Mr. Trump’s Press Secretary Sean Spicer says the president was thinking about financing his long-promised southern border wall with a 20 percent tax on “imports from deficit countries, like Mexico.”
Mexico is not waiting to react.
Dairy Market News reports some Mexican buyers now prefer to source their skim and nonfat dry milk “from other countries aside from the United States. In addition, Mexican skim milk powder production has been stronger compared to a couple weeks ago.” Mexico accounted for 43 percent of U.S. nonfat dry milk and skim milk powder exports in 2016.
Visalia-based California Dairies cooperative manufactures 724 million pounds (328,400 metric tons) of milk powder or 42 percent of all the milk powder produced in the United States. Almost all is exported.
Trade figures show as recently as October that Mexico was the buyer of about half of US dry milk exports – 28,537 tons – the most ever.
After the onslaught of presidential tweets, Mexican buyers will most likely look to Europe to meet their milk powder needs, fear some dairy farmers. The EU has plenty of product in storage.
A recent NPR report notes “Mexico is the No. 1 buyer of U.S. dairy products in the world,” according to John Wilson, senior vice president of Dairy Farmers of America, a cooperative with 14,000 dairy farmer members including here in the Valley. Wilson says the U.S. exports about $500 million worth of milk powder to Mexico annually – up more than 10 times from 20 years ago.
The NPR report says NAFTA allows products to enter Mexico duty-free and makes American commodities just slightly cheaper than the competition, such as milk powder from rival New Zealand.
“Pennies do matter in the milk business,” Wilson says. “It’s a very competitive business worldwide, and the presence or absence of a tariff can make or break a deal.”
“This is an issue that could come back to bite us” says Kings County dairyman Joaquin Contente. Contente suggests dairymen contact Congressman Devin Nunes since he seems to have a relationship with Trump. Both he and Congressman Valadao are dairymen.
“Otherwise this could develop into a real tit for tat” worries Contente. Mexico takes in about one-fourth of all U.S. milk exports including increased shipments of cheese.
Under threats to possibly taxing imports from Mexico or renegotiating NAFTA, Mexican officials have threatened to retaliate against American exports besides milk, including Texas beef, Iowa pork and Midwest corn and soybeans. Mexico imported 13.3 million metric tons of U.S. corn in 2015-16 – about 28 percent of U.S. corn exports. We export about a third of our pork to Mexico.
In addition, California fruit and vegetables growers who have set up farms in Mexico are concerned they will be caught up in any cross-border trade war. Production of fruit and vegetables in Mexico and shipped to the U.S. now tops $12 billion.
Last time there was a short-lived trade war with Mexico, the U.S. did not allow Mexican trucks into the country and Mexico slapped a tough tariff on U.S. tomatoes. Then the U.S. allowed the trucks in.
There is hope some back channel negotiating over NAFTA will help lower the political temperature that could help ease ag loses on this side of the border.
“We sure hope to avoid a trade war,” says Western United Dairymen leader Tom Barcellos. “Everyone needs to flex their muscle and then sit down and work it out.”
Kings River flood release underway
With the continuing series of storms over the past few weeks, Pine Flat Dam is releasing about 5,000 cubic feet per second from the three-quarters full reservoir this week but only about half of that water is being used for recharge within the district. That is according to Ed Dittenbir, hydrologist for the Kings River Water Association: ”We are spreading about 2,700 cfs, but the rest of the 5,000 cfs is heading out the north fork to Mendota Pool.”
There was a flood advisory last week over concerns there could be a break in a levee where the San Joaquin and Kings rivers meet in Fresno County.
Dittenbir says the district and farmers do not have the infrastructure to take more water even though “groundwater recharge is the future.”
Kaweah Delta Water Conservation District Mark Larsen says this year would be the first since 2011 that will allow some groundwater recovery after several years of intensive pumping by farmers.
In a wet year like this one, it is possible that parts of the district “could see a groundwater level recovery of 10 to 20 feet” estimates Larsen.
While some floodwater on the Kings is being lost to sea, in the old lakebed they are still taking Kaweah and Tule water and asking for more, says Larsen.
Water engineer Dennis Keller says the recovery happens over time not just because of all the rain but the expected delivery of surface water to the region allowing the groundwater to rest for a while.
With Shasta, Millerton, Pine Flat and San Luis reservoirs all full this year, there should be cheap and ample surface water over the hot summer that should help make up for years of drought.
“This is a great time to put water back in the bank,” adds Keller.
The good news is the storms are trending colder as we go forward so precipitation falls as snow instead of rain that threatens more flooding like we have seen in recent warm atmospheric river events, nine of them so far this year.
As far as recharge is concerned, Kings County tomato grower Brad Johns says he is “sinking 275 cfs today into the south fork of the Kings next to his land and it’s heading straight down.”
”We are recharging beyond everyone’s dreams right now.”