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Dittmer: U.S. political outlook for 2021

Free Market Reflections with Steve Dittmer

Government bureaucrats and politicians tend to interfere with our lives when it is not necessary, harming our livelihoods, and then refuse to get involved when we need them, to defend our rights, uphold the law or make hard decisions.

A long held conservative principle is that the government closest to the people governs best, e.g. municipal vs. state or state vs. national. The election and the pandemic disproved that, as judges, governors and mayors used the pandemic to declare themselves dictators, issuing edicts claiming the force of law though passed by no legislative body. Our foodservice sector — over 50 per cent of all beef sold — has been decimated by local and state shutdowns disallowing indoor dining or restricting capacity to 25 or 50 per cent. The National Restaurant Association estimates 100,000 restaurants have closed during the pandemic and it’s unknown how many will ever reopen.

Some of the chains have shut down, some declared bankruptcy. Many independent restaurants were forced into permanent shutdowns. Some chains have the advantage of deeper pockets. Some independents with a devoted local following have survived. Other operations, with a menu adaptable to, or modified to take-out or delivery, have survived.

Fast food chains that are a critical supplier of beef meals have stayed close to normal sales volumes by streamlining and speeding the order process and shrinking menus.

Regarding courts ducking responsibilities, we hope the courts deal with another issue, the Constitution’s Commerce Clause, that the Ninth Circuit Court of Appeals (West Coast region) pretends doesn’t apply in California. The attorneys general of 20 states and the Department of Justice have joined in the petition for an en banc (all judges) rehearing of a case the North American Meat Institute (NAMI) lost in the Ninth Circuit earlier, NAMI CEO Julie Anna Potts said.

The complaint was filed against California’s Proposition 12 that prevents out-of-state eggs from selling in California, if that state’s hen cages don’t meet its highly restrictive and prescriptive management details. There are minimum square-footage requirements for pigs and veal calves, also. No conforming requirements, no access to California’s markets.

The Constitution’s Commerce Clause clearly states that no state can restrain commerce between the states. If allowed, California could keep out many agricultural products if other states didn’t conform to activists’ prescribed production or animal welfare provisions, feed or antibiotic standards.

Of course, all this increases costs for Californians. Even California’s state economic analysis concurs. However, mere economic data or citizen welfare is often irrelevant to California’s government, much less trivialities such as the Constitution or other states’ citizens.

Congressionally exempted, California already mandated cars with stricter emissions standards. Now they are trying the same stunt by phasing out internal combustion vehicles.

President Trump pushed hard on trade and played hardball to get countries to the bargaining table. Japan is America’s number one beef trading partner, with South Korea right behind. The deal with Japan, dropping tariffs over 11 per cent right away to TPP levels, graduating down to nine per cent over 15 years, was game-changing. It languished 40 years until Trump and U.S. Trade Representative Robert Lighthizer. Our agreement with China allowed us in again with fewer restrictions than expected.

It’s unlikely Biden will push trade as hard as Trump, and Biden’s international interests have been more aligned with China and Russia. A big question is whether Biden is tough enough for a followup Chinese Phase Two agreement.

Experts estimate that China has rebuilt most of its hog production capacity, although it bought record amounts of pork in 2020. As pork becomes more available and less expensive, will Chinese consumers continue to increase their purchases of grain-fed beef? Another question is Chinese consumers’ concern about COVID-19 contamination. Although there is no evidence of human infection from coronavirus on fresh or frozen food, unfounded rumours are circulating in parts of China that are reducing sales of imported meat and drawing discounting.

The other major new trade deal could be with the U.K. Biden’s approach is hard to guess. British Prime Minister Boris Johnson is more of a maverick, as Trump was, so it’s unlikely there’ll be the same personal relationship with Biden. The U.K. should be interested, needing new partners and being able to negotiate for the first time in 48 years without EU constraints. There will be technical hurdles, since things such as chlorinated water or vinegar rinses and modern production technology seem to terrify both U.K. regulators and the populace.

About the author

Contributor

Steve Dittmer is the CEO of Agribusiness Freedom Foundation, a non-profit group promoting free market principles throughout the food chain. He can be reached at [email protected]

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