Louisiana could take dramatic hit from Chinese tariffs

Newell Normand
Friday, July 20th

Newell talks to Louisiana Dept. of Agriculture and Forestry Commissioner Dr. Mike Strain about what the impact of Chinese tariffs will be on our local and regional economies


Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

Demoted Owens a beautiful morning thank god it's fri day we got a great show for you today a lot going on cheap tricks planned out of the sign or Saturday night at 730. If you look at the something fun tales of the cocktail is and town this weekend so many different things going on with that is well. Piero graces and healthy bay are terror waterways Saturday 10 AM to 6 PM live entertainment food all content thing the Gretna four. Farmers market Saturday as well. 830 to 1230 and the list goes on and on a pull that up when he advocate. And gambit there are so many different activities. I mean it must be sixteen pages long of what's cool all around the cities I mean week. So I can. Consider us. Those lucky lot to choose from a lot of different things going on it ought to be a lot of fun we got a great show today will have no felt a fraud in the last hour in the second hour we're gonna talk to. The new Jefferson Parish schools superintendent has been here several months now doctor Cade. Broadly comes from DeSoto parish where he made incredible gains. In their testing scores in a lot of what they do. In the school system there and he's now starting his first full school year in less than a month and we'll talk to him about the challenges of being a school superintendent. And on line joining us at the present time is doctor Mike strain commissioner Louisiana department of agriculture and forestry. And Mike is with us to talk about tariffs and what they're going to do to our Louisiana products that we shipped overseas welcome to the show my. Oh. Doing great always good have you on the show this our first time looking forward to would. You know have a lot of respect for the job that you do you get around quite a bit I don't know when you when you get home at all. But you know representing the farmers in so many other folks that are you know ancillary to the farming industry and agriculture in forestry big big time industry in Louisiana. It is and if you look you know we're talking about export you know up important fact distort what. But we can export all of my different products worldwide cop for 20%. Of the State's gross domestic product. Again export all I wanna settle Louisiana's GE the so we all maritime. State and most people really don't think about that we gamut as one of the top export markets. You know actually in the world war topped with an apprentice is the largest. Tonnage. Port in the world. And so exports and markets. You know what's called a world wide is very important week an analyst for what we raised in if you look at the value we've got to exports and wanna seventeen. Top 56 billion dollars you look at the value of the agricultural production and exports from the weekend we export. Abroad and across the United States from Louisiana eight point three billion dollars up thirteen billion in production. So the worldwide markets all of these issues or apps are very critical and make a significant difference in the overall economy of the entire state. Mike has been some question have we have all of the tariffs been put in place as of yet I think they have been on steel and aluminum. They're still seems to be some push pull Tug O war on agricultural products is that true or is. Absolutely you're absolutely on the mark. Number the caps haven't placed all on steel there are a number of different means of processes they go through. And then up between each country and remember you know we're dealing with Arabs now ad on multiple levels you know China Canada. Mexico. You know European Union. As so many different countries all of this is in motion simultaneously. And so each state in the each nation you know and there's. A lot a decision making that has to go on as to the overall effect on the them on the domestic side panel formed cited what rep questions will be. So this is like a very large. Chess game if you think about it but it's almost like playing chess. On the on the table but sizeable football field and multiple levels of this everything in motion all about negotiators were there. This is moving you know pretty rapidly and I think it's going to move rapidly. And but I think what we've seen now in agricultural markets opened with we found the bottom this year actually if you look at the trading in the last two weeks. The markets have been advancing in a positive fashion after taking the initial. Our decline which was pretty significant you know if you go back you know just three months to to look at soybeans three months ago between then and now. You know that tumbled more than two dollars and corn down bumps are in almost bowed down in half but distorted to move forward there's some key indices that are going on what watching. Very closely public of what's happened would you ever you have worldwide disruption which is what we have now. There is generally a decrease in supply. Because less crops getting planted in actually as we speak. We were gonna Arab world wide a severe reduction in the amount of corn that available for use or next year. And even though the corner down from like 343. You could see an immediate spike upwards. What cease trade negotiations have been concluded. So Mike when we think about you know the amount of soy that we export and in this whole problem which stems from China's export to US 505 billion US exports to China. 130 billion dollars. You know somewhere around 370 saw the 365. Billion dollar trade deficit for the progress. And that in a love the analogy of the chessboard when we think about soy hear it in his state is there an alternative crop. If we have a decrease in acreage was sort that we can. Moved to. Well whenever you look what former student there are always moving towards a prop that will better help the cash flow however. If you look at what soybeans and corn you rotation soybeans. Corn or cotton. And cotton acreage or is is actually growing a little bit but over the if you look at the you know the five year average. You know will probably have about 200000 acres of cotton cotton. Prices have been a little bit better. They have went down a bit but there's still you know. That was strongly about 88 cents was statement 92. The thing about soybeans we've been moving toward soybeans for years the word about one point two million acres of soybeans. So I mean even at the current price you know in today's market of about 8061. Cents. If you look at court coins at 351. And so we're gonna seep probably less corn acres and more soybean acres. Because it's soybeans. You know it's still potentially more profitable than. Or and so can you switch rapidly. But does it again to what I mean I don't know I don't think we're gonna see more corn acres I think world wide is going to be a record deficit which could result next year. But also for the first time in the United States will probably gonna have more soybeans. And corn. Planted. That being said you know more than 60%. Of the soybeans that are produced. In the United States or exported. Majority of that to China. Overall in the United States won and three acres of America's agricultural production its export all part shorts. And most of our core a lot of according to our outside Louisiana is used in our own ethanol emerald street lots of feed livestock. Most corner in the weeds out of that which is not used Barak chicken farms is exports were down river so that you can't really switch. Very large you know when you talk about one point two million acres. To go immediately to another crop. I don't think we're gonna say that I think are so we receive less soybean acres but I think they're going to be back and so would be. So then. A dangerous proposition of taken acreage out of the stream of commerce. Yes yes that's what happens I've detected a good job stream of commerce. One you know really hard to hold in Maine tables markets but think about this. The amount of hornet in beams and all the food products world why. There has not a lot of extra product available worldwide so what we call. The amount in stock. To mop its use stocks these ratio is very tight. So you know if China does what I gonna buy American means barb from Brazil. Well whoever was I'm from Brazil and not the bottom for month that's simply not that much. Extra available product in the world wide markets so but the thing about the markets but about the prices of went about agriculture business everything. Requires stability. You and I are old enough that we remember how many years was the market that we're gonna trade prosperity for peace. Peace for prosperity. On all the strike negotiations. And now we're at a point where that we must right the ship we must have fair. Level freight across the board because in the long term. The economy in the United States you know we are eight net deficit nation now in the it's for our federal government. We have to straighten us that we straighten it out unity is very positive impact not only in article two but all sectors. Of the American economy so right now yes it is called them some thanks. How will working hard I've visited with the the USDA head of the forms services latency. Bill northern as a very good friend among a former commissioner is working with doctors Sonny Purdue's is the secretary of agriculture United States. To try to figure out a way that we can help the farmers. If the price drops slow and up to where they can't cash flow this year. And a lot of discussion in the assigned discussion other countries are having. That take money from the task at being collected and put it back in the hands. Of reformers the help offset that price differential to we can get this straight but I think we're gonna I really think we're gonna get this straight before the November elections. We're talking a doctor might strained commissioner Louisiana department of agriculture and forestry. Why do you think that we have you know the economists are kind of divided on this did we absolutely reached the point of diminishing return. And it did the that trumps timing on this issue was key and it had to happen now. Well it had to happen for a number of reasons number one you talk about that trade deficit it has been as high as 600 billion dollars a year in annual trade deficit with China. Number two. Odd journalists openly. Taking our intellectual property taken a product reverse engineering of them. And selling them and it's been a big gate the issue and it's kind of. And actually I'm in the agricultural industry as well this current. You know you know if you look at Johnny Crawford that are with their prop fish. That would then went and they were brought to Chinatown is seven of them back to us but when you look at that. It's critical item if you look at where we're at United States our economy as a pro improving yeah. The low unemployment rate is 75 years yes we expect I'd GDP it's 3% but China's GDP is going to be at five point one. In the is that 55 point one. We have to straighten it south and for the president's campaign pledge we can expand to go to vote properly it would need the support the president. What he's doing a great deal of courage. Stand up and telling the world that we or going to have a level playing field. If we wanna send beef to Japan as a political percent tapped before all this start. Australia it's up 14%. But what type all of their cars I mean it needs to be fair. And honest across the board and we can all play that Americans fought and compete with anyone American manufactured and compete with anyone without straight trading. Have to be expire. And they have to be away that if they have been the issue with a shipment of whatever. That gave can be immediate all corporation the deal of that as to why is that important for instance. If we sent a low proper rights to the European Union. And handle on the route bears say the price differential changes and it would it is so and not in the favor of the eight year. So that we know we aren't a part per billion of liberty ranging problem like that. He that we get the discount you gotta go sell out somewhere else all that's gotta stop we need to have. You know when you are when you agreed to the shipment you'll greats of the shipment we have to have arbitration. And then again it's got to be fair and the quality is got to be the same and that's another big deal would be able to food safety modernization act. Hey Mike I gotta get to a break can you stay with us through amber all right we got doctor Mike strain commissioner Louisiana department of agriculture and forestry and I knew that he would have the information that we were looking for an already. I'm convinced that he has a we're gonna talk about shipping. And about political capital because this is not an easy thing to take on politically when we return we'll be right back this is Nolan WW. Rebecca we're talking to doctor Mike strain commissioner of Louisiana department of agriculture and forestry and Mike thanks again for joining us and you have had a busy schedule I waited a week to get chew on issue. I know I'm OK. But it's great to be busy I would know how to handle it any other way. Let me you know this. As I said before this terror thing is really been a portion of Poland has a lot of lawmakers in congress that I think are experiencing a lot of angst and anxiety and I Pastor Wright before we went to the break where that this was the point of diminishing return for a us. No president actually likes to really engage in this because the there's not a lot of there's not a huge political upside lot of political capital consumed. But this is kind of the typical. Worldwide. Caught off your nose to spite your face move because. The other side of the equation China's hurting as well and and all the other countries that we've got this trade dispute with correct. That's Greg and if you look yet the administration is spending a tremendous amount of political capital. And the gain from this will be years from now you know we see a little meeting gain actually but the gains will be over the next 25 years. Remember these trade negotiations to look at NAFTA. That was started thirty years ago we've been in it over point five years. But take a great deal political courage but we know in the long term this is what we must do. And so it's about the long term commitment and not have to you know give kudos to the president and to the administration. Because they are under a phenomenal amount repression not that we need to support the administration that has the path we are on. This is the path we must take and that's as we cannot back down we have to stand strong work together and negotiate. Forward. And then come out with you know some so some good trade in if you look in the free trade agreement you know if you look. The majority of our trade is with the countries we have these free trade agreements where. And so it is important that you could set back not spend political capital which you don't get anything done. And so you know all of us you know you and I who been in politics a long time. That you know you build political capital on top what you have to stand up suspended use truly believe when you ought that this is the right move. And you know act tell everybody in everybody needs to read the book profiles in courage written by. John F. Kennedy talks about those congressmen and senators that did the right thing even though it wasn't necessarily politically popular. And that and you know in the growth of this country. You've talked to a lot of folks both thank you know domestically and non domestic about the movement of the agricultural products what are you hearing from. Not only around the country but internationally. Well internationally everyone knows we need to get this behind us and move forward there's a growing demand for our products around the world if you think about where we Iraq. We know that we have to produce more room between now and 2050 that's been thirty to grow and see. And we have some that don't. We also know that the increase in rate of production of these products is lagging behind it being pretty in growth population. To all have to work together and get this behind this as well and one of the things that you know food instability. But against the bill because it is the greatest. Social instability and all of the countries involved China have to make this work in the has got to make this work we have to make this work. And not think the good news is is that I don't think bigamy anymore pressure or any administration I've met personally. What members. The Chinese delegation met personally with members you know from Mexico up that doubles terms. Mike I've got another break he Caroline mistake. All right we're gonna stay would doctor Mike strain commissioner Louisiana department of agriculture and forestry got to get to this breaks CBS news will be right back stay with this this is new rule on dividend Leo. We're back door talking to doctor Mike strain commissioner of the Louisiana department of agriculture. And forestry and folks if you don't think that this is an important job he's got the Paul's. On two of the major industries in this state agriculture and the forestry industry. And it says he pointed out earlier the state GDP is really heavily reliant on both of those. And Mike is we were talking about joke geared conversations with both domestic players as well as non domestic players. What are the domestic guys say. Well I've domestic guys really put pressure on that we need to get this resolved. Because one we're looking at contracts for next year so that's where the rubber could hit the road would be the 2019 crops. And you know so we we know where we're going you know we see you know the prices. And the prices they'll announce very hard performer to make a profit that the core prices also. We're concerned about it is that ship in overall trade affect what have all of our ports. If you look at forensic report about rich here. And each sport every ship that comes in leads at least a million dollars. Just in the economy of the show up. And every ship that leaves leaves takes started about fifty million about what a product and so as so much about GDP quote sort of right GDP depends on exports. That is critical. And again and support stop we examined and it's important warlords and the ports below the walls of civil order sports systems in the world. So this is absolutely critical ownership and our exports. Can mean a tremendous change in the overall number of jobs if you look at the number of jobs. Estimated a 155000. Jobs were supported by a Louisiana export ports. I'll exports and that's the point that being number and so it's a tremendous part of our economy. So there's pressure and of course we're communicating with everyone. In opposite phone calls on the way here this morning talk about a number of a major grain fields and brokers trying to you know forgot there's ways we can expedite this. And again we are working on all of our negotiators on the Ted McGinley personally have served with him. He's with the US GAO reform export service. You know on the flight horizons. Trade ambassador or other working diligently but the pressure is on us. Yet it's done. It's okay we support the administration we know we have to do that but we need to get it done and we also need to see it is they fail safe coming in place. And case for some reason we do not get it done to those out. Yeah Andy shipping schedules that you may or may not know the answer to this question how far out in advance student. Do they validate those. Well when you start looking at contracts. You know when you where we're booking stop and it would mean ninety you know all of that is way in advance. And we sell grain and I agree in advance and so a lot of those contracts you know for those ships when these start looking at the trends. And one of the things we have seen is that China is not moving all of with a significant number of contracts going and that's when he nineteen. What happens. If you would shippers look at this they're going to be look and see where that's going associates can't stand still an average ship just standing still. It's around 45 to 65000 miles today just to stand still. Announced that medium sized ship not the great big ships. And so everyone is always we all looking forward if you look at what goes on on the boards of trade you would see that price changes in the commodities this year from about eight weeks. How all the time and so all of that it is backed Davis and everything isn't a constant motion what he's talking about containers. Rail park weather go to oil agricultural products. Where the ships off the price of the shipping whether or not we can get to containers on the ships from the ports in the war council who supports Alabama. Off Florida so everything is as long term you don't vote shipping quickly. Let me just ask you this. That unit. Put forth that this situation. Argentina's had a drought so they they have a depressed soybean. Yield right now correct. And Brazil the other folks think they can. They don't really have the additional acreage. Available. So when you think of that as it relates to shipping what's the alternative product that China goes to. Well soybeans is that number one source of protein. You know for for seeds you know for animal fees and others. So when you don't look at where they go picking go to Brazil Argentina. It's it's it is rather limited you know there's some parts of the Ukraine produce something like Milo and other products eat. You know you can have a ship he can't get been GAAP usable products. And at the end of the day though like in this limited supply and and the thing about Brazil. You know it's probably don't have a lot of products have been really rainy they can't get the product now they have infrastructure. Issues. And so one of the things we talked about court this morning. Is in the fact that we know the world wide are all that's available is markedly reduced. And I think you're going to see that immediately if you watch in the court in all on the overtake its move enough because now the world realizing. That's not there in the same thick and absorbent so what it happened immediately. You know if we don't have a product available Eva from drought or from lack of plants in worldwide lack planting. Then as we move into the next GA you concede the value of those commodities surprise those commodities literally skyrocket. And then it then again that creates instability in the whole system and that's why it's against support we try to do that but everything's worldwide. And if you look at China you know China is what we're gonna impose these tariffs on American products. The cap is imposed and paid for but if they are in the product who buy the product Chinese Government. Who collects attack the Chinese Government. So if you look at that hour Q with the Chinese with the Communist country it's a little bit different candidates were private capitalist. Right and you know this is kind of the sort that feed goes up the beat goes up there's kind of that old song the bones connected to delay. Yes I op commodities. Those price ships can be shipped can be rapid and dramatic. And again because there's not a lot in stories of these or perishable products. And you know just the amount that's available the amount that's produced is very very very tight and cannot remain stored indefinitely. And if you look at also talk talk about these differences affect flop or perhaps pounds of grain. Profound debate. So the price of these that is leverage. You know multiple times by the change in the price of the growing. And so you know each each particular product the amount of statesmanship and bright. Depends on the supply ship of the speed that goes in there and those. And that is multiplied depending on whether it's. Beef pork poultry. Well like I knew that and was confident that you're going to be able to make sense of this for us and bring it down to a level that we can all understand this whole thing is not very nimble. And is very fragile. When you think about the overall system. It is it is and that's why we have those diplomats in place they're very good at what they do. And not messes everybody needs to sit down that's permanent stop and let's get emotion just like that deals with Cuba. You know we need to come and and move forward we are now selling pesticides. Seeds and fertilizers and other things to it will we need to. Chases that what we can sell them food but that's a tremendous Markovic to embrace market is critical to our Louisiana cop. All Roddy docked in my extra a conditional Louisiana department of agriculture and forestry thanks so much for joining us and have a great weekend and really appreciate it. We'll be right back and questions to 60187. Near Texas at 87887. And we just have some breaking news as well. On some tariffs and we'll talk about that when we return this is new rule on debit audio. All new blue or on our opinion polls show the tariffs placed on Chinese goods being lifted 84% of the respondents say no. When attacks on doctor Mike strain what a capable man color me impressed I was very impressed and I that was my expectation I mean he really does have his finger on the pulse of what's going on in the agricultural. And forestry business in Louisiana and we are well represented there. But the text says it funny might never mentioned government back price insurance to farmers know he did in fact the one of the additional. Things that they're talking about his taking that tariffs. That are actually paid to us. And putting that into a pond in order to him helps stabilize pricing. Performs. Remember these are transitional. Remediation. Techniques. To try and carry them through to win there hopefully is an agreement that's hashed out. And that's the reason why I brought up the point of whether or not we had reached a point of diminishing return. When you think about the trade deficit that we have which China alone. Over 400 an excuse me of just under a 400 billion dollars. 40% of US exports to China are going to be affected and 10% of their exports to the US would be effected. Just and it tariff war alone you can see. That we we have become a loser but it has to be kind of I checked. And a wakeup call and from the folks and I'm talking to we have. Been able to get China's. Attention. The question really is is gonna be how long is this gonna go on and how long can. Both sides in this equation suffer and who who can take. The hits for the longest CBS news just issued a report talking about that tariffs on car imports could raise prices by nearly. 7000. Dollars is a proposed 25% tariff on imported cars and auto parts from Europe. And elsewhere. And local dealer. Actually not locally here but up on it in the northeast and New York. As talking about consumers having to shell out nearly 7000 dollars more per vehicle and have some examples. The Honda Civic could cost an extra 11100. The Ford Escape of nearly 16100. In the Audi Q five could run nearly 6000. Dollars more. So as they talk about this they said 20%. Of the US economy is based on the automobile business. Whether that be insurance companies advertising banking. Every industry. That is in that. Might grow our economy of the automobile economy with a in this country and if you think about the trickle down effect. There's so many. That helped that deal with that. Interestingly vote to. 44%. Of all the US car sales were from. Imported. Vehicles. I knew the number was time but I had no idea. He was that give us a call let us know what you think in 2601870. Or Texas at 8787. In. I get to a break we'll be right back stay with us. Hot off the press is 11:18. This morning fortune magazine. President trump speaking with CNBC. He's ready to place tariffs on every Chinese goods imported to the US. As the trade war between the two countries escalates. Trump said I'm ready to go to 500. Billion. Referred to the 505 point five billion dollar in Chinese imports a US took in last year. Currently the administration has only put tariffs on 34. Billion worth of Chinese products. President trump goes on to say I'm not doing this for politics I'm doing this to do the right thing for our country. We have been ripped off by China for a long time. I don't want them to be scared I want them to do well I really liked presidency a lot. But it was very on. They're so it's obvious he's doubled down. Key is looking. Across that poker table. And is gonna see what the reaction is going to be from the Chinese obviously we're gonna have another show next week. About tariffs because we're shipping industry were an agricultural industry forestry industry chemical that. Industry energy sector industry here. Louisiana is is con of the gumbo of any number of things we've got the Mississippi this shipping. Alone someone texted and friend of mine it's in the business talking about it. You know a dozen or so ships in here. All the time waiting two to three weeks at the grain elevators to to load up their their ships in order to get across the the oceans to China. And abroad and it's critical and you heard what Mike strain said. About the fact that every time these ships com. Then they are leaving basically a million dollars at the very least in services in this anatomy and everything that that is spent. On on servicing these ships so this is. All very critical. To the economy of Louisiana so it it's incumbent upon us to keep our finger on the pulse of this to see exactly what's happening. And I'll say it again I don't know about you but I think doctor Mike strain to commissioner of Louisiana department of agriculture and forestry. He has his finger on the pulse of this and obviously he's in constant communication with any number of folks. That's a good thing. It's now time for the cash contest ready for your chance to win 1000 dollars in the inner com national cash contest the code word for this hour is. Face FAA. CE text FA CE. To 72881. At 72881. Tex now and you could win 1000 dollars cash. Listen for the next code word just before the top of the hour every hour now to 6 PM. 1000 dollars is up for grabs when a for your wallet good luck from all of us at WWL we never charge protects an individual plain text and data rates apply please doled texting drive will be right back after the break.