January 29, 2020

Farm Bill; Ag Economy; Regulations; and, Immigration

Farm Bill- Policy Issues

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The next bill may be more difficult to develop and pass as a pair of farm-bill lobbyists urged advocates of all types to begin thinking about how to work together again.

“The lobbyists analyzed the political divisions created trying to pass the 2014 farm bill during a panel discussion Wednesday at the Consumer Federation of America’s National Food Policy Conference.

Bill O’Conner, a former House Agriculture Committee staff director and USDA official, noted that the relationship between the farm titles and the nutrition title has ‘changed, and not just in one direction.’”

Mr. Hagstrom noted that, “In 1985 the agriculture community recognized that it needed anti-hunger advocates to collect the urban and suburban votes needed to pass the farm bill, and that anti-hunger advocates ‘felt they had hitched a ride on the farm bill’ that got them conservative votes for their programs, explained O’Conner, who now works at the law firm of McLeod, Watkinson and Miller.

By the 1990s, O’Conner said, he began to believe that the food programs ‘didn’t need the farm bill as much as when I got there.’

“But with the growth of the food stamp program in 2008 and the conservative takeover of the House in 2010, he said, it’s become harder for the farm programs to carry the food programs and harder for the food programs to garner votes for the farm programs.”

The DTN article indicated that, “But O’Conner warned that there are still ‘grudges and bad feelings’ because the $40 billion cut in food stamps over 10 years that passed the House at one point was reduced to a $8.6 billion cut, and now some governors have increased their Low-Income Home Energy Assistance Program payments to $20 per year per household to maintain food stamp benefit levels. Even if unemployment goes down to 5% or less, there will still be proposals to cut food stamps because it is now being discussed as welfare reform.”

Yesterday’s article also pointed out that, “While food stamps became the most contentious issue in the farm bill, [Mary Kay Thatcher, the senior director of congressional relations for the American Farm Bureau Federation] said that divisions among farm groups and the farmers’ apathy about the farm bill in 2012 and 2013 were also responsible for how long it took to pass it.

“‘I think they will be less apathetic the next time,’ she said.

Farm Bureau remains committed to keeping the farm program and nutrition programs in one bill, Thatcher said.”

Nick Paulson and Jonathan Coppess of the University of Illinois indicated yesterday at the farmdoc daily blog (“Further Discussion of the Supplemental Coverage Option”) that, “A previous post provided an initial look at the Supplemental Coverage Option (SCO) in the new farm bill (it can be found here).  This post continues that discussion with further analysis of the statutory language authorizing the program and additional examples illustrating its expected operation. The examples in our earlier post on SCO assumed the example farm’s crop insurance APH yield was the same as the expected county yield.  The examples below illustrate how SCO could work for farms whose APH yields differ from the expected county yield.”

And Ron Nixon reported in today’s New York Times that, “An obscure provision tucked inside a Coast Guard spending bill could prevent millions of people in troubled countries around the world from receiving American food aid and cost taxpayers millions of dollars in shipping costs, the Obama administration said this week.

“The provision, which is included in the Senate version of a House bill that passed this month, would require that three-quarters of the United States food aid that is shipped to places like South Sudan be sent on American vessels, up from the one-half now required by law.

“The administration, which has made overhauling the food aid program one of its top priorities, said the change would drastically increase the costs of shipping food aid overseas because it would limit the ability of the United States Agency for International Development, which runs the program, to use the most cost-effective shipping options available at the time of each shipment.”

Today’s article explained that, “The Department of Homeland Security, which oversees the Coast Guard, also warned in a letter to the Senate Commerce Committee that the bill ‘would have grave effects on United States humanitarian assistance programs.’ The committee is still considering the bill.”

Kristina Peterson reported in today’s Wall Street Journal that, “The clash over the Coast Guard bill, which was passed by voice vote in the House on April 1 and is headed for the Senate, is the latest flare-up in a debate about how to modernize the U.S. food-aid system. President Barack Obama has pushed in recent budgets to maximize efficiency in delivering food overseas, but has encountered resistance from lawmakers from both parties worried about the potential impact on U.S. jobs or military might.

“Both industry officials and many lawmakers have said the policy of using U.S.-flagged ships to transport food aid is necessary to ensure that a viable fleet of private ships—and the mariners trained to operate them—are available during wars and other emergencies.

“‘The secondary reason for food aid is food,’ Rep. Duncan Hunter, the California Republican who introduced the bill, said in an interview Thursday. ‘The No. 1 reason is military readiness.’”

The Journal article pointed out that, “Sen. Bob Corker of Tennessee, the top Republican on the Foreign Relations Committee, and Sen. Chris Coons (D., Del.) are expected to introduce legislation later this spring overhauling the food-aid program to make it more efficient, according to both lawmakers’ offices.

“The ‘cargo preference’ requirement for food aid is permanent law, though its level has frequently bounced around. The current requirement to transport 50% of food aid on U.S.-flagged ships had been boosted to 75% in 1985, then returned to 50% in 2012, as part of legislation renewing highway funding.”


Agricultural Economy (Trade)

Don Lee reported yesterday at the Los Angeles Times Online that, “The U.S. and Japan failed to reach agreement on free-trade talks as President Obama left Japan on Friday without the breakthrough needed to advance a key element of his broader agenda of strengthening America’s hand in Asia.

“Despite a last-minute push through the night, the two sides could not bridge their differences on tariffs and market access, clouding the prospects for the proposed free-trade pact among a dozen nations that includes the U.S., Japan, Canada and Mexico.”

Mr. Lee added that, “Obama had hoped to come away from his two-day summit with Japanese Prime Minister Shinzo Abe with a bilateral deal that would propel the stalled Trans-Pacific Partnership negotiations to a conclusion.

“Instead, as Obama headed for South Korea, the second stop of his four-nation Asia tour, the U.S. and Japan issued a statement that made clear they had fallen short of their goal. Although it said that they ‘have identified a path forward on important bilateral TPP issues,’ the statement gave no specifics and noted that ‘there is still much work to be done to conclude TPP.’”

“The U.S. had hoped to wrap up the Trans-Pacific Partnership deal at the end of last year, but its future is now even more uncertain. The deal has been touted by the Obama administration and its supporters as groundbreaking in that it would not only remove tariffs but also establish rules and standards on such critical trade and investment matters as intellectual property rights and government subsidies to enterprises,” the LA Times article said.

Jonathan Soble and Shawn Donnan reported today at The Financial Times Online that, “Despite encouraging statements from Mr Obama and Japanese prime minister Shinzo Abe on Thursday, negotiators failed to overcome differences over Japanese agricultural tariffs and the automobile trade.”

The FT article added that, “Chief negotiators from all 12 TPP countries are due to gather in Vietnam in May and their trade ministers are expected to meet shortly afterwards in China. Both encounters are seen as important for efforts to wrap up the TPP. Not having a US-Japan deal before then would be a setback.

Any deal with Japan would also help the Obama administration in its efforts to secure so-called ‘fast track’ negotiating authority from Congress. Senior Democrats have been reluctant to back the US president’s plan.”

AP writers Julie Pace and Elaine Kurtenbach reported today that, “U.S. officials said the teams narrowed their differences on market access issues related to agriculture and automobiles, two key sectors that had deadlocked negotiations. While both countries kept key details of the negotiations private, a senior Obama adviser said there was particular progress on the parameters for tariffs on six products of concern to Japan: beef, pork, dairy, sugar, rice and wheat.

“‘We believe that we have worked through very difficult issues and because of that work there is a clear path to resolve our bilateral issues with Japan and give momentum to the broader regional agreement,’ Ben Rhodes, Obama’s deputy national security adviser, told reporters traveling with Obama Friday from Toyko to Seoul, South Korea.

Japanese officials were less upbeat, saying only that the two sides see a way forward and had agreed to keep talking.”

Mark Landler and Jodi Rudoren reported in today’s New York Times that, “In round-the-clock negotiations this week, American and Japanese officials said, the United States pressed Japan to make major concessions, including cutting protective tariffs close to zero on agricultural products like cheese and pork.

“‘There are a lot of people in Japan who question whether Japan should make big concessions just because Obama is here,’ said Nobuhiro Suzuki, a professor of agriculture at the University of Tokyo. ‘Abe has to heed them, too, to avoid appearing like an American patsy.’

Other analysts faulted Mr. Obama, saying his decision not to fight for the legislative authority at home to pass major trade deals had robbed him of leverage with the Japanese, who are reluctant to make concessions for a deal that may not survive Congress.”

In other trade related news, Reuters writer Michael Hirtzer reported yesterday that, “U.S. exporters last week shipped the most corn in at least 24 years, government data showed on Thursday, despite another round of canceled purchases by China tied to a banned variety of genetically-modified grain.

More than 1.6 million tonnes of corn was loaded for shipment during the week ended April 17 in the United States, the world’s largest producer and exporter. That is the highest total in U.S. Department of Agriculture records dating to 1990.

“A bulk of the grain was destined to major origins, such as Japan, Mexico and South Korea, as well as emerging buyers, including Colombia, Egypt and Saudi Arabia.”

Also, Wayne Arnold, Ira Iosebashvili and Chuin-Wei Yap reported in today’s Wall Street Journal that, “World commodity markets are turning more positive toward China as the country continues to import massive amounts of resources like iron ore, copper and soybeans even as economic growth slows [related graph].”

The Journal writers noted that, “Now, many investors and analysts are betting prices have bottomed. They contend China’s government is likely to avert an economic meltdown and that growth will stabilize at current levels around 7%. While that is below the double-digit expansions of the past decade, the economy is now so large it will continue to suck in rising quantities of raw materials for years to come, they argue.”

Today’s article added that, “Soybeans for May delivery settled at $14.720 a pound Thursday, up 12% for the year. Soybean prices have risen steadily as demand from China has depleted U.S. stockpiles, which are forecast to fall to the lowest in a decade at the end of the marketing year in August.”

Meanwhile, a Reuters update yesterday reported that, “Brazil is investigating a potential case of atypical mad cow disease, the agriculture ministry said on Thursday, just over a year after several countries banned Brazilian beef imports when a similar case of the disease was confirmed.

“A routine inspection at a slaughterhouse in Mato Grosso state found an animal that veterinarians suspect of having a neurological problems, a ministry spokesman said in an e-mail.

“Laboratory tests are under way and atypical bovine spongiform encephalopathy (BSE), or mad cow disease, has not yet been confirmed, the e-mail said.”

And an update this week at the U.S. Drought Monitor Online indicated that, “Drier-than-normal weather dominated the Plains this week and much of the last 6 months. A colder-than-normal winter and early spring have delayed agricultural activities; April 21 USDA reports indicated that the condition of winter wheat has declined in Kansas, with winter wheat condition rated poor to very poor for 32% of the crop in Kansas, 12% in Nebraska, and 4% in South Dakota…[I]n Arizona, livestock water tanks were dry so water hauling was an issue on ranges that don’t have water improvements with pumps, tanks, and pipes. D2-D3 expanded in southeast Arizona where stream levels continued to fall and evaporation was high.”

The Drought Monitor update added that, “The frustration caused by the drought can be seen in a report by an observer in Siskiyou County: ‘Our snow pack is pathetic, rainfall is way below normal, (low) stream flows are running at 2-3 months ahead of normal depending on the area, well levels have dropped severely and many wells are dry in spring or have levels typical of late fall, surface water irrigation supplies are non-existent to extremely limited in many areas, and the situation is only getting worse daily (especially after 3 consecutive years of drought).’ With the expansion of D1 across southeast California and southwest Arizona, this week marks the first time in the 15-year history of the USDM that 100% of California was in moderate to exceptional drought [related graph].”

Emiko Terazono reported yesterday at The Financial Times Online that, “After a relatively benign year in 2013, when most agricultural commodity prices stabilised or declined, the price of coffee, wheat and sugar has fluctuated hugely this year, triggering an immediate response from groups that spend hundreds of millions of dollars on raw materials.

“In its first quarter trading results on Thursday, Unilever, the consumer goods group behind Ben & Jerry’s and Flora margarine, forecast that commodity prices would increase by ‘mid-single digit’. To offset commodity cost increases, it said it was seeking cost savings and making price increases on selected products.

“Earlier this month, Nestlé also noted a single-digit rise in input costs due to higher coffee prices, while Procter & Gamble this week told investors that ‘higher commodity costs’ were a factor affecting gross margins.”

The FT article added that, “Worries about wheat production after a harsh US winter and the crisis in Ukraine, a top 10 producer, have driven up the grain’s volatility by 51 per cent, while pork prices have been pushed higher by a virus in the US, a leading exporter.”

Also, Steven Greenhouse reported in today’s New York Times that, “By enlisting the might of major restaurant chains and retailers — including Walmart, which signed on this year — the Coalition of Immokalee Workers has pressured growers that produce 90 percent of Florida’s tomatoes to increase wages for their 30,000 workers and follow strict standards that mandate rest breaks and forbid sexual harassment and verbal abuse.

“The incentive for growers to comply with what’s called the Fair Food Program is economically stark: The big companies have pledged to buy only from growers who follow the new standards, paying them an extra penny a pound, which goes to the pickers. The companies have also pledged to drop any suppliers that violate the standards.”


Regulations: FDA- Spent Grains

AP writer M.L. Johnson reported yesterday that, “The U.S. Food and Drug Administration said Thursday it will revise proposed livestock feed rules after hearing objections about the potential cost from brewers who sell grain leftover from making beer to ranchers and dairy farmers.

“Beer makers big and small feared they would have to pay for grain testing, equipment, audits and other safety measures at an estimated cost of $13.6 million per brewery, likely affecting the price of beer, beef and dairy products. To avoid passing on those costs, some brewers said they would have simply sent the grain to landfills.”

The AP article added that, “Livestock feed is generally safe, and the FDA is not aware of any problems with brewers’ grain, [Dan McChesney, director of the Office of Surveillance and Compliance at the FDA’s Center for Veterinary Medicine] said. The agency did not intend to force beer makers to come up with costly food safety plans, but it is concerned about potential contamination between the factory and the farm, he said.”



Sheila McLaughlin reported yesterday at the Cincinnati Enquirer Online that, “House Speaker John Boehner theatrically mocked his fellow Republican Congressmen for being afraid to reform immigration policy when he spoke Thursday before the Middletown Rotary Club in his home district.

“‘Here’s the attitude. Ohhhh. Don’t make me do this. Ohhhh. This is too hard,’ Boehner whined before a luncheon crowd at Brown’s Run County Club in Madison Township.

“‘We get elected to make choices. We get elected to solve problems and it’s remarkable to me how many of my colleagues just don’t want to … They’ll take the path of least resistance.’”

Seung Min Kim reported yesterday at Politico that, “A House GOP lawmaker is urging Speaker John Boehner (R-Ohio) to bring up immigration reform, saying it would benefit the nation and the Republican Party to undertake an overhaul that includes a pathway to citizenship for undocumented immigrants.

“The letter from Rep. Peter King (R-N.Y.) adds to a quiet but growing chorus of comments from House Republicans during the current congressional recess speaking in favor of immigration reform this year – which remains a steep uphill battle, with the House GOP fundamentally divided on the hot-button issue.

In the missive, dated April 23, King tells Boehner that a ‘confluence of events’ makes immigration reform possible, including a path to citizenship coupled with ‘strong and real’ border security and enforcement measures.”

Keith Good

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