FarmPolicy

September 19, 2017

Tuesday Morning Update: Policy; Ag Economy; Trade; Immigration; and, Regs

Note: FarmPolicy.com ends publication on Friday.

Policy Issues

An interview with House Ag Committee Ranking Member Collin Peterson (D., Minn.) aired on yesterday’s AgriTalk radio program with Mike Adams.

The interview, which focused on the Farm Bill, trade, regulations, and biotech issues, was recorded last week and was conducted before a group of Farm Bureau members from Missouri, Minnesota, Iowa, and Texas.

An unofficial FarmPolicy.com transcript of the AgriTalk interview is available here.

Rep. Peterson noted that, “Well, you know, I opposed NAFTA vigorously, and we had it defeated for a while. We were told, at the time, that we were going to have twice as many ag exports in NAFTA as we had imports, and what I predicted ended up happening—we had twice as many imports as we had exports under NAFTA. We had a problem in sugar that we’ve somewhat resolved now, but we had to work through that.

“So one of my big issues with the TPP is that we finally solved some of the problems that were caused by NAFTA, and if we don’t solve it in the TPP, we’ll never solve it. And one of the biggest problems is dairy. And it’s Canada dairy. A lot of people aren’t focused on this, and a lot of people don’t even know about it.

“But in the NAFTA, we allowed the Canadians to keep their supply management system. And so if you dairy farm in Canada, you are making a lot of money, considerably more than you make in the United States. Also, when we try to sell dairy products to Canada, there’s a tariff, but when they sell to us there’s no tariff. So the result of that has been, because the Canadian system can’t grow, and they’re making all this money in these co-ops, we now have the Canadian co-ops in Quebec owning—they’re No. 1 and 3 in ownership of dairy processing in the United States. That’s the effect of what we did.”

Rep. Peterson added that, “And it’s got to be fixed, or at least get on a path to be fixed, in this deal for me to support it. So that’s one of my main issues. Also it applied—poultry and eggs are also supply managed in Canada. I’m not as familiar with the economics of that as I am of dairy. But that’s the big issue.

“Another big issue is getting access in the Japanese market for beef and rice. Now, Froman sat in my office and said we will get a pathway or get changes in the Canadian supply management system, and we will get access to the Canadian rice and beef market or we won’t have a deal. And I said, well, you’re saying to me that we’re not going to have a deal, because I am very skeptical that the Canadians will be able to agree to anything in the supply management area.”

The AgriTalk discussion also included the following exchange:

Mike Adams: “Biotech labeling. National standards or leave it up to the states?”

Rep. Peterson: “Well, we need a voluntary label, national. We need to preempt these states from setting their own, you know, own laws. The last thing we need is to have 50 different states have 50 different labels. That’s not workable. And we had a good hearing yesterday. We got some people criticized it.

“But, you know, the reality is, you know, I’ve told some of these big companies that if Vermont is successful with this appeal to their lawsuit, and they are allowed to go ahead with their labeling law, I wish that these big companies would just not sell to Vermont, and let them understand what the effect of what they’re doing is.

“The same thing in California. I don’t want them to fix the egg problem. If those people created that problem, and I hope they run out of eggs, and I hope eggs go to 20 bucks a dozen, you know, so people figure out what’s going on, you know, so… [Applause.]”

The Washington Post editorial board indicated yesterday that, “Eighty-eight percent of scientists polled by the Pew Research Center in January said genetically modified food is generally safe to eat. Only 37 percent of the public shared that view. The movement to require genetically modified food products to be labeled both reflects and exploits this divergence between informed opinion and popular anxiety.

Mandated labeling would deter the purchase of genetically modified (GM) food when the evidence calls for no such caution. Congress is right to be moving toward a more sensible policy that allows companies to label products as free of GM ingredients but preempts states from requiring such labels.”

Meanwhile, Cristina Marcos reported yesterday at The Hill Online that, “Rep. Dina Titus (D-Nev.) has unveiled legislation to establish a program, so schools and food banks can offer meals to low-income students on weekends and holidays.

“Titus’s bill would create a five-year pilot program for providing food to students eligible for free or reduced lunch during the week, when school is out.”

Josh Barro pointed out in today’s New York Times that, “Putting photos on the cards people use to redeem food stamps seems like a simple anti-fraud idea. But in Massachusetts, which started putting photos on Electronic Benefit Transfer cards in 2013, it hasn’t worked out for reasons that should have been obvious from the outset, according to a report from the Urban Institute, a left-of-center think tank.

The main reason is that, under federal law, you sometimes have a right to use a food stamp card that was issued to someone else.

Food stamps aren’t awarded to an individual; they go to a household, and anyone in the household is entitled by federal law to use the E.B.T. card the food stamps come on. So, Alyssa Renta, a 12-year-old resident of Boston, sometimes shops for groceries using a card that has her father’s photo on it — and retailers accept it, as they are supposed to under the law. If you don’t have to be the person in the photo to use the card, how is the photo supposed to stop misuse?

Also with respect to nutrition issues, Nigel Duara reported in yesterday’s Los Angeles Times that, “On a weekday shopping trip to the only real grocery store for 30 miles, Ann Neagle paused before a bag of Red Delicious apples, $7 for a dozen, plus a new discount — the Navajo Nation lifted the 5% sales tax on fresh fruits and vegetables.

“That’s the carrot in the tribe’s attempt to curb rampant obesity, diabetes and heart disease. Next comes the stick: A 2% tax on junk food.

“That tax, the first of its kind nationwide, will hit one of the most economically depressed areas in the country, where more than 40% of people are unemployed. Neagle is worried.”

 

Agricultural Economy

Jesse Newman reported in yesterday’s Wall Street Journal that, “U.S. farmers increasingly are eschewing ‘King Corn’ in favor of planting soybeans, a dramatic shift that is shaking up futures markets and rippling through the broader agricultural economy.

Analysts predict farmers will plant record soybean acreage this spring for a second consecutive year while cutting corn plantings for the third in a row. The move comes as growers grapple with a roughly 50% decline in the price of corn, the nation’s largest crop by volume, since 2012.

“The U.S. Department of Agriculture on Tuesday will forecast corn and soybean plantings in a key report based on farmer surveys. Analysts on average expect soybean acreage to rise 3% from last year to 85.9 million acres, while corn will fall 2% to 88.7 million acres, according to a survey by The Wall Street Journal [related graph].”

University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Expected Corn and Soybean Returns and Shifts in Acres”) that, “Tomorrow’s (March 31) release of USDA’s Prospective Plantings report will focus attention on 2015 plantings of corn and soybean. Many expect corn acres to decrease and soybean acres to increase. Where acreage shifts could occur are examined by calculating 2015 expected corn minus soybean returns for counties in the United States. These projections suggest that shifts to soybeans are more likely outside the Corn Belt. Moreover, expected 2015 returns suggest smaller acreage shifts than in other recent years.”

The USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report yesterday, which stated in part that, “The corn price, at $3.79 per bushel, is down 2 cents from last month and 56 cents below February 2014 [related graph]…and…The soybean price, at $9.92 per bushel, decreased 38 cents from January and is $3.28 below February a year earlier [related graph].”

Bloomberg writer Marvin Perez reported yesterday that, “Farmers in West Texas, the main U.S. growing region, will cut cotton acreage this season as a drop in prices spurs them to sow alternative crops, according to the state’s biggest producer group.

Plantings of the fiber will probably fall 5 percent to 15 percent from 3.9 million acres last year, said Shawn Wade, director of policy analysis and research at Plains Cotton Growers Inc. The Department of Agriculture will issue its acreage estimates on Tuesday for U.S. crops.”

And Bloomberg writers Megan Durisin, Jeff Wilson and Lydia Mulvany reported yesterday that, “Across the Great Plains, U.S. farmers are turning to a little-known grain called sorghum for relief from a two-year slump in agriculture prices.

“A kernel-yielding stalk that’s native to Africa, sorghum has three things going for it right now: it’s cheap to plant; it holds up better in drought-like conditions than other crops; and most importantly, demand is soaring in China, where farmers feed the plant to their hog herds, and moonshiners make it into a whiskey-like liquor called baijiu. While corn, soybeans and wheat slumped into bear markets last year amid a global supply glut, sorghum prices have held stable.”

In other news, Grant Rodgers reported on the front page of yesterday’s Des Moines Register that, “Does protecting America’s lucrative genetically modified seed corn industry warrant the use of national security laws intended to fight terrorists and government spies?

The FBI says yes, and it has invoked the broader powers afforded by the Foreign Intelligence Surveillance Act, or FISA, to surreptitiously gather evidence against two Chinese siblings accused of plotting to steal patented seed from Iowa cornfields, according to court records.

“Stealing hybrid seeds enhanced with traits such as drought resistance doesn’t pose the same immediate threat as a suicide bomber, but the FBI treats economic espionage and similar trade secret theft as dangerous threats to national security.”

 

Trade

Robin Harding reported yesterday at The Financial Times Online that, “Japan’s economy minister has called on US President Barack Obama to ramp up his lobbying of Democrats to secure congressional authority for the Trans-Pacific Partnership, as the mammoth trade deal approaches a make-or-break deadline in the next few months.

“The rare direct appeal by Akira Amari, the Japanese minister responsible for the talks, shows how nerves on both sides of the Pacific are fraying as the effective deadline for a deal draws close.”

And William Mauldin reported yesterday at The Wall Street Journal Online that, “Wavering support in Congress has emerged as the biggest obstacle holding up completion of a 12-nation Pacific trade pact under negotiation for nearly a decade.

“The Obama administration’s push to win fast-track powers from Congress to expedite the deal’s passage has stalled amid disagreements among lawmakers over how much leverage they should have over the pact’s final form.

“That uncertainty is stirring fear among many of the 11 countries negotiating the Trans-Pacific Partnership with the U.S., who say they need proof Congress is on board before agreeing to final conditions in the deal.”

 

Immigration

Tina Susman reported on the front page of yesterday’s Los Angeles Times that, “When Mike McMahon’s Latino employees need to go to the bank, the pharmacy or the grocery store, he makes sure someone drives them to town, waits while they run errands, and then brings them safely back to his dairy farm.

“Even then, there is no guarantee law enforcement in their small, rural community won’t spot the workers, ask for their IDs, and put them on a path toward deportation if they cannot prove they are here legally. It is a risk that dairy farmers in this agricultural region have faced for years, but it is hitting them harder as immigration reform languishes in Washington and the nation’s demand for milk-heavy products like Greek yogurt soars.

“‘It’s just crazy,’ said McMahon, who has several hundred cows at his farm more than 200 miles north of New York City.”

The article noted that, “McMahon and other dairy farmers in central and upstate New York are in a quandary. On one hand, farms have thrived because of several factors, including the popularity of yogurt in recent years and drought in other milk-producing countries. At the same time, they are battling to find the reliable, year-round labor that 24/7 milking operations require.”

A news release yesterday from Rep. Dan Newhouse (R., Wash.) indicated that, “[Rep. Newhouse] led a bipartisan letter signed by 61 House Members to Speaker Boehner and House Judiciary Committee Chairman Bob Goodlatte (R-VA) requesting that agricultural labor reforms that give farmers access to a legal, reliable and stable workforce accompany implementation of measures to stem the flow of illegal immigration.”

 

Regulations

The Wall Street Journal editorial board indicated in today’s paper that, “Washington has spent the years since the financial panic of 2008 targeting big banks for revenge, but as so often happens the politicians ended up shooting their smaller competitors. So congratulations to the Bank of Bird-in-Hand, which Journal reporter Ryan Tracy reports is ‘the only new bank to open in the U.S. since 2010, when the Dodd-Frank law was passed and enacted.’ It’s based in a rural village in Amish country in Pennsylvania.

Mr. Tracy reports that the bank has 16 employees, one of whom does nothing but compliance. Last year the management team spent over a month preparing for its first annual exam, a three-week visit from a team of about 10 FDIC and state examiners, who visited in shifts. This fits the pattern we’ve heard again and again from community bankers, who say they’ve been deluged with regulatory costs aimed at the big banks that are better able to absorb them.

Dodd-Frank thus appears to have achieved the opposite of its intentions.”

Keith Good

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