FarmPolicy

December 18, 2018

Wednesday Morning Update- Policy Issues; Trade; and, the Ag Economy

Note: Thanks very much to the many readers who have expressed how much they have enjoyed the FarmPolicy newsletter over the years. The numerous Emails and tweets from readers about the newsletter ending next week have been extraordinarily gracious and very much appreciated.

Policy Issues

Philip Brasher reported yesterday at Agri-Pulse that, “Republicans and Democrats slammed the Agriculture Department over allegations of abuse at a livestock research facility in Nebraska and accused agency officials of stonewalling lawmakers’ requests for information.

“‘It sounds like it was a house of horrors that was going on there,’ said Rep. Tom Rooney, R-Fla., referring to allegations about the U.S. Meat Animal Research Center contained in a New York Times article published in January.

“Rooney, one of several members of the House Agriculture Appropriations Subcommittee who grilled USDA officials about the issue, said the allegations cast the cattle industry in a bad light. The idea that the research highlighted in the article was undertaken at the industry’s request was ‘bull-you-know-what,’ Rooney said.”

Mr. Brasher noted that, “Rep. Kevin Yoder, R-Kan., said the article was ‘hard to read’ and a ‘sad testament’ to USDA research.

“The subcommittee’s ranking Democrat, Sam Farr of California, took officials to task for declining to answer questions from the subcommittee’s staff. ‘You’re really trying to hide this story. You’re trying to bury it,’ he said.”

Yesterday’s Agri-Pulse article noted that, “Catherine Woteki, USDA’s undersecretary for research, education and economics, vigorously defended the facility’s current practices and emphasized that the allegations had not been proven and were the subject of an ongoing investigation by the department’s inspector general.

“The draft report of a review panel that checked over the center after the article was published ‘clearly states that animals are being treated well, that they found no evidence of abuse,’ she told the panel. An animal-care committee also is being re-established to provide oversight at the facility’s research projects.

“She said the department’s response to the subcommittee’s questions was based on internal discussions with USDA’s general counsel and congressional relations team.”

A news release yesterday from the House Ag Committee stated that, “Today, the House Committee on Agriculture held a public hearing to examine the costs and impacts of states implementing mandatory biotechnology labeling laws. In 2014, 125 bills mandating the labeling of biotechnology were introduced in 30 different states.  According to a report by a Cornell Business School professor, shifting from the current voluntary system to a mandatory system in New York State would significantly increase food costs. The report found that a family of four in New York State could pay, on average, an additional $500 in annual food costs if mandatory labeling becomes law. The state would also incur an estimated $1.6 million in costs from writing and enforcing new regulations and litigating potential lawsuits related to mandatory labeling, which could run as high as $8 million and would likely be passed onto consumers.

“The committee recognizes the desire among some consumers for more information about food. Voluntary marketing programs already exist in the Department of Agriculture that provide consumers with this information in an effective and affordable manner, such as the National Organic Program.”

Committee Chairman Mike Conaway (R., Tex.) indicated yesterday that, “In Washington and across the country, we are hearing a great deal of misinformation about so-called ‘GMOs’ and the use of biotechnology in food and agricultural production. These unfounded attacks are not supported by the facts and mislead both consumers and policymakers. This misinformation could threaten our farmers’ ability to feed an ever-growing population and result in higher food costs for consumers.

Biotechnology is an essential tool for farmers to have in the toolbox if we plan to feed an estimated 10 billion people by the year 2050 in an environmentally sound, sustainable, and affordable way. Unfortunately, threats exist to our ability to fully utilize this technology in the form of proposed Federal and State laws, as well as some State laws that will soon implemented if we don’t act.”

Biotech, Horticulture, and Research Subcommittee Chairman Rodney Davis (R., Il.) noted yesterday that, “‘Biotech labeling is an important issue that we cannot afford to get wrong,’ said Davis. ‘A patchwork of inconsistent or unnecessary regulations from states could add hundreds to a family’s grocery bill each year. As we continue this discussion regarding labeling, we must remember the benefits biotech has on our environment and the role it plays in feeding a growing population.’”

Ag Committee ranking member Collin Peterson (D., Minn.) indicated yesterday that, “This is an issue that I hope that we can find a way to address because if we don’t we’re going to have 50 states with 50 different labeling programs and that’s just not going to work. If we don’t do something to stop this we could end up with something similar to what we’re seeing with California’s egg standards.”

Meanwhile, AP writer Mary Clare Jalonick reported today that, “Inspired by the popular ‘USDA organic’ label, House Republicans are proposing a new government certification for foods free of genetically modified ingredients.

The idea is part of an attempt to block state efforts to require mandatory labeling of foods that include genetically modified organisms, or GMOs. The label would be voluntary, says Rep. Mike Pompeo, R-Kan., who is including the idea in legislation he plans to introduce as soon as Wednesday.

Pompeo says a government-certified label would allow companies that want to advertise their foods as GMO-free to do so, but it would not be mandatory for others. The food industry, which backs Pompeo’s bill, has strongly opposed individual state efforts to require labeling, saying labels would be misleading because GMOs are safe.”

Also yesterday, Sarah Gonzalez reported at Agri-Pulse that, “The House Agriculture Committee is considering reauthorization of the agency that oversees swaps and futures market. During a subcommittee hearing today, Democrats and Republicans on the panel agreed that legislation for the Commodity Futures Trading Commission (CFTC) should allow end-users who are legitimate ‘commercial market participants’ to avoid being inadvertently classified as financial entities because of their commercial activities.”

The Commodity Exchanges, Energy, & Credit Ag Subcommittee continues its look at CFTC issues at a hearing scheduled for this afternoon, while the Livestock & Foreign Agriculture Ag Subcommittee will meet this morning for a hearing, “To examine the implications of potential retaliatory measures taken against the United States in response to meat labeling requirements.”

The Senate Ag Committee met yesterday to consider “the impacts of the U.S. Environmental Protection Agency’s proposed ‘Waters of the United States’ (WOTUS) rule.”

Senate Ag Committee Chairman Pat Roberts (R., Kan.) indicated yesterday that, “I find it particularly troubling that despite the unanimous outcry from a broad coalition of stakeholders and industries that have voiced concern about the manner and process by which EPA advanced this proposed rule — EPA continues to plunge ahead.

“Just last week, EPA Administrator Gina McCarthy made public statements that the agency is working to finalize the proposed rule as early as this spring or summer.

“However, the Administrator did say that they are changing the name of the rule from ‘Waters of the United States – WOTUS’ to the ‘Clean Water Rule.’ Quite frankly Administrator McCarthy – merely changing the name is not enough…change the rule. If you want to protect clean water, it is time to listen and change the rule in a manner that allows for public input and collaboration AND is effective for farmers, ranchers and rural America.”

Committee ranking member Debbie Stabenow (D., Mich.) noted that, “Based on the response I received and several discussions I have had with the EPA – I believe the appropriate changes will be made to ensure that our agricultural producers get the certainty they need — and deserve. This is critically important so that our farmers and ranchers can continue operating with the confidence that their farming activities will not be regulated under the Clean Water Act. In fact, I believe we are all committed to making sure that is the case.”

Additional perspective from Committee members at yesterday’s hearing is available at the following links: Heidi Heitkamp (D., N.D.), John Thune (R., S.D.), Thad Cochran (R., Miss.), John Boozman (R., Ark.), and John Hoeven (R., N.D.).

In other developments, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “USDA is moving ahead with authority under the 2014 farm bill to limit farm-program payments for people called farm managers who are not actively engaged in real farm management or operations.

“Under the 2014 farm bill, family operations are exempted from these changes in actively engaged rules. Only farm businesses defined as ‘non-family joint ventures’ or general partnerships are affected.

“In an announcement Tuesday, USDA stated that farm managers who are in non-family joint ventures or general partnerships must now prove they are contributing at least 500 hours of farm management work per year, or at least 25% of the time necessary for the farm to operate. This likely means many operations that fit the definition of non-family joint venture or general partnership will be limited to one farm manager who can receive a commodity-program payment.”

AP writer Mary Clare Jalonick pointed out yesterday that, “The rules are in response to concerns that some people were abusing the idea of ‘actively engaged’ to qualify for subsidies. A report by the Government Accountability Office in 2013 looked at some farms that received hundreds of thousands of subsidies a year and claimed that 11 or more people were actively engaged in the operation. For some operations, unlimited numbers of so-called managers can now receive payments.”

A statement on this development from Iowa GOP Sen. Chuck Grassley yesterday indicated in part that, “The rule proposed by USDA today regarding who can qualify as ‘actively engaged’ in farming to make them eligible for farm subsidies is not as stringent as the Farm Bill amendment I authored that was approved by majority votes in both bodies of Congress.

This rule is however a small step in the right direction.”

With respect to nutrition related issues, secretary of Agriculture Tom Vilsack, Arne Duncan, the secretary of Education and Sylvia Burwell, the secretary of Health and Human Services, penned a joint opinion item yesterday at USA Today Online titled, “Keep school lunches healthy: Look to science, not politics, for reauthorization of the Child Nutrition Act.”

Also, Jason Riley authored a column in today’s Wall Street Journal titled, “The Next Welfare Reform: Food Stamps.”

 

Trade

Reuters news reported yesterday that, “Delays in finalizing U.S. legislation to speed free trade deals through Congress are casting a cloud over a 12-nation trade pact many thought was near completion, officials close to the negotiations said.

“In conversations with Reuters, officials from six countries in the Trans-Pacific Partnership said the lack of clarity over the conditions Congress would impose on U.S. negotiators was a stumbling block for the talks, frustrating some of the U.S.’s major trading partners.”

Vicki Needham reported yesterday at The Hill Online that, “A new trade effort got a boost on Tuesday with the addition of a Democratic power trio to sell the Obama administration’s trade agenda on Capitol Hill.

“Former Massachusetts Gov. Deval Patrick, former Washington State Gov. Christine Gregoire, and former U.S. Trade Representative Ron Kirk have joined the Progressive Coalition for American Jobs (PCAJ), a new effort launched by Democrats and progressives to push for free trade.”

 

Agricultural Economy

Rebecca Howard reported today at The Wall Street Journal Online that, “New Zealand’s exports and its dairy farmers could be in for some good news. Prices for one of the island nation’s key exports, whole milk powder, could start pushing higher, dairy giant Fonterra Co-Operative Group Ltd.’ s chief executive said.

“Whole milk powder is currently undervalued but prices could increase if China returns to a milk-supply deficit, Theo Spierings told The Wall Street Journal in an interview.

“Any increase in dairy prices would be good news for New Zealand, 30% of whose exports are milk related. New Zealand’s agriculture-rich economy has been supported in recent years by surging demand from Asia’s rising middle classes for its dairy exports. Global dairy prices, however, tumbled more than 50% in 2014, hurt by strong global production, high inventories in China and a supply glut caused by Russia’s ban on U.S. and European food imports—including dairy products.”

Reuters writer Tom Polansek reported yesterday that, “Shares of the world’s biggest poultry producers fell on Tuesday as expectations for an increasing U.S. chicken supply to pressure profit margins overshadowed a decision by top importer Mexico to ease trade restrictions.

“Poultry companies have been enjoying large profits recently thanks to high meat prices and declining feed costs. However, a larger-than-expected rise in chicken supplies could push down prices and squeeze margins, analysts said.”

Neil Munshi reported earlier this week at The Financial Times Online that, “Monsanto has called for the World Health Organisation’s cancer agency to retract a report that found that glyphosate, the world’s most widely-used herbicide, a ‘probable carcinogen’.

Brett Begemann, chief operating officer of the world’s largest seed maker, told a media conference call that the WHO study ‘contradicts decades’ of well-established science.

“The comments were in response to a report published on Friday in the journal Lancet Oncology by researchers for WHO’s International Agency for Research on Cancer.”

Keith Good

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