In economic news this week:
- U.S. exporters’ secure rights to use common food names in Chilean market
- GDT index down slightly
- September FSA interest rates are lowered again
- Farmer sentiment took a nose dive in August
- USDA launches online debt consolidation tool
U.S. exporters’ secure rights to use common food names in Chilean market
The U.S. Dairy Export Council (USDEC), National Milk Producers Federation (NMPF) and the Consortium for Common Food Names (CCFN) commended the passage into law of commitments by the Chilean National Congress that safeguard the rights of U.S. cheese and meat exporters to use certain common names – such as “Parmesan” and “prosciutto” – to market and sell their products in the Chilean market.
The agreement came together following an exchange of letters between U.S. Trade Representative Katherine Tai and Chile’s undersecretary of international economic relations, Claudia Sanhueza, on June 21, which confirmed a mutual understanding and agreement that U.S. exporters will be able to continue to market their products in Chile using a number of common cheese and meat terms.
Certain provisions under the European Union (EU)-Chile trade agreement signed in December 2023 enabled the unfair treatment of U.S. meat and dairy products by abusing geographical indication protections. In response, CCFN, NMPF and USDEC worked closely with U.S. and Chilean government officials to address the U.S.-Chile Free Trade Agreement’s (FTA) threats to U.S. cheese and meat products.
Included in the agreement is a mutual understanding regarding “prior users” of certain cheese and meat terms in the market. For a limited number of products that the EU allowed to be grandfathered and that American exporters had exported to Chile prior to the updated FTA, all U.S. producers of those products will have the right to continue to use those terms in Chile. In addition, an extensive list of common names will also be protected for use in Chile for all U.S. producers. The exchange of letters is now integrated into the FTA between the two countries and is subject to its provisions, including the FTA’s enforcement measures.
According to the International Dairy Foods Association (IDFA), Chile makes up well over half of all U.S. cheese exports for the continent and is by far the largest U.S. cheese market in South America. This agreement protects over half of all U.S. dairy exports to Chile, which value exceeded $55 million in 2023.
The agreement will enter into force 90 days from the National Congress’ Sept. 3 approval.
GDT index down slightly
The price index of dairy product prices sold on the Global Dairy Trade (GDT) platform fell slightly by 0.4% in an auction held Sept. 3.
Compared to the previous auction, prices for individual product categories were mostly higher. Buttermilk powder was up 8.4% and mozzarella was up 7%. Posting smaller increases were skim milk powder at 4.5%, cheddar cheese at 0.9% and anhydrous milkfat at 0.7%. Lactose was down significantly by 8.9%, while whole milk powder and butter were down by less at 2.5% and 0.9%, respectively.
The GDT platform offers dairy products from several global companies: Fonterra (New Zealand), Darigold, Valley Milk and Dairy America (U.S.), Arla (Denmark), Arla Foods Ingredients (Denmark), BMI (Germany), Kerry Dairy (Ireland) and Solarec (Belgium).
The next GDT auction is Sept. 17.
September FSA interest rates are lowered again
The announced interest rates on loans through the USDA’s Farm Service Agency (FSA) decrease for the second month in a row. As we begin September 2024, interest rates for operating and ownership loans (compared to August) are as follows:
- Farm operating loans (direct): 5.25%, down from 5.375%
- Farm ownership loans (direct): 5.5%, down from 5.625%
- Farm ownership loans (direct, joint financing): 3.5%, down from 3.625%
- Farm ownership loans (down payment): 1.5%, down from 1.625%
- Emergency loan (amount of actual loss): 3.75%, unchanged
The FSA also offers guaranteed loans through commercial lenders at rates set by those lenders. For more information, producers can contact their local USDA Service Center.
Farmer sentiment took a nose dive in August
After a strong bounce back in July, farmer sentiment nose-dived in August due to weakening farm income prospects, according to the latest Purdue University/CME Group Ag Economy Barometer.
“This month’s decline in the barometer takes farmer sentiment back to the average level observed from fall 2015 to winter 2016, a period when farm incomes were declining sharply,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
He added, “The weakness in farmer sentiment could indicate that farmers expect this year’s farm income downturn to last for an extended period.”
Primarily cropping minded, the producers’ concerns about lower commodity prices nearly surpassed high input costs, which has been the top concern since February. Again, fewer respondents cited rising interest rates as a top concern.
The Ag Economy Barometer provides a monthly snapshot of farmer sentiment regarding the state of the agricultural economy. The survey collects responses from 400 producers whose annual market value of production is equal to or exceeds $500,000. Minimum targets by enterprise are as follows: 53% corn/soybeans, 14% wheat, 3% cotton, 19% beef cattle, 5% dairy and 6% hogs. Latest survey results, released Sept. 3, reflect ag producer outlooks as of Aug. 12-16.
USDA launches online debt consolidation tool
The USDA announced the launch of the debt consolidation tool, an innovative online tool available through Farmers.gov that allows agricultural producers to enter their farm operating debt and evaluate the potential savings that might be provided by obtaining a debt consolidation loan with USDA’s FSA or a local lender.
“Providing producers with options to structure their debt in a manner that affords them every opportunity to meet the goals of their agricultural operation is the best way to ensure the nation’s farmers and ranchers build financial equity and resilience,” said FSA Administrator Zach Ducheneaux.
A debt consolidation loan is a new loan used to pay off other existing operating loans or lines of credit that might have unreasonable rates and terms. By combining multiple eligible debts into a single, larger loan, borrowers may obtain more favorable payment terms such as a lower interest rate or lower payments. Consolidating debt may also provide farmers and ranchers additional cash flow flexibilities.
