Pruitt Takes Heat - EPA Administrator: WOTUS Rule May Be Completed in 2018

OMAHA (DTN) -- The U.S. Environmental Protection Agency continues to look at whether it can approve the use of E15 year-round, EPA's Administrator Scott Pruitt said on Tuesday during his first appearance before the U.S. Senate Environment and Public Works Committee.

As members of Congress continue to explore possible reform to the Renewable Fuel Standard and amid pressure from petroleum refiners to waive RFS requirements, the expansion of the E15 market continues to be a top priority for the ethanol industry.

Allowing year-round E15 sales would bolster demand for corn, and as a result, would boost markets for other feedstocks used for cellulosic ethanol and other advanced biofuels.

"This is not a policy issue," Pruitt told the committee, "it's about the determination of legal authority. The process of internal review continues. We are working to get an answer as soon as we can."

Federal law currently forbids the sale of E15 from June 1 to Sept. 15. The ethanol industry continues to push for EPA to extend the waiver for Reid Vapor Pressure, or RVP, to E15. Currently, E15 sales are restricted in nearly two-thirds of the country during the summer months because of ozone concerns.

Ethanol and gasoline are both low volatility. When the two fuels are mixed, the volatility spikes, but only at blends just below E10. As more ethanol is blended with gasoline, the vapor pressure decreases, which essentially means E15 reduces vapor pressure.

In addition, Pruitt told the committee he understands ethanol's place in a high-octane future.

Brian Jennings, CEO of the American Coalition for Ethanol, said his group was encouraged by Pruitt's testimony.

"ACE members are grateful Administrator Pruitt is committed to completing the review of EPA's legal authority to provide RVP relief for E15 and higher blends and that he reiterated the agency's interest in how high-octane fuels can meet fuel efficiency standards," Jennings said in a statement.

"RVP relief is not only a common sense step EPA can take to provide regulatory relief to fuel marketers, it is also the quickest way to take pressure off RIN (renewable identification number) prices. E15 blending nationwide will increase ethanol blending, which will increase the supply of RIN credits and help bring down their price."

WOTUS WORK

While a number of senators thanked Pruitt for work underway to replace the waters of the United States, or WOTUS, rule, the administrator also was grilled on a number of fronts.

"I anticipate the proposed substitute will be out by April," Pruitt said, and finalized by the end of 2018.

Pruitt faced questions about transparency involving the public sharing of his schedule, travel expenses, repeal of the Clean Power Plan, budget cuts to the agency that may affect a variety of programs, his agency's handling of scientists serving on agency boards, and other issues.

Sen. Tom Carper, D-Del., outlined a litany of concerns he has about Pruitt's EPA.

As part of repealing and rewriting the WOTUS rule, Carper said, the EPA has removed important information from its website.

"Mr. Pruitt, you say over and over again that, 'process matters,'" Carper said. "Do you really think that verbally directing career staff at EPA to delete the inconvenient economic benefits of the Clean Water Rule is a good rulemaking process, Mr. Pruitt? Do you think that ignoring the advice of EPA scientists helps us clean up our nation's water?"

Carper said EPA erred in moving to repeal the Clean Power Plan with "no real replacement" plan.

"Similarly, EPA has moved to repeal the clean water rule, but again, with no new plan to protect the drinking water sources on which 117 million Americans rely," Carper said.

Pruitt testified that much of the work his agency is doing is to create more regulatory certainty for the broader economy.

Carper said the record shows the agency has moved on repealing, reconsidering or delaying at least 25 environmental regulations in the past year.

"Those aren't achievements, Mr. Pruitt," he said. "Those are the exact opposite -- clear failures to act. The state of our environment is also fundamentally linked to the state of our climate. And what did we see in 2017 alone? The second-hottest year on record."

In his written testimony, Pruitt outlined the EPA's three primary goals. That is to refocus the agency back to its core mission, restore power to the states, and "adhere strictly" to the rule of law.

In addition, Pruitt said the agency will continue to expand the work it does with the states.

"Cooperation and shared responsibility between states, tribes, and federal government is a bedrock in the environmental laws that Congress enacted," he said.

"States have assumed more than 96% of the delegable authorities under existing federal law. This administration will undertake a series of initiatives to rethink and assess where we are and where we want to be with respect to joint governance. EPA needs to be a better partner to the states, which all have unique challenges and needs when it comes to meeting environmental goals." 

Trump: State of the Union Strong - President Highlights Trade Renegotiation, Cutting Regulations, Tax Reform

OMAHA (DTN) -- In his first State of the Union address Tuesday evening, President Donald Trump spoke about improving the nation's trade agreements and touted tax reform and slashing regulations, all while pushing for Congressional support for rebuilding America's infrastructure -- all issues important to farmers and ranchers. He also called on both parties to work on immigration issues to safeguard the nation's borders.

However, with U.S. Agriculture Secretary Sonny Perdue not in attendance for the speech, as he was the so-called "designated survivor" of the president's cabinet, Trump made no mention of ethanol, agriculture or the North American Free Trade Agreement by name in his nearly 90-minute speech.

Though President Trump didn't mention biofuels, he said his administration had "ended the war on American energy" including clean coal. "We are now an exporter of energy to the world," he said.

The president also did little to move from his position on renegotiating or walking away altogether from NAFTA, though he did talk about the need to improve trade deals.

"America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs and our nation's wealth. The era of economic surrender is over. From now on, we expect trading relationships to be fair and to be reciprocal.

"We will work to fix bad trade deals and negotiate new ones. And we will protect American workers and American intellectual property, through strong enforcement of our trade rules."

The president also laid out his vision for rebuilding the nation's infrastructure.

The president called America a "nation of builders" that built the Empire State building in one year. "Isn't it a disgrace that it can now take 10 years just to get a permit approved for a simple road?"

"I am asking both parties to come together to give us the safe, fast, reliable, and modern infrastructure our economy needs and our people deserve," Trump said.

The president's proposal calls for about $1.5 trillion in federal investment to fix the nation's roads and bridges and other infrastructure.

Trump called for federal dollars to be spent "leveraged by partnering with state and local governments and, where appropriate, tapping into private sector investment -- to permanently fix the infrastructure deficit."

In addition, he said infrastructure legislation should also include streamlining the permitting and approval process.

Trump also used his address as an opportunity to tout the new tax reform law.

In recent weeks, more than 250 companies have cited the tax law in announcing bonuses, pay raises and plans to grow their operations. A number of changes to the tax code affect farmers.

The corporate tax rate was reduced from 35% to 21% and includes several provisions such as immediate business expensing and expanded Section 179 deductions -- all meant to stimulate business growth and higher incomes.

Farmers who receive income from pass-through entities will see a 20% deduction. The effective impact of a 37% tax rate and a 20% deduction for pass-through income would set a top tax rate on business income at 29.6%.

The law also ends the health-insurance mandate under the Affordable Care Act. With the estate tax, the asset exemption was bumped to $11.2 million per person or $22.4 million for a married couple.

"Just as I promised the American people from this podium 11 months ago, we enacted the biggest tax cuts and reform in American history," the president said.

"Our massive tax cuts provide tremendous relief for the middle class and small businesses. Since we passed tax cuts, roughly three million workers have already gotten tax cut bonuses -- many of them thousands of dollars per worker. This is our new American moment. There has never been a better time to start living the American dream."

The president also touched on another issue important to agriculture: immigration.

Trump said immigration policies should be designed to help "struggling communities" and focus on "the best interests of American workers and American families.

"So tonight I am extending an open hand to work with members of both parties, Democrats and Republicans, to protect our citizens, of every background, color, and creed," Trump said.

SENATORS PRESS ON NAFTA

Just ahead of the State of the Union address, in a letter to Trump, 36 Republican U.S. senators urged the president to maintain the benefits and improve the North American Free Trade Agreement.

"NAFTA supports 14 million jobs, representing thousands of jobs in each of the 50 states," the senators wrote.

"Despite all of its benefits, however, we can do better and there are opportunities to improve the agreement. Modernizing NAFTA to increase market access, expand energy exports to maximize domestic energy production and including provisions on intellectual property and e-commerce will make this agreement even more beneficial to the United States."

"You have the opportunity to unleash the American economy like no president has done before and fuel historic growth," the Senators stated in the letter.

"Mr. President, your leadership has jump-started our economy. The recent tax reform bill is already leading to economic success across all industries and the stock market is at record highs. The next step to advance the economy requires that we keep NAFTA in place, but modernize it to better reflect our 21st century economy."

Washington Insider: No NAFTA Stalemate, but No Deal Either

The New York Times is reporting this week amid the State of the Union hoopla that discussions to revamp NAFTA moved from stalemate to actual negotiation during the sixth round that concluded on Monday, but that a deal was still far from guaranteed as negotiators “continue to squabble.”

Government officials and trade analysts described the mood around the talks as “cautiously optimistic” as Canada, in particular, joined Mexico in offering counterproposals to America’s requests for drastic changes. This seemed to persuade some that this outcome that seemed likely to dissuade the United States from imminent withdrawal.

Still, the reality is that more than six months into the talks, a conclusion still appeared elusive. And tensions between the countries grew as the United States criticized Canada’s suggested changes to the pact on areas including automobile manufacturing and investment.

Robert Lighthizer, the United States trade representative, suggested that Canada had been responsible for the stalled talks. He said discussions were now progressing as the nation recognized the need to protect its trading relationships, though he added that talks were not moving fast enough.

“The reality is some of the participants weren’t willing to talk about anything,” Lighthizer said. “Now, they’re starting to realize that we have to begin to talk. I think that’s a reason for guarded optimism. But you know, I’m never really very optimistic,” he added.

Officials from Canada and Mexico sounded more positive. Ildefonso Guajardo Villarreal, the Mexican economic secretary, said that the three countries were at “a better moment in this negotiation process,” and that progress made so far had put the countries “on the right track to create landing zones to conclude the negotiation soon.”

Chrystia Freeland, the Canadian foreign minister, said that Canada had come to the table “with creative ideas we believed could move us forward.” She also emphasized the benefits of trade with Canada for the United States.

Trump has repeatedly threatened to walk away from the trade pact if it cannot be renegotiated in the United States’ favor, a position that has put him at odds with many in the business community and Congress, who see trade with Mexico and Canada as integral to industries as varied as manufacturing, agriculture and energy. The auto industry, in particular, has arranged its North American supply chains around the deal’s terms.

With talks now reaching into their seventh month, negotiators are about to butt up against several political events that could make an agreement even more difficult, including the Mexican general election on July 1.

The election could usher in a leftist political party that may be less willing to make concessions. The front-runner, Andres Manuel Lopez Obrador, has advocated a more combative approach to the Trump administration.

“Doing this before the Mexican election is critical, because you don’t know who is going to be leading afterward,” said Representative Will Hurd, a Texas Republican who attended the talks.

The negotiations have faced a series of collapsing deadlines. Last year, officials insisted that the deal must be largely concluded by the end of 2017. Then in October, they decided to extend the talks into the first quarter of 2018, with March widely cited as a deadline.

Midterm elections in the United States on Nov. 6 could also complicate the deal. The administration will need a simple majority in both the House and Senate to approve their revised trade agreement, which could prove difficult if Democrats win control of either chamber.

Lighthizer reiterated in his remarks on Monday that he hoped to win the support of some Democratic lawmakers. That may hinge on the administration’s efforts to improve labor standards. Last Tuesday, more than 180 Democrats and one Republican lawmaker sent a letter to Lighthizer urging the administration to propose stronger measures to improve Mexican labor conditions.

The United States has proposed significantly raising the so-called rules of origin and Canadians last week discussed changing the way the figures were calculated to include design, investment and parts of an automobile like high-tech software and sensors that are common in cars today but not measured under NAFTA.

The change is likely to raise the proportion of a car’s value produced by the United States, because many high-tech industries are centered there. Lighthizer criticized the idea, saying that it “may actually lead to less regional content than we have now” and said “this is the opposite of what we’re trying to do.”

Lighthizer also used his remarks to criticize a recent case Canada brought to the World Trade Organization, in which it claimed that the United States system for policing dumping and subsidies was unfair. “It is imprudent, and my suspicion is, spiteful,” he told reporters.

So, progress is progress, although the U.S. position still seems to be aimed at holding back and increasing the risk of running out of time. This certainly is an effort producers should watch closely as it proceeds and hopefully succeeds in further opening, rather than restricting, North American markets, Washington Insider believes.

USTR Lighthizer Calls On Senate to Approve Agency Nominees

Holds placed on four nominees to posts at the Office of the U.S. Trade Representative (USTR) need to be removed, USTR Robert Lighthizer urged during the post-negotiation presser following the Montreal-based NAFTA 2.0 talks.

"We've had 230 days since we nominated the first deputy, and I've had none confirmed. Are we slow or is the Senate slow?" Lighthizer said. "And these guys are all going to get 80 votes. Right? It's not like these are controversial people, 51 votes. No! It's just a bad process. ... So how many negotiations am I going to do?"

The nominations have been held up by both Democrats and Republicans and include Gregg Doud who was nominated to be the chief U.S. ag negotiator.

TPA Renewal to Be Sought

President Donald Trump has decided to ask Congress to renew Trade Promotion Authority (TPA/fast track) for three years, U.S. Trade Representative Robert Lighthizer said. The 2015 TPA law expires June 30, unless Trump formally requests a three-year extension by April 1.

Congress could block the renewal by passing a resolution of disapproval, but Lighthizer was upbeat. "I shouldn't maybe be making an announcement, but the reality is the president has decided. We’re going to ask for fast track," Lighthizer said. "Remember, the president says he wants to do bilaterals with people in Asia and other parts of the world. He made that speech in Vietnam. So we’re clearly going to ask for fast track and I think it’s extremely likely given the process we will get that."

Perdue in Pennsylvania, Talking Farm Bill

(Dow Jones) -- USDA Secretary Sonny Perdue is hitting the road in Pennsylvania, spreading the gospel about his hopes for the next American farm bill while Congress remains mired in questions over how to fund the government and solve deep divides over immigration. In a broad-ranging set of principles gleaned from Mr. Perdue's meetings with farmers across more than 30 states, USDA laid out support for "fiscally responsible" legislation that reflects Trump's budget goals. That's bound to worry stakeholders who panned steep cuts to federal agricultural programs proposed in the president's budget last year, though USDA makes a plug for some items slated for cuts, like public agricultural research.

Invasive Pests Get Top Billing on Farm Bill Tour

(Dow Jones) -- USDA Secretary Perdue kicked off his farm bill tour hearing from Pennsylvania researchers about a growing threat to the region's grape farmers: the spotted lanternfly. Academics at Pennsylvania State University, a standout in the nation's land grant system, gave Perdue an earful on the importance of federal funding for agricultural research, which got a boost in the last US farm bill. "I think it will be a priority going forward," Perdue said, after university members highlighted their work on improving water quality, disappearing bee colonies and emerging pest problems like the spotted lanternfly, which is devastating nearby crops. They pushed for ongoing funding for agricultural research, the scale of which is uncertain given steep cuts proposed by the Trump administration.

California Sues Over Fracking Rules Repeal

(Dow Jones) -- California's attorney general sues to stop the Trump Administration's rollback of proposed rules for hydraulic fracturing and other oil- and gas-drilling practices on government lands. Attorney General Xavier Becerra claims an arm of Trump's Interior Department failed to give a reasoned basis in its decision to rescind rules initially pushed by the Obama administration, violating the Administrative Procedure Act. The repeal also fails to ensure environmentally responsible development, violating environmental statutes, Becerra claims. The rules had already been blocked by a federal judge in Wyoming before they were to take effect in 2015, and the Trump administration said this year they duplicate the efforts of state regulators and private industry.

Tunisia Tenders for 100,000 Tons of Wheat

(Dow Jones) -- The Tunisian state grain agency launched a tender for 100,000 metric tons of durum wheat, European traders said Thursday.

The tender is due to close on Jan. 26, with delivery between March 5 and April 25.

The price of wheat was last down 0.4% at $4.31 a bushel.

Tyson Takes Stake in Cultured Meat Startup

(Dow Jones) -- Tyson Foods Inc. has invested in a startup that grows meat from animal cells, a bet on alternatives to chicken farms and cattle feedlots.

Tyson on Monday said it had purchased a minority stake in Memphis Meats Inc., a Bay Area company developing technology to produce meat using cell-culture technology. Memphis has produced a beef meatball and a chicken strip so far, though the company says it likely will be several years before its products are sold at stores and restaurants.

Memphis Meats and other startups working on alternatives to the traditional slaughtering of livestock tout the technology as a cheaper and more environmentally friendly way to produce meat for a growing and increasingly affluent global population. The United Nations projects global meat production will increase by two-thirds over the next 35 years.

Lighthizer Launches Fresh Attack on Canada's WTO Complaint

(Dow Jones) -- US Trade Representative Robert Lighthizer and Canadian Foreign Minister exchanged verbal volleys over Canada's complaint with the World Trade Organization over how Washington applies tariffs. "Clearly the case they brought at the WTO is unprecedented, and it is imprudent, and my suspicion is, spiteful," Lighthizer told journalists following closing press event at the sixth round of Nafta talks. Freeland said the complaint was triggered by US tariffs on Canadian softwood, which it views as unfair and punitive. She added Canada was clear it would take this legal route if necessary. "I don't think I need to have to defend Canada's actions when it comes to protecting our workers and our industry," she said, adding a negotiated settlement on softwood lumber could lead to withdrawal of Canada's complaint.

NZ Drought Makes Bumper Trade Surplus Unsustainable

(Dow Jones) -- An extension of a drought classification in New Zealand's South Island suggests the lengthy duration of farmers' struggles with especially dry weather may start to have a wider impact on the economy. The formal request for the classification, which triggers government funding, came from community groups and was made to New Zealand's agriculture minister this week, according to a statement. Economists say the dry weather will crimp milk production, making New Zealand's bumper monthly trade surplus unsustainable. Milk comes after tourism as New Zealand's main export.

Secretary Perdue to Speak at Global Meat Conference This Summer

Agriculture Secretary Sonny Perdue will speak at this summer’s World Meat Congress in Dallas, Texas. Taking place May 30th through June first, Perdue will address participants on Thursday morning, May 31st, during the “Global Politics of Food” session. The U.S. Meat Export Federation, the organization hosting the global event, announced the appearance by Perdue. USMEF CEO Emeritus Philip Seng says the event provides “an opportunity to showcase the U.S. agricultural model for industry leaders from across the globe.” Seng called Perdue a “champion for trade,” who can provide his insights on the Trump administration’s philosophy on trade and its approach to trade agreement negotiations. The World Meat Congress is a biennial event, with the 2018 theme being “Trusting in Trade.” This is the first time in the history of the more than 20-year-old event that it will be held in the United States.

Census of Agriculture Deadline Nears

Farmers and ranchers have less than a week to submit their information to the Department of Agriculture as part of the Census of Agriculture. USDA’s National Agricultural Statistics Service says producers should respond online at agcounts.usda.gov or by mail by February 5th. Agriculture Secretary Sonny Perdue says the Census, for farmers, is “their voice, their future, their opportunity,” while saying USDA needs to hear from all farmers and ranchers. Everyone who received the 2017 Census of Agriculture questionnaire is required to return it, even if they are not currently farming. The first few qualifying questions on the form will determine whether completing the entire questionnaire is necessary. After the deadline, USDA NASS will begin follow-up contact methods to collect responses.

U.S. Soy Losing Ground to Brazil in China

The U.S. is losing soybean market share to Brazil in China over protein. Reuters says soybean growers in the U.S. seeking higher-yielding crops is robbing the crop of protein content. A decline in protein levels make soybeans less valuable to the $400 billion feed industry in China A decade ago, the United States supplied 38 percent of soybeans to China, the world's top importer, compared to 34 percent from Brazil. Now, Brazil supplies 57 percent of Chinese imports compared to 31 from the United States, according to China's General Administration of Customs. The United Soybean Board is advocating that the industry takes protein content seriously. The industry group will spend $5.6 million in fiscal year 2018 on research and other efforts to boost protein, up from $3.7 million last year. USB director Jared Hagert says: "China needs soybeans, and we're at risk of becoming a residual supplier if we don't work on protein improvements.”

EPA Sends WOTUS Delay Rule to White House

The Environmental Protection Agency has sent a final rule to the White House that would prevent the Waters of the U.S. Rule from taking effect. The EPA rushed the rule to the White House because of the recent U.S. Supreme Court ruling placing the legal jurisdiction of the rule in federal district courts, not federal appeals courts, where a stay was issued against the original rule. The Supreme Court ruling will lift that delay, allowing WOTUS to go into effect in 37 states. EPA water chief Davis Ross told Politico the rushed delay rule would be finalized within a month. Farm groups, such as the American Farm Bureau Federation, have long opposed the Obama-era rule. During an event with AFBF members last year, EPA administrator Scott Pruitt said the EPA will bring more certainty in water regulation for farmers and ranchers through a repeal and replacement effort.

Trump Says U.S. Open to TPP, If Better Deal Negotiated

President Donald Trump has left the door open to rejoining the Trans-Pacific Partnership through comments in a recent speech. However, the now TPP 11 countries may not be as welcoming, forging ahead to sign an agreement in March. Addressing the World Economic Forum in Switzerland last week, Trump said of the TPP nations, the U.S. would consider negotiating with them “either individually or perhaps as a group if it is in the interest of all.” In an interview with CNBC, he was quoted as saying, “I would do TPP if we were able to make a substantially better deal.” The original TPP agreement was expected to be worth billions of dollars for U.S. agriculture. However, New Zealand Trade Minister David Parker points out that the U.S.’s negotiating position was “of course weakened” by its withdrawal a year ago from the original agreement. Further, there is currently little expectation that the U.S. would move to rejoin the TPP agreement.

NAFTA Talks to Continue, Optimism Increasing

Talks to renegotiate the North American Free Trade Agreement are at a “much better point,” according to trade officials from Mexico. Speaking at the conclusion of the latest round of talks held in Canada, U.S. Trade Representative Robert Lighthizer said: "we finally began to discuss the core issues." All three sides agreed to language governing anti-corruption during the latest round, while making progress on customs and food sanitation issues. However, two of the biggest issues, auto trade and a sunset clause, remain. Some speculate that the trade agreement renegotiation effort will stretch into the upcoming Mexican election cycle, a timeline that negotiators had hoped to avoid. Farmers for Free Trade, a bipartisan campaign focusing on NAFTA, says it is "heartening" to see progress but notes that further delays create more uncertainty for U.S. farmers. Lighthizer said Monday that the U.S. is “committed to moving forward” with the renegotiation effort. Two more rounds are scheduled, one in Mexico next month, and a hopeful final round in Washington, D.C. in March.

"Squeal Award" goes to Congress for failing to pass a budget

Senator Joni Ernst (R-IA) gives a monthly "Squeal Award" to expose extravagant spending or the misuse of funds by the government. This month, the dubious award goes to Congress for failing to pass a budget. As a result, Ernst is co-sponsoring the “No Budget, No Pay Act,” which would withhold the pay of Senators and Representatives until a budget is passed.

“The responsibility of Congress, as outlined in Article 1 of our Constitution, is to handle financial and budgetary matters of the federal government - in other words, establishing a budget is constitutionally and legally part of our job,” Ernst wrote in a letter to her constituents.

“This is why I have co-sponsored the commonsense No Budget, No Pay Act,” she continues. “This bipartisan legislation would withhold the pay of Senators and Representatives until Congress is able to pass a bicameral budget and all of our appropriations bills by the end of the fiscal year.”

She says that, according to the U.S. Government Accountability Office, Congress has averaged five continuing resolutions per year since 1999.

“Not only are we shirking our responsibility to thoughtfully appropriate funds, but these short-term spending bills hurt our military and waste millions of taxpayer dollars,” Ernst writes.

It's highly unlikely the Act will pass, but it might serve as another nudge to get Congress off-center, and it sends a message that some members of Congress are frustrated with the delays.

Ernst writes that she has repeatedly “called on Senate leadership to cancel recesses and turn on the Senate24 hours a day, seven days a week in order to get more work done, like passing a balanced budget.”

Family members of killed rancher sue the U.S. government

Family members of a rancher who was shot and killed by police during the 2016 armed occupation of a federal wildlife refuge have sued the U.S. government, Federal Bureau of Investigation, state of Oregon and others claiming he was willfully “executed.”

The lawsuit was filed in U.S. District Court in Portland nearly two years to the day after Robert “LaVoy” Finicum, 54, was shot dead by Oregon State Police on Jan. 26, 2016, along a snow-covered road near the Malheur National Wildlife Refuge.

“As it turns out, he was deliberately executed by a pre-planned government ambush, after he had exited his vehicle with his hands up,” the plaintiffs allege in their 48-page lawsuit.

Washington Insider: More Trade Policy Tensions

Well, President Trump is back from his trip to Davos where he made a major presentation that reporters said did not break much new trade or economic policy ground. He is now preparing for his State of the Union speech on Tuesday.

One interesting development did attract press attention last week, though, and that was discussions of much more vital global markets. A number of analysts are now suggesting that global markets have turned around now and that economic growth is much more widespread--modest, but widespread, Bloomberg says.

The group also points out that Europe is approaching the next stop in its global market-opening drive aimed at countering a U.S. “protectionist tilt.” Top officials from the European Union will meet with the Mercosur group of Argentina, Brazil, Paraguay and Uruguay this week to gauge the prospects for a “free-trade deal that would follow groundbreaking commercial pacts with Japan and Canada,” Bloomberg says.

The EU-Mercosur talks began almost two decades ago, faltered and were re-started in 2010. President Trump’s move into the White House a year ago with his “America First” agenda prompted an EU push to wrap up the negotiations, which advanced before getting hung up last month over the politically sensitive issues of agriculture and cars.

“Our aim is to conclude a very ambitious trade agreement between us and Mercosur in the coming weeks,” EU Trade Commissioner Cecilia Malmstroem said in an interview in Brussels last week. “We aim to finalize this very soon because the clock is ticking.”

EU policymakers are seeking to keep markets open worldwide in the face of Trump’s anti-globalization stance and to underscore the bloc’s continuing commercial clout as the UK prepares to leave. In addition to building on existing European free-trade pacts with partners that also include Singapore, Vietnam and South Korea, a deal with Mercosur would give the EU political momentum as it gears up for talks with Australia and New Zealand.

The U.S. threat to the global order in place since the end of World War II was highlighted last week when Trump invoked rarely used “safeguard” rules to impose tariffs on U.S. imports of solar panels and washing machines, Bloomberg said.

With EU-Mercosur trade worth almost 85 billion euros ($105 billion) in 2016, a market-opening agreement would be among Europe’s biggest. The meeting on Tuesday will be at ministerial level, giving both sides a chance to make political concessions that would embolden the negotiators.

However, there are still bumps to be worked out. Mercosur says an EU offer to open further its agricultural markets, including for beef, is inadequate. Malmstroem’s team in December proposed to let Mercosur export to the bloc at reduced duties an extra 70,000 metric tons of beef, 600,000 tons of ethanol and 100,000 tons of sugar annually.

“If we don’t get a significant agricultural offer, we cannot achieve this agreement,” Rigoberto Gauto Vielman, Paraguay’s ambassador to the EU, told the European Parliament’s trade committee on Jan. 23 in Brussels. Europe must do more to ensure a “fair and reasonable” accord, he said.

The EU counters that its farm offer is generous and Mercosur must agree to open its markets more to European cheeses, cars and car parts.

European agricultural producers’ interests, traditionally a touchy issue in Brussels, may be even more so now because Ireland is concerned about the potential impact of the UK’s planned exit from the EU on Irish beef exports. Mercosur already accounts for around three-quarters of EU beef imports and focuses on pricier cuts.

“The moment is quite difficult for Europe in terms of beef,” Sandra Gallina, the chief EU negotiator with Mercosur, told European lawmakers last Tuesday. “Our partners are very well aware that there is a Brexit going on and that beef from Ireland may be impacted, so I want to say this is perhaps not the best of moments to go after such a deal.”

Pekka Pesonen, secretary general of Copa-Cogeca, the main European farm-lobby group, told reporters on Jan. 24 that a Mercosur-EU accord could cost farmers in Europe billions of euros and that “we would reject any concessions at this stage.” Malmstroem played down the deadlock over agriculture, saying farmers’ interests have long kept international trade negotiators at the table longer.

“They are always the last to remain,” she said. “They are difficult, but I hope they are surmountable.”

So, we will see. Many U.S. producer groups are nervous already about EU and Latin American efforts underway to open ag markets while the U.S. remains on the sideline—and are especially worried about the NAFTA talks. As always, the groups will parse the SOU talk for hints of policy commitments that could increase market access and also support beneficial policies in the coming farm bill debate. This will be yet another week of high level, high tension policy discussion that producers should watch closely as they proceed, Washington Insider believes.

Japan Signals They Will Push Ahead With TPP-11

While signaling Japan will "examine" comments by President Donald Trump to CNBC that he would be open to rejoining the Trans-Pacific Partnership (TPP) agreement if it can be significantly improved, several Japanese officials have commented their focus now is on implementation of the TPP-11 agreement – dubbed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – first said Deputy Chief Cabinet Secretary Yasutoshi Nishimura. However, he noted, "We will consistently explain to Washington that the TPP will work in favor of the American economy and employment, and urge its return to the deal."

Biofuels Issues See More Talk on Capitol Hill

Congressional contacts continue to signal a biodiesel tax incentive extension is likely, but they discount staffer talk about moving to a producer credit. Senate Finance Chairman Orrin Hatch, R-Utah, would revive the lapsed credit for blenders of biodiesel in a tax-extenders bill. Derek Theurer, an aide to Sen. Bill Cassidy, R-La., said at an event this week that Finance panel members still are considering moving it to a producer credit. But veteran Capitol Hill contacts say the Trump administration already has made its views known in opposition to any such change, and there is not widespread support in Congress.

Meanwhile, Sen. John Barrasso, R-Wyo., a top Renewable Fuel Standard (RFS) foe, continued to push for RFS reforms. "If a refinery goes bankrupt because of a system that the government put in place after the refinery was built, that’s not a system that’s worked. So we need to modernize and modernize this to take into account where we are today with the technology and the vehicles and the amount of fuel being consumed," he told Politico, adding "[Sen. John Cornyn, R-Texas, is] leading the efforts to develop this bipartisan reform bill that all the stakeholders can support and then once that’s introduced the committee is going to give it serious consideration."

U.S. Red Meat Production Sets December Record

American red meat production totaled 4.40 billion pounds in December of 2017, up slightly from December of the previous year. For the calendar year 2017, commercial red meat production was 52 billion pounds. That was three percent higher than the previous year. Additional packing capacity helped make 2017 a very good year for pork producers. Large export demand at home and overseas kept cattle supplies busy. Pork production hit a record high of 2.23 billion pounds in December, up one percent from 2016. Hog slaughter totaled 10.5 million head, down slightly over the previous December. Beef production in December reached 2.15 billion pounds, down one percent from 2016. Cattle slaughter totaled 2.58 million head, down one percent from December of the previous year. Lamb and mutton production was 12.8 million pounds in December, down two percent over December of 2016. Sheep slaughter was just 188,100 head, a five percent drop from 2016.

Broadband Coalition Praises Connectivity Act

The Agricultural Broadband Coalition applauded bipartisan leadership in both houses of Congress for introducing the Precision Agriculture Connectivity Act of 2018. The group calls it a milestone piece of legislation that will aid in revolutionizing farming across America. The bill is designed to help deploy broadband across rural America, including ranchland and cropland. Broadband connectivity is growing more important for production agriculture. Nick Tindall, senior director for the Association of Equipment Manufacturers, says they applaud the legislation as a way to make sure the federal government evolves along with the technology that’s changing modern agriculture. “This legislation creates a clear mandate for the FCC to work with other branches of government to develop a comprehensive strategy to update our rural infrastructure,” he says. American Farm Bureau President Zippy Duvall adds, “Broadband deployment in unserved and underserved croplands and ranchlands is essential to farmers and rancher who produce food, fuel, and fiber, across the U.S. and for customers around the world.” The legislation would create a task force designed to take a comprehensive look at broadband distribution, where it falls short, and come up with recommendations to improve access across all rural areas.

Dairy Industry Emphasizing Unity

International Dairy Foods Association President and CEO Michael Dykes gave his annual state-of-the-industry speech to the Dairy Forum in California. One of his highlights focused on the unity between dairy producers and processors. The Hagstrom Report says that unity that has led to joint positions on the upcoming farm bill, as well as the Trump Administration’s strong advocacy for dairy in the North American Free Trade Agreement negotiations. Jim Mulhern, National Milk Producers Federation CEO, says, “This is the first time my career that producers and processors have been united for a farm bill. It’s the first time in living memory that Congress won’t have to choose between one side or another. That’s a real accomplishment.” The goal of their collective efforts is to help make way for a new farm bill that will improve the Margin Protection Program for dairy farmers while enhancing risk management options for processors. At the same time, they’d like to improve nutrition and build domestic demand through the Supplemental Nutrition Assistance Program. The House recently included provisions to help the nation’s dairy farmers in the disaster bill put together to aid hurricane victims. That bill is currently under consideration in the Senate.

U.S. Food Exports to Cuba Rising

The hard-line rhetoric against Cuba in Washington, D.C., has led to a chink in the diplomatic ties formed in the Obama-era. However, the amount of food exports going from the U.S. to Cuba paints a very different picture. The U.S-Cuba Trade Economic Council released numbers showing that agricultural exports to Cuba totaled up over $250 million in 2017. Those numbers stretch from January to November, and they show an increase of $50 million in exports of food products and other agricultural commodities in comparison to 2016. The report from the U.S.-Cuba council shows that, in terms of overall dollar value, chicken makes up more than half of the exports to Cuba. Chicken has consistently been at the top of the list of the items that Cubans buy most from the U.S for a decade. The island country also regularly purchases U.S. soybeans and corn. Cuba largely relies on imports for agricultural products. However, U.S. policy toward Cuba doesn’t allow private financing for Cubans to buy goods from the U.S., making it tough for American producers to fully tap into the market.

No NAFTA, No Trump Re-election

Trade was a big topic at the Agri-Talk Farmers Forum on Wednesday. Farmers at the show were of the opinion that if President Trump pulls out of the North American Free Trade Agreement, he may not see another term in office. One day earlier, Trump said the negotiations were moving along well. He added, “I happen to be of the opinion that if it doesn’t work out, we’ll terminate it.” That didn’t sit well with the farmers, legislators, and ag industry stakeholders in attendance. Frank Howey, a North Carolina farmers, says, “Republicans are supposed to be free-traders and Trump got elected by U.S. farmers. If he does us wrong on trade, he will not get re-elected.” Top Republicans in the legislature are studying the options they may have to override a possible Trump withdrawal from NAFTA. Agri-Talk host Chip Flory says that shows how far the problem has come.”You have a Republican-controlled Senate and a Republican in the White House,” Flory says. “If the Republican President withdraws from NAFTA, then you’ll have a Republican-controlled Senate looking for ways to overturn that withdrawal.” A new study from the group Farmers for Free Trade showed just how much a withdrawal would cost farmers and the economy. For example, cheese would face a 45 percent tariff rate without NAFTA.

Some Sections of NAFTA Negotiations Closer to Completion

While the U.S. is still unhappy with the slow pace in the North American Free Trade Agreement negotiations, there are some sections that are close to completed. Canada’s chief NAFTA negotiator says that the sixth round of talks could lead to a revamped sanitary and phytosanitary chapter of the pact. Politico says that chapter covers rules on food safety and animal and plant health. While Canadian officials said there were discussions on that chapter Thursday, even though it’s not finished, they’re more hopeful that it’s close to being wrapped up. Talks on Canada’s dairy supply management system are stalled, which may mean it takes a backseat on things like automobiles, government procurement, and dispute settlement. Jaime Castaneda, senior vice president for trade policy with the National Milk Producers Federation, says he believes there is still a way forward on dairy negotiations, and he feels that the Canadian government believes that too.

Cattle and calves on feed totaled 11.5 million head

Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.5 million head on Jan. 1, up 8 percent above Jan. 1, 2017.

The inventory included 7.34 million steers and steer calves, up 4 percent from the previous year. This group accounted for 64 percent of the total inventory. Heifers and heifer calves accounted for 4.15 million head, up 16 percent from 2017.

Placements in feedlots during December totaled 1.80 million head, 1 percent above 2016. Net placements were 1.73 million head.

During December, placements of cattle and calves weighing less than 600 pounds were 470,000 head, 600-699 pounds were 410,000 head, 700-799 pounds were 445,000 head, 800-899 pounds were 279,000 head, 900-999 pounds were 100,000 head, and 1,000 pounds and greater were 95,000 head.

Marketings of fed cattle during December totaled 1.75 million head, 1 percent below 2016.

Other disappearance totaled 74,000 head during December, 35 percent above 2016.

UP TO $3 M IN FUNDING NOW AVAILABLE FOR LOCALLY-FOCUSED ENVIRONMENTAL EDUCATION GRANTS

EPA has recently announced that up to $3 million in funding for locally-focused environmental education grants will be available under the 2018 EE Local Grant Program.  EPA will award three to four grants in each of EPA’s ten Regions, for no less than $50,000 and no more than $100,000 each, for a total of 30-35 grants nationwide. Proposals are due March 15, 2018. The Requests for Proposals will be posted on www.grants.gov later this week.

In addition to other environmental topics, the 2018 EE Local Grant Program includes support for projects that reflect the intersection of environmental issues and agricultural best-practices, conservation of natural resources, food waste management, and natural disaster preparedness.

Funded projects will increase public awareness of those topics and help participants to develop the skills needed to make informed decisions. A Request for Proposals (also called a Solicitation Notice) containing details will be issued by each of the ten EPA Regions.

“By recognizing these locally-based learning and awareness opportunities, the Environmental Protection Agency is taking both a local and national leadership role in promoting sound agricultural conservation practices, environmental disaster preparedness, adequate food waste management and other important environmental best-practices,” said Administrator Scott Pruitt. “Environmental education starts locally in our own backyards, classrooms and in the fields of farmers who work the land directly, and I’m proud to play a role in enhancing such learning opportunities.”

Through this grant program, EPA intends to provide financial support for projects that design, demonstrate; and/or disseminate environmental education practices, methods, or techniques, as described in this notice, that will serve to increase environmental and conservation literacy, and encourage behavior that will benefit the environment in the local community/ies in which they are located.

Since 1992, EPA has distributed between $2 million and $3.5 million in annual grant funding under this program, supporting more than 3700 grants.

Proposals are due by March 15, 2018. The full solicitation notices will be posted later this week at www.grants.gov and athttp://www.epa.gov/education/environmental-education-ee-grant-solicitation-notice.

Find background on the EE Grants Program and resources for applicants at http://www.epa.gov/education/environmental-education-ee-grants.

Washington Insider: Global Trade Review

The urban media is increasingly paying attention to the evolving U.S. trade policy these days. For example, the New York Times reported this week that President Trump is arriving at the World Economic Forum in Davos, Switzerland, to explain his “America First” approach at a moment when the world is moving ahead with a trade agenda that no longer revolves around the United States.

The Times noted that the world “marked a turning point in global trade on Tuesday,” when 11 countries agreed to join the Trans-Pacific Partnership. They announced the completion of the pact and expected to sign a deal on March 8 in Chile.

As the world’s largest economy, and architect of many international organizations and treaties, the United States remains an indispensable partner. But as the global economy gains strength, Europe and countries including Japan and China are forging ahead with deals that do not include the United States the Times warned.

Thirty-five new bilateral and regional trade pacts are under consideration around the world, the Times says. The United States is party to just one of them, with the European Union, and that negotiation has gone dormant. At the same time, theU.S. is also threatening to withdraw from one of its existing multilateral agreements—the North American Free Trade Agreement with Mexico and Canada—if it cannot be renegotiated in the United States’ favor.

“Maybe there was some sort of presumption on the part of the president and his team that if the U.S. said stop, this process would come to a halt,” said Phil Levy, a senior fellow at the Chicago Council on Global Affairs and an economist in the George W. Bush administration. “What this shows is that’s not true. The world just moves on without us.”

So now, business interests in the United States are “watching with alarm as other countries strike agreements that exclude American exporters,” the Times says. It notes that ranchers in Canada and Australia will be able to sell beef at lower prices in Japan than their American competitors, who will be subject to higher tariffs because the United States is not party to the Trans-Pacific Partnership.

The Trump administration has pushed back against claims that the America First doctrine is isolationist. While advisers have continued to criticize global institutions, they insist their goal is to improve, not destroy, them. Mr. Trump and his advisers say that the United States will be pushing ahead with new trade deals — ones that will ultimately be better for American companies and their workers.

Yet the willingness of countries to engage with the United States is unclear, as global leaders observe the Trump “administration’s approach to renegotiating trade pacts with Canada, Mexico and South Korea.

In Davos, at a forum long considered the center for globalization, the administration’s America First message has not been entirely well received. On Wednesday, comments by Wilbur Ross, the commerce secretary, that American troops were “coming to the ramparts” in what he called a continuing global trade war prompted blowback from other state leaders.

Chancellor Angela Merkel of Germany warned on Wednesday that “protectionism was not the answer” and called right-wing populism a “poison,” in a speech largely seen as a rebuttal to Mr. Trump before his expected speech today.

So far, it is unclear which countries the United States could be courting to create new trade deals. Britain has expressed interest in a bilateral deal with United States, but talks could not begin until it finishes extricating itself from the European Union, which does not look likely to be resolved soon.

Japan, the preferred partner for many American businesses, appears to have spurned the United States’ offer to forge a trade deal one on one, after Mr. Trump pulled the United States out of the Trans-Pacific Partnership.

And China has positioned itself as a global leader — a sharp change from the early 1990s, when the leader at the time, Deng Xiaoping, cautioned his countrymen to “hide your strength and bide your time.”

In addition, China has set about building its own vision of an international order, including an Asian investment bank to rival the World Bank, and its global infrastructure project, One Belt One Road.

The Trump administration’s more aggressive stance toward allies and adversaries may shift this balance in China’s favor. At an event on Tuesday in Washington, Juan Gabriel Valdés, the Chilean ambassador to the United States, contrasted Chile’s now warm relationship with China with the United States’ more combative stance on trade, especially in its negotiations over NAFTA.

“The United States continues to be, and will probably be in the next 10, 20 years, the main partner of the Latin American region,” he said. “But change is there. It’s written on the wall if this continues like it is.”

So, the administration’s trade policy will continue to be tested in Canada and Mexico, and elsewhere, and with China and other global trading partners as the economy strengthens—developments producers should watch closely as they emerge, Washington Insider believes.

USDA's Perdue More Involved In USDA Budget Plan, But Silent on Potential Crop Insurance Cuts

USDA Secretary Sonny Perdue, who was confirmed after the Fiscal 2018 budget plans by the Trump administration were put forward, told reporters in Pennsylvania Wednesday that he is more involved in this year's process. However, he would not say whether there will be sizable cuts to crop insurance proposed in the Fiscal 2019 plan. Some in Washington expect even bigger cuts for the program may be proposed in the Fiscal 2019 budget plan.

If that is the case, expectations are Congress once again will not follow the administration's proposed cuts. However, some expect that a big crop insurance cut proposed by the administration could be used to back amendments during the upcoming farm bill debate. And, with Congress unlikely to agree on a Fiscal 2019 budget any time soon, that could mean the new farm bill is likely to be written to the 2018 budget that requires no cuts to the farm bill or crop insurance.

US Still Open To Multilateral Trade Deals

The U.S. is still open to multilateral trade agreements, despite an initial Trump administration preference for bilateral deals, Commerce Secretary Wilbur Ross said during a speech at the World Economic Forum in Davos, Switzerland. While the Trump administration has been criticized for its lack of engagement in multilateral deals, including its withdrawals from the Trans-Pacific Partnership (TPP) and the Paris climate accords, Ross said the administration's desire to make changes to current practices did not mean it would no longer be a world leader. Ross stressed the administration's willingness to participate in multilateral agreements provided member countries are open to equitable tariffs.

"If China or the EU or anybody else is willing to match our tariffs, we’ll pull" for an agreement, Ross said. Specifically on the European Union (EU), Ross pointed out the U.S. has not pulled out of the Transatlantic Trade and Investment Partnership (TTIP), a sign of that openness to multilateral deals, Ross noted. "When we dropped from TPP, we did not drop from TTIP," he said. "It wasn't an accident that we didn't walk from TTIP." However, there have not been any additional talks via TTIP.

Americans to Eat 1.35 Billion Chicken Wings for Super Bowl

The annual Chicken Wing Report by the National Chicken Council estimates that Americans will consume 1.35 billion wings during Super Bowl weekend, an all-time high. The report released Thursday says the number of wings that will be consumed during next weekend’s Super Bowl between the Philadelphia Eagles and New England Patriots is up 20 million wings, or 1.5 percent from last year. NCC spokesperson Tom Super assured consumers “there will be no wing shortage” to contend with when heading out to the grocery store before the big game. The number of wings consumed, according to NCC is enough to put 625 wings on every seat in all 32 NFL stadiums. The report also finds that 59 percent of U.S. adults who eat chicken wings say they typically like to eat their wings with ranch dressing. Further, according to the survey, 60 percent of wing eaters prefer traditional, bone-in wings while 40 percent chose boneless.

NBB Celebrates 25 years of Biodiesel

Biodiesel supporters kicked off a yearlong celebration this week at the National Biodiesel Conference and Expo in Fort Worth, Texas, celebrating the National Biodiesel Board’s 25th anniversary. A NBB representative told attendees during the event, after noting that the U.S. went from zero to three billion gallons of biodiesel production in 25 years, that “we are at the tipping point, on the verge of greatness,” adding that “anything is possible,” in the future. Information presented during the annual conference showed that in 2017, the U.S. biodiesel industry used more than six billion pounds of soybean oil and another six billion pounds of other fats and oils, creating demand for agricultural products and byproducts.

USDA Helped Improve Essential Services for 7 Million Rural Residents in 2017

Agriculture Secretary Sonny Perdue says the Department of Agriculture assisted more than seven million rural Americans during the 2017 fiscal year. Perdue says USDA invested in nearly 400 projects that provided “essential services” that “help communities significantly improve their schools, hospitals and public safety facilities, and improve the quality of life.” USDA infused $1.5 billion into rural areas in 2017 through the Community Facilities Direct Loan Program for projects such as schools, libraries, municipal centers, first responder vehicles and equipment, social service buildings, recreational activities and other community needs. The agency says USDA Rural Development provides loans and grants to help expand economic opportunities and create jobs in rural areas. The assistance supports infrastructure improvements; business development; housing; community services such as schools, public safety and health care, and high-speed internet access in rural areas.

2018 Drought Concerns Shifting South

Last year, drought worries centered around the northern Plains and grazing conditions in the Dakotas and across Montana. Those areas remain dry, but the intensity has weakened, according to the latest U.S. Drought Monitor. Moving into 2018, drought intensity and area is spreading, extending over the Southwest, southern Plains and Great Plains, according to the American Farm Bureau Market Intel service. Parts of Texas have not seen any measurable precipitation for more than 100 days. A swath from northern Texas, extending into parts of the Oklahoma panhandle region, and further into southern Kansas, is rated in extreme drought, according to the monitor. All of Oklahoma falls under a drought classification, with much of the state rated in moderate drought. The Monitor reports that agricultural impacts from the drought are being felt in Utah, Kansas and Oklahoma, and include decreasing hay and soybean yields, deteriorating wheat and grazing conditions, and decreasing water supplies as ponds and wells are going dry. Some of these effects started from moisture deficits dating back to the summer of 2017. Meanwhile, much of the Western Corn Belt is under some form of classified drought.

Not All Canada Ag Happy with TPP 11

Not all ag sectors in Canada are thrilled with the Trans-Pacific Partnership Agreement, known as the Comprehensive and Progressive Trans-Pacific Partnership, or TPP 11. Canada’s dairy and chicken producer groups claim the deal will “chip away” at their markets. Chicken Farmers of Canada says the agreement still includes concessions on market access for chicken products in response to U.S. demands. AgCanada reports Canada granted those concessions in 2016 coming out of negotiations for the original TPP trade deal, before the U.S. withdrew from the 12-country agreement early last year. With the U.S. out of the partnership, the group said, “those concessions should have been taken off the table.” A spokesperson for Chicken Farmers of Canada says the nation has “reached the limit” of concessions for any future negotiations, referring to the North American Free Trade Agreement, adding that if the U.S. wants market access to Canada “they are welcome to rejoin” the TPP 11 agreement. Dairy Farmers of Canada agreed, calling NAFTA “another vehicle that threatens to weaken the Canadian dairy industry.”