Economic recovery depends on ‘the path of the virus’ — Fed official
The U.S. recovery from the pandemic will depend in part on success in managing the coronavirus through steps such as therapeutics and a vaccine, the president of the Kansas City Federal Reserve Bank told an agribusiness conference on Monday. Also at the meeting, two Trump administration officials attacked the EU Farm-to-Fork policy as a barrier to U.S. farm chemicals and biotechnology.
“The good news is that an economic recovery is underway” and growing more rapidly than many analysts expected, said president Esther George of the Kansas City Fed. Consumer spending has regained its footing, unemployment is dropping rapidly, and inflation is minimal. “So all in all, the outlook is positive but that, of course, depends on how the path of the virus goes.
“And in our region, we will continue to keep a close eye on how businesses, how households and on how important sectors to us like the ag sector are experiencing this recovery,” George said at the annual Outlook Forum sponsored by the Agricultural Business Council of Kansas City.
George credited the ‘”general resiliency” of the economy for part of the recovery, aided by fiscal stimulus from Congress, the White House, and the Federal Reserve, and by the growing knowledge of how to manage the coronavirus, which has allowed business activity to pick up. The Fed’s Open Market Committee, which sets interest rates, “has said in its statements over its past few meetings that how goes the virus will be how the economy” will proceed. “To the extent there are therapeutics, there are better ways to manage the virus, that will be a positive. To the extent there is a vaccine that the public will begin to adopt at some point, that too will begin to allow the economy to resume activities that have been pulled back on, up until now.”
Deputy Agriculture Secretary Steve Censky and Gregg Doud, the U.S. chief agricultural negotiator, panned the Farm-to-Fork strategy adopted by the European Commission on May 20 as a retreat from full-throttle food production. Farm-to-Fork calls for a 50% reduction in the use of pesticides, a 20% cut in fertilizer use, a 50% reduction in sales of antibiotics for food-bearing animals and aquaculture, and bringing 25% of farmland under organic practices.
By contrast, the United States introduced genetically engineered crops in the mid-1990s and relies on highly mechanized, high-volume food production, with use of synthetic fertilizers and pesticides. The EU and the United States have squabbled for decades over agricultural practices with the EU skeptical of biotech. Agriculture is a stumbling block in transatlantic trade negotiations.
“We welcome and want to bring on innovation and new technologies. In the EU, their strategy is about taking technologies away from farmers, taking crop protection products away from farmers, about taking animal therapy drugs away from farmers,” said Censky. Doud ridiculed the EU policy as “farm to empty fork.” Both said the EU might demand other countries adopt its practices if they want to sell food in Europe. That would create a roadblock to U.S. seeds, chemicals, and foods, they said.
“The question is whether our customers (around the world) are going to impose the same conditions,” said former agriculture secretary Tom Vilsack, now the head of the U.S. Dairy Export Council. The challenge for the United States is to present a “compelling alternative” of the safety and high quality of its goods, he said via the internet in the closing presentation of the conference.
USDA chief economist Rob Johansson said payments from the newly announced $14 billion round of coronavirus aid to farmers will run into the new year. Record amounts of farm subsidies, more than $32 billion, are being paid this year. Most of the money comes from stopgap programs created by the Trump administration that are due to expire at the end of the year. Farm income would plunge in 2021 without the payments, which will account for 36% of farm income this year.
An open question among farmers is “how do we get back to getting our money from the marketplace,” said John Newton, chief economist for the American Farm Bureau Federation.