FarmPolicy

June 16, 2019

Ag Appropriations- Policy Issues; Ag Economy; Regulations; and, Biofuels

Agriculture Appropriations- Policy Issues

The House Majority Leader’s Weekly Schedule for July 7 does not include a reference to the Agriculture Appropriations measure.

Recall that the Ag Appropriations bill contains a provision, “to allow school districts to temporarily opt out of school dietary requirements championed by first lady Michelle Obama.”

Robert Gebelhoff reported earlier this week at the Milwaukee Journal Sentinel Online that, “Schools across the nation are preparing to work with stricter standards for nutrition from the U.S. Department of Agriculture, as part of a nationwide campaign championed by first lady Michelle Obama to eliminate empty calories. The new standards took effect Tuesday for all schools that participate in the National School Lunch Program and will build off previously implemented standards that limited serving sizes and restricted what food was healthy enough for the program.

“What can students expect to find? Wheat bread, low-calorie drinks, meals with limited sugar, fat and salt.

Some district officials are saying they’re all for healthy food, but they have to sell enough hot lunches to break even on their program — and that won’t work if the kids shun the food. They also are a little prickly about federal officials telling them what to do.”

Mr. Gebelhoff explained that, “Frustration by schools and parents across the country prompted Republicans in Congress to propose a waiver system that would allow schools strapped for cash the chance to receive federal subsidies from the government without having to comply with the USDA’s requirements. If it becomes law, schools that can demonstrate a net loss over a six-month period in their food service would be eligible to operate outside the standards.”

Meanwhile, an article today from Inside U.S. Trade (“Groups Push For COOL Amendment As New WTO Ruling Is Handed Down”) reported that, “Business associations and meat packing groups are eyeing the pending House agriculture appropriations bill as a vehicle to change the U.S. country-of-origin labeling (COOL) regime, just as the U.S., Canada and Mexico begin to review the outcome of a World Trade Organization compliance ruling on the U.S. COOL rule.

“A confidential interim report of the COOL compliance panel has been issued to the parties in the dispute, but is not expected to be made public until the second half of this year, according to a spokesman for the Office of the U.S. Trade Representative. He declined to comment on the contents of the report.”

The Inside U.S. Trade item added that, “The House agriculture appropriations bill was introduced on the House floor in early June, but later yanked by the leadership because of controversial amendments that were introduced. These included amendments on school nutrition, horse slaughter, and a nutritional program for women, infants and children commonly referred to as WIC.

“Industry sources said they expect the bill to come up again in the weeks following the July 4 recess, after the chamber votes on funding bills for Energy and Water and Financial Services-related agencies, but that it was uncertain whether the path toward passage was now clear.”

Recall that House Ag Committee Chairman Frank Lucas (R., Okla.) noted in a recent interview with Ron Hays of the Radio Oklahoma Network that, “That’s why ultimately, in the nutrition title, we wound up with $8 billion in savings, because I had to have a [Farm] Bill that would continue the crop insurance programs, would continue the conservation programs, the rural development programs, all of those sorts of things.

“Now, some of the governors, yes, are trying to game the system. But CBO leads me to believe that the overall savings in the nutrition title will be higher than they projected. And in some of the northeastern states that have really tried to game the system, if I am a part of a Congress next year where I have a Republican majority in the Senate and continue a Republican majority in the House, don’t be surprised, whether it’s the appropriations process or some area, that the nutrition programs are not revisited. So the old line about some of my friends in the northeast may have outsmarted themselves could well be the case next year.”

An update yesterday at WNAX Radio (Yankton, S.D.) Online stated that, “House Agriculture Committee Chairman Frank Lucas says he’s looking into ways to rein in the Supplemental Nutrition Assistance Program especially if the Republicans win the Senate in November. National Farmers Union President Roger Johnson whose group supports SNAP says there’s no point in revisiting the issue right now.

“Johnson says SNAP is needed now more than it’s ever been needed while agriculture has had a period of positive prices and good economic conditions with record farm income and record exports.

“Johnson says both the House and Senate need to focus on approving measures that can be reconciled so that laws can get passed.”

And next week, the House Agriculture Subcommittee on Horticulture, Research, Biotechnology, and Foreign Agriculture will hold a hearing on Wednesday (“To consider the societal benefits of biotechnology”) and the House Ag Subcommittee on General Farm Commodities and Risk Management will hold a hearing on Thursday (“Implementing the Agricultural Act of 2014: Commodity Policy and Crop Insurance”).

Also, a news release yesterday from USDA stated that, “The U.S. Department of Agriculture (USDA) announced today that Deputy Secretary Krysta Harden will travel to Beijing and Guangzhou, China, July 7-12.

“While in China, the deputy secretary will lead the USDA delegation at the U.S.–China Strategic and Economic Dialogue. The Dialogue will bring together high level officials and discuss the challenges and opportunities that both countries face on a wide range of bilateral, regional and global areas of immediate and long-term economic and strategic interest. The U.S. delegation will be led by Secretary of State John Kerry and Secretary of the Treasury Jacob Lew.”

 

Agricultural Economy

Bloomberg writer Rudy Ruitenberg reported yesterday that, “World food prices declined for a third month in June as the cost of grains and vegetable oils slumped amid expectations for rising supplies, the UN’s Food & Agriculture Organization said.”

The article added that, “Corn futures dropped 8.7 percent last month in Chicago on an outlook for a record crop in the U.S., the biggest grower, while wheat fell 7.9 percent as harvests in Europe are seen higher. World grain stocks at the end of 2014-15 will climb to a 14-year high, the FAO forecast in a separate report today.”

Katie Micik reported yesterday at DTN (link requires subscription) that, “The DTN National Average Corn Index was calculated at $3.98 on Tuesday and fell again Wednesday evening.

“‘If the market stays under pressure, this could be the first weekly settlement below $4.00 by the national average corn price since the week of Aug. 23, 2010,’ DTN Senior Analyst Darin Newsom said.”

And Bloomberg writers Lydia Mulvany and Megan Durisin reported yesterday that, “Cattle futures extended a rally to a record as Americans are gearing up to pay the most ever for beef served at barbecues over the Fourth of July holiday weekend.

Prices for wholesale beef jumped 24 percent this year, reaching an all-time high of $2.4865 a pound today, and cattle prices have climbed 15 percent. Futures are rising after years of drought parched pastures in Texas, the top producer, forcing ranchers to shrink the U.S. herd to the smallest in 63 years.

“Reduced supplies drove retail prices for ground beef and boneless-sirloin steak to records. Meat costs are increasing at a time when drought in California is making produce more expensive, and rising demand for U.S. dairy exports is also adding to grocery bills. An index tracking foods popular at barbecues rose 5.1 percent in May from a year earlier to the highest ever for the month, signaling record consumer expenses for holiday cookouts.”

 

Regulations

A news release yesterday from Sen. John Hoeven (R., N.D.) stated that, “[Sen. Hoeven] pressed U.S. Department of Agriculture Secretary Tom Vilsack yesterday to work with him to eliminate the proposed ‘Waters of the United States’ rule and to address widespread concern among farmers and ranchers about the regulation that would expand Environmental Protection Agency (EPA) authority to regulate small wetlands, creeks, stock ponds and ditches under the Clean Water Act (CWA). The senator has led the effort on the Appropriations Committee to provide relief for farmers and job creators from this burdensome regulation.

“‘In speaking with Secretary Vilsack, I made it clear that this rule could have far-reaching and detrimental effects on farmers and ranchers, as well as other businesses,’ said Hoeven. ‘Our farmers and ranchers are very concerned that the EPA is trying to step in and make land-use decision for them. We’re working to eliminate the proposed Waters of the U.S. regulation as it is clearly bureaucratic overreach.’”

 

Biofuels

Reuters writer Ayesha Rascoe reported earlier this week that, “The U.S. Environmental Protection Agency on Wednesday expanded the types of fuel that can be used to satisfy the federal biofuel mandate, a move that could play a role in the agency’s delayed targets for 2014 renewable fuel use.

“The EPA finalized a plan allowing compressed natural gas and liquefied natural gas produced using biogas from landfills, manure digesters and sewage treatment plants to qualify as cellulosic biofuel, fuel typically derived from sources like grasses and wood.

“Electricity generated from biogas and used to power electric vehicles would also qualify to meet the cellulosic portion of the federal biofuel mandate.”

And Donnelle Eller reported this week at The Des Moines Register Online that, “Quad County Corn Processors beat DuPont and Poet to produce the state’s first-ever gallon of commercial-scale cellulosic ethanol.

“The northwest Iowa company produced a limited amount Monday but plans to quickly scale-up so that it’s producing about 2 million gallons of cellulosic ethanol a year.

“‘We’re running 24/7 now,’ said Delayne Johnson, CEO of Quad County Corn Processors in Galva. ‘It was minimal production today, but it will be thousands of gallons tomorrow and by next week, it will be full speed.’”

Keith Good

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