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Canada and Mexico said they will ask the WTO approval for $3.7 billion in retaliatory tariffs on U.S. agricultural and manufactured goods in their latest response to a U.S. meat-labeling law. "The only way for the United States to avoid billions in immediate retaliation is to repeal COOL," said Agriculture Minister Gerry Ritz of Canada, referring to the country-of-origin labeling law. The U.S. House could vote as early as next week on a bill to repeal COOL for beef, pork and chicken, the three most widely consumed meats. There has been no action in the Senate.

Beef and pork were the objects of the WTO challenge by Canada and Mexico due to sizable cross-border trade in meat and animals. At every turn, the WTO ruled that COOL, which became mandatory for meat in 2008, discouraged imports from Canada and Mexico because of the difficulty in tracking the source of every cut of meat. In its latest iteration, COOL requires each package of meat sold in grocery stores to say where the animals yielding the meat were born, raised and slaughtered.

In a joint statement, Canada said it would seek $3.1 billion in retaliatory tariffs and Mexico said it would ask for $653 million.

The WTO was scheduled to consider Canada's request on June 17. Trade Minister Ed Fast said the United States "continues to avoid its international trade obligations" following the fourth, and final, WTO ruling against COOL on May 18. Two years ago, Canada published a long list of potential targets, including U.S. beef, pork, wine, cherries, pasta, corn, office furniture and mattresses.

Consumer groups and the National Farmers Union support COOL as part of a consumers' right to know and as a way to spotlight U.S. products. But U.S. foodmakers, meatpackers and the largest cattle and pork groups oppose it. A longtime backer, the 6 million-member American Farm Bureau Federation, has changed sides and now supports repeal for beef, chicken and pork.

COOL covers a large swath of the U.S. diet - fruits and vegetables, seafood, lamb, goat and venison, peanuts, pecans, macadamia nuts and ginseng - without controversy.

The NFU has said the United States should call Canada's bluff, by demanding Canada prove to the WTO that its farmers and ranchers suffered under COOL. The 2008-09 recession and weak economic growth are the true factors, says the NFU, and the WTO should not allow any retaliation. However, the House Agriculture Committee voted 6 to 1 to repeal the labeling law, with Chairman Michael Conaway saying COOL was a failure.
    --Reporting by Chuck Abbott

Prices for the major food commodities fell by 1.4 percent during May, to their lowest levels since September 2009, said the UN Food and Agriculture Organization. Its Food Price Index, at a reading of 166.8, was down by 20.7 percent in one year. Prices for meat, dairy products and cereal grains fell in May. For the two other sectors of the index, sugar and vegetable oils, prices were up in May. Vegetable oil prices rose during May because of concerns that the El Nino weather pattern would reduce production in southeast Asia.

In a companion report, FAO raised its forecast of world grain production by 15 million tonnes, to 2.524 billion tonnes, or only 1 percent below the record 2014 harvest. Due to "more buoyant prospects for China and West African countries," the world rice crop would be 1.3 percent larger than the record set last year of 494.2 million tonnes. Cereal stocks would remain at nearly 25 percent of use, "reinforcing the view of stable cereal markets" and prices. Wheat stocks are projected to climb to a 13-year high of 201 million tonnes.

The Food Price report said cereal grain prices dropped by 3.8 percent in May. "Ample stocks combined with generally favorable crop outlooks for this year continued to keep international prices under downward pressure," said FAO. The May index was down by 22 percent from the previous May and the lowest level since July 2010 for cereals. Dairy prices were down by 2.9 percent due to the "flush" season for milk production in the northern hemisphere and large stockpiles in Europe and New Zealand. "Generally lower prices for meat exports from the United States" were a primary factor for a 1-percent drop in global meat prices.

A WTO appellate panel ruled that India violated fair-trade rules by barring imports of U.S. poultry, eggs and hogs as a way to prevent entry of avian influenza. The poultry industry estimated sales of poultry to India could rise quickly to $300 million a year once India's restrictions are removed. The case began eight years ago and the United States won a first-round WTO ruling in 2014. The United States said India excluded U.S. products in order to give a leg up to its own farmers.

U.S. officials said the victory, arriving in the midst of the worst U.S. epidemic ever of avian influenza, was a signal to trading partners to act reasonably when a supplier is hit by livestock disease. Trade restrictions should be based on scientific standards that include tailoring any trade restrictions to apply to the region where the disease is present, rather than a nationwide blanket ban.

Agriculture Secretary Tom Vilsack said "this decision serves to encourage USDA's efforts to maintain open markets for U.S. poultry based on international standards." Dozens of countries have restricted or banned U.S. poultry products in reaction to the epidemic, including some of the largest customers.

"This ruling should send a signal other countries that have placed similar bans on U.S. poultry that they are inconsistent with WTO rules and with guidelines established by the World Organization for Animal Health (OIE),” said the trade groups National Chicken Council and the USA Poultry and Egg Export Council. Usually, 20 percent of U.S. poultry meat is exported.

The USDA estimates broiler exports will drop by 6.8 percent this year because of bird flu and the stronger dollar. The monthly U.S. Livestock and Meat International Trade report, updated on Thursday, listed broiler exports of 2.2 billion pounds for January through April, compared to 2.4 billion pounds in the same period in 2014. Shipments to China and South Korea, which barred imports because of the epidemic, were less than one-tenth of their totals for the first four months of 2014.
    --Reporting by Chuck Abbott

The WTO appellate decision is available here.

The worst avian influenza epidemic ever to hit the U.S. poultry industry is losing its punch, says Agri-Pulse, with fewer outbreaks being reported on a weekly basis and "leading industry and government officials to discuss steps to prevent a similar outbreak in the fall." An official from the U.S. Poultry and Egg Association told Agri-Pulse that the spread of the virus, which can kill a flock in 48 hours, was "slowing down very significantly." At its worst, in the three-week stretch from April 19 to May 9, 30 cases, or more, were recorded each week. The USDA says there were 28 cases in the final two weeks of May.

The National Association of Egg Farmers is pursuing an indemnity plan that would pay egg farmers more than $7 per hen that died from bird flu just as it was starting to lay eggs. The indemnity would be 20 cents for hens at the end of their productive career, said Agri-Pulse.

The USDA's running tally lists 212 confirmed poultry outbreaks that affected 46.2 million fowl, mostly chickens and turkeys. In Iowa, the No. 1 egg state, there are 71 confirmed cases with losses of 30 million fowl. "There are no new probable cases of highly pathogenic avian influenza today," said the Iowa Agriculture Department. "Depopulation and disposal of birds from previously announced sites is ongoing." Iowa says 24 million egg-laying hens were lost to the virus, about 7 percent of the U.S. laying flock.

The wholesale price of consumer-grade eggs more than doubled since May 4 and was a record $2.62 a dozen according to the commodity research company Urner Barry, said Bloomberg. The price of "breaker" eggs, used by foodmakers, has quadrupled.

"Lower energy prices are expected to lead to lower total production expenses by the agricultural sector," say USDA economists, with savings of $5 billion, or 8 percent, this year and $5 billion in 2016, also an 8-percent savings. Farmers would spend about $60 billion on energy, much of it indirectly in fertilizer and pesticides and $22 billion directly for electricity, fuel and oil in each year.
"The agricultural sector will benefit from lower energy prices primarily because of reduced production and transportation costs," says the report.

"Direct energy inputs such as fuel and oil account for a large share of agricultural production expenses. Energy prices - particularly, for natural gas - also strongly influence the cost of fertilizer, which is a major production expense for most crops. Additionally, energy prices influence costs of agricultural chemicals, such as herbicides and insecticides," says the report. Crude oil prices are down more than 40 percent from a year ago and natural gas prices are down by 20 percent.

The report, "Effects of recent energy price reductions on U.S. agriculture," is available here.

Rudy Mussi, who farms in the Sacramento Delta, "is not the California farmer you've been hearing about," says the NPR blog The Salt. "He is not fallowing all his fields or ripping up his orchards due to a lack of irrigation water." There's plenty of water because the delta is fed by two of California's largest rivers. There's also an emerging fight over how to allocate the water, some of which is diverted to the Central Valley, where water is scarce and growers stand in line behind Delta farmers in the right to access to water. "The fact that farmers are pointing fingers at other farmers shows just how big of a disaster this drought has become, and how political the issue of water is here in the country's most productive food-growing state," says NPR.

Strawberry, blueberry and raspberry production in California is down slightly this year, compared to 2014's pace, says Capital Press. California is the largest strawberry-growing state in the nation.

The North Carolina Legislature decisively overrode a gubernatorial veto to enact "a bill aimed at discouraging undercover investigations of farm and workplace conditions," reports the Charlotte Observer. "The bill will create a recourse in civil court for business owners to sue employees who use their positions to secretly take photographs or shoot video in their workplace." Opponents called the measure an "ag gag" bill aimed at animal-welfare groups." The Humane Society of the United States spent $50,000 on a TV ad campaign against the law. The Observer quoted the sponsor of the bill as saying it was intended to steer whistleblowers to the police and regulatory agencies, "and not the media and not private special interest organizations."

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