FarmPolicy

August 18, 2019

Budget; Biotech; Agricultural Economy; and, Policy Issues

Budget

Ashley Parker and Robert Pear reported in yesterday’s New York Times that, “After moments of high drama, dry process and acrimony, the Senate passed a sweeping $1.1 trillion spending package Saturday night, abruptly ending several days of chaotic legislative maneuvers and clearing the bill for President Obama to sign.

“The legislation, which will fund most of the government through the fiscal year that ends in September, passed in a bipartisan vote, 56 to 40, after a turbulent process — a fitting coda for a governing body that has often failed to govern.”

Robert Pear reported on the front page of today’s New York Times that, “Health insurance companies preserved their tax breaks. Farmers and ranchers were spared having to report on pollution from manure. Tourist destinations like Las Vegas benefited from a travel promotion program.

“Also buried in the giant spending bill that cleared the Senate on Saturday and is headed to President Obama for his signature were provisions that prohibit the federal government from requiring less salt in school lunches and allow schools to obtain exemptions from whole-grain requirements for pasta and tortillas.

“The watered-down standards for school meals were a setback for the first lady, Michelle Obama, who had vowed to fight ‘until the bitter end’ for tougher nutrition standards. But they were a victory for food companies and some local school officials, who had sought changes in regulations that are taking effect over several years.”

Today’s article noted that, “The School Nutrition Association, representing cafeteria directors, welcomed the bill’s language on sodium and whole grains. The lower sodium standards would have been ‘extremely difficult to achieve,’ and the government needs more research before compelling schools to make such costly changes, said the association, which receives financial support from food companies.”

Furthermore, Mr. Pear indicated that, “The National Cattlemen’s Beef Association scored several victories that require the government to keep its regulatory hands off farms and ranches [see related news release from Saturday].

The bill says the government cannot require farmers to report ‘greenhouse gas emissions from manure management systems.’ Nor can it require ranchers to obtain greenhouse gas permits for ‘methane emissions’ produced by bovine flatulence or belching. The Environmental Protection Agency says on its website that ‘globally, the agriculture sector is the primary source’ of methane emissions.”

Today’s article added that, “The spending bill requires the E.P.A. to withdraw a new rule defining how the Clean Water Act applies to certain agricultural conservation practices. It also prevents the Army Corps of Engineers from regulating farm ponds and irrigation ditches under the Clean Water Act.

“‘This is a major victory for farmers and ranchers, who consistently tell many of us that they are concerned about the potential of the E.P.A. and the Army Corps of Engineers’ overreach into their operations,’ Representative Mike Simpson, Republican of Idaho, said.”

Speaking on the Senate floor on Friday, Deb Fischer (R., Neb.) referenced some of the EPA issues in the omnibus spending measure, and indicated that, “A farmer’s field is not a water of the U.S. A farm pond is not a water of the U.S. An irrigation ditch is not a water of the U.S. But, there are overzealous regulators out there who disagree. We have seen the Corps try to regulate a family farm when the farmer tried to change from a ditch irrigation system to a piped irrigation system to improve water efficiency.”

Sen. Fischer added that, “Section 111 stops that regulatory overreach and preserves the protections Congress has provided to ranchers and farmers by making it clear that the recapture provisions of section 404(f)(2) do not apply to normal farming, forestry, and ranching activities, upland soil and water conservation practices, and the construction and maintenance of farm or stock ponds or irrigation ditches and the maintenance of drainage ditches.

“Of course, the greatest abuse of the Clean Water Act is the Obama Administration’s proposed ‘waters of the United States’ rule, and this section does not alleviate the concerns that farmers, small businesses, and local communities have with the proposed rule. This section will, however, ensure that the will of Congress to protect farmers and ranchers from burdensome 404 permitting requirements is carried out, and I will continue to do everything in my power to stop EPA from finalizing the proposed ‘waters of the United States’ rule next year.”

More specifically with respect to nutrition, Lydia Wheeler reported on Friday at The Hill Online that, “Health advocates are blasting provisions in federal funding legislation that are seen as dialing back school nutrition standards, even as the White House seeks to downplay the riders as ‘minor adjustments’ to the first lady’s signature policy.

“The bill known as ‘cromnibus,’ contains language that would allow states to exempt struggling districts from having to offer all whole grain products and eases requirements for schools to reduce sodium levels.”

The Hill article added that, “Critics who lobbied against more restrictive nutrition rules hailed the language as a win.

“The American Heart Association, meanwhile, worries the changes will open the door for more legislation that will allow schools to revert back to serving pizza and French fries every day for lunch.”

Tennille Tracy reported in today’s Wall Street Journal that, “The Santa Clarita Valley school systems in California lost $250,000 in cafeteria sales last year when students rejected healthier fare designed to meet new federal nutrition standards. Now the districts are trying to win back diners by hiring a chef trained at Le Cordon Bleu, the prestigious culinary school.”

The Journal article explained that, “School cafeterias, long run by no-frills lunch ladies, are turning to fancier chefs and culinary-school graduates to improve their food. While some districts have employed professionally trained cooks for years, the introduction of tougher nutrition rules in 2012 is making them more of a necessity as students shun wholesome dishes and cafeteria revenues fall, schools say.”

Ms. Tracy indicated that, “The new standards, pushed by first lady Michelle Obama, require schools to provide a greater amount of fruit, vegetables and whole grains at breakfast and lunch. In the two years since the standards took effect, the number of students participating in the lunch programs dropped by an average of 1.4 million a day, the largest decline in more than 30 years, according to U.S. Agriculture Department data.”

Today’s article stated that, “Some school districts say they don’t have the money to hire experienced chefs. Half of the school meal operators surveyed by the School Nutrition Association in November said they expect their costs to exceed revenue this school year. The association wants Congress to provide a one-year waiver to schools losing money on their meal programs.

The USDA said in July that more than 90% of the schools were in compliance with the nutrition standards. The agency has awarded more than $35 million in grants to help schools buy kitchen equipment, such as food processors and walk-in freezers.”

Also with respect to the omnibus appropriations measure (“CRomnibus”), Chris Clayton pointed out last week at the DTN Ag Policy Blog that, “The bill blocks the Farm Service Agency from closing 250 county offices or eliminating 815 staff. The budget agreement actually puts a ‘temporary moratorium’ on closing FSA offices or relocating employees until a comprehensive assessment of FSA workload is completed by USDA. ‘This agreement reiterates dissatisfaction with the agency’s budget submission. The budget request did not provide a rationale for the proposed office closures and staffing changes, did not clearly describe the effect of the proposed actions, and did not include a timeline for implementation that demonstrates how savings could be achieved.’

“USDA also is directed to operate the Marketing Assistance Loan Program in a way that encourages redemption and minimizes forfeitures of commodity loans.

“Within 15 day or a final resolution at the World Trade Organization, or May 1, 2015, whichever comes first, USDA must submit a new plan for COOL to the House and Senate Agriculture Committees with recommendations for any changes in federal law ‘that does not conflict with, or is in any manner inconsistent with, the trade obligations of the United States.’”

Christopher Doering noted last week at The Des Moines Register Online that, “Buried deep within the 1,603-page annual spending package expected to be approved this week in Congress is $2 million to address the Porcine Epidemic Diarrhea, a virus that has ravaged the country’s hog herd.”

A news release on Saturday from the American Soybean Association (ASA) noted in part that, “The Senate has passed a combination continuing resolution and omnibus spending bill that will fund the federal government for the 2015 fiscal year, after the House passed the same legislation earlier this week. Informally dubbed the ‘CRomnibus,’ the bill designates funding for 11 individual spending bills, including the agriculture appropriations legislation. The [ASA] thanked Senate committee Chairwoman Barbara Mikulski (D-Md.) and House committee Chairman Hal Rogers (R-Ky.) for their leadership on the bill.

“‘This bill represents a mixed bag, with some ASA-championed programs receiving steady or increased funding, while other ASA-supported programs receiving cuts. It doesn’t give us one hundred percent of what we need, but it does recognize a significant number of our priorities by making investments in the projects and programs that soybean farmers use every day,’ said Wade Cowan, ASA’s president and a farmer from Brownfield, Texas.”

On the issue of tax extenders, Bernie Becker reported on Saturday at The Hill Online that, “Congress is poised to enact a $42 billion tax bill that opponents on the left and right insist is full of corporate giveaways, and even supporters acknowledge is no way to set tax policy.

The Senate is expected to vote in the coming days to restore more than 50 tax breaks, all of which expired at the end of 2013, just through the end of this year.

“House Republicans passed the measure last week, after President Obama and other Democrats torpedoed an emerging deal that would have made dozens of these incentives permanent.”

 

Biotech

Jesse Newman reported in today’s Wall Street Journal that, “China’s tough new stance on imports of genetically modified crops is shaking up a little-noticed U.S. industry: hay.

“Over the summer China began testing imports to detect the presence of hay made from a biotech alfalfa that Beijing hasn’t approved. Consequently, shipments to China have plunged since midsummer and some deliveries have been rejected.”

The Journal article explained that, “Hay is the second major U.S. crop roiled recently by China’s more-stringent position on biotech crops. U.S. corn exports to China have plunged 87% by weight this year following Beijing’s move last autumn to reject shipments containing a genetic modification developed by Syngenta AG . U.S. farmers and grain traders including Archer Daniels Midland Co. have sued Syngenta, claiming it acted irresponsibly by selling the biotech seeds in the U.S. before Chinese authorities approved the corn. Syngenta has said the suits have no merit and it has been transparent about the approval process for the biotech corn. Last week, the company said it expects China soon will grant approval of the corn.

China’s moves are posing tough questions for agricultural companies about how to balance the growing use in the U.S. of genetically modified seeds—which are altered to make them resistant to pests or able to withstand herbicides— against tighter restrictions elsewhere. China has approved some types of genetically modified seeds, but its approval process often takes longer than in other big countries, according to U.S. industry executives.”

Reuters writer Tom Polansek reported on Friday that, “Syngenta AG expects to win Chinese government approval soon for imports of a type of genetically modified corn at the center of lawsuits over U.S. grain shipments rejected by Beijing, a company spokesman said on Friday.

“Syngenta, one of the world’s largest seed companies, will make an announcement when it receives official documentation from China that Agrisure Viptera corn, known as MIR 162, has been cleared for import, spokesman Paul Minehart said. He declined further comment.”

 

Agricultural Economy

Bloomberg writers Shruti Date Singh and Lydia Mulvany reported on Saturday that, “Eggs are about to get more expensive, as California moves to make sure hen houses are roomy enough to allow the birds to lay down, stand up, extend their wings and dance around.

Farmers nationwide who want to continue selling to the most populous U.S. state are moving to comply with a new law, taking effect next month, that requires the larger cages. They either must build more hen houses, or house fewer birds in the ones they have, raising their costs.

Wholesale egg prices already average a record $2.27 a dozen nationally, up 34 percent from a year earlier. With the new law, the price Californians pay may jump as much as 20 percent for shell eggs in three to six months, according to Dermot J. Hayes, an agribusiness professor at Iowa State University in Ames. The rest of the country will probably follow suit, he said.”

The AP reported on Friday that, “Falling gas and food costs pushed down overall wholesale prices last month, evidence that cheaper oil is limiting inflation…[Friday’s Producer Price Index indicated that] food prices decreased 0.2 percent, led by sharp declines in the cost of pork and fresh fruit.”

Kelsey Gee reported in today’s Wall Street Journal that, “That holiday roast may be easier to swallow. The cost of a steak may not go down this month, but consumers may get a break from a dramatic increase in prices since the start of the year.

“Live-cattle prices in the U.S. rallied to $1.71 a pound on Nov. 17, driven by persistently tight supplies. The nation’s herd of market-ready animals is the smallest in decades, a factor that boosted beef prices for retailers and consumers to records as well. Last month, the U.S. Department of Agriculture estimated that consumer prices for beef would rise by up to 12% this year, compared with overall inflation for food at 2.5% to 3.5%.”

Ms. Gee pointed out that, “Now, beef buyers are pushing back, at a time when the market usually sees a seasonal uptick in purchases of ribs, roasts and other items before the Christmas holiday.

“Although the most figures on retail prices date to October, when the cost of beef was still rising, live-cattle prices have dropped by about 5% in the past month, falling from all-time highs because of slack demand. In the wholesale market, prices for choice-grade beef fell 2.2% over the week through Friday, a sign of sluggish demand to some industry watchers.”

Meanwhile, Henry Fountain reported in Saturday’s New York Times that, “The strong Pacific storm that left Northern California a sodden mess will not have much impact on the state’s historic drought, meteorologists said Friday.

“As the storm moved south into the Los Angeles area after causing floods, mudslides, power failures and at least two deaths in the north on Thursday, water levels in the state’s two largest reservoirs, Shasta and Oroville, showed some improvement. As of midnight Thursday, according to the state’s monitoring system, Shasta was at 29 percent of capacity, up from 23 percent on Dec. 1, and Oroville was at 30 percent, compared with 26 percent at the beginning of the month. Both reservoirs are still far below historic averages for mid-December.”

NOAA’s National Climatic Data Center tweeted on Friday that, “Dec 9: Early Dec heavy rains not enough to reduce long-term ‪#CAdrought yet ‪http://www.drought.gov  ‪#DroughtMonitor

And the National Weather Service tweeted yesterday that, “Sizeable plume of moisture with upcoming storm, though not as wet as last, more focused on southern half of the area”

In other news, the Los Angeles Times continued its series highlighting the working conditions of some farm laborers in Mexico, publishing its third article, titled, “Company stores trap Mexican farmworkers in a cycle of debt”, while the final article appeared on the front page of yesterday’s paper.

And in trade news, Aaron Back reported yesterday at The Wall Street Journal Online that, “Voters handed Japanese Prime Minister Shinzo Abe another chance to revive Japan’s economy on Sunday.”

However, the article noted that, “On the stump, he hardly mentioned the Trans-Pacific Partnership, a proposed free-trade pact with the U.S. and other Pacific Rim nations. Many in Mr. Abe’s own party, which relies on rural areas for support, fear exposing farmers to global competition.”

U.S. Trade Representative Michael Froman spoke about the President’s trade agenda on Friday on the MSNBC television program, Andrea Mitchell Reportsvideo replay here– “Andrea Mitchell talks to U.S. Trade Representative Michael Froman about one of the top priorities for the Obama administration in his final two years at the White House: getting two major international trade agreements to the finish line.”

Also, Reuters writers Niu Shuping and David Stanway reported on Friday that, “Ukraine is struggling to honor corn contracts signed with China in October and may default on about 20 percent of the volumes because of a shortage caused in part by the political turmoil engulfing the country, industry sources said.”

 

Policy Issues

A news release Friday from USDA indicated that, “Agriculture Secretary Tom Vilsack today announced that greater protection is now available from the Noninsured Crop Disaster Assistance Program for crops that traditionally have been ineligible for federal crop insurance. The new options, created by the 2014 Farm Bill, provide greater coverage for losses when natural disasters affect specialty crops such as vegetables, fruits, mushrooms, floriculture, ornamental nursery, aquaculture, turf grass, ginseng, honey, syrup, and energy crops.”

Keith Good

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