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Policy Issues; Ag Economy (Trade); Regulations and GMO Labeling

Policy Issues

Tim Devaney reported yesterday at The Hill’s RegWatch Blog that, “The U.S. Department of Agriculture (USDA) is looking to crack down on welfare fraud around the country.

“The USDA’s Food and Nutrition Service announced Wednesday it is targeting people who sell food stamps for money. Some recipients cheat the system by claiming they have lost their food stamp debit cards so they can request new ones, the agency said.

“To combat fraud, the USDA will require states to monitor the Supplemental Nutrition Assistance Program and be on the lookout for excessive requests for replacement cards. People who request four or more replacements in a year will receive a warning notice.”

The Hill update indicated that, “‘If trafficking is suspected, the state agency must refer the cases to the state’s fraud investigation unit,’ the USDA wrote in the Federal Register.

“‘After the fourth replacement card, a household’s shopping behavior is three times more likely to be flagged as potential trafficking,’ the agency added.

“The Supplemental Nutrition Assistance Program is the nation’s largest food assistance program for low-income people. It used to provide food stamps to people, but now it deposits those food stamps on electronic cards, which act like debit cards that recipients can use to buy groceries.”


Agricultural Economy- Trade

Jennifer Epstein reported today at Politico that, “President Barack Obama traveled nearly 7,000 miles around the globe to Tokyo but returned to domestic political troubles with a new trade agreement and to the situation in Ukraine on Thursday, suggesting that another round of sanctions against Russia are ‘teed up’ and ready to go should President Vladimir Putin prove unwilling to work through diplomatic means.

“Obama has struggled to build domestic support for the Trans-Pacific Partnershipfrom Democrats and Republicans alike — but urged critics of the deal to make sacrifices in the interest of expanding trade with Asia.

“‘Sometimes [we] have to push our constituencies beyond their current comfort levels,’ Obama said of opposition to TPP, not only among some American politicians but among some in Japan. Speaking alongside Japanese Prime Minister Shinzo Abe at a joint press conference, the president said that on TPP, ‘Prime Minister Abe has to deal with his politics and I’ve got to deal with mine.’”

The Politico article noted that, “Obama said he supports the trade deal ‘because ultimately I think it is good for America’ to have a wide-ranging trade agreement with much of the Asia-Pacific region. ‘But it’s a win-win situation’ because the same is true for all the other countries that are involved in negotiating the deal. ‘That means that short term all of us need to move out of our comfort zones.’

“Abe also supports the finalization of TPP, saying Thursday that ‘it’s strategically very important’ and that ‘the remaining issues must be overcome very quickly.’”

Also with respect to the joint press briefing, Juliet Eilperin reported today at The Washington Post Online that, “The two leaders also spoke of how they hoped to foster closer economic ties between their countries through adoption of the Trans-Pacific Partnership initiative, a massive trade deal involving 12 nations. But they acknowledged they had yet to reach a compromise on key obstacles to a final accord, such as how much Japan would open up its agricultural and automotive sectors to foreign competition.

“Abe spoke of the prospect of creating a ‘21st century type of economic zone,’ noting that before that happens, ‘The remaining issues must be overcome very quickly and resolved.’”

The Post article indicated that, “Obama said for that to occur, ‘American manufacturers and farmers need to have meaningful access to markets, including here in Japan.’

“And even as the president called for ‘bold steps’ to reach an accord, he noted that both he and his Japanese counterpart faced domestic resistance to such a deal.”

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “U.S. Trade Representative Michael Froman ramped up pressure on Japan to open its economy to more foreign trade during talks on Wednesday in Tokyo.

“Froman met with Akira Amari, Japan’s minister for economic and fiscal policy, to continue discussions over a bilateral agreement between the two nations that could help boost the chances for completing the 12-nation Trans-Pacific Partnership (TPP).

The Hill update noted that, “‘We’re at an important crossroads in the TPP negotiation, as Japan looks to revitalize its economy and to help shape a stronger regional economic architecture for the negotiation of a high-standard, ambitious and comprehensive TPP agreement,’ Froman said during a break in the talks.

“‘This is a moment for Japan to take an elevated view and to choose a bold path of economic renewal, revitalization and regional leadership,’ he said.”

Don Lee reported in yesterday’s Los Angeles Times that, “After more than four years and 20 rounds of negotiations, the world’s biggest free-trade deal in a generation has come down in good part to this: the United States and Japan squabbling over beef.

“With President Obama due to arrive Wednesday in Tokyo for a two-day summit with Prime Minister Shinzo Abe, their aides have been pulling all-nighters in the hope of reaching a compromise on tariffs for beef and, to a lesser extent, pork and dairy products.”

Yesterday’s article noted that, “Even with fast-track authority, it would be hard to come to terms on beef. The deal has gotten stuck largely because of Japan’s import tariffs on sensitive farm goods, notably beef, which carries a 38.5% duty.

“The U.S. and many countries in Europe and Asia have agricultural cooperatives, but none has the kind of financial power and reach as those in Japan.

“They have a hand in Japanese banking, life insurance and other financial operations for farmers and non-farmers alike, as well as control of sales of all agricultural products and services, according to Kazuhito Yamashita, research director at the Canon Institute for Global Studies in Tokyo.”

Mr. Lee explained that, “What’s more, Japan’s beef and farming families are a core constituency for the Japanese prime minister and his Liberal Democratic Party. From the beginning, they have opposed Abe’s interest in joining the Trans-Pacific Partnership.

Still, the beef, pork and dairy industries involve only about 100,000 households out of 46 million in Japan, said Richard Katz, chief editor of the Oriental Economist Report, a newsletter in New York that specializes in Japan and Japan-U.S. relations.”

Meanwhile, Bloomberg writer Aya Takada reported yesterday that, “Japan, the world’s largest pork importer, may accelerate tariff talks with Canada to increase pressure on the U.S. to ease demands for cuts in agricultural protection, the Asian nation’s biggest hog farmers group said.

Canada, the largest pork exporter after the U.S. and the European Union, has been in talks with Japan on a bilateral trade pact since November 2012. Japan agreed to almost halve its tariff on Australian pork under a deal reached earlier this month between the two governments. The four countries are among 12 nations negotiating the Trans-Pacific Partnership.”

And Edward-Isaac Dovere reported yesterday at Politico that, “President Barack Obama’s in Asia this week pushing a deal that almost none of his allies at home want.

On the Hill, most of the pushback is coming from the president’s fellow Democrats, who say it undercuts the economic fairness argument that’s a central focus of his midterm strategy.

“Despite Obama’s support for the agreement, Senate Majority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi have made clear they don’t have much interest in the Tran-Pacific Partnership or broader fast-track trade authority passing before November — if then.”

The Politico article pointed out that, “Of course, Democrats aren’t the only problem. Though both House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) say they support fast-track authority that would facilitate all trade deals by allowing them to go before Congress for a straight up or down vote, Republicans also aren’t rushing to open themselves up to protectionist concerns ahead of the election.”

“The best predictor for Senate votes on TPP is probably a vote like the 2011 Colombian trade agreement. Of the senators in the most competitive races this year, Mary Landrieu (D-La.), Jeanne Shaheen (D-N.H.), Mark Pryor (D-Ark.) and Mark Udall (D-Colo.) were all in favor, and Kay Hagan (D-N.C.) and Mark Begich (D-Alaska) were opposed,” the Politico article said.

And The Wall Street Journal editorial board indicated in today’s paper that, “Absent leadership from Washington, protectionists are rallying to block reform. Japan wants to keep its exceptionally high agricultural tariffs, which Mr. Abe has described as ‘sacred.’ Tokyo earlier this month signed a bilateral trade pact with Australia that reduces beef tariffs, although nowhere near as much as Washington has pushed for in TPP talks, and Japan now is calling for greater American ‘flexibility’ to accept those higher tariffs.”

“Maybe Mr. Obama will manage to rescue TPP this week, but the quickest way to get talks moving again is to push aggressively for fast-track trade approval when he gets home. America’s partners are waiting for a sign that Washington is still on board,” the Journal said.

A news release yesterday from Rep. Kevin Cramer (R., N.D.) stated that, “Today [Rep. Cramer] urged U.S. Secretary of Agriculture Tom Vilsack and U.S. Trade Representative Michael Froman to ensure full market access for agriculture products is included in any Trans-Pacific Partnership (TPP) trade agreement. Cramer said market access for farm commodities must be a top national priority in U.S. trade policy.

“‘TPP negotiations set an important standard for future trade agreements, and a positive outcome on agriculture products could mean billions in future exports and hundreds of thousands of jobs. This success will only be realized, however, if Japan and other U.S. trading partners agree to address trade barriers comprehensively, without broad exclusions for sensitive products such as those submitted by Japan,’ wrote Cramer and more than 60 colleagues to Vilsack and Froman.”

In other news, Reuters writers James Topham and Niu Shuping reported yesterday that, “Three employees at one of Marubeni Corp’s (8002.T) grain trading units in China have been detained by authorities, the Japanese trading house said on Thursday, a move sources told Reuters was prompted by allegations the unit evaded taxes on soy bean imports.

“The employees worked at a Chinese unit of Marubeni’s Columbia Grain, Inc, a spokesman at the trading company said. He added he did not know why they had been detained. He also said he did not know the nationalities of the employees.”

Domestically, David Rogers reported yesterday at Politico that, “Cow-calf ranchers may be the last romantics of American agriculture. And these days that romance stands to be profitable — very profitable.

Young 550-pound steers on the southern Plains are commanding prices 30 percent higher than a year ago. With corn down almost as much in the same period, feedlots are betting the margins even as the cost of hamburger at the supermarket goes through the roof.

“‘The prices are as good as I have ever seen,’ says Myron Williams, a 66-year-old South Dakota rancher who has been in the cattle business since the late 1960s. Net returns for cow-calf operations for 2014-15 will run 35 percent higher in real dollars than the previous peak in 2004-05, according to projections by the University Missouri’s Food and Agricultural Policy Research Institute.”

Mr. Rogers noted that, “To keep up production, packers have eaten into their inventory to a point where the next few years will require a significant retrenchment with more plants closed and high prices for American consumers.

“Growing back the cattle herd is a slow process even in the best of times. Cows don’t have litters. They live outside. And what’s beginning now is really a two-to-three year cycle driven by economics — but also biology.

“It all adds up to a fascinating but immensely intricate supply-and-demand story about what’s really a bit of Americana.”

Reuters writer Theopolis Waters reported yesterday that, “Porkier pigs are commanding premiums in the United States as packers and producers look for ways to mitigate the effects of a smaller herd caused by a lethal virus by pushing weights up to record highs, but leaner times may be ahead.

“Plumper hogs are helping to offset a drop of around 10 percent in the national herd as piglets die from Porcine Epidemic Diarrhea virus (PEDv) and putting more money in the pockets of those producers with pigs to sell.”

The Reuters article noted that, “Latest figures on Wednesday put average hogs at 286.4 lbs, the fifth record in a row and up 9.3 lbs from a year ago. That adds up to about 15 million lbs of extra pork on the market for the week, said Bob Brown, an independent market analyst in Edmond, Oklahoma.

PEDv has swept through 30 states and some analysts estimate it has killed up to 7 million pigs out of a total herd of 62.899 million. More information on the virus’ stretch may emerge now that the United States Department of Agriculture is mandating reporting of outbreaks.”

Bloomberg writer Marvin G. Perez reported earlier this week that, “The cost of breakfast beverages are poised to increase as coffee futures surge after a Brazilian drought damaged crops, while orange-juice prices climb with Florida’s output heading for a 29-year low.”

And Jenn Harris reported earlier this week at the Los Angeles Times Online that, “The next time you visit the grocery store, you may experience sticker shock. Prices for some of your favorite foods, including bacon, coffee and oranges, are on the rise.”

Leslie Josephs reported in today’s Wall Street Journal that, “Raw-sugar futures rose to the highest level in nearly four weeks after a Brazilian industry group forecast that sugar production would decline from a year ago.”


Regulations and GMO Labeling

A news release yesterday from Sen. John Hoeven (R., N.D.) stated that, “[Sen. Hoeven] today again pressed his opposition to the Environmental Protection Agency’s (EPA) proposed ‘Waters of the United States’ rule, which was published in the federal register Monday. Hoeven is working to get the EPA to withdraw the proposed rule that would expand the agency’s authority to regulate non-navigable bodies of water under the Clean Water Act. Hoeven said he is circulating a letter in the Senate and drafting legislation to overturn the proposed rule, which could have a far-reaching and detrimental effect on farmers, ranchers, the construction industry and others business activities.”

Tim Devaney reported yesterday at The Hill’s RegWatch Blog that, “A labor group is calling on the Obama administration to ‘trash’ a controversial poultry inspection rule that it says would lead to more contaminated food and pose a greater risk of injury to slaughterhouse workers.

“American Federation of Government Employees President J. David Cox Sr. criticized the U.S. Department of Agriculture (USDA) for a rule that would speed up the rate at which chickens and turkeys are processed by as much as 25 percent. It would also cut back on available inspectors — according to Cox, that means remaining inspectors would have to work at unrealistically fast speeds to ensure the safety of poultry.”

And Stephanie Strom reported in today’s New York Times that, “Going further than any state so far, Vermont on Wednesday passed a law requiring the labeling of foods that contain genetically engineered ingredients.

“Though the move came in a tiny state far from the nation’s population centers, proponents of such labeling immediately hailed the legislative approval as a significant victory. Labeling efforts are underway in some 20 other states, and the biotech and food industries have been pushing for federal legislation that would pre-empt such action.”

“Governor Peter Shumlin, who had expressed reservations about the bill, said after the vote that he would sign it into law,” the Times article said.

Keith Good