FarmPolicy

March 25, 2019

Appropriations; Biofuels; Biotech; Immigration; CFTC; Tax Extenders; Data; and, the Ag Economy

Appropriations- Nutrition, and Conservation

Tom Hamburger reported in today’s Washington Post that, “First lady Michelle Obama is set to take an unusual, high-profile step Tuesday into the center of a legislative battle by delivering White House remarks taking issue with makers of frozen pizzas and french fries and other companies seeking to scale back school lunch standards.

“Obama is scheduled to speak out against a House measure, backed by Republicans and pushed by the food industry and some school officials, that would allow some districts to opt out of federal mandates passed in 2010 to reduce sodium and increase whole grains, fresh fruits and vegetables in school lunches. White House aides say she will announce the launch of a campaign-style push to fight the legislation.

“The effort fits with the spirit of Obama’s ‘Let’s Move’ campaign and other initiatives in which she has advocated for healthy eating and a reduction of obesity. Until now, however, she has largely shied away from direct confrontations with lawmakers and industry groups.”

Today’s article noted that, “In addition to Tuesday’s event, White House officials will be speaking publicly this week and next about the benefits of the federal dietary standards, calling members of Congress to lobby for support and organizing scientific and advocacy groups to speak out.

“The new dietary standards, authorized by the Healthy Hunger-Free Kids Act of 2010, already have produced what the White House says are noticeable improvements in children’s health.

“The House Appropriations Committee is expected to approve language this week that would grant waivers from the new rules to school districts that report they are having problems complying.”

Mr. Hamburger also noted that, “Lately, the School Nutrition Association, once an advocate for the new rules, has led criticism of the standards, saying that ‘plate waste’ is piling up in school cafeterias and that local school nutritionists are having difficulty complying with the rules. The Agriculture Department has said that 90 percent of school districts are meeting the new standards — a statistic that the SNA disputes.

On Tuesday, the first lady is scheduled to join school nutritionists from around the country who say the program is working well. She will hear from an official from the Los Angeles Unified School District about the city’s success in putting in place higher dietary standards than those required by the 2010 federal law.”

(See also this related front page Los Angeles Times article from April on food waste regarding the Los Angeles Unified School District).

Meanwhile, Sam Easter reported on Friday at MLive Online that, “U.S. legislators are set to visit Bay County next week to make a ‘major national announcement’ on a new initiative on the Great Lakes and water conservation.

“U.S. Senator Debbie Stabenow, D-Michigan, U.S. Secretary of Agriculture Tom Vilsack, and U.S. Rep. Dan Kildee, D-Flint Township, will be present at the Bay City State Recreation Area [today] to explain details of the new program geared toward collaborative environmental initiatives that are part of the 2014 Farm Bill.”

Also on the opinion page of today’s Wall Street Journal, James Bovard penned a column titled, “Why the California Raisins Have Stopped Singing: Using 1930s-era regulations, the USDA can commandeer up to half a farmer’s harvest.”

 

Biofuels

Katie Micik reported on Friday at DTN (link requires subscription) that, “EPA expects to send its final Renewable Fuel Standard targets for 2014 to the Office of Management and Budget next week, possibly as early as Tuesday, in a step toward finalization, an EPA official said.

“‘The agency is continuing to prepare the final standard for interagency review and is expected to send the RFS package to OMB on Tuesday. The OMB website will note when that process has begun,’ EPA spokesperson Carissa Cyran told DTN in an email. ‘The agency still expects the rule to be released in June.’

“Last fall, EPA released its proposal to cut roughly 3 billion gallons from the 2014 RFS, including more than 1 billion gallons of corn-based ethanol. EPA said lagging production of advanced biofuels and lack of infrastructure supporting higher blends of corn-based ethanol influenced the decision.”

Reuters news reported late last week that, “A government ethics watchdog on Thursday asked for an investigation into the U.S. Environmental Protection Agency’s proposal to cut federal biofuel use targets for 2014.

“Citizens for Responsibility and Ethics in Washington (CREW) said EPA’s Inspector General should look into whether The Carlyle Group and Delta Air Lines improperly influenced the agency’s draft rule issued late last year.

“The request followed a Reuters report this month about how Carlyle and Delta, owners of two Philadephia-area oil refineries, worked with policymakers to help convince the administration to lower the biofuel mandate.”

And University of Illinois agricultural economist Scott Irwin indicated on Friday at the farmdoc daily blog (“Recent Ethanol Blending Margins”) that, “Ethanol prices went on a tear in March and April 2014 and reached new record levels exceeding $3 per gallon (see earlier farmdoc daily articles here and here).  A single factor did not appear explain the price rise, but instead, a combination of factors created something of a perfect storm.  The question addressed in today’s article is whether the rising ethanol prices caused ethanol blending margins to go negative.   The ethanol blending margin is important for several reasons, including the net impact of ethanol on gasoline prices at the pump, compliance costs for the RFS, and the pricing of RINs.”

After additional analysis, the farmdoc update noted that, “Ethanol prices increased about 60 percent to new record levels in late winter.  Despite this huge increase, ethanol blending margins remained positive for all but a few weeks.  This surprising outcome can be traced to the highly positive blending margins that existed at the start of the spike, providing a healthy margin cushion as ethanol prices rose, and the 20 percent increase in wholesale gasoline prices that occurred in parallel with the ethanol price spike.  The fact that the ethanol blending margin became negative for such a short period of time with record high ethanol prices speaks to the firmly entrenched position of ethanol as the cheapest source of octane currently available for E10 gasoline blends.”

 

Biotech

Chuin-Wei Yap reported yesterday at the China Real Time blog (Wall Street Journal) that, “A stream of public criticism from retired military officials against China’s rising engagement with genetically modified food doesn’t amount to institutional hostility against the science, a senior adviser to Beijing’s cabinet said.

“Ye Xingqing, director of the rural economy department at the State Council Development Research Center, said Beijing still regards GMO as the kind of cutting-edge global technology the country must pursue, at least in research, despite vocal sections of public opinion that oppose broadening the use of GMO food for human use.

“Recent essays published in local newspapers by some of China’s former brass drew attention to fears that GMOs might be a way by which a Western conspiracy, led by the U.S., could further undermine China’s security. But this is mostly coming from some retired officers writing on an issue outside their areas of expertise, Mr. Ye told the Wall Street Journal at a China Europe International Business School conference on Sunday.”

Yesterday’s update indicated that, “‘They think GMOs are a technology with ulterior motives, and that Americans are laying a trap for the Chinese. But not all ordinary Chinese support this opinion, and Chinese officials also feel that GMO is essentially a technological issue, not a political question or one with ulterior motives,’ Mr. Ye said.

“Mr. Ye’s remarks offer an insight to the different stripes of opinion that make GMOs one of China’s most contentious public policy issues. They also underline that, despite recent controversy over China’s rejection of some GMO U.S. corn imports, Beijing squarely recognizes that it must embrace the technology, even if it would rather do so on its own terms.”

 

Immigration

Benjamin Goad reported on Friday at The Hill Online that, “Congressional Democrats are pressing President Obama to take executive action to achieve his goals on immigration, as hopes for passage of a sweeping reform bill fade in Congress.

“Democrats say House Republican obstructionism on immigration is forcing Obama to use all the tools available to him. They’re betting Hispanic voters will agree come November’s midterm elections.

“‘I think it’s necessary,’ Rep. Raúl Grijalva (D-Ariz.) said. ‘Given that political tenor, the administration becomes the only relief left.’”

And Keith Laing reported on Saturday at The Hill Online that, “House Minority Leader Rep. Nancy Pelosi (D-Calif.) said Saturday that lawmakers should approve immigration reform legislation this year because welcoming newcomers to the United States is part of the ‘essential character of our country.’

“The comments came while Pelosi was delivering a graduation speech at Bard College in Annandale-on-Hudson, N.Y.”

The Hill update added that, “‘Let’s embrace that tradition, that essential character of our country, by passing comprehensive immigration reform,’ she said.”

 

CFTC- Commodity Futures Trading Commission

Reuters News reported last week that, “The U.S. derivatives watchdog asked on Thursday for more industry comments on a proposed rule to curb speculators in commodity futures markets.

“Commodity Futures Trading Commission acting Chairman Mark Wetjen said reopening the comment period was designed to ensure the proposed changes did not block access to markets for those who use them to hedge prices rather than for speculation.

The proposed rule for position limits, a curb on the percentage of the market any trader can hold, was one of the most controversial reforms that emerged from the 2010 Dodd-Frank Act to overhaul financial markets.”

 

Tax Extenders

Bernie Becker reported yesterday at The Hill Online that, “The quicker the Senate moves on extending popular tax breaks the better, GOP tax writers in the House say.

“Ways and Means Chairman Dave Camp (R-Mich.) and his allies are pushing to revive and make permanent some of the dozens of incentives that expired at the end of last year, like the credit for business research.

“GOP tax writers are hesitant to weigh in on the broader fight over amendments and floor procedure that is stalling the Senate legislation to restore the more than 50 tax breaks commonly known as extenders.”

The Hill article indicated that, “Finance Chairman Ron Wyden (D-Ore.) and Sen. Orrin Hatch (Utah), the committee’s top Republican, are negotiating over potential amendments for the tax breaks package, with the hopes of bringing it back to the Senate floor soon.”

 

Data Issues

An update on Saturday at The Economist Online noted that, “Innovation is a word that brings to mind small, nimble startups doing clever things with cutting-edge technology. But it is also vital in large, long-established industries—and they do not come much larger or older than agriculture. Farmers can be among the most hidebound of managers, so it is no surprise that they are nervous about a new idea called prescriptive planting, which is set to disrupt their business. In essence, it is a system that tells them with great precision which seeds to plant and how to cultivate them in each patch of land. It could be the biggest change to agriculture in rich countries since genetically modified crops. And it is proving nearly as controversial, since it raises profound questions about who owns the information on which the service is based. It also plunges stick-in-the-mud farmers into an unfamiliar world of ‘big data’ and privacy battles.”

The update added that, “But the story of prescriptive planting is also a cautionary tale about the conflicts that arise when data entrepreneurs meet old-fashioned businessfolk. Farmers might be expected to have mixed feelings about the technology anyway: although it boosts yields, it reduces the role of discretion and skill in farming—their core competence. However, the bigger problem is that farmers distrust the companies peddling this new method. They fear that the stream of detailed data they are providing on their harvests might be misused. Their commercial secrets could be sold, or leak to rival farmers; the prescriptive-planting firms might even use the data to buy underperforming farms and run them in competition with the farmers; or the companies could use the highly sensitive data on harvests to trade on the commodity markets, to the detriment of farmers who sell into those markets.

“In response to such worries, the American Farm Bureau, the country’s largest organisation of farmers and ranchers, is drawing up a code of conduct, saying that farmers own and control their data; that companies may not use the information except for the purpose for which it was given; and that they must not sell or give it to third parties. The companies agree with those principles, though so far their contracts with farmers do not always embody them. Also, once data have been sent and anonymised, farmers might be said no longer to own them, so it is not clear what rights to them they still have. For this reason and others, some Texan farmers have banded together to form the Grower Information Services Co-operative, to negotiate with the data providers.”

 

Agricultural Economy

Gregory Meyer reported on Friday at The Financial Times Online that, “Rains in the high plains of west Texas have waterlogged the cotton market as traders predicted a larger harvest from the US’s most important growing region.

“Farmers and merchants were celebrating as much as four inches of precipitation in the region around Lubbock this week with more forecast to arrive over the long Memorial day holiday.”

Emiko Terazono reported yesterday at The Financial Times Online that, “As sugar traders and industry executives gathered in New York this month for the industry’s annual jamboree, the mood was as gloomy as the skies over Manhattan.

“The reason for the glum faces among many of the delegates at the cavernous Waldorf Astoria Hotel on Park Avenue was Braziland the continuing deterioration of its sugar and ethanol industry.”

The FT article noted that, “Brazil used to have the lowest sugar production costs in the world. Levels have risen steadily over the past few years, however, and now range between about 20 cents and 24 cents per pound, depending on the age and size of the mills.

“In order to increase processing efficiency, the mills have ramped up cane production to bolster plant utilisation, leading to additional output.

“Meanwhile, to the alarm of the mills, the Brazilian government – concerned about rising inflation – capped fuel prices, which in turn squeezed ethanol margins.”

And in trade related news, Vicki Needham reported on Friday at The Hill Online that, “U.S. and European Union trade negotiators said Friday that they made progress this week during their fifth round of talks, but acknowledged there is still no deadline to complete a final deal.

Dan Mullaney, chief negotiator for the United States, and Ignacio Garcia Bercero, the EU’s top negotiator on the Transatlantic Trade and Investment Partnership, provided no indication of where the negotiations actually stand after nearly a year of discussions.”

A statement Friday from U.S. Trade Representative Michael Froman on the conclusion of the fifth round of Transatlantic Trade and Investment Partnership (T-TIP) negotiations is available here.

And a news release Friday from the National Cattlemen’s Beef Association indicated that, “Beef producers from four Trans-Pacific Partnership (TPP) member countries have again demanded that any TPP agreement be a high quality deal that eliminates all tariffs on beef.

“Members of the Five Nations Beef Alliance (FNBA) from Australia, Canada, New Zealand and the United States, urge all participants involved in the TPP negotiations to re-commit to securing a comprehensive, non-discriminatory outcome – one which eliminates tariffs and importantly addresses behind the border trade barriers.”

Keith Good

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