply reduced this nation’s agricultural exports also continues to mount.

A review of the recent trade war history includes these key developments:

• Beginning in 2017, the United States initiated two trade actions. In April 2017, the U.S. Department of Commerce initiated an investigation under

Section 232 of the Trade Expansion Act of 1962 to determine whether aluminum and steel were being imported in such quantities or under such circumstances to affect U.S. national security. In August 2017, the U.S. Trade Representative initiated a

Section 301 investigation to determine whether

China’s policies related to intellectual property and technology transfer were actionable under U.S. trade law. As a result of the Section 232 investigation, the United States applied tariffs of 25% on steel imports and 10% on aluminum imports from all suppliers, although exceptions were made for certain countries. Additionally, the Section 301 investigation found China’s policies were actionable, and the United States imposed a 25% tariff on a broad range of goods from China.

• In 2018, the United States imposed tariffs on steel and aluminum imports from major trading partners and separate tariffs on imports from China.

• Six trading partners then imposed retaliatory tariffs: Canada, China, the European Union (EU, including the United Kingdom), India, Mexico, and Turkey imposed the levies on many U.S. exports, including a wide range of agricultural and food products.

• Losses from retaliatory tariffs were concentrated among Midwestern States, with the largest losses among producers of soybeans, sorghum and pork.

Among the states Iowa, Illinois, and Kansas have incurred the most lost revenues.

• Retaliatory tariffs on U.S. agricultural exports have been costly for many states and ultimately affect the revenue that U.S. farmers receive. ERS

researchers estimated $13.2 billion in revenues lost annually from 2018–19, with most losses felt by producers in the Midwest and by soybean producers. However, many retaliatory tariffs are still in place and continue to affect U.S. producers. Continued analysis is needed to assess the total costs of retaliatory tariffs to U.S. producers over time.

Food safety information available at research library

If you need the most current information on food safety, the National Agricultural Library’s Food Safety Research Information Office (FSRIO) is a resource with the latest food safety research.

To view additional information on what’s available, visit the website at https://www.nal.usda.gov/ fsrio. The FSRIO team can be contacted at fsrio@ usda.gov.

More funding for Local Ag Market Program

The U.S. Department of Agriculture (USDA) has announced supplemental American Rescue Plan Act funding for the Local Agriculture Market Program (LAMP). The program will receive a total of $130 million in supplemental American Rescue Plan (ARP) Act funding to promote competition and create more and better markets for local and regional food producers by expanding and strengthening opportunities to sell to institutions, such as universities, hospitals and settings operated by local, tribal and state governments.

The supplemental ARP funding is divided into $65 million for fiscal years 2022 and 2023 each.

In fiscal year 2022, LAMP will receive a total of $97 million in competitive grant funding to help local and regional food entities develop, coordinate and expand producer-to-consumer marketing, local and regional food markets and local food enterprises. The total includes the first $65 million of supplemental ARP funding and $32 million in funds provided through the 2018 Farm Bill.

Of the $97 million, LAMP’s Farmers Market and Local Food Promotion Program (FMLFPP) will receive $57 million and the Regional Food System Partnerships (RFSP) will receive $40 million.

Food labels – info for some, uncertainty for others

Food labels – such as labels that describe chicken as raised without antibiotics or using organic farming methods, canned tuna as sustainable, and beef as grass-fed – can inform consumers about animal-raising claims or other attributes that are difficult for most consumers to verify independently.

Research shows that consumers use label information to distinguish product characteristics and may be willing to pay a premium for certain product features.

But experimental evidence also finds that the willingness to pay for the label “grass-fed” on beef products is more pronounced for consumers who believe that the label signals food safety, suggesting consumers may not fully understand the meaning of the label.

To make informed product choices, consumers must be able to properly interpret food labels. In some cases, consumers may not fully understand a label’s meaning or a food label may conjure perceptions that lack scientific backing or are against scientific consensus. For example, consumers may assume a label about sustainable farming practices means the food is safer to eat, which may not be true. USDA, Economic Research Service (ERS) researchers recently carried out studies on food labels to better understand how different labels affect buying behavior.

In the United States, antibiotics are used to treat, control and prevent animal disease. However, the use of any antibiotics may lead to antibiotic resistance, which can in turn make both human and animal diseases difficult and costly to treat. In recent years, consumers have become increasingly concerned about antibiotic resistance and the use of antibiotics in the meat and poultry industry. These concerns have given rise to a market for meat and poultry that are “raised without antibiotics (RWA).” Consumer spending on RWA chicken grew considerably from 2012 to 2017, ERS study results concluded.

Another type of label that has emerged to communicate product characteristics are eco-labels, or environmental labels. These labels typically signal environmental stewardship practices in raising animals or sustainable harvesting practices. An increasing number of eco-labels are being used to market foods, such as USDA Organic, Rainforest Alliance and Marine Stewardship Council labels. While the growth in the number of eco-labels suggests they are in demand, it is not well understood how eco-labels may interact with other food labels to affect consumer behavior.

Grass-fed is another production claim that is sometimes labeled on beef products. Another study examined the impact of this information on consumer’s perception of the product’s safety.

Overall, most respondents perceived low food safety risk from eating beef, as only about one-third reported “a moderate amount” to “a great deal” of risk. Nearly 40% believed grass-fed is safer, compared to conventional beef; in contrast, nearly 50% believed organic beef is safer. On average, consumers were willing to pay around $1 per pound more for grass-fed and organic beef compared to conventional grain-fed beef.

The use of food labels such as RWA and eco-labels to signal production practices has become common. These labels signal how foods are produced and can impact what consumers buy and how businesses and retailers market products. While food labels serve a role in informing consumers about features of the products, the manner in which labels are interpreted and used remains an open topic for additional research.

Another type of label that has emerged to communicate product characteristics are eco-labels, or environmental labels. These labels typically signal environmental stewardship practices in raising animals or sustainable harvesting practices. An increasing number of eco-labels are being used to market foods, such as USDA Organic, Rainforest Alliance and Marine Stewardship Council labels.

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