November 15, 2019

Policy Issues; Ag Econ; Biotech; Trade; Immigration; CFTC; and Climate

Policy Issues- Farm Bill, Tax Extenders

Chase Purdy reported yesterday at Politico that, “‘Kansas Republican Pat Roberts, the likely next chairman of the Senate Agriculture Committee, says he has no plans to reopen the farm bill to make any substantial changes,’ Pro Agriculture’s Bill Tomson reports this morning. ‘Roberts, who sought far bigger cuts to food stamps and opposed the price-based subsidies in the 2014 farm bill, stressed in an interview with POLITICO Monday that it would be a mistake to expose the massive five-year, $500 billion piece of legislation to others who would seek to make changes.’

“‘I do not intend to open up the farm bill,’ Roberts assured. ‘That would be irresponsible.’”

Meanwhile, Chris Clayton reported yesterday at the DTN Ag Policy blog that, “When it comes to the new farm programs, ‘the flip side of choice is complexity,’ noted Chad Hart, an associate professor and crop markets specialist at Iowa State University.

“Hart was on a panel Monday at the American Bankers Association National Agricultural Bankers conference in Omaha, AKA ‘the ag bankers’ meeting.’”

The DTN update noted that, “Gary Schnitkey, an agricultural economics professor at the University of Illinois, said if farmer believe corn prices are going to average $3.30 or below over the next five years then they want to choose PLC over ARC-County. If a farmer believes corn prices are going to be higher, then they would want to go with ARC for corn.

“‘If you are concerned about moderately low prices for corn — $3.70, $3.50, $4 — ARC-County might be the better alternative,’ Schnitkey said. ‘If you are concerned about prices below $3 for corn, PLC is going to be the better alternative.’

“With an $8.40 reference price for soybeans, ARC-County is going to win out for soybeans as well. ‘For soybeans, it’s going to be hard to find ARC-County not being the higher payment.’”

Mr. Clayton added that, “Holding off on making a decision between ARC and PLC is going to help producers get a better feel for potential payments for the 2014 crop year. Farmers are going to know a lot more by early March as USDA releases county yield data for crops. Producers also are going to have a good feel for how prices are going to go for the rest of the year given that it will be nearly roughly six months into the marketing year for the crop.”

And with respect to tax extenders, Chris Clayton reported yesterday at DTN that, “One of Sen. Charles Grassley’s priorities for the lame-duck session of Congress is to approve a package of tax breaks that would make it more attractive for farmers and other small businesses to buy larger equipment and machinery.

“Grassley, an Iowa Republican, told reporters in a weekly conference call that Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, is working with House Ways & Means Chairman Dave Camp, R-Mich., to try to move the same bill of tax extenders through both chambers to speed up the process and avoid conference talks, Grassley said.

Grassley said one of his goals in the lame-duck session is to see a bill that would include returning the Section 179 deduction to $500,000 for business equipment, including farm machinery. After losing an extension at the end of last year, the Section 179 deduction was returned to a $25,000 cap for 2014.”

This DTN article pointed out that, “Leaders from both the American Farm Bureau Federation and the National Farmers Union last week separately called on Congress to pass a tax-extension package during the lame-duck session. The presidents of both organizations specifically cited the Section 179 deduction and bonus depreciation provisions.”

In a discussion on yesterday’s AgriTalk radio program with Mike Adams, Kansas GOP Senator Jerry Moran noted that, “And I think that agenda will, when you talk about jobs and the economy, I think what that means is a focus on the tax code. Certain provisions are awfully important to agriculture producers and to the businesses that serve them, particularly Section 179.”

In other news, Lynn Hicks reported yesterday at The Des Moines Register Online that, “You thought New Jersey Gov. Chris Christie’s bridge traffic jam scandal was bad? Now he can’t shake Gestation Crate-Gate.

Critics are charging that Christie is in the pocket of big pork producers from Iowa, because he hasn’t signed a bill that would outlaw the use of the crates for Garden State sows.”

The Register article noted that, “In January 2013, Christie vetoed a gestation crate bill, after it was passed by huge margins in the Legislature. Christie cited support of the crates from two national veterinary groups. The Clive, Ia.-based National Pork Producers Council praised Christie for ‘standing up to powerful lobbying groups on behalf of small, independent farmers.’

The pregnant pig protection bill is now back on Christie’s desk, after the state Assembly passed it last month.”


Agricultural Economy

Bloomberg writer Whitney McFerron reported yesterday that, “South America’s soybean harvest probably will face delays early next year, boosting demand for U.S. exports, Oil World said.

“The soybean harvest in Brazil, the world’s top exporter last year, may be delayed by two to three weeks this season, postponing the beginning of the country’s export program to the second or third week of February, the Hamburg-based researcher said in a report. Recent dry weather in Brazil meant farmers delayed planting this year, setting back crop development.

U.S. soybean exports may rise to 41 million metric tons from September through February, the most ever for that period and 3 million tons more than the same time last year, Oil World said. Combined shipments from Brazil, Argentina, Paraguay and Uruguay, South America’s top exporters, will fall by 34 percent in the same period to 7.9 million tons, according to the report.”

And Leslie Josephs reported in today’s Wall Street Journal that, “The sugar market gave investors a buzz on Tuesday, when news of a surprisingly sharp decline in Brazilian production sent prices to their biggest percentage gain in more than six weeks.

“The report, by a Brazilian trade group, rattled investors who had made large bets that sugar prices would decline amid a global glut. Those wagers—the biggest in almost 18 months—largely hinge on a big Brazilian harvest flooding the market with supply. The country produces about one-fifth of the world’s sugar.

Brazil’s main sugar-growing region experienced its worst drought in decades earlier this year, hurting the development of sugar cane, and dozens of mills have closed for the year because of poor weather and low prices, reducing Brazil’s output. But Tuesday’s report was weaker than expected.”



The AP reported yesterday that, “European lawmakers have voted to give EU member states the power to ban cultivation of genetically modified crops on their territory even if they have been approved by the 28-nation bloc.

“Tuesday’s vote on genetically modified organisms, or GMOs, must still be converted into EU-wide law by the bloc’s executive, the European Commission and national governments.”

Also, an update yesterday at indicated that, “The $ 25 million ‘Factor GMO’ study will investigate the health effects of a genetically modified (GMO) crop that has been in our food and animal feed supplies for many years. It will answer the question: Is this GMO food and associated pesticide (Glyphosate / Roundup) safe for human health?

“Farmers, retailers, governments, scientists and consumers have been involved in a heated international debate since GM foods were introduced in 1994. However, there has never been a scientific study that is comprehensive enough to give them a clear answer regarding the safety for human health of any one GM food – until now.

“Factor GMO will also add invaluable data of unprecedented power to enable regulators, governments and the general public of every country to answer the question: Is the GM food and associated pesticide tested safe at real-world levels of consumption and exposure?”

And the National Agricultural Law Center recently announced an upcoming webinar on November 19, titled, “Mandatory GMO Labeling Laws: Overview and Status of Current Legal Issues.”



Steven Chase reported yesterday at The Globe and Mail Online that, “Stephen Harper begins a second Pacific Rim trip this month in New Zealand, a natural ally on nearly every topic except for Canada’s heavily sheltered dairy industry, where the small country that’s been dubbed the ‘Saudi Arabia of milk’ is hoping regional free-trade talks will pry open Canadian markets.

“The Trans-Pacific Partnership trade talks appear to be making progress and could soon put pressure on Canada to make concessions of its own, namely slashing the exorbitant tariff walls that Ottawa uses to keep foreign milk and cheese at bay.”

The article added that, “Mr. Harper and New Zealand Prime Minister John Key are expected to talk about issues ranging from global security threats from Islamic militants in Iraq to Russian aggression in Ukraine. They are talking ahead of a Group of 20 meeting of major economies that both will attend in Australia starting on Nov. 15.

“The conversation is expected to get more awkward when the subject turns to the Trans-Pacific talks, where New Zealand is pushing for Canada to open its dairy markets. The 12 countries in the negotiations, including the United States, announced Monday that significant progress in recent months ‘sets the stage to bring these landmark … talks to conclusion.’”

Yesterday’s update pointed out that, “Trade experts say significant obstacles to a Trans-Pacific deal remain, including the question of whether Japan, which is deeply protectionist on some fronts, will agree to major concessions.

“But Mr. Tucker [Simon Tucker, New Zealand’s high commissioner] says he thinks Mr. Obama is trying to wrap up TPP talks by the middle of 2015 and that the White House will push hard for an ambitious deal because the Republican-dominated Congress will only approve one that significantly slashes trade barriers.”



Justin Sink reported yesterday at The Hill Online that, “President Obama is ‘looking forward’ to taking executive action on immigration, White House press secretary Josh Earnest said in an interview published Tuesday.

“‘The president is disappointed that this legislative solution won’t be achieved, but the president is looking forward to taking executive action on his own, to solve as many of these problems as he can,’ Earnest told Fusion.”

In his discussion on AgriTalk yesterday, Mike Adams asked Sen. Jerry Moran (R., Kans.), “If the President takes executive action on immigration, what does that force you, or what’s the reaction going to be in the Senate?”

Sen. Moran noted that, “Well, I think all senators, all Americans, ought to oppose that idea. The President operates in a way that’s contrary to what I learned in high school government class about the Constitution. The legislature, the Congress legislates. The executive branch, the President, executes those laws.

“It’s not within the President’s authority to do many of the things that he has done during his term in office, and I think the reaction from Congress—and it should be both Republicans and Democrats—is this is not your duty, this is not your responsibility. In fact, you’re violating the Constitution, the basic framework of our government. And again, where we have the opportunity to rein the President in is in the appropriations process. No money can be spent to implement this plan.”

The Los Angeles Times editorial board indicated yesterday that, “If the speaker [John Boehner] doesn’t want Obama to act unilaterally on immigration reform, his best move would be to bring the Senate measure up for a vote in the House in the coming weeks…[T]he Senate bill expires with the end of this Congress early next year, and it’s hard to foresee the new Republican Senate, under incoming Majority Leader Mitch McConnell (R-Ky.), crafting anything as rational or comprehensive as the existing bill. It should be approved by the House, and signed into law.”

The Wall Street Journal editorial board opined today that, “President Obama will set the tone for his final years in office with his looming decision on an immigration executive order. These columns supported reform long before Mr. Obama, and we still do, but if he does act on his own he’s likely to harm the immigration cause and his own legacy…[A]s for the politics, we think there’s a good chance Republicans would pass immigration reform in some form in the next two years. The leadership wants to do it, and a majority of the rank and file privately want to vote for it to end the debate. Most realize the growing importance of minority voters to the GOP’s chances of winning the Presidency.

The reforms would have to pass Congress in piecemeal fashion, rather than one giant bill like the Senate passed in 2013: a single bill each for border security, interior enforcement, guest-worker program, high-tech visas, a path to citizenship, and so on. But this makes sense because it’s easier to build House majorities for narrower legislation, especially with voters today so skeptical of Washington.”


Commodity Futures Trading Commission (CFTC)

Katy Burne reported in today’s Wall Street Journal that, “A top U.S. regulator said new rules governing the multitrillion-dollar derivatives markets are sending swaps trading overseas, threatening Wall Street jobs and potentially destabilizing financial markets.

“In remarks he intended to deliver at an industry conference this week, J. Christopher Giancarlo, the lone Republican among four commissioners at the Commodity Futures Trading Commission, said the agency’s rules have split the swaps market into domestic and foreign niches, as non-U.S. firms seek to avoid CFTC oversight.”

The Journal article stated that, “The CFTC was handed oversight of swaps under the 2010 Dodd-Frank law. For U.S. regulators, the aim was to bring swaps trading into the open and to protect against entities amassing large positions in non-U.S. markets that could harm the U.S. economy.

“Traders said the recent division in swaps trading stems from a CFTC advisory last year that U.S. trading rules apply to any transaction if it is ‘arranged, negotiated or executed’ by U.S. located personnel or agents, even if the trade is booked by, or for, a non-U.S. firm.

“Critics such as Mr. Giancarlo have said that as foreign firms seek to avoid CFTC oversight, many have pulled back from trading with U.S. firms over the past year, effectively splitting trading into U.S. and non-U.S. pools, providing fewer choices for derivatives users.”



Mark Landler reported in today’s New York Times that, “China and the United States made common cause on Wednesday against the threat of climate change, staking out an ambitious joint plan to curb carbon emissions as a way to spur nations around the world to make their own cuts in greenhouse gases.

“The landmark agreement, jointly announced here [Beijing] by President Obama and President Xi Jinping, includes new targets for carbon emissions reductions by the United States and a first-ever commitment by China to stop its emissions from growing by 2030.

“Administration officials said the agreement, which was worked out quietly between the United States and China over nine months and included a letter from Mr. Obama to Mr. Xi proposing a joint approach, could galvanize efforts to negotiate a new global climate agreement by 2015.”

Timothy Cama reported yesterday at The Hill Online that, “Senate Minority Leader Mitch McConnell (R-Ky.) wasted little time Tuesday night in blasting President Obama’s climate agreement with China as another costly, unpopular environmental move.

“‘Our economy can’t take the president’s ideological war on coal that will increase the squeeze on middle-class families and struggling miners,’ McConnell said in a statement minutes after the White House announced the bilateral deal.”

Keith Good

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