OMAHA (DTN) -- Wheat inspections were bullish while corn and soybean inspections were bearish in the latest USDA export inspections report, according to DTN Senior Analyst Dana Mantini.
Corn inspections totaled 25.4 million bushels (mb) for the week ended Thursday, July 25, below the 42.9 mb needed each week to reach USDA's export estimate of 2.100 billion bushels (bb). Inspections for 2018-19 now total 1.742 bb, down 14% from the previous year. The overall pace of corn inspections is bearish in 2018-19, Mantini said.
Soybean inspections totaled 37.9 mb for the week ended July 25, above the 37.6 mb needed weekly to reach USDA's export estimate of 1.700 bb. Inspections for 2018-19 now total 1.481 bb, down 23% from the previous year. The overall pace of soybean inspections is bearish in 2018-19, Mantini said.
Wheat inspections totaled 14.4 mb for the week ended July 25, below the 18.3 mb needed weekly to reach USDA's export estimate of 950 mb. Inspections for 2019-20 now total 139.6 mb, up 24% from the previous year. The overall pace of wheat inspections is bullish in 2019-20, Mantini said.
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Wednesday, July 31, 2019
Trump: China May Delay Deal Until After the 2020 Election
President Donald Trump spoke last week with reporters as he prepared to send officials to Beijing for trade negotiations. He says China may delay an agreement until after the 2020 presidential election because “they would prefer to reach a deal with a Democrat.” U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin (Muh-NOO-chin) are in China this week for the first high-level negotiations since the talks broke down back in May. Bloomberg says officials will cover a wide range of issues this week, including intellectual property, agriculture, and trade imbalance. Trump met with Chinese President Xi at the G-20 in Japan last month and reached a tentative truce in their trade war which has stretched out over the last year. After the G-20, the two leaders of the world’s largest economies directed their officials to resume negotiations. Bloomberg says the gap between the two countries may be widening as both Trump and Xi are facing pressure to resist key demands from the other side. The big sticking point from China’s perspective is the U.S. keeping the tariffs in place until Beijing actually implements some of the reforms the U.S. is looking for. However, it’s politically not likely that Xi will sign a deal that doesn’t immediately lift the U.S. tariffs on Chinese imports.
Commerce Department: Mexico is Dumping Tomatoes in the U.S.
Last week, the U.S. Department of Commerce announced that it found Mexico is guilty of dumping tomatoes into the United States. Commerce says the preliminary dumping margin is just over 25 percent. The announcement refutes the Mexican claim that the data that they submitted to the Department of Commerce will prove that it’s not dumping the produce into the U.S. The evidence that Mexico is dumping tomatoes into the United States isn’t exactly surprising to U.S. tomato growers, who say they’ve had to compete against unfairly dumped Mexican imports. The Florida Tomato Exchange says the U.S. industry is looking forward to the chance to show the U.S. International Trade Commission that it has suffered economic damage by the rising amounts of unfairly traded Mexican imports. The U.S. Department of Agriculture says tomato imports have swamped U.S. markets, increasing from just 20 percent of the market in 1994 up to 60 percent as recently as 2017. Mexican tomatoes account for 90 percent of that rise in imports. Meanwhile, the market share for U.S. farmers has dropped by half, going from 80 percent down to 40 percent, all while hundreds of growers have gone out of business.
Poultry Outlook is Bullish
Despite a recent increase in the cost of feed and softness in the price of breast meat, chicken producers are expected to prosper over the rest of 2019. An industry analyst who spoke with the website Meating Place Dot Com says turkey prospects are progressing, albeit at a slower pace. Poultry supplies are remaining manageable in 2019, with wings and leg quarters selling well above last year’s prices. A cooler-than-normal spring resulted in higher bird weights this year, putting some price pressure on boneless chicken breast in the near term. Analysts say warmer summer temperatures will likely turn that around. However, it was wetter and hotter spring weather that resulted in late crop plantings that have led to a rise in the cost of feed. While the African Swine Fever has been hard on the pork industry, the impact on poultry demand will be a “multi-year positive for the protein industry.” Analysts say an expected shortfall in pork products from the deadly disease should prompt shifts among consumer diets on a global basis. The pace of recovery for the turkey industry’s profitability remains slower than anticipated. The analysts who spoke with the trade industry website say they “remain optimistic” about supply cutbacks and rising global demand for other proteins because of the ASF outbreak.
RFA: Legislation Seeks to Prop Up “Big Oil”
The Renewable Fuels Association says Congress once again has legislation before it that’s designed to gut the Renewable Fuels Standard. Senators Dianne Feinstein of California and Pat Toomey of Pennsylvania are the main sponsors of the legislation. Geoff Cooper, RFA President and CEO, says Toomey and Feinstein appear to be confused about the RFS. “There is no ‘corn-ethanol mandate’ under the program and there never has been,” Cooper says. “Yet, the senators are once again seeking to bolster fossil fuels by trying to kill one of the most successful environmental and climate policies ever enacted by Congress.” He says the RFA is confident that, as with previous attempts, the legislation will go nowhere. The legislation is titled the Restore Environmental Sustainability to our Renewable Energy Act. “It’s particularly ironic today that the senators would dare suggest this legislation would ‘restore environmental sustainability,’ when it, in fact, won’t,” Cooper says. “It would force more petroleum into our nation’s fuel supply. Whether it’s oil spills in the Gulf, increased carbon emissions, or earthquakes in fracking country, what’s sustainable about today’s oil industry?” Cooper says renewable fuels like ethanol reduce greenhouse gas emissions by 40-50 percent compared to gasoline, while also slashing harmful tailpipe pollutants.
NCGA Corn Yield Contest Deadline Extended
Because many farmers are going through planting difficulties due to weather, the National Corn Growers Association has extended the entry deadline for its National Corn Yield Contest. The new deadline is Thursday, August 15, and the NCGA is hoping that all interested growers will be able to participate because of the additional time. All harvest forms will be due by November 15. Contest winners will be chosen on December 16. For access to additional contest information and a detailed list of the entry and harvest rules, click here. Winners get national recognition in publications like the NCYC Corn Yield Guide, as well as cash, trips, or other awards from participating sponsors, which include seed, chemical, and crop protection companies. The winners will also be honored during the 2020 Commodity Classic in San Antonio, Texas. Contact the direct call line at 636-733-5512 or email ncyc@ncga.com with any questions.
USDA Weekly Crop Progress - Corn, Soybean Good-to-Excellent Ratings Lowest in 7 Years
OMAHA (DTN) -- The condition of the U.S. corn crop improved slightly last week and the condition of soybeans held steady, according to the latest USDA NASS Crop Progress report released Monday. However, good-to-excellent ratings for both crops remain the worst they've been in seven years.
NASS pegged corn condition at 58% good to excellent as of Sunday, July 28, up 1 percentage point from 57% the previous week, but still the lowest good-to-excellent rating for this time of year in seven years, said DTN Lead Analyst Todd Hultman. Eighteen percent of corn in Illinois was rated poor or very poor, he noted.
Meanwhile, NASS estimated the condition of soybeans at 54% good to excellent, unchanged from the previous week and also the lowest good-to-excellent rating since 2012, Hultman said.
Development of both corn and soybeans jumped significantly last week, but continued to lag well behind the average pace.
Fifty-eight percent of corn was silking as of Sunday, NASS estimated, up 23 percentage points from 35% the previous week but still 25 percentage points behind the five-year average of 83%. Corn in the dough stage was pegged at 13%, up 8 percentage points from 5% the previous week but 10 percentage points behind the average of 23%.
The portion of the U.S. soybean crop that was blooming jumped 17 percentage points last week to reach 57% as of Sunday. That was 22 percentage points behind the five-year average of 79%. Soybeans setting pods jumped 14 percentage points to reach 21% as of Sunday, 24 percentage points behind the average pace of 45%
Winter wheat harvest moved ahead another 6 percentage points last week to reach 75% complete as of Sunday, behind last year's 84% and 11 percentage points behind the five-year average of 86%. However, harvest appeared to be suffering no obvious consequences despite being later than usual, Hultman said.
"Winter wheat harvest is moving slowly northward with Kansas 98% complete, Nebraska at 55% and South Dakota at 24%," Hultman said.
Spring wheat heading was nearly complete, at 97% as of Sunday, and was near the five-year average of 98%.
"NASS estimated that 73% of spring wheat was in good-to-excellent condition, down from 76% last week and below 78% a year ago as conditions have been drier," Hultman said. "Montana shows the largest problem area with 14% rated poor or very poor, followed by Idaho at 11% poor to very poor."
Sorghum heading reached 33% as of Sunday, behind both last year's 52% and the five-year average of 50%. Sorghum coloring was estimated at 21%, behind the average of 25%. Sorghum condition was rated 71% good to excellent, down 2 percentage points from the previous week. Oats were 97% headed, behind the average of 100%, and 21% of the crop was harvested, also behind the average of 35%.
Cotton squaring reached 86% as of Sunday, near the average pace of 87%. Cotton setting bolls was 45%, slightly behind the average of 48%. Cotton condition was rated 61% good to excellent, up 1 percentage point from the previous week. Rice headed was pegged at 42%, behind the average of 57%. Rice condition was rated 68% good to excellent, up 3 percentage points from the previous week.
NASS pegged corn condition at 58% good to excellent as of Sunday, July 28, up 1 percentage point from 57% the previous week, but still the lowest good-to-excellent rating for this time of year in seven years, said DTN Lead Analyst Todd Hultman. Eighteen percent of corn in Illinois was rated poor or very poor, he noted.
Meanwhile, NASS estimated the condition of soybeans at 54% good to excellent, unchanged from the previous week and also the lowest good-to-excellent rating since 2012, Hultman said.
Development of both corn and soybeans jumped significantly last week, but continued to lag well behind the average pace.
Fifty-eight percent of corn was silking as of Sunday, NASS estimated, up 23 percentage points from 35% the previous week but still 25 percentage points behind the five-year average of 83%. Corn in the dough stage was pegged at 13%, up 8 percentage points from 5% the previous week but 10 percentage points behind the average of 23%.
The portion of the U.S. soybean crop that was blooming jumped 17 percentage points last week to reach 57% as of Sunday. That was 22 percentage points behind the five-year average of 79%. Soybeans setting pods jumped 14 percentage points to reach 21% as of Sunday, 24 percentage points behind the average pace of 45%
Winter wheat harvest moved ahead another 6 percentage points last week to reach 75% complete as of Sunday, behind last year's 84% and 11 percentage points behind the five-year average of 86%. However, harvest appeared to be suffering no obvious consequences despite being later than usual, Hultman said.
"Winter wheat harvest is moving slowly northward with Kansas 98% complete, Nebraska at 55% and South Dakota at 24%," Hultman said.
Spring wheat heading was nearly complete, at 97% as of Sunday, and was near the five-year average of 98%.
"NASS estimated that 73% of spring wheat was in good-to-excellent condition, down from 76% last week and below 78% a year ago as conditions have been drier," Hultman said. "Montana shows the largest problem area with 14% rated poor or very poor, followed by Idaho at 11% poor to very poor."
Sorghum heading reached 33% as of Sunday, behind both last year's 52% and the five-year average of 50%. Sorghum coloring was estimated at 21%, behind the average of 25%. Sorghum condition was rated 71% good to excellent, down 2 percentage points from the previous week. Oats were 97% headed, behind the average of 100%, and 21% of the crop was harvested, also behind the average of 35%.
Cotton squaring reached 86% as of Sunday, near the average pace of 87%. Cotton setting bolls was 45%, slightly behind the average of 48%. Cotton condition was rated 61% good to excellent, up 1 percentage point from the previous week. Rice headed was pegged at 42%, behind the average of 57%. Rice condition was rated 68% good to excellent, up 3 percentage points from the previous week.
Washington Insider: New USDA Headaches
The press is reporting this week on a couple of items that likely mean new headaches for USDA. The first is a report that the agency “omitted” from a regulatory impact analysis its own estimate that the new SNAP regulations would result in the loss of access by some 500,000 low-income children to free school meals – a figure Bloomberg said that House Education and Labor Committee aides were given on a call with USDA on July 22.
Although the recent rule change proposed for nutrition programs would affect the voluntary standard that states can use to automatically qualify recipients of non-cash welfare for food aid, neither the official posting nor the regulatory impact analysis included its impacts on the meal program or their participants.
As a result, the House Education and Labor Committee chair, Bobby Scott, D-Va., wrote to USDA Secretary Sonny Perdue recently asking that USDA “revise the analysis to include expected impacts and confirm that information provided to the committee is accurate.”
USDA responded negatively, arguing that it cannot provide additional information during the public comment period – but did acknowledge that the rule “could” affect the use of direct certification of SNAP participants for free school meals.
“The effect on school meal eligibility represents an important technical finding that must be made public so that stakeholders have the opportunity to comment on all aspects of the rule’s impact,” Scott said.
Observers say the USDA’s omission of a likely significant impact can be expected to be a factor in the debate over the Department’s proposal – and it almost certainly will make life more difficult for USDA officials in coming budget hearings.
That isn’t the only new hot potato USDA can look forward to dealing with during the late summer and fall – Bloomberg also is reporting that a new study by the Environmental Working Group (EWG) says that “most” of the trade aid benefits offered under USDA’s first Market Facilitation Program (MFP) aid programs go to a very small share of affected producers. The organization regularly analyzes and publishes detailed databases on federal farm subsidy payments, often highlighting disparities in aid.
The administration is beginning its second MFP program, an additional $16 billion round of aid as the trade dispute with China continues.
While the initial payments were based on crops produced, this time they are to be tied to the acreage planted.
USDA said that the program “is designed to provide a level of support that’s proportionate to a farm’s size and success … to our knowledge, USDA’s payments have all been made in accordance with our published regulations and existing procedures,” the department said.
Eighty-two farming operations received more than $500,000 each in payments through April under the MFP, the EWG said. It noted that it analyzed payment records obtained through the Freedom of Information Act covering $8.4 billion in payments.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, a Republican who has long favored payment limits on farm subsidies, said the findings show the need for “hard payment caps” on the assistance.
Trade aid and other farm subsidies are “meant to help people over humps beyond their own control,” Grassley told reporters. “Some large farmers do have the benefit of having resources to get over those humps without government help.”
The EWG, which published a searchable database of trade aid recipients on its website and said the top 1% of farmers were paid an average $188,000 while the bottom 80% averaged less than $5,000.
Trade aid payments are capped at $125,000 per person in each of three categories of commodities: one for soybeans and other row crops; one for pork and dairy; and one for cherries and almonds.
Still, some farms set up as corporations or partnerships can exceed those limits. Relatives and partners who don’t live or work on a farm can collect payments as long as they help make management decisions such as what to plant, said Scott Faber, senior vice president for government affairs for the group said. EWG also found that thousands of trade aid recipients live in the nation’s largest cities.
The analysis and searchable database covers payments to more than 563,000 participants in 2018 through April 2019, EWG says.
The database only covers payments made directly to farmers. Last year’s $12 billion farm trade assistance package also included other programs, including commodity purchases and export promotion assistance, Bloomberg noted.
Although the EWG’s reports tend to be controversial, they have been a well-known feature of ag policy debates for many years. They are widely reported and frequently discussed as indicators of the amount and distribution of USDA program benefits which many producers believe are inadequate compensation for ag’s frontline position in the global tariff wars, Washington Insider believes.
Although the recent rule change proposed for nutrition programs would affect the voluntary standard that states can use to automatically qualify recipients of non-cash welfare for food aid, neither the official posting nor the regulatory impact analysis included its impacts on the meal program or their participants.
As a result, the House Education and Labor Committee chair, Bobby Scott, D-Va., wrote to USDA Secretary Sonny Perdue recently asking that USDA “revise the analysis to include expected impacts and confirm that information provided to the committee is accurate.”
USDA responded negatively, arguing that it cannot provide additional information during the public comment period – but did acknowledge that the rule “could” affect the use of direct certification of SNAP participants for free school meals.
“The effect on school meal eligibility represents an important technical finding that must be made public so that stakeholders have the opportunity to comment on all aspects of the rule’s impact,” Scott said.
Observers say the USDA’s omission of a likely significant impact can be expected to be a factor in the debate over the Department’s proposal – and it almost certainly will make life more difficult for USDA officials in coming budget hearings.
That isn’t the only new hot potato USDA can look forward to dealing with during the late summer and fall – Bloomberg also is reporting that a new study by the Environmental Working Group (EWG) says that “most” of the trade aid benefits offered under USDA’s first Market Facilitation Program (MFP) aid programs go to a very small share of affected producers. The organization regularly analyzes and publishes detailed databases on federal farm subsidy payments, often highlighting disparities in aid.
The administration is beginning its second MFP program, an additional $16 billion round of aid as the trade dispute with China continues.
While the initial payments were based on crops produced, this time they are to be tied to the acreage planted.
USDA said that the program “is designed to provide a level of support that’s proportionate to a farm’s size and success … to our knowledge, USDA’s payments have all been made in accordance with our published regulations and existing procedures,” the department said.
Eighty-two farming operations received more than $500,000 each in payments through April under the MFP, the EWG said. It noted that it analyzed payment records obtained through the Freedom of Information Act covering $8.4 billion in payments.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, a Republican who has long favored payment limits on farm subsidies, said the findings show the need for “hard payment caps” on the assistance.
Trade aid and other farm subsidies are “meant to help people over humps beyond their own control,” Grassley told reporters. “Some large farmers do have the benefit of having resources to get over those humps without government help.”
The EWG, which published a searchable database of trade aid recipients on its website and said the top 1% of farmers were paid an average $188,000 while the bottom 80% averaged less than $5,000.
Trade aid payments are capped at $125,000 per person in each of three categories of commodities: one for soybeans and other row crops; one for pork and dairy; and one for cherries and almonds.
Still, some farms set up as corporations or partnerships can exceed those limits. Relatives and partners who don’t live or work on a farm can collect payments as long as they help make management decisions such as what to plant, said Scott Faber, senior vice president for government affairs for the group said. EWG also found that thousands of trade aid recipients live in the nation’s largest cities.
The analysis and searchable database covers payments to more than 563,000 participants in 2018 through April 2019, EWG says.
The database only covers payments made directly to farmers. Last year’s $12 billion farm trade assistance package also included other programs, including commodity purchases and export promotion assistance, Bloomberg noted.
Although the EWG’s reports tend to be controversial, they have been a well-known feature of ag policy debates for many years. They are widely reported and frequently discussed as indicators of the amount and distribution of USDA program benefits which many producers believe are inadequate compensation for ag’s frontline position in the global tariff wars, Washington Insider believes.
Reuters: EPA’s Wheeler Defended Small Refiner Waivers to Farm-State Senators
EPA Administrator Andrew Wheeler defended the use of small refiner exemptions (SREs) in a session last week with four biofuel-backing senators, according to a report from Reuters.
The expanded use of SREs relative to obligations under the Renewable Fuel Standard (RFS) has become a flashpoint between biofuel supporters and the U.S. refining industry. Wheeler told the farm-state lawmakers – including key Sen. Chuck Grassley, R-Iowa, – that the program has not had a negative impact on ethanol demand, the report said.
The refining industry says the SREs are critical for small refiners as complying with the RFS can put them in a financial bind, arguing that ethanol demand has not be curtailed due the expanded use of SREs. Wheeler, the report said, argued that the downturn in ethanol demand came from falling gasoline consumption, not SREs.
The meeting took place July 24, the report said.
The expanded use of SREs relative to obligations under the Renewable Fuel Standard (RFS) has become a flashpoint between biofuel supporters and the U.S. refining industry. Wheeler told the farm-state lawmakers – including key Sen. Chuck Grassley, R-Iowa, – that the program has not had a negative impact on ethanol demand, the report said.
The refining industry says the SREs are critical for small refiners as complying with the RFS can put them in a financial bind, arguing that ethanol demand has not be curtailed due the expanded use of SREs. Wheeler, the report said, argued that the downturn in ethanol demand came from falling gasoline consumption, not SREs.
The meeting took place July 24, the report said.
Lighthizer Remains Mum On Specific Commodity Buys By China
Question of purchases of U.S. ag goods by China as the two sides negotiate remains an open issue, with U.S. Trade Representative Robert Lighthizer not signaling any specific commodities or tonnages involved in answers to questions from members of the Senate Finance Committee.
“As you know, the United States is demanding that China make substantial purchases of U.S. agricultural products, in addition to making structural changes across a wide range of unfair policies and practices,” he said. Meanwhile the U.S. is pushing to get China to change its ways.
Asked again about the purchase commitments, Lighthizer said the U.S. focus continues on getting China to change how it treats imported products.
“The United States has been negotiating with China to resolve a large number of unwarranted and longstanding trade barriers to U.S. agricultural exports,” he observed. “We are encouraging China to demonstrate real structural changes across a wide range of unfair policies and practices that will yield actual, verifiable, and enforceable results. The administration has been clear in demanding that China make substantial purchases of U.S. agricultural products and remove technical and regulatory barriers that impede U.S. agricultural exports to China.”
“As you know, the United States is demanding that China make substantial purchases of U.S. agricultural products, in addition to making structural changes across a wide range of unfair policies and practices,” he said. Meanwhile the U.S. is pushing to get China to change its ways.
Asked again about the purchase commitments, Lighthizer said the U.S. focus continues on getting China to change how it treats imported products.
“The United States has been negotiating with China to resolve a large number of unwarranted and longstanding trade barriers to U.S. agricultural exports,” he observed. “We are encouraging China to demonstrate real structural changes across a wide range of unfair policies and practices that will yield actual, verifiable, and enforceable results. The administration has been clear in demanding that China make substantial purchases of U.S. agricultural products and remove technical and regulatory barriers that impede U.S. agricultural exports to China.”
Wednesday Watch List:
Markets
At 7:15 a.m. CDT, ADP employment figures will offer a clue to Friday's report on U.S. unemployment and be followed by the Employment Cost Index at 7:30 a.m. The U.S. Energy Department will update weekly energy inventories at 9:30 a.m., including ethanol. At 1 p.m. CDT, the Federal Reserve will announce its decision on interest rates with many expecting a quarter-percent reduction.
Weather
Dry conditions will dominate the crop weather scene Wednesday. Conditions will again be cool for the season in the Midwest, and warm to hot in the western and Southern Plains through the Delta and Southeast. The only notable precipitation will be a swath of thunderstorms in portions of the western Midwest. Crop progress remains a month behind average due to the wet spring season-related late planting.
At 7:15 a.m. CDT, ADP employment figures will offer a clue to Friday's report on U.S. unemployment and be followed by the Employment Cost Index at 7:30 a.m. The U.S. Energy Department will update weekly energy inventories at 9:30 a.m., including ethanol. At 1 p.m. CDT, the Federal Reserve will announce its decision on interest rates with many expecting a quarter-percent reduction.
Weather
Dry conditions will dominate the crop weather scene Wednesday. Conditions will again be cool for the season in the Midwest, and warm to hot in the western and Southern Plains through the Delta and Southeast. The only notable precipitation will be a swath of thunderstorms in portions of the western Midwest. Crop progress remains a month behind average due to the wet spring season-related late planting.
Tuesday, July 30, 2019
U.S. Ethanol Near the Breaking Point?
The Trump Administration’s trade war with China and the surge in small oil refinery RFS exemptions have the U.S. ethanol industry nearing the breaking point. Green Plains Ethanol CEO Todd Becker tells Reuters that the weight of those two factors is becoming almost unbearable. The U.S. ethanol industry growth has stalled in the face of President Trump’s trade war with China, a major ethanol buyer. The small refinery exemptions under the Renewable Fuels Standard handed out to small refineries by the Environmental Protection Agency has seriously cut into demand. The sustained downturn is beginning to take a significant toll. Becker tells Reuters that, “Some plants will slow down, some will shut down, and some will shut down forever.” The president did fulfill a promise to lift the summer ban on higher blends of ethanol. However, the infrastructure the industry needs to deliver it will require time to build. Becker says there are about 2,000 retail stores equipped to supply E85 gasoline, but the industry needs about 10,000 stores to boost demand. Becker did say he feels the industry has been “undisciplined,” continuing to ramp up production while facing weak demand growth and growing supplies.
EPA Will Rule on Refinery Biofuel Waivers Soon
The Environmental Protection Agency says it will decide soon on the 2018 petitions for small refinery waivers from the Renewable Fuels Standard blending obligations. Administrator Andrew Wheeler says they hope to get through the petitions in the next few weeks. Wheeler visited the Monroe Energy Oil Refinery in Pennsylvania on Monday, telling reporters that, “We’re going through them. We hope to be processing them in the next few weeks and month at the most.” President Trump recently ordered a review of the waiver program, which has been a serious bone of contention between the ethanol and oil industries for some time. An MSN Dot Com article says sources in both the oil and biofuel industries says the waiver decisions were nearly complete before President Trump demanded a review of the program. Both the EPA and the USDA are working to come up with a solution to the problem. The sources also say that the Department of Energy has already provided its scoring results last April on the 40 outstanding 2018 petitions. Trump, looking at possible reelection next year, has struggled to find a balance between oil refiners and corn growers since taking office.
Lighthizer Promises Ag Wins in Japan Deal
Any potential trade deal between the U.S. and Japan will include big gains for farmers and ranchers. Politico says that statement comes directly from U.S. Trade Representative Robert Lighthizer. He says in written comments to the Senate Finance Committee that ag producers will see “significant new opportunities for agricultural exports” once any agreement gets finalized. The Economic Revitalization Minister from Japan will be in Washington, D.C., for trade discussions on Thursday and Friday. Negotiators tell Politico that they’re hoping to get a mini-deal done quickly that focuses on agriculture and automobiles. They’d like to get it done within the coming weeks and months. An agreement on farm products would be a big boost for U.S. farmers and ranchers. Now that the Trans-Pacific Partnership is in effect without the United States, American producers fear losing their share of the large Japanese market to competitors like Canada and Australia. Lighthizer and Treasury Secretary Steven Mnuchin (Muh-noo-chin) will be returning this week from trade negotiations in China and be back in time to meet with Japanese officials.
China Trying to Boost Pork Production
The Chinese government is looking to battle back against the effects of African Swine Fever. The government has mandated a boost in domestic pork production to shore up supplies and stabilize prices that have been hit hard by the disease. China has lost 13 million tons of pork, which is equal to the entire yearly production level of the U.S. That loss is pushing Chinese officials to go forward with domestic actions, which will help 13 cities in the nation’s top pork-producing province produce 34 million pigs this year. City governments will subsidize pig farms and require banks to make credit and favorable insurance policies available to pig farmers and pork processors. China will earmark a total of $111.6 million from the provincial budget for the effort. U.S. pork producers are hopeful that a new trade deal with China would get rid of the giant 62 percent tariff that the National Pork Producers Council estimates have caused its producers to miss out on $1 billion in sales.
African Swine Fever Makes First Appearance in Slovakia
African Swine Fever has made its first appearance in Slovakia. The first confirmed infection showed up on a backyard farm in a village near the border with Hungary. The Director-General of the State Veterinary and Food Administration says it’s the very first case of ASF diagnosed in Slovakia. The disease turned up on a small farm with just four pigs located near the border of Hungary and Ukraine, two countries that have had ASF infections already confirmed. Hundreds of wild boars in Hungary have also been confirmed to have ASF infection this year. Slovakian authorities say all pigs within a three-kilometer radius of the infected farm will be culled. They will also establish a three-kilometer protection zone and a ten-mile surveillance zone. Farm Journal’s Ag Web Dot Com says only the Czech Republic has successfully kept ASF outbreaks under control and was declared free of ASF earlier this year. However, recent outbreaks in Bulgaria and Poland indicate big challenges ahead in keeping the disease from spreading.
More Softening in Farmland Values in 2019
Farmland values slipped some during the first half of this year in Iowa, Nebraska, and South Dakota. However, Farm Credit Services of America says overall that the market for cropland values continues to make adjustments to the current agricultural economy. The value of the 64 benchmark farms that FCSA keeps track of declined an average of 0.59 percent in the first half of this year. Since the farmland market peaked back in 2013, cropland values have dropped 20 percent in Iowa, 21 percent in Nebraska, and 12 percent in South Dakota in the company’s benchmark farmland study. Tim Koch, FCSA’s Chief Credit Officer, says, “Despite continued tight commodity price margins in 2018, real estate values remained stable and were supported by favorable interest rates, market facilitation payments, and equilibrium in supply and demand for real estate.” While Iowa farmland had the biggest decline in value during the benchmark study, values are still up 2.7 percent from a year ago. The average quality of land has not changed in the past year, and buyer demand for high-quality ground remains strong.
Washington Insider: New Fed Hypothesis About Inflation
Bloomberg is reporting this week that Federal Reserve Chairman Jerome Powell probably will kick off his post-meeting press conference on Wednesday the same way he’s begun every one this year – by telling reporters that the Fed has one over-arching goal: to sustain the economic expansion.
Behind that statement lies a grand ambition, Bloomberg thinks. Powell is effectively taking on a task that many of his inflation-wary predecessors shunned: extend the fruits of a growing economy to those who rarely benefit, from struggling African-American families to poor rural white people.
The improvement in the jobs market has “started to reach communities at the edge of the workforce,” Powell told lawmakers this month. “It’s just so important for us to continue that process for a couple of years.”
That means keeping the economy growing at or ideally somewhat above its long-run cruising speed of about 2%, and running a high-pressure labor market by holding unemployment at levels many economists think unsustainable.
To help in that effort and to protect the U.S. from downside risks from abroad, the Fed chief and his Federal Open Market Committee colleagues are expected to cut interest rates by a quarter percentage point after meeting today and Wednesday, lowering borrowing costs for the first time in more than a decade.
“I can’t remember a Fed chair who was as emphatic about the benefits of this high-pressure labor market to people who have long been left behind,’’ said Jared Bernstein, now at the Center on Budget and Policy Priorities and a former adviser to former Vice President Joe Biden.
Powell can afford to stoke the record-long expansion because inflation is contained and shows no sign of taking off in spite of unemployment near a half-century low. Indeed, the Fed would welcome some rise in price pressures after years in which inflation has languished below its 2% target.
The Fed chief also may be betting that pumped-up demand from lower borrowing costs will be met with added supply from the economy that will keep prices from skyrocketing.
That’s what happened in 2018, Bloomberg notes. At that time, a step-up in growth of GDP on the back of President Trump’s tax cuts was supported by an expansion in the labor force and gains in productivity.
There are risks, of course. Inflation may end up not being as tame as the Fed believes. There’s also a chance that low interest rates will lead to economically-dangerous asset bubbles and excessive borrowing that haunt the economy later.
Powell heard first-hand about the broad-based benefits of a tight jobs market at a Chicago Fed conference in June. “This is a great time” for economically vulnerable Americans who’ve had trouble getting a job, Patrick Dujakovich, president of the Greater Kansas City AFL-CIO, told the gathering. “There are a lot of prerequisites being waived” for getting hired.
Employers are taking on workers with limited skills and limited or no experience and hiring Americans with criminal records and disabilities. Companies are also being forced to raise wages to retain some lower-educated employees.
The Americans being helped the most by the tight labor market are “people at the bottom,’” said former Fed Vice Chairman Alan Blinder.
Powell has made clear he sees more room to run. At a congressional hearing this month, he took issue with a suggestion that the U.S. has a hot labor market.
“To call something hot, you need to see some heat,” he said, noting that wage growth has picked up but not yet surged. In a lively exchange at that same hearing with social media star Rep. Alexandria Ocasio-Cortez, D-N.Y., Powell said the current 3.7% unemployment rate was “well within the range of potential estimates” of its long-run natural state.
Back in 1973, influential economist Arthur Okun asked whether a high-pressure economy could contribute to upward mobility of workers, Bloomberg said. But a subsequent outbreak of double-digit inflation convinced central bankers that wasn’t the way to go.
Now may be time for a rethink, Powell suggested in a speech in Paris this month. Policy makers face a different world today: a world of low inflation, globalization and aging societies.
It’s also a world where yawning income and wealth gaps are spurring a populist backlash against the established economic order, including central banks. Powell has said repeatedly that it’s up to Congress and the White House to tackle such deep-rooted ills as income inequality and racial disparities in the labor market.
But he acknowledged this month that the Fed has a role to play, too. “What we can do,” he told lawmakers, “goes back to taking seriously the job you’ve given us, which is maximum employment.”
The conventional idea is that low unemployment and low borrowing costs risk inflation, a huge concern for traditional Republicans, among many others. In addition, there is the risk that the “modern” economy reflects new technologies and restructured resource needs, so where inflation fits in the modern world is uncertain, many observers conclude – but it has almost certainly not gone away. Thus, the new labor force “hypothesis” will be important for producers to watch closely if and when it emerges, Washington Insider believes.
Behind that statement lies a grand ambition, Bloomberg thinks. Powell is effectively taking on a task that many of his inflation-wary predecessors shunned: extend the fruits of a growing economy to those who rarely benefit, from struggling African-American families to poor rural white people.
The improvement in the jobs market has “started to reach communities at the edge of the workforce,” Powell told lawmakers this month. “It’s just so important for us to continue that process for a couple of years.”
That means keeping the economy growing at or ideally somewhat above its long-run cruising speed of about 2%, and running a high-pressure labor market by holding unemployment at levels many economists think unsustainable.
To help in that effort and to protect the U.S. from downside risks from abroad, the Fed chief and his Federal Open Market Committee colleagues are expected to cut interest rates by a quarter percentage point after meeting today and Wednesday, lowering borrowing costs for the first time in more than a decade.
“I can’t remember a Fed chair who was as emphatic about the benefits of this high-pressure labor market to people who have long been left behind,’’ said Jared Bernstein, now at the Center on Budget and Policy Priorities and a former adviser to former Vice President Joe Biden.
Powell can afford to stoke the record-long expansion because inflation is contained and shows no sign of taking off in spite of unemployment near a half-century low. Indeed, the Fed would welcome some rise in price pressures after years in which inflation has languished below its 2% target.
The Fed chief also may be betting that pumped-up demand from lower borrowing costs will be met with added supply from the economy that will keep prices from skyrocketing.
That’s what happened in 2018, Bloomberg notes. At that time, a step-up in growth of GDP on the back of President Trump’s tax cuts was supported by an expansion in the labor force and gains in productivity.
There are risks, of course. Inflation may end up not being as tame as the Fed believes. There’s also a chance that low interest rates will lead to economically-dangerous asset bubbles and excessive borrowing that haunt the economy later.
Powell heard first-hand about the broad-based benefits of a tight jobs market at a Chicago Fed conference in June. “This is a great time” for economically vulnerable Americans who’ve had trouble getting a job, Patrick Dujakovich, president of the Greater Kansas City AFL-CIO, told the gathering. “There are a lot of prerequisites being waived” for getting hired.
Employers are taking on workers with limited skills and limited or no experience and hiring Americans with criminal records and disabilities. Companies are also being forced to raise wages to retain some lower-educated employees.
The Americans being helped the most by the tight labor market are “people at the bottom,’” said former Fed Vice Chairman Alan Blinder.
Powell has made clear he sees more room to run. At a congressional hearing this month, he took issue with a suggestion that the U.S. has a hot labor market.
“To call something hot, you need to see some heat,” he said, noting that wage growth has picked up but not yet surged. In a lively exchange at that same hearing with social media star Rep. Alexandria Ocasio-Cortez, D-N.Y., Powell said the current 3.7% unemployment rate was “well within the range of potential estimates” of its long-run natural state.
Back in 1973, influential economist Arthur Okun asked whether a high-pressure economy could contribute to upward mobility of workers, Bloomberg said. But a subsequent outbreak of double-digit inflation convinced central bankers that wasn’t the way to go.
Now may be time for a rethink, Powell suggested in a speech in Paris this month. Policy makers face a different world today: a world of low inflation, globalization and aging societies.
It’s also a world where yawning income and wealth gaps are spurring a populist backlash against the established economic order, including central banks. Powell has said repeatedly that it’s up to Congress and the White House to tackle such deep-rooted ills as income inequality and racial disparities in the labor market.
But he acknowledged this month that the Fed has a role to play, too. “What we can do,” he told lawmakers, “goes back to taking seriously the job you’ve given us, which is maximum employment.”
The conventional idea is that low unemployment and low borrowing costs risk inflation, a huge concern for traditional Republicans, among many others. In addition, there is the risk that the “modern” economy reflects new technologies and restructured resource needs, so where inflation fits in the modern world is uncertain, many observers conclude – but it has almost certainly not gone away. Thus, the new labor force “hypothesis” will be important for producers to watch closely if and when it emerges, Washington Insider believes.
Proposed 2020 RFS Levels Finally Published
The proposed levels for 2020 biofuels and 2021 biodiesel under the Renewable Fuel Standard (RFS) were published in the Federal Register today.
The action proposes some reforms to the Renewable Identification Number (RIN) market, though the changes do not go as far as some had expected. The proposed rule also contains EPA’s response to a court order directing it to reassess its RFS levels for 2016. Comments on the proposed rule are due August 30.
The action reflects EPA’s apparent reset of the RFS for 2020 biofuel and 2021 biodiesel, though the rule that covers the full period of 2020-2022 has yet to be sent back to EPA from the Office of Management and Budget (OMB), with meetings on the RFS reset taking place last week.
EPA still signals the 2020 RFS levels will be finalized by the statutory November 30 deadline. The RFS reset plan, however, is listed as being targeted to be finalized in February 2020.
The action proposes some reforms to the Renewable Identification Number (RIN) market, though the changes do not go as far as some had expected. The proposed rule also contains EPA’s response to a court order directing it to reassess its RFS levels for 2016. Comments on the proposed rule are due August 30.
The action reflects EPA’s apparent reset of the RFS for 2020 biofuel and 2021 biodiesel, though the rule that covers the full period of 2020-2022 has yet to be sent back to EPA from the Office of Management and Budget (OMB), with meetings on the RFS reset taking place last week.
EPA still signals the 2020 RFS levels will be finalized by the statutory November 30 deadline. The RFS reset plan, however, is listed as being targeted to be finalized in February 2020.
EPA’s Wheeler Says Small Refiner Exemption Actions Still Coming
EPA currently expects to make decisions on small refiner exemptions (SREs) under the Renewable Fuel Standard (RFS) for the 2018 compliance year in the next few weeks, according to Administrator Andrew Wheeler.
"We're going through them," Wheeler told reporters as he visited a refinery in Pennsylvania Monday. "We hope to be processing them and making decisions in the next few weeks and month at the most.”
EPA received the recommendations from the Department of Energy (DOE) in April relative to the SREs for the 2018 compliance year. However, no action has been taken as of yet on most of the requests. EPA data shows 40 SRE requests were received for the 2018 compliance year with two being declared ineligible or withdrawn, leaving 38 still pending.
President Donald Trump also asked EPA and USDA to come up with a resolution on the controversial topic after he was surprised by criticism of the SREs when he made a stop in Iowa in June to tout the allowance of year-round sales of E15 fuel. That order by Trump prompted a firestorm of criticism from those on both sides of the issue..
"We're going through them," Wheeler told reporters as he visited a refinery in Pennsylvania Monday. "We hope to be processing them and making decisions in the next few weeks and month at the most.”
EPA received the recommendations from the Department of Energy (DOE) in April relative to the SREs for the 2018 compliance year. However, no action has been taken as of yet on most of the requests. EPA data shows 40 SRE requests were received for the 2018 compliance year with two being declared ineligible or withdrawn, leaving 38 still pending.
President Donald Trump also asked EPA and USDA to come up with a resolution on the controversial topic after he was surprised by criticism of the SREs when he made a stop in Iowa in June to tout the allowance of year-round sales of E15 fuel. That order by Trump prompted a firestorm of criticism from those on both sides of the issue..
Monday, July 29, 2019
Application Period for MFP Payments Opens
Farm Service Agency offices starting today (Monday) are accepting producer applications for the Market Facilitation Program payments announced last week. The payments are part of the $16 billion trade aid package for producers in 2019. The Department of Agriculture expects the first round of payments to start mailing around mid-to-late August. A producer will receive 50 percent of the per-acre payment rate in the first round of payments. So, if a county-level rate is $60, the producer would receive $30 per-acre in August, and the remaining $30 would be split between two additional payments, if they’re determined necessary by the Trump administration, later in the year. Producers have until Friday, December 6, 2019, to apply. Dairy and hog producers are also eligible for aid, but have specific requirements producers must follow during the application process. USDA is encouraging all eligible producers to contact their local FSA office to apply, or find the application and requirements, along with the list of agricultural products covered, at www.farmers.gov/mfp.
More Reaction to U.S. Trade Assistance Package
The U.S. Department of Agriculture announced the details of the 2019 Market Facilitation Program payments last week, which includes up to $14.5 billion in direct assistance to producers. The first round of payments will get underway in August. Davie Stephens, president of the American Soybean Association, says his group appreciates the help. “The county rate for farmers in areas with a higher percentage of crops suffering from negative trade impacts will receive a higher offset for the damages we’ve seen because of the tariffs,” he says. “We appreciate the Administration’s efforts to determine how the payments will work and hope that our soybean growers will feel some relief from the assistance.” Signup for farmers with eligible crops begins on July 29th (today). The National Cotton Council also expressed its appreciation for the Administration recognizing the economic pressures caused by the trade tensions with China. NCC Chair Mike Tate says the assistance is timely as U.S. cotton’s economic health is deteriorating. Cotton futures have fallen by 30 cents per pound since the summer of 2018. “There’s no doubt this downward price pressure is due in large part to cotton sales to China being substantially lower than what we expected before the tariffs,” Tate says. “Pressure is building in the distribution chain as U.S. cotton exports lag and stocks continue to build higher.”
Chinese Government Allows Some Tariff-Free Purchases from the U.S.
The Chinese government permitted several domestic companies to purchase U.S. agricultural products without tariffs. People familiar with the situation tell Bloomberg that the companies will buy U.S. cotton, corn, sorghum, and pork without facing the extra costs of the tariffs. Some textile mills have permission to buy a total of 50,000 tons of U.S. cotton without the 25 percent duty. The total amounts of the corn, sorghum, and pork purchases weren’t available. The move follows the approval for purchasing three million tons of U.S. soybeans last week Bloomberg says there could be a second round of exemptions, depending on how trade talks progress. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin (Muh-NOO-chin) are in China this week for the first high-level, face-to-face discussions since the talks broke down in May. In a press conference last week, China’s commerce ministry said companies are willing to buy U.S. farm products, but only in line with domestic demands, and the purchases are their own decisions. A ministry spokesman says there are no direct connections between purchases and the resumption of trade talks.
Japanese Delegation in Washington This Week for Trade Talks
U.S. Trade Representative Robert Lighthizer told Agri-Pulse last week that a delegation from Japan will be in Washington this week for trade negotiations. The talks are scheduled to get underway on Thursday, August 1. Lighthizer will actually be in China early this week to continue discussions aimed at ending the trade war between the U.S. and China. However, he’s expected to be back in Washington for talks with the Japanese. Japan and the U.S. had been talking earlier this year, but those talks were suspended due to elections in Japan, which have now taken place. U.S. agriculture couldn’t be more excited about the possibility of a trade deal with Japan, which buys a lot of American pork, wheat, dairy, wine, along with fruits and vegetables. Japan was prepared to lift tariffs on U.S. agricultural products when America was part of the Trans-Pacific Partnership Agreement. Some of America’s main competitors, such as Australia and Canada, who remained in the pact, are now enjoying the benefits of reduced tariffs. Japan has also cut tariffs on goods from the European Union, another chief competitor of America, as the two nations recently reached a free trade deal of their own. Japan is the fourth-biggest market for U.S. agricultural exports.
Large Banks Leaving Ag Lending, Rabobank Filling the Gap
Top U.S. banks like J.P. Morgan and Capital One are on the way out of ag lending. However, Banking Dive magazine says Rabobank will be stepping in to fill that gap. The nation’s top 30 banks saw a decline of 17.5 percent, or about $3.9 billion, in their farm-loan portfolios between the peak of December 2015 and March of this year. However, Rabo AgriFinance, which only lends to farmers, saw its business jump seven percent during that same time frame. “In my opinion, the big banks have never played a significant role in ag lending, even when they’ve had exposures to it,” says Executive Vice President Curt Hudnutt. “We’re solely focused on food and agribusiness, so we know we have to be in this sector in the good times and bad.” He says when things don’t go well for clients, Rabo AgriFinance is even more active than normal because the company believes it can bring the right solutions to the right producers and help them weather downturns. The U.S. Department of Agriculture says farm debt will rise to approximately $426.7 billion this year, levels that are approaching the 1980’s farm crisis. Hudnutt says Rabo AgriFinance has about $15 billion in total loans outstanding.
USDA Says Hemp Production Rules Will Be Ready In August
The U.S. Department of Agriculture announced last week that it will complete the federal rules governing domestic hemp production by August. The website Hemp Industry Daily Dot Com says the agency had previously said in February that it wouldn’t release the final rules until the 2020 growing season. However, states and Native American tribes began to submit their hemp production plans for the USDA to review starting the day after the 2018 Farm Bill was signed. Under the bill, states and tribes can run hemp oversight themselves, but they have to submit their plans for that oversight to USDA, which has up to 60 days to respond. States that don’t submit a plan will be subject to the still-unwritten federal regulations. Even in states that said they planned to wait for federal guidance, many hemp bills have moved forward in their legislatures, allowing farmers to participate in the 2019 growing season under the rules in the 2014 Farm Bill. The USDA is also providing new assistance to the hemp industry, including advising the industry on properly importing hempseed into the U.S.
Monday Watch List
Markets
U.S. officials head to Shanghai Monday, trying once again to secure a trade agreement with China or at least more meetings to keep the process going. USDA will release weekly export inspections at 10 a.m. CDT, followed by the 3 p.m. Crop Progress report. Updated crop ratings for row crops and spring wheat will get the most attention, along with this week's weather forecasts.
Weather
Monday features a swath of light to moderate rain in the central Midwest, benefiting pollinating corn and flowering soybeans. Dry conditions will be in place elsewhere. Conditions will be cool north and seasonal to above normal in other areas.
U.S. officials head to Shanghai Monday, trying once again to secure a trade agreement with China or at least more meetings to keep the process going. USDA will release weekly export inspections at 10 a.m. CDT, followed by the 3 p.m. Crop Progress report. Updated crop ratings for row crops and spring wheat will get the most attention, along with this week's weather forecasts.
Weather
Monday features a swath of light to moderate rain in the central Midwest, benefiting pollinating corn and flowering soybeans. Dry conditions will be in place elsewhere. Conditions will be cool north and seasonal to above normal in other areas.
Washington Insider: More US, China Trade Talks
The urban press is reporting this week that almost three months after their trade talks broke down in acrimony, Chinese and American negotiators meet again in Shanghai. For example, Bloomberg says that this is amid “tempered expectations for breakthroughs in their yearlong trade war.”
Two days of talks are scheduled to restart tomorrow after an uneasy truce reached by Presidents Trump and Xi Jinping on the sidelines of the Group of 20 summit in Osaka, Japan, last month. “Deep tensions remain, though, and recent days have brought mixed signals from both sides, with neither showing an urge to compromise.”
While China has indicated its readiness to buy US agricultural products, it has also called the U.S. the "black hand" behind anti-government protests in Hong Kong and said Friday an investigation into FedEx Corp.’s claims it mistakenly rerouted Huawei Technologies Co. packages to the US as well as other legal violations.
Trump has spoken with tech executives recently about the ban on selling products to Huawei and potentially easing that prohibition while other US officials played down the possibility of a quick trade deal.
Increasingly at stake now is the health of a global economy “weighed down by uncertainty for markets and companies.” The International Monetary Fund last week further reduced its estimates for global growth and warned that damage was to some extent “self-inflicted” by prolonged uncertainty caused by the trade war, escalating tensions over technology, and Brexit.
“There is still a huge gap between the two sides on key sticking points,” said Robin Xing, chief China economist at Morgan Stanley in Hong Kong. “So far there is still no clear path toward a comprehensive deal.”
China is seen sticking to its three key demands: The immediate removal of all existing tariffs, a balanced agreement, and realistic targets for additional Chinese purchases of American products. No achievements would be made if the U.S. sticks to its existing stance during the Shanghai talks, Taoran Notes, a blog run by the state-owned Economic Daily newspaper, said Friday.
The U.S. should remove all additional tariffs first if it wants to reach a deal, and equality and respect between the two sides are the only way to reach agreement, it said. China is not afraid of US threats to impose tariffs on an additional $300 billion of Chinese goods, it said.
Among the U.S. demands are structural reforms to China’s economy, greater protection of intellectual property rights and a more balanced trading relationship.
Leading the delegation from Washington, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin “will put forth the view we’d like to go back to where we were last May, where we did not have an agreement but we seemed to be about 90% of the way there,” White House economic adviser Larry Kudlow told reporters on Friday.
The prospects for an agreement are also hampered by tensions over geopolitical issues including Hong Kong, North Korea, Taiwan and the South China Sea. Huawei remains a key point of contention, with China last week urging the U.S. to block a proposed bill that would stop the Chinese telecom giant from accessing US patents.
Some in the U.S. administration also are concerned about the inclusion of new “hard-liners” on the Chinese side. Such a view is dismissed by China analyst Pauline Loong, managing director at research company Asia-Analytica in Hong Kong.
“This is not some minor discussion with give and take on minor issues,” she said. “The concessions now needed to clinch an agreement will require decisions at the Politburo Standing Committee level, not at the level of the negotiating team.”
The discussions will cover a range of issues, including intellectual property, forced technology transfer, non-tariff barriers, agriculture, services, the trade deficit, and enforcement, according to a White House statement.
“China is not going to make dramatic concessions, so the issue for the U.S. side is whether it wants to accept a practical compromise or resume escalation,” said David Dollar, a former U.S. Treasury official in Beijing, who is now a senior fellow at the Brookings Institution in Washington.
On Friday, President Trump said China may wait until after the 2020 U.S. presidential election to sign an agreement because Beijing would prefer to reach a deal with a Democrat. “I think that China will probably say, ‘let’s wait,’” he told reporters in the Oval Office. “When I win, like almost immediately, they’re all going to sign deals.”
So, we will see. There are growing numbers of press reports about pressure on U.S. crop and livestock producers, as well as on Chinese manufacturers as a result of the trade standoff. And it seems clear that the U.S. negotiators have lowered their expectations, perhaps significantly. Whether there is a political will to actually agree is another matter, experts warn, so the coming talks should be watched closely by producers as they proceed, Washington Insider believes.
Two days of talks are scheduled to restart tomorrow after an uneasy truce reached by Presidents Trump and Xi Jinping on the sidelines of the Group of 20 summit in Osaka, Japan, last month. “Deep tensions remain, though, and recent days have brought mixed signals from both sides, with neither showing an urge to compromise.”
While China has indicated its readiness to buy US agricultural products, it has also called the U.S. the "black hand" behind anti-government protests in Hong Kong and said Friday an investigation into FedEx Corp.’s claims it mistakenly rerouted Huawei Technologies Co. packages to the US as well as other legal violations.
Trump has spoken with tech executives recently about the ban on selling products to Huawei and potentially easing that prohibition while other US officials played down the possibility of a quick trade deal.
Increasingly at stake now is the health of a global economy “weighed down by uncertainty for markets and companies.” The International Monetary Fund last week further reduced its estimates for global growth and warned that damage was to some extent “self-inflicted” by prolonged uncertainty caused by the trade war, escalating tensions over technology, and Brexit.
“There is still a huge gap between the two sides on key sticking points,” said Robin Xing, chief China economist at Morgan Stanley in Hong Kong. “So far there is still no clear path toward a comprehensive deal.”
China is seen sticking to its three key demands: The immediate removal of all existing tariffs, a balanced agreement, and realistic targets for additional Chinese purchases of American products. No achievements would be made if the U.S. sticks to its existing stance during the Shanghai talks, Taoran Notes, a blog run by the state-owned Economic Daily newspaper, said Friday.
The U.S. should remove all additional tariffs first if it wants to reach a deal, and equality and respect between the two sides are the only way to reach agreement, it said. China is not afraid of US threats to impose tariffs on an additional $300 billion of Chinese goods, it said.
Among the U.S. demands are structural reforms to China’s economy, greater protection of intellectual property rights and a more balanced trading relationship.
Leading the delegation from Washington, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin “will put forth the view we’d like to go back to where we were last May, where we did not have an agreement but we seemed to be about 90% of the way there,” White House economic adviser Larry Kudlow told reporters on Friday.
The prospects for an agreement are also hampered by tensions over geopolitical issues including Hong Kong, North Korea, Taiwan and the South China Sea. Huawei remains a key point of contention, with China last week urging the U.S. to block a proposed bill that would stop the Chinese telecom giant from accessing US patents.
Some in the U.S. administration also are concerned about the inclusion of new “hard-liners” on the Chinese side. Such a view is dismissed by China analyst Pauline Loong, managing director at research company Asia-Analytica in Hong Kong.
“This is not some minor discussion with give and take on minor issues,” she said. “The concessions now needed to clinch an agreement will require decisions at the Politburo Standing Committee level, not at the level of the negotiating team.”
The discussions will cover a range of issues, including intellectual property, forced technology transfer, non-tariff barriers, agriculture, services, the trade deficit, and enforcement, according to a White House statement.
“China is not going to make dramatic concessions, so the issue for the U.S. side is whether it wants to accept a practical compromise or resume escalation,” said David Dollar, a former U.S. Treasury official in Beijing, who is now a senior fellow at the Brookings Institution in Washington.
On Friday, President Trump said China may wait until after the 2020 U.S. presidential election to sign an agreement because Beijing would prefer to reach a deal with a Democrat. “I think that China will probably say, ‘let’s wait,’” he told reporters in the Oval Office. “When I win, like almost immediately, they’re all going to sign deals.”
So, we will see. There are growing numbers of press reports about pressure on U.S. crop and livestock producers, as well as on Chinese manufacturers as a result of the trade standoff. And it seems clear that the U.S. negotiators have lowered their expectations, perhaps significantly. Whether there is a political will to actually agree is another matter, experts warn, so the coming talks should be watched closely by producers as they proceed, Washington Insider believes.
Immigration Shift Eyed for Investment in Rural Areas
A rule that would raise the investment limits for immigrants applying to the EB-5 visa program was published Wednesday by the Trump administration.
The program currently allows foreigners who invest $1 million in a U.S. commercial project that will create or preserve at least 10 jobs to apply for a green card. That investment threshold drops to $500,000 if the project takes place in a high-unemployment or rural area.
Under the new regulation, the standard threshold is increased to $1.8 million, and the threshold for rural or high-unemployment areas will rise to $900,000 — a smaller jump than the $1.35 million proposed in an earlier version of the rule.
Sen. Chuck Grassley, R-Iowa, in a floor speech last week said it will encourage investment in rural America.
The program currently allows foreigners who invest $1 million in a U.S. commercial project that will create or preserve at least 10 jobs to apply for a green card. That investment threshold drops to $500,000 if the project takes place in a high-unemployment or rural area.
Under the new regulation, the standard threshold is increased to $1.8 million, and the threshold for rural or high-unemployment areas will rise to $900,000 — a smaller jump than the $1.35 million proposed in an earlier version of the rule.
Sen. Chuck Grassley, R-Iowa, in a floor speech last week said it will encourage investment in rural America.
US-China Trade Talks This Week
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Shanghai Tuesday to meet with Chinese Vice Premier Liu He. Mnuchin said the U.S. team will be in Shanghai for two days.
White House press secretary Stephanie Grisham said in a statement the officials will "continue negotiations aimed at improving the trade relationship between the United States and China... The discussions will cover a range of issues, including intellectual property, forced technology transfer, non-tariff barriers, agriculture, services, the trade deficit, and enforcement," Grisham said.
As for the reasoning behind Shanghai being chosen as opposed to Beijing, Mnuchin said on CNBC, “The reason why we’re going to Shanghai is that the host country, China, has invited us there. There’s a significance to them of the Shanghai Communiqué and the symbolism, obviously, of that important agreement. So, hopefully I’ll take that as good news that we’ll be making progress next week.“
The Shanghai Communiqué was a document that set the stage for normalized diplomatic relations between the U.S. and China during President Richard Nixon’s visit to the country in 1972.
Chinese President Xi Jinping could make an appearance in Shanghai and meet with the visiting U.S. officials, some sources speculate.
White House press secretary Stephanie Grisham said in a statement the officials will "continue negotiations aimed at improving the trade relationship between the United States and China... The discussions will cover a range of issues, including intellectual property, forced technology transfer, non-tariff barriers, agriculture, services, the trade deficit, and enforcement," Grisham said.
As for the reasoning behind Shanghai being chosen as opposed to Beijing, Mnuchin said on CNBC, “The reason why we’re going to Shanghai is that the host country, China, has invited us there. There’s a significance to them of the Shanghai Communiqué and the symbolism, obviously, of that important agreement. So, hopefully I’ll take that as good news that we’ll be making progress next week.“
The Shanghai Communiqué was a document that set the stage for normalized diplomatic relations between the U.S. and China during President Richard Nixon’s visit to the country in 1972.
Chinese President Xi Jinping could make an appearance in Shanghai and meet with the visiting U.S. officials, some sources speculate.
Friday, July 26, 2019
USDA Announces MFP Payments, Sign-up Begins Monday
The sign-up period begins Monday for the next round of trade aid payments to farmers. The Department of Agriculture Thursday announced details of the Market Facilitation Program payments as part of a $16 billion trade aid package. USDA will begin mailing payments to producers in late August. County payment rates range from $15 to $150 per acre, depending on the impact of “unjustified trade retaliation” in that county. Most payments for Corn Belt states average between $60 and $80 an acre. Meanwhile, producers who filed a prevented planting claim and planted an FSA-certified cover crop, with the potential to be harvested, qualify for a $15 per acre payment. Acres that were never planted in 2019 are not eligible. Dairy producers will receive a per hundredweight payment on production history. Hog producers will receive a payment based on the number of live hogs owned on a day selected by the producer between April 1 and May 15, 2019. For more information, visit farmers.gov/mfp or contact your local FSA office.
Farm Groups React: MFP Needed, Urge Free and Fair Trade
Farm groups welcomed the Market Facilitation Program payments announced Thursday but urge the Trump administration to restore trade markets quickly. With a depressed farm economy, and agitated global trade stemming from President Trump's trade agenda, farm groups say U.S. agriculture desperately needs help. However, farmers would rather receive help through fair and free trade, not a government check. American Farm Bureau Federation President Zippy Duvall says U.S. farmers are “grateful for the continuing support,” but says its "critically important to restore agricultural markets." National Sorghum Producers Chairman Dan Atkisson says, “farmers need all the support they can get," but calls for "meaningful dialogues that lead to long-term solutions" with China. National Farmers Union President Roger Johnson followed the trend, stating a "sense of confusion and insecurity will likely persist," until a long-term solution is reached. NFU expressed disappointment the program doesn’t include efforts to reduce production, and questioned the fairness of the county-by-county basis of the payments. Meanwhile, China and the U.S. meet again next week to continue trade talks.
Food Purchases Planned Through MFP Payments
As farmers learn more about the payments planned through the Market Facilitation Program, the $16 billion package also includes up to $1.4 billion in commodity purchases. The Department of Agriculture’s Agricultural Marketing Service will purchase surplus commodities to be distributed to food banks, schools and other outlets serving low-income individuals. Specifically, USDA will spend up to $432 million to purchase U.S. poultry products, $208 million of pork and $200 of processed fruit and vegetable products. Additionally, USDA will buy $151 million of beef, $104 million worth of citrus products, $88 million of U.S. apples and $68 million of dairy products. The Agricultural Marketing Service will buy affected products in four phases, starting after October 1, 2019, with deliveries beginning in January 2020. The products will be distributed to states for use in food banks and food pantries that participate in The Emergency Feeding Assistance Program, elderly feeding programs such as the Commodity Supplemental Foods Program, and tribes that operate the Food Distribution Program on Indian Reservations.
Farmers See Hemp as Alternative Crop, But Need Support
A Kentucky farmer tells lawmakers hemp is a potential alternative crop, but not without its own issues. During a Senate Agriculture Committee hearing Thursday, lawmakers heard the needs of what a U.S. program should address. Kentucky Farmer Brian Furnish says hemp farmers struggle to plant a crop that can emerge, as hemp seed needs very specific conditions for germination and initial growth. He also says weeds are hard to control in hemp because there are currently no crop protection products certified for use on hemp. The Department of Agriculture is set to release guidelines regarding hemp sometime next month. USDA undersecretary Greg Ibach told lawmakers at the hearing the guidelines address testing standards, disposal, land use, and law enforcement compliance, along with licensing requirements for products and farmworkers. There remains concern, giving the interest, that the hemp market may overpopulate quickly. Agriculture Secretary Sonny Perdue earlier commented he is “concerned farmers may overproduce.” The U.S. currently lacks processing and marketing infrastructure for wide-spread hemp production.
Pork Checkoff Vigilant as African Swine Fever Marks One Year in China
The National Pork Board says the U.S. is in a better position to defend against African swine fever. The one-year anniversary of AFS in China, August 3, also marks a year of preparation and border solidification in the United States. NPB President David Newman says the U.S. is in a better position, but notes “we can never be too prepared” with devastating diseasing like African swine fever. Industry-wide collaboration, led by the Pork Checkoff, has helped North America develop improved biosecurity measures, and increased border inspections, to keep the disease out. Primary partners in the effort include the Department of Agriculture, the National Pork Producers Council, the North American Meat Institute, the American Association of Swine Veterinarians and the Swine Health Information Center. However, NPB stresses the ASF situation in China and other Asian countries "won't likely get better in the near term," implying the need for continued preparedness. Data from China shows pork production fell 5.5 percent in the first half of this year because of ASF.
Beyond Meat Developing So-called Bacon Product
Plant-based food company Beyond Meat is developing a “bacon alternative.” The effort from the growing company, already mastering plant-based burger and sausage alternatives, is part of Beyond Meat's recent focus on the breakfast table. There's no launch date for the fake bacon, but company CEO Ethan Brown told Bloomberg news the product is improving as it goes through development. Doughnut shop Tim Hortons now serves plant-based sausage on breakfast sandwiches from Beyond Meat in nearly 4,000 locations. Beyond Meat also announced a breakfast sandwich partnership with Dunkin' Donuts earlier this week. The company is also developing plant-based steak alternatives. Since the public stock offering of Beyond Meat in May, company stock has soared almost 700 percent. The company is continuing to expand its reach as its products are now sold in more than 30,000 supermarkets and restaurants around the world. The company claims it's providing a solution to four "growing issues" in livestock production, being human health, climate change, constraints on natural resources and animal welfare.
Washington Insider: Coffee, Industry Crises and Immigration
There’s another side to the new fight between the administration and Guatemala, Bloomberg says this week—it thinks that the threats against Guatemala could “worsen the income outlook for 125,000 farm families.”
The main point is that the coffee producers in Central America are already facing a crisis from “rock-bottom commodity prices and depressed incomes,” which sanctions from the U.S. could make worse as the administration threatens tariffs against the country.
The President this week said his administration is examining tariffs, remittance fees, and other sanctions after he claimed that Guatemala backed out of an agreement to become a “safe third country” to slow the flow of undocumented migrants. U.S. companies, including Starbucks Corp., are the main buyers of coffee beans from the Latin American nation, according to data from Guatemala’s National Coffee Association, Anacafe. It’s the country’s second most important agricultural export after bananas.
And while the administration threat comes amid its battle to reduce immigration, taking the action against Guatemala could end up producing the opposite result, Bloomberg says.
It says that the “coffee crisis” has already forced many of the nation’s small growers to leave the country and take the risky trip through Mexico to cross the U.S. border. Tariffs would likely further beat down the commodity market in the Central American country and possibly exacerbate the flow of migrants.
While there’s no official information on the possible tariffs, “we are analyzing the possible scenarios,” Bernardo Solano, president of Anacafe, said. “As the United States is our main trading partner, if tariffs were increased, it would affect the competitiveness of our country.”
Coffee futures traded in New York have tumbled almost 25% in the past two years as supplies boomed in Brazil, the world’s top producer and exporter. Competition has gotten so fierce and prices so low that coffee farming has become untenable for many small growers--leading their adult children to shun the business in many cases.
Guatemala has one of the highest inequality rates in Latin America, with some of the worst poverty, malnutrition and maternal-child mortality rates in the region, especially in rural and indigenous areas, according to the World Bank.
If the President follows through on this threat, it would “aggravate the international price crisis that we are going through, further complicating the economy of the 125,000 Guatemalan coffee-producing families, who will be in need of finding other alternatives to generate income--among these, is migration," Solano said.
Overall, it seems that the U.S. border security problems are likely much more complex than is generally understood and will continue to be highly controversial. The United States has traditionally sponsored development programs across Central America in continuing efforts to reduce immigration pressures, extending back to the Reagan Administration’s Caribbean Basin Initiative that worked to expand U.S. imports and stimulate exports from the region, but which has fallen out of favor more recently.
So, we will see. It seems increasingly that the administration’s heavy reliance on tariffs as a main trade policy tool is being questioned by front line industries in a growing number of industrial sectors—-and opposed by major and minor trading partners. A key test appears to be coming soon as the Congress debates approval of the new NAFTA agreement, amid the resumption of tariff talks with China and administration threats of new European duties on automobiles. Each of these is yet another issue producers should watch closely as the debates intensify, Washington Insider believes.
The main point is that the coffee producers in Central America are already facing a crisis from “rock-bottom commodity prices and depressed incomes,” which sanctions from the U.S. could make worse as the administration threatens tariffs against the country.
The President this week said his administration is examining tariffs, remittance fees, and other sanctions after he claimed that Guatemala backed out of an agreement to become a “safe third country” to slow the flow of undocumented migrants. U.S. companies, including Starbucks Corp., are the main buyers of coffee beans from the Latin American nation, according to data from Guatemala’s National Coffee Association, Anacafe. It’s the country’s second most important agricultural export after bananas.
And while the administration threat comes amid its battle to reduce immigration, taking the action against Guatemala could end up producing the opposite result, Bloomberg says.
It says that the “coffee crisis” has already forced many of the nation’s small growers to leave the country and take the risky trip through Mexico to cross the U.S. border. Tariffs would likely further beat down the commodity market in the Central American country and possibly exacerbate the flow of migrants.
While there’s no official information on the possible tariffs, “we are analyzing the possible scenarios,” Bernardo Solano, president of Anacafe, said. “As the United States is our main trading partner, if tariffs were increased, it would affect the competitiveness of our country.”
Coffee futures traded in New York have tumbled almost 25% in the past two years as supplies boomed in Brazil, the world’s top producer and exporter. Competition has gotten so fierce and prices so low that coffee farming has become untenable for many small growers--leading their adult children to shun the business in many cases.
Guatemala has one of the highest inequality rates in Latin America, with some of the worst poverty, malnutrition and maternal-child mortality rates in the region, especially in rural and indigenous areas, according to the World Bank.
If the President follows through on this threat, it would “aggravate the international price crisis that we are going through, further complicating the economy of the 125,000 Guatemalan coffee-producing families, who will be in need of finding other alternatives to generate income--among these, is migration," Solano said.
Overall, it seems that the U.S. border security problems are likely much more complex than is generally understood and will continue to be highly controversial. The United States has traditionally sponsored development programs across Central America in continuing efforts to reduce immigration pressures, extending back to the Reagan Administration’s Caribbean Basin Initiative that worked to expand U.S. imports and stimulate exports from the region, but which has fallen out of favor more recently.
So, we will see. It seems increasingly that the administration’s heavy reliance on tariffs as a main trade policy tool is being questioned by front line industries in a growing number of industrial sectors—-and opposed by major and minor trading partners. A key test appears to be coming soon as the Congress debates approval of the new NAFTA agreement, amid the resumption of tariff talks with China and administration threats of new European duties on automobiles. Each of these is yet another issue producers should watch closely as the debates intensify, Washington Insider believes.
Multiple House Ag Leaders Critical of Second Trade Aid Package
The Democratic chairs of four House Agriculture Subcommittees voiced criticism of USDA's second trade aid package, after the department unveiled payment rates and other details about the effort Thursday (July 25).
The joint statement was issued Reps. Jim Costa, D-Calif., chair of the Subcommittee on Livestock and Foreign Agriculture, Marcia Fudge, D-Ohio, chair of the Subcommittee on Nutrition, Oversight, and Department Operations, Filemon Vela, D-Texas, chair of the Subcommittee on General Farm Commodities and Risk Management and Stacey Plaskett, D-V.I., chair of the Subcommittee on Biotechnology, Horticulture and Research.
"While these second Market Facilitation Program payments will undoubtedly help farmers in tough economic conditions, they continue to tell us loudly and clearly they want fair access to global markets, not one-off handouts from the Federal government," the lawmakers wrote.
Of particular concern, is the " fairness and the equity of payments across crops and commodities, including specialty crops, dairy, and livestock products," the lawmakers said. Also a worry, is how the aid package "will affect our World Trade Organization commitments, especially given concerns raised by our trading partners after the first round of trade aid," they noted.
The lawmakers reiterated calls for President Donald Trump to end the trade war, arguing it "isn’t accomplishing anything but added pain for our farmers."
The joint statement was issued Reps. Jim Costa, D-Calif., chair of the Subcommittee on Livestock and Foreign Agriculture, Marcia Fudge, D-Ohio, chair of the Subcommittee on Nutrition, Oversight, and Department Operations, Filemon Vela, D-Texas, chair of the Subcommittee on General Farm Commodities and Risk Management and Stacey Plaskett, D-V.I., chair of the Subcommittee on Biotechnology, Horticulture and Research.
"While these second Market Facilitation Program payments will undoubtedly help farmers in tough economic conditions, they continue to tell us loudly and clearly they want fair access to global markets, not one-off handouts from the Federal government," the lawmakers wrote.
Of particular concern, is the " fairness and the equity of payments across crops and commodities, including specialty crops, dairy, and livestock products," the lawmakers said. Also a worry, is how the aid package "will affect our World Trade Organization commitments, especially given concerns raised by our trading partners after the first round of trade aid," they noted.
The lawmakers reiterated calls for President Donald Trump to end the trade war, arguing it "isn’t accomplishing anything but added pain for our farmers."
House Passes Two-Year Spending Agreement, Senate to Vote Next Week
The House passed a two-year spending package, which increases government spending by $320 billion and suspends the debt limit through the end of July 2021.
The legislation, which has the support of President Donald Trump, passed 284-149 – though a majority of Republicans opposed it amid concerns about growing deficits. “This is not the bill that we would write, we’re not in the majority,” said House Minority Leader Kevin McCarthy, R-Calif. “We are where we are. We put a plan together that had to have compromise.”
The legislation now heads to the Senate, where Majority Leader Mitch McConnell, R-Ky., plans to bring it to a vote next week before the chamber leaves for its August recess. The bill is expected to clear the GOP-controlled Senate easily.
Meanwhile, Trump tweeted he was "pleased the House has passed our budget deal," calling the legislation "Great for our Military and our Vets."
The legislation, which has the support of President Donald Trump, passed 284-149 – though a majority of Republicans opposed it amid concerns about growing deficits. “This is not the bill that we would write, we’re not in the majority,” said House Minority Leader Kevin McCarthy, R-Calif. “We are where we are. We put a plan together that had to have compromise.”
The legislation now heads to the Senate, where Majority Leader Mitch McConnell, R-Ky., plans to bring it to a vote next week before the chamber leaves for its August recess. The bill is expected to clear the GOP-controlled Senate easily.
Meanwhile, Trump tweeted he was "pleased the House has passed our budget deal," calling the legislation "Great for our Military and our Vets."
Thursday, July 25, 2019
Market Facilitation Program Payments Will Range From $15 to $150 Per Acre
MOUNT JULIET, Tenn. (DTN) -- UDSA's Market Facilitation Program payment rates will range from $15 and $150 per acre and will be made in three parts, with the first and largest payment expected in mid-August.
Sign-up for the program begins on Monday, July 29, and ends on Dec. 6, USDA leadership said on a press call.
USDA Undersecretary for Farm Production and Conservation Bill Northey said the agency most likely already has the data it needs from producers since the payments are based on certified acreage of qualifying crops.
"This should be a fairly simple process," he said. "We want signup to be easy for producers, straightforward and want it to be such that it doesn't take a lot of time for them, and we can get these payments to them so they can address the challenges they have due to these tariffs that have been placed on our agricultural products."
Rates will be based on county-level estimates of damages, with the first payment being either a minimum of $15 or half of the county rate, whichever is higher. For instance, if a county rate is $40 per acre, a grower will receive $20 in the first payment. But if the county rate is only $25 per acre, the grower will receive $15.
County rates are available at: www.farmers.gov/mfp
Farmers who plant an eligible cover crop on prevented planting acres will receive a $15-per-acre payment.
Hog and dairy producers are also eligible for payments. Hog producers will receive $11 per head, based on inventory between April 1 and May 15, 2019. Payments to dairy producers will be based on historical production with a rate of 20 cents per hundredweight.
There are several key differences between this year's program and last year's, USDA Chief Economist Rob Johannson said. Last year's program was based on trade damages compared to 2017. This year, USDA looked at trade over the past 10 years and used estimates from the year with the highest level of exports to determine damages.
This addresses one of the top concerns of corn growers, who didn't sell much corn to China in 2017 due to non-tariff barriers the Chinese had put in place.
"When we looked back over 10 years, we can see that, in previous years, China did import quite a bit of corn from the United States," he said. "This modelling effort reflects that if China does come to the table and makes an agreement with negotiators, that it will incorporate some of these other issues that we've been working on for a number of years, not just the 2017 and 2018 tariff measures."
Johannson said the 2019 payment rates also take into account the resolutions of trade issues with Canada and Mexico, new tariffs from India and higher Chinese tariffs on some products.
Another change is higher payment limitations. The MFP payments are being made in three categories: non-specialty crops (includes row crops like corn and soybeans), specialty crops such as nuts and fruit, and hogs and dairy producers.
Farmers are eligible for up to $250,000 of payments per category with a $500,000 limit across all categories.
There is also an adjusted gross income limitation of $900,000; however, that limit can be waived if 75% or more of that income comes from farming and ranching.
Perdue said there will be instances of "misalignment." For instance, a cotton producer in a county that primarily grows wheat may see a lower payment, while a wheat grower in a county with high levels of cotton production may see a larger payment.
"There will be some disparities that are just impossible to overcome aside from doing an individual program for every producer," he said, adding that USDA spent hours trying to smooth out the disparities where they could.
The second and third payments will most likely be made in November and January if they're still needed, Northey said, with half of the remaining county payment being made each time.
"Hopefully we'll have a situation where we're back to a full trading arrangement, and we have some folks working hard to try to make that happen," Northey said. "If that's the case ... we will not need those payments."
USDA expects payments to farmers to total $14.5 billion if all three sets of payments are made. The agency will also spend $1.4 billion on purchases of food products and give $100 million to trade promotion groups.
"While we are grateful for the continuing support for American agriculture from President [Donald] Trump and Secretary [Sonny] Perdue, America's farmers ultimately want trade more than aid," American Farm Bureau Federation President Zippy Duvall said in a news release. "It is critically important to restore agricultural markets and mutually beneficial relationships with our trading partners around the world.
National Association of Wheat Growers President and Lavon, Texas, farmer Ben Scholz, said MFP payments provide necessary assistance to growers affected by lower prices resulting in part from tariffs. "However, this is a Band-Aid when we really need a long-term fix," Scholz said. "NAWG understands holding China accountable for its WTO violations and unfair trade practices, but a trade war is not the solution, especially when farmers are the casualties."
More than 25% of U.S. pork is sold in foreign markets, and producers want to compete on a level playing field, the National Pork Producers Council stated in a news release.
"Our top priorities are an end to the trade dispute with China, where retaliatory tariffs are preventing U.S. pork from fully capitalizing on a historic sales opportunity created by the outbreak of African swine fever in the world's largest pork-consuming nation, and a trade agreement with Japan, where U.S. pork is losing market share due to trade agreements Japan has recently formed with the EU and other international competitors," NPPC President David Herring said.
National Farmers Union President Roger Johnson said that he had concerns about some of the county-to-county disparities as well as the fact the plan doesn't include any incentives to reduce production.
"This assistance is desperately needed, but the ad-hoc rollout and convoluted structure of these programs has caused significant confusion among producers," he said in a news release. "Until more predictable, longer-term solutions are made available, that sense of confusion and insecurity will likely persist. In the future, we urge the administration to work more closely with Congress to build on the existing safety net and provide certainty and stability in farm country."
Sign-up for the program begins on Monday, July 29, and ends on Dec. 6, USDA leadership said on a press call.
USDA Undersecretary for Farm Production and Conservation Bill Northey said the agency most likely already has the data it needs from producers since the payments are based on certified acreage of qualifying crops.
"This should be a fairly simple process," he said. "We want signup to be easy for producers, straightforward and want it to be such that it doesn't take a lot of time for them, and we can get these payments to them so they can address the challenges they have due to these tariffs that have been placed on our agricultural products."
Rates will be based on county-level estimates of damages, with the first payment being either a minimum of $15 or half of the county rate, whichever is higher. For instance, if a county rate is $40 per acre, a grower will receive $20 in the first payment. But if the county rate is only $25 per acre, the grower will receive $15.
County rates are available at: www.farmers.gov/mfp
Farmers who plant an eligible cover crop on prevented planting acres will receive a $15-per-acre payment.
Hog and dairy producers are also eligible for payments. Hog producers will receive $11 per head, based on inventory between April 1 and May 15, 2019. Payments to dairy producers will be based on historical production with a rate of 20 cents per hundredweight.
There are several key differences between this year's program and last year's, USDA Chief Economist Rob Johannson said. Last year's program was based on trade damages compared to 2017. This year, USDA looked at trade over the past 10 years and used estimates from the year with the highest level of exports to determine damages.
This addresses one of the top concerns of corn growers, who didn't sell much corn to China in 2017 due to non-tariff barriers the Chinese had put in place.
"When we looked back over 10 years, we can see that, in previous years, China did import quite a bit of corn from the United States," he said. "This modelling effort reflects that if China does come to the table and makes an agreement with negotiators, that it will incorporate some of these other issues that we've been working on for a number of years, not just the 2017 and 2018 tariff measures."
Johannson said the 2019 payment rates also take into account the resolutions of trade issues with Canada and Mexico, new tariffs from India and higher Chinese tariffs on some products.
Another change is higher payment limitations. The MFP payments are being made in three categories: non-specialty crops (includes row crops like corn and soybeans), specialty crops such as nuts and fruit, and hogs and dairy producers.
Farmers are eligible for up to $250,000 of payments per category with a $500,000 limit across all categories.
There is also an adjusted gross income limitation of $900,000; however, that limit can be waived if 75% or more of that income comes from farming and ranching.
Perdue said there will be instances of "misalignment." For instance, a cotton producer in a county that primarily grows wheat may see a lower payment, while a wheat grower in a county with high levels of cotton production may see a larger payment.
"There will be some disparities that are just impossible to overcome aside from doing an individual program for every producer," he said, adding that USDA spent hours trying to smooth out the disparities where they could.
The second and third payments will most likely be made in November and January if they're still needed, Northey said, with half of the remaining county payment being made each time.
"Hopefully we'll have a situation where we're back to a full trading arrangement, and we have some folks working hard to try to make that happen," Northey said. "If that's the case ... we will not need those payments."
USDA expects payments to farmers to total $14.5 billion if all three sets of payments are made. The agency will also spend $1.4 billion on purchases of food products and give $100 million to trade promotion groups.
"While we are grateful for the continuing support for American agriculture from President [Donald] Trump and Secretary [Sonny] Perdue, America's farmers ultimately want trade more than aid," American Farm Bureau Federation President Zippy Duvall said in a news release. "It is critically important to restore agricultural markets and mutually beneficial relationships with our trading partners around the world.
National Association of Wheat Growers President and Lavon, Texas, farmer Ben Scholz, said MFP payments provide necessary assistance to growers affected by lower prices resulting in part from tariffs. "However, this is a Band-Aid when we really need a long-term fix," Scholz said. "NAWG understands holding China accountable for its WTO violations and unfair trade practices, but a trade war is not the solution, especially when farmers are the casualties."
More than 25% of U.S. pork is sold in foreign markets, and producers want to compete on a level playing field, the National Pork Producers Council stated in a news release.
"Our top priorities are an end to the trade dispute with China, where retaliatory tariffs are preventing U.S. pork from fully capitalizing on a historic sales opportunity created by the outbreak of African swine fever in the world's largest pork-consuming nation, and a trade agreement with Japan, where U.S. pork is losing market share due to trade agreements Japan has recently formed with the EU and other international competitors," NPPC President David Herring said.
National Farmers Union President Roger Johnson said that he had concerns about some of the county-to-county disparities as well as the fact the plan doesn't include any incentives to reduce production.
"This assistance is desperately needed, but the ad-hoc rollout and convoluted structure of these programs has caused significant confusion among producers," he said in a news release. "Until more predictable, longer-term solutions are made available, that sense of confusion and insecurity will likely persist. In the future, we urge the administration to work more closely with Congress to build on the existing safety net and provide certainty and stability in farm country."
Washington Insider: The Administration Aims at Food Stamps, Yet Again
Much of the urban press is reporting a new effort this week by the administration to reduce access to the federal nutrition programs, in this case the long-standing “food stamp” program now called Supplemental Nutrition Assistance Program, or SNAP. For example, the New York Times says that more than three million people would no longer be eligible for benefits under a rule proposed Tuesday by USDA.
Agriculture officials say they are “fixing a loophole” that some states use to provide food stamps to people who have a certain amount of savings and other assets. Critics say the rule will punish the working poor and stymie their ability to accumulate assets. SNAP now provides benefits to more than 38 million low-income Americans, the Times says.
Under the current law, 39 states, the District of Columbia, Guam and the Virgin Islands ease some administrative restrictions for participants if they already qualify for another federal aid program, Temporary Assistance for Needy Families. The new rule would greatly reduce the ability of those jurisdictions to use that approach.
Republican advocates of the change say it would limit abuses by people who do not need the benefits. For example, a Minnesota critic of the program, Rob Undersander, claims he received food stamps for 19 months even though he had significant assets.
Representative Mark Meadows, R-N.C., told the press, “As a member who personally met with a millionaire that took advantage of the food stamp program to prove a point, I can tell you: Reform is certainly needed.”
Robert Rector, a research fellow at the conservative Heritage Foundation, said the proposed rule “removes an obvious abuse of the system by state governments and it basically would restore confidence in the food stamp program.”
Democrats were outraged. “The administration’s latest act of staggering callousness would steal food off the table of working families and hungry children and dismantle proven pathways out of poverty for millions,” Speaker Nancy Pelosi, D-Calif., said in a statement. “The administration’s proposal is both cruel and counterproductive.’’
Senator Chuck Schumer, D-N.Y., the Democratic minority leader, called the proposed rule “cruel, ideological and inhumane,” and told reporters that Democrats would work to beat back this effort to restrict food stamps, as they had in the past.
To qualify for food stamps, a family’s assets and income must fall below certain limits—those with an elderly or disabled family member must have assets of $3,500 or less. Incomes must be at or below 130% of the federal poverty level.
But those requirements are sometimes waived by states who see modest amounts of assets as a buffer against food insecurity. Some allow food stamps for people with incomes as high as 200% of the poverty line, the Times said. The proposed rule would make it much harder for people above the basic asset limits and income levels to qualify.
The proposal would still allow some families with assets or incomes above the limits to be eligible for food stamps in cases where they have been receiving help under the Temporary Assistance for Needy Families program for more than six months. It would also restrict the kind of noncash assistance received under the program that qualifies families for food stamps and limit eligibility to those who are receiving aid like job training and child care help.
The idea behind the requirement, agriculture officials said, was that it would help demonstrate which families were truly in need of help and weed out fraud.
Program advocates counter that the new rule would cut off families most in need of support. “It’s exactly the kinds of households that the administration is interested in supporting,” said Elaine Waxman, a senior fellow at the Urban Institute.
Democrats view the proposed rule as another attempt to dismantle the food stamp program. In 2018, the House tried and failed, despite support from President Trump, to impose work requirements on able-bodied adults seeking food stamps. Conservatives had also hoped to close a loophole that allows states to waive the requirements in areas with high unemployment.
“This proposal is yet another attempt by this administration to circumvent Congress and make harmful changes to nutrition assistance that have been repeatedly rejected on a bipartisan basis,” Senator Debbie Stabenow, D-Mich., the top Democrat on the Committee on Agriculture, Nutrition and Forestry, said.
There will be a 60-day public comment period before the Agriculture Department can move forward with the rule, the Times noted.
So, we will see. While budget hawks frequently oppose the nutrition programs because of their cost, many producers traditionally have seen them as part of the “three-legged farm policy foundation” that has successfully supported expensive programs for decades, including those that provide food assistance, especially in urban areas; conservation programs that protect the soil; and the farm programs themselves.
This promises to be another of a long series of fights against those programs that will be both highly controversial and long lasting and which producers should watch closely as it proceeds, Washington Insider believes.
Agriculture officials say they are “fixing a loophole” that some states use to provide food stamps to people who have a certain amount of savings and other assets. Critics say the rule will punish the working poor and stymie their ability to accumulate assets. SNAP now provides benefits to more than 38 million low-income Americans, the Times says.
Under the current law, 39 states, the District of Columbia, Guam and the Virgin Islands ease some administrative restrictions for participants if they already qualify for another federal aid program, Temporary Assistance for Needy Families. The new rule would greatly reduce the ability of those jurisdictions to use that approach.
Republican advocates of the change say it would limit abuses by people who do not need the benefits. For example, a Minnesota critic of the program, Rob Undersander, claims he received food stamps for 19 months even though he had significant assets.
Representative Mark Meadows, R-N.C., told the press, “As a member who personally met with a millionaire that took advantage of the food stamp program to prove a point, I can tell you: Reform is certainly needed.”
Robert Rector, a research fellow at the conservative Heritage Foundation, said the proposed rule “removes an obvious abuse of the system by state governments and it basically would restore confidence in the food stamp program.”
Democrats were outraged. “The administration’s latest act of staggering callousness would steal food off the table of working families and hungry children and dismantle proven pathways out of poverty for millions,” Speaker Nancy Pelosi, D-Calif., said in a statement. “The administration’s proposal is both cruel and counterproductive.’’
Senator Chuck Schumer, D-N.Y., the Democratic minority leader, called the proposed rule “cruel, ideological and inhumane,” and told reporters that Democrats would work to beat back this effort to restrict food stamps, as they had in the past.
To qualify for food stamps, a family’s assets and income must fall below certain limits—those with an elderly or disabled family member must have assets of $3,500 or less. Incomes must be at or below 130% of the federal poverty level.
But those requirements are sometimes waived by states who see modest amounts of assets as a buffer against food insecurity. Some allow food stamps for people with incomes as high as 200% of the poverty line, the Times said. The proposed rule would make it much harder for people above the basic asset limits and income levels to qualify.
The proposal would still allow some families with assets or incomes above the limits to be eligible for food stamps in cases where they have been receiving help under the Temporary Assistance for Needy Families program for more than six months. It would also restrict the kind of noncash assistance received under the program that qualifies families for food stamps and limit eligibility to those who are receiving aid like job training and child care help.
The idea behind the requirement, agriculture officials said, was that it would help demonstrate which families were truly in need of help and weed out fraud.
Program advocates counter that the new rule would cut off families most in need of support. “It’s exactly the kinds of households that the administration is interested in supporting,” said Elaine Waxman, a senior fellow at the Urban Institute.
Democrats view the proposed rule as another attempt to dismantle the food stamp program. In 2018, the House tried and failed, despite support from President Trump, to impose work requirements on able-bodied adults seeking food stamps. Conservatives had also hoped to close a loophole that allows states to waive the requirements in areas with high unemployment.
“This proposal is yet another attempt by this administration to circumvent Congress and make harmful changes to nutrition assistance that have been repeatedly rejected on a bipartisan basis,” Senator Debbie Stabenow, D-Mich., the top Democrat on the Committee on Agriculture, Nutrition and Forestry, said.
There will be a 60-day public comment period before the Agriculture Department can move forward with the rule, the Times noted.
So, we will see. While budget hawks frequently oppose the nutrition programs because of their cost, many producers traditionally have seen them as part of the “three-legged farm policy foundation” that has successfully supported expensive programs for decades, including those that provide food assistance, especially in urban areas; conservation programs that protect the soil; and the farm programs themselves.
This promises to be another of a long series of fights against those programs that will be both highly controversial and long lasting and which producers should watch closely as it proceeds, Washington Insider believes.
Farm Bureau's Duvall Stresses Importance of USMCA Ratification
Ratification of the U.S.-Mexico-Canada Agreement (USMCA) remains a key issue for the U.S. ag sector, American Farm Bureau Federation President Zippy Duvall stressed in a July 24 column.
Approval of the trade pact, which updates the 1994 North American Free Trade Agreement (NAFTA), would be an important signal to other trade partners, Duvall wrote. "Approval would set off a positive domino effect of successful trade negotiations and agreements around the world," he argued, noting the continued push to ink new trade deals with partners like "China, Japan, the European Union, Great Britain and potentially other nations and regions."
Duvall suggested that ratifying USMCA would push those other partners "to belly up to the negotiating table, and go back to their farmers, industries and legislative bodies with a message of determination to make the compromises necessary to secure a deal with the world’s largest economy."
As lawmakers return to their districts for the August recess, Duvall urged producers to make their views on USMCA clear. "We have the opportunity ??? the imperative ??? to send those members of Congress back to Washington in early September with the backbone to do the right thing for agriculture and the economy," he argued.
Approval of the trade pact, which updates the 1994 North American Free Trade Agreement (NAFTA), would be an important signal to other trade partners, Duvall wrote. "Approval would set off a positive domino effect of successful trade negotiations and agreements around the world," he argued, noting the continued push to ink new trade deals with partners like "China, Japan, the European Union, Great Britain and potentially other nations and regions."
Duvall suggested that ratifying USMCA would push those other partners "to belly up to the negotiating table, and go back to their farmers, industries and legislative bodies with a message of determination to make the compromises necessary to secure a deal with the world’s largest economy."
As lawmakers return to their districts for the August recess, Duvall urged producers to make their views on USMCA clear. "We have the opportunity ??? the imperative ??? to send those members of Congress back to Washington in early September with the backbone to do the right thing for agriculture and the economy," he argued.
USDA Releases First DMC Enrollment Update
Enrollment in the new Dairy Margin Coverage (DMC) program has already exceeded one third of licensed US dairy operations, according to USDA's first weekly update on signups for the new program.
Of the nation's 37,468 licensed dairy operations, 13,240 had enrolled in the program as of July 22. Among states, Wisconsin led enrollments with 4,121 farms, followed by Minnesota with 1,511, New York with 1,397 and Pennsylvania with 1,137. So far, farms enrolled in the program have qualified for $145 million in payments, $41 million of that going to Wisconsin operations.
DMC was established under the 2018 Farm Bill. Dairy groups have encouraged farmers to enroll in the program, stressing the major improvements under DMC compared with its predecessor, the Margin Protection Program (MPP).
Lawmakers crafted the new program with help from dairy groups to avoid many of the shortcomings of MPP, which saw poor enrollment and never lived up to expectations. Farms that enrolled in MPP between 2014 and 2017 are eligible for a partial refund of premiums they paid – up to 50 percent for cash refunds or 75 percent if applied toward DMC premiums.
Of the nation's 37,468 licensed dairy operations, 13,240 had enrolled in the program as of July 22. Among states, Wisconsin led enrollments with 4,121 farms, followed by Minnesota with 1,511, New York with 1,397 and Pennsylvania with 1,137. So far, farms enrolled in the program have qualified for $145 million in payments, $41 million of that going to Wisconsin operations.
DMC was established under the 2018 Farm Bill. Dairy groups have encouraged farmers to enroll in the program, stressing the major improvements under DMC compared with its predecessor, the Margin Protection Program (MPP).
Lawmakers crafted the new program with help from dairy groups to avoid many of the shortcomings of MPP, which saw poor enrollment and never lived up to expectations. Farms that enrolled in MPP between 2014 and 2017 are eligible for a partial refund of premiums they paid – up to 50 percent for cash refunds or 75 percent if applied toward DMC premiums.
Trade, Disaster Aid, Coming to Farmers Quickly
Farmers can expect trade aid this week and disaster aid next month. Agriculture Secretary Sonny Perdue says the Market Facilitation Program payments will be announced yet this week and will offer producers at least $15 an acre for those who qualify. However, payments rates will vary, as USDA used county-level production data to create its formula for payment rates. So, counties with higher production, naturally, will likely receive higher payments. The first round of three expected payments will represent roughly 50 percent of the funds available to farmers from the $16 billion Market Facilitation Program. Cover crops grown on acres prevented from planting this year will qualify for the payments. Meanwhile, $3 billion in disaster funds for agriculture should launch next month. The disaster package includes funds for farmers impacted by hurricanes, wildfires, tornadoes and flooding since last year. Politico reports that since 2018, roughly $33 billion in disaster funding has been set aside for agriculture. The new package also includes nutrition funding for Puerto Rico.
China Tax Cuts Could Offset Trade War Harm
Tax cuts in China could offset trade war harm and support economic growth. A China International Capital Corporation economist told CNBC tax cuts in China could provide growth needed to offset economic losses from the trade war. However, the economist says more tariffs from the U.S. poses risks to the growth potential. President Trump still holds a proposed round of additional tariffs against China, if trade talks don't make progress. China launched a personal income tax cut in March, which led to an increase in retail sales, up 9.8 percent from a year ago. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to China next week to continue negotiations with China. The White House says the discussion will “cover a range of issues,” including agriculture. The negotiations stalled in May when China backtracked on previously agreed-to provisions of a potential agreement. Retaliation against U.S. tariffs by China have focused on U.S. agriculture, slowing China purchases of U.S. ag products.
Senate Committee Advances Food Supply Protection Bill
The Senate Homeland Security and Governmental Affairs Committee has approved a bill to protect the nation’s food supply. The committee unanimously approved The Protecting America’s Food & Agriculture Act of 2019, introduced by Senate Agriculture Committee leaders Pat Roberts and Debbie Stabenow. The bill would authorize U.S. Customs and Border Protection to hire additional inspectors to fully staff U.S. airports, seaports and land ports of entry. Stabenow called agricultural inspectors the “first line of defense against threats” to agriculture. The Department of Agriculture and Border Patrol work together to facilitate the safe and secure entry of agricultural goods into the country. Agricultural specialists and canine units conduct inspections to detect products and prevent the entry of disease, including African swine fever, to the United States. The bill authorizes the annual hiring of 240 agricultural specialists a year until the workforce shortage is filled. The legislation has received support from a broad coalition including the U.S. Chamber of Commerce, and the American Farm Bureau Federation.
Energy Department Says EPA Issued RFS Exemptions Against DOE Advice
Senator Chuck Grassley of Iowa says small refinery waivers are being granted to refineries facing little or no “hardship.” The waivers, approved by the Environmental Protection Agency, exempt refiners from Renewable Fuel Standard regulations due to economic hardship. However, Grassley says the waivers are being issued to large refineries. Grassley also points out that the Energy Department in at least one occasion recommended no exemption, yet the EPA granted the waiver. The Energy Department says it has not changed how analyses are applied or scored from the prior administration. Still, the number of small refinery waivers issued by EPA has skyrocketed the last two years. Grassley says Trump “delivered on E15,” but says the EPA is “undermining the president’s commitment” to farmers. Grassley is calling on the White House to “put an end to these handouts to big oil.” The National Corn Growers Association says the waivers have reduced the RFS by 2.6 billion gallons, and called on the President to end the waivers last week.
Hyde-Smith Proposes Fisheries, Aquaculture Disaster Funding
A Senate bill proposed this week would create a disaster program for commercial fishing and aquaculture operations. Introduced by Mississippi Senator Cindy Hyde-Smith, the Commercial Fishing and Aquaculture Protection Act of 2019 would authorize a risk-management tool for the sector. Hyde-Smith says the bill would help commercial fisheries, farm-raised catfish, and other seafood producers mitigate losses associated with market, weather, and other disaster conditions. An influx of freshwater from months of record rainfall and flooding decimated oyster, shrimp, and crab harvests in the northern Gulf Coast this summer. Other hardships continue to threaten farm-raised fishing operations. Hyde-Smith’s legislation would establish a permanent revenue-based disaster program to either replace or serve as an alternative to the “ad hoc” fishery disaster assistance provided by the U.S. Commerce Department. The new assistance program would begin with the 2019 calendar year and be subject to the availability of appropriated funding, such as the $150 million provided for fishery disaster assistance in the FY2019 Supplemental Appropriations Act enacted on June 6, 2019.
Tofurkey, ACLU, Challenging Arkansas Labelling Law
A plant-based foods company and the American Civil Liberties Union are challenging an Arkansas labeling law. The law prevents plant-based or cell-derived alternative protein products from using words implying that they contain “meat” on the label. Meat industry publication Meatingplace reports the company Tofurkey has teamed up with the ACLU in challenging the constitutionality of the law. The lawsuit claims the law “violates the First Amendment and Fourteenth Amendment’s due process clause by illegally censoring speech.” The labeling law, going into effect this week, would fine companies that use such phrases as burgers, dogs, ham or sausage up to $1,000 per violation even if the words plant-based or vegan are used to modify the description of the product on the label. Similar laws in other states were passed this year, and also face legal challenges, including laws enacted in Missouri, Mississippi, Louisiana and South Dakota. The Plant-Based Foods Associations lawsuit against the Mississippi law claims, “No reasonable consumer would be misled by these uses of these terms.”
Wednesday, July 24, 2019
U.S. and Guatemala Working Together on H-2A Recruiting
Governments in the U.S. and Guatemala are working together to form a “registered Foreign Labor Recruiter Program” for farmworkers who want to come to the U.S. Politico says the initiative is part of several agreements that the governments are discussing to address what they call “irregular immigration patterns.” Under the program, the U.S. would prioritize H-2A visa applications from Guatemalan workers ahead of other non-immigrant visa categories. In conjunction with Guatemala’s Ministry of Labor, it would also start an outreach campaign to recruit workers. As recently as last week, the U.S. Labor Department released a rule that would change the H-2A certification process, which would possibly make it easier for producers to participate in the program and find the labor they need. Current regulations require those employers seeking temporary workers through the program to complete a labor certification process to demonstrate the positions couldn’t be filled by U.S. workers. They must also show that hiring guest workers won’t hurt the wages of similarly-skilled U.S. workers.
Farm Bureau: Guest Worker Reforms Vital as Enforcement Increases
The federal government recently announced plans to expand and expedite the deportation of undocumented workers. That move led to a forceful call from Farm Bureau President Zippy Duvall asking for guest-worker reforms. “We are a nation of laws and farmers believe our laws must be followed,” Duvall says. “However, our laws also ought to allow for an adequate, legal workforce. Farmers deserve better than to be forced to leave crops to rot in the field because there aren’t enough workers to help with the harvest.” Duvall says stronger immigration enforcement should be coupled with an improved and more affordable H-2A guest-worker program. “Currently, farmers with year-round worker needs, such as dairy and livestock producers, are unable to use the program and that’s not right,” Duvall says. “An adequate workforce is needed to address issues ranging from food waste to farm sustainability. America disagrees on many things, but surely we can agree that we need to keep putting healthy food on the table.” More information about the reforms needed can be found here:https://www.fb.org/issues/immigration-reform/agriculture-labor-reform/
USDA Proposal Would Close SNAP Loophole
The U.S. Department of Agriculture proposed closing a loophole that allows states to make participants receiving minimal Temporary Assistance for Needy Families (TANF) benefits automatically eligible for the Supplemental Nutrition Assistance Program. The proposed rule would limit SNAP/TANF automatic eligibility to households that receive substantial, ongoing TANF-funded benefits aimed at helping families move toward self-sufficiency. USDA says the proposal would fix a loophole that has expanded SNAP recipients in some states to include people who clearly don’t need the benefits. The agency points out that the eligibility requirements have become so flexible that a millionaire in Minnesota successfully enrolled in the program to highlight the waste of taxpayer money. USDA says the proposal will save billions of dollars and ensure that nutrition assistance programs are delivered with consistency and integrity to those who need it most. “For too long, the loophole has been used to effectively bypass important eligibility guidelines,” Perdue says. “Too often, states have misused this flexibility without restraint. We’re changing the rules to prevent abuse of a critical safety net system.”
Growth Energy Campaign Asking Trump to Listen to Rural America
Growth Energy, the nation’s largest ethanol association, launched a new ad campaign that featured a fourth-generation corn and soybean farmer talking directly to President Trump. The ad is asking the president to ensure that the U.S. Environmental Protection Agency considers the devastating impact some of its policies are having on family farms. The farmer in the ad spotlight is Scott Henry of Longview Farms in Nevada. He asks the president to continue to listen to rural America. “President Trump has been our greatest champion for ethanol, for family farms, for rural America,” Henry says in the ad. “The unelected bureaucrats in the EPA are rigging the system for oil companies directly on the backs of family farmers.” Henry accuses the EPA of undermining the administration. Growth Energy CEO Emily Skor says the new ads “put a face to the farm crisis across the country and give a voice to those in rural communities who are most impacted by the EPA’s failure to follow the law.” She says EPA’s recent 2020 RVO proposal failed to account for the 2.6 billion gallons of American biofuel lost because of the indefensibly high number of refinery exemptions granted in recent years. “We’re at a critical junction,” Skor says. “The president has an important decision to make: is he going to let EPA continue down this destructive path, or is he going to stand up for the hardworking farmers he vowed to protect?” The ads will run in primetime on Fox News in Washington, D.C., and in other states across the country.
Comment Period Open on Hours-of-Service Regulations for Ag Drivers
The Federal Motor Carrier Safety Administration announced it’s looking for public comments on potential revisions to agricultural commodity or livestock definitions in its hours-of-service regulations. The Hagstrom Report says the agency worked hand-in-hand with the Department of Agriculture to provide clarity for the nation’s commercial drivers and farmers. Currently, states determine their harvesting and planting seasons. Drivers who transport agricultural commodities, including livestock, are exempt from the hours-of-service requirements from the source of the commodities to any location within a 150-mile radius. The advanced rule put together by the FMCSA would redo the definitions of livestock and agricultural commodities in order to make sure the exemption is consistently applied and has enough flexibility that makes it easy for eligible farmers and commercial drivers to use it. Transportation Department Secretary Elaine Chao (chow) says, “The agriculture industry is vital to our nation and we look forward to receiving input that will help clarify these definitions, improve safety, and offer additional flexibility to farmers and commercial drivers.”
Bill Would Extend CAFO Environmental Liability to Processors
Representatives from California and Wisconsin have introduced a bill called the Farmer Fairness Act. The bill deals with environmental liability that Concentrated Animal Feeding Operation contract farmers are already subject to under the Clean Water Act. Under the new bill, that liability would extend to the poultry and meat companies that they contract with to sell their livestock and poultry. In announcing the legislation, the sponsors said, “Large agribusiness companies like Tyson and Perdue buy livestock and animal products from farmers. The companies control the way the livestock is fed, medicated, and housed. They dictate what equipment and capital the farmer has to use. Farmers often don’t make enough to live off of because the cost of the operations, which are mandated by the companies, can leave farmers in the red.” They say through all of that, the farmer also takes on environmental liability as well. The bill is supported by groups like the National Farmers Union, Food and Water Watch, and the Iowa Citizens for Community Improvement.
Washington Insider: Currency Weakening Traps
Bloomberg is reporting this week that the appeal of weaker currencies in the U.S. may lead to “strong countermeasures by rivals.” This reflects the fact that major economies around the globe all seem to covet a weaker currency as risks to growth mount and make engineering a weaker dollar, euro or other heavyweight currency all the harder.
Bloomberg runs down the list. President Donald Trump has repeatedly badgered the Federal Reserve to cut rates and complained that the US dollar is too strong--but he’s got competition. It might not mention the exchange rate explicitly, but the European Central Bank is poised to loosen policies that are “weighing on the common currency,” Bloomberg says.
Bank of Japan Governor Haruhiko Kuroda says the bank will “persistently continue with powerful monetary easing” to boost inflation. In China, the central bank looks set to step up stimulus to revive growth.
The result? Thanks to synchronized monetary easing, any simultaneous moves to weaken currencies might cancel each other out--making “beggar-thy-trading partner” policies a waste of time.
“Everyone is sort of pushing on the same piece of string,” said Charles Diebel, head of fixed income at Mediolanum Asset Management. “If you have the Fed easing and the ECB easing, it’s just a relative game. It’s very hard for currency volatility to remain elevated.”
Despite the Fed’s increasing dovishness, the greenback has beaten most Group-of-10 peers this quarter. The Bank of Korea surprised markets with a rate cut last week, but the won only weakened briefly. Even though the Swiss National Bank keeps reiterating it has leeway to ease, the franc continues to be buoyant against the euro.
Foreign-exchange strategists say the risk of a U.S. move to weaken the dollar has risen after Treasury Secretary Steven Mnuchin said last week that there’s no change in the nation’s currency policy “as of now.”
Bloomberg calls this situation “the latest race to the bottom.” In 2010, when major central banks were printing money and cutting rates, causing their exchange rates to fall, then-Brazilian Finance Minister Guido Mantega famously labeled it a “currency war.” The difference is that back then, the dollar was falling and other countries tried to catch up with it.
Now, the greenback is among the most overvalued G-10 currencies, according to a Bank for International Settlements model on real effective exchange rates.
A desire among policy makers to expand their toolkit to prop up growth is understandable. The International Monetary Fund has revised downward its growth forecast for 2019 repeatedly--including last week--as trade and geopolitical tensions threatened to damp the world economy. Major central banks, including those in Switzerland and Australia, are sticking to a low-rates policy.
“If the U.S. wants a weaker dollar now, they are going to struggle to get that with just the use of monetary policy,” said Kit Juckes, a strategist at Societe Generale SA. “Fed policy is no longer the driver of the dollar--growth is. A rate cut by the Fed isn’t going to get the euro stronger if the prospect of growth there is weak.”
Any competitive devaluations are naturally fraught with political tensions, while prolonged low interest rates risk asset bubbles and financial repression, Bloomberg says.
Some experts see this development as a U.S.-Europe story, including Stephen Jen, the chief executive officer of Eurizon SLJ Capital. He reckons the BOJ has already done so much easing that it is now worried about the economic effects of sustained negative rates. Meanwhile, the People’s Bank of China may refrain from enacting a large stimulus amid fears it could destabilize the economy over the long haul.
“It’s really the euro and the dollar racing lower,” Jen said in an interview. “The Fed doesn’t really have a strong case to cut at all as the U.S. economy is doing fine. The real issues are happening outside the U.S. That’s a very different situation than the Europeans face. They are facing weakness right there in Germany.”
Markets expect the Fed to announce a 25-basis-point cut in interest rates next week. Despite that, the euro depreciated 1.7% against the dollar this quarter, and is down 2.5% this year.
So, we will see what happens, especially regarding the extent of dollar “weakness” as the U.S. policy changes and trading partners react. These may well be more muted than many US officials expect—and should watched closely as they appear, Washington Insider believes.
Bloomberg runs down the list. President Donald Trump has repeatedly badgered the Federal Reserve to cut rates and complained that the US dollar is too strong--but he’s got competition. It might not mention the exchange rate explicitly, but the European Central Bank is poised to loosen policies that are “weighing on the common currency,” Bloomberg says.
Bank of Japan Governor Haruhiko Kuroda says the bank will “persistently continue with powerful monetary easing” to boost inflation. In China, the central bank looks set to step up stimulus to revive growth.
The result? Thanks to synchronized monetary easing, any simultaneous moves to weaken currencies might cancel each other out--making “beggar-thy-trading partner” policies a waste of time.
“Everyone is sort of pushing on the same piece of string,” said Charles Diebel, head of fixed income at Mediolanum Asset Management. “If you have the Fed easing and the ECB easing, it’s just a relative game. It’s very hard for currency volatility to remain elevated.”
Despite the Fed’s increasing dovishness, the greenback has beaten most Group-of-10 peers this quarter. The Bank of Korea surprised markets with a rate cut last week, but the won only weakened briefly. Even though the Swiss National Bank keeps reiterating it has leeway to ease, the franc continues to be buoyant against the euro.
Foreign-exchange strategists say the risk of a U.S. move to weaken the dollar has risen after Treasury Secretary Steven Mnuchin said last week that there’s no change in the nation’s currency policy “as of now.”
Bloomberg calls this situation “the latest race to the bottom.” In 2010, when major central banks were printing money and cutting rates, causing their exchange rates to fall, then-Brazilian Finance Minister Guido Mantega famously labeled it a “currency war.” The difference is that back then, the dollar was falling and other countries tried to catch up with it.
Now, the greenback is among the most overvalued G-10 currencies, according to a Bank for International Settlements model on real effective exchange rates.
A desire among policy makers to expand their toolkit to prop up growth is understandable. The International Monetary Fund has revised downward its growth forecast for 2019 repeatedly--including last week--as trade and geopolitical tensions threatened to damp the world economy. Major central banks, including those in Switzerland and Australia, are sticking to a low-rates policy.
“If the U.S. wants a weaker dollar now, they are going to struggle to get that with just the use of monetary policy,” said Kit Juckes, a strategist at Societe Generale SA. “Fed policy is no longer the driver of the dollar--growth is. A rate cut by the Fed isn’t going to get the euro stronger if the prospect of growth there is weak.”
Any competitive devaluations are naturally fraught with political tensions, while prolonged low interest rates risk asset bubbles and financial repression, Bloomberg says.
Some experts see this development as a U.S.-Europe story, including Stephen Jen, the chief executive officer of Eurizon SLJ Capital. He reckons the BOJ has already done so much easing that it is now worried about the economic effects of sustained negative rates. Meanwhile, the People’s Bank of China may refrain from enacting a large stimulus amid fears it could destabilize the economy over the long haul.
“It’s really the euro and the dollar racing lower,” Jen said in an interview. “The Fed doesn’t really have a strong case to cut at all as the U.S. economy is doing fine. The real issues are happening outside the U.S. That’s a very different situation than the Europeans face. They are facing weakness right there in Germany.”
Markets expect the Fed to announce a 25-basis-point cut in interest rates next week. Despite that, the euro depreciated 1.7% against the dollar this quarter, and is down 2.5% this year.
So, we will see what happens, especially regarding the extent of dollar “weakness” as the U.S. policy changes and trading partners react. These may well be more muted than many US officials expect—and should watched closely as they appear, Washington Insider believes.
US-China Trade Talks Set To Take Place in Shanghai Next Week
U.S. trade negotiators will reportedly travel to Shanghai, China this Monday for the first round of face-to-face talks since last month's G20 summit in Osaka, Japan.
U.S. Trade Representative (USTR) Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead the US delegation, while Vice-Premier Liu He and Commerce Minister Zhong Shan will head up the Chinese side.
The face-to-face meeting came after concessions were recently announced by both U.S. and China. The U.S. said it would offer exemptions from import tariffs for 110 Chinese products. Meanwhile, China said companies will soon purchase US agricultural products after being granted exemptions from duties imposed by Beijing.
U.S. Trade Representative (USTR) Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead the US delegation, while Vice-Premier Liu He and Commerce Minister Zhong Shan will head up the Chinese side.
The face-to-face meeting came after concessions were recently announced by both U.S. and China. The U.S. said it would offer exemptions from import tariffs for 110 Chinese products. Meanwhile, China said companies will soon purchase US agricultural products after being granted exemptions from duties imposed by Beijing.
White House and Congress Reach Spending Deal
The White House and Congress reached a budget deal consisting of $2.7 trillion in spending for Fiscal Years (FY) 2020 and 2021. The agreement would increase overall spending by around $50 billion for FY 2020.
The agreement would authorize spending levels around $320 billion more than limits set under the 2011 sequester, which established mandatory cuts. It would also suspend the debt ceiling until July 2021 – after the 2020 elections.
Savings of around $77 billion would be achieved through small spending reductions for Medicare after FY 2027 and fees collected by Customs and Border Protection (CBP), with both helping to offset the cost of the package. The Trump administration had originally sought $150 billion in spending offsets but faced opposition on that front from House Speaker Nancy Pelosi, D-Calif.
The agreement must still be passed by both houses of Congress and signed by President Donald Trump. Pelosi and Sen. Chuck Schumer, D-N.Y., both pledged to quickly bring the deal to a floor vote, and Senate Majority Leader Mitch McConnell, R-Ky., said he intends to hold a floor vote on the package before the August recess.
The agreement would authorize spending levels around $320 billion more than limits set under the 2011 sequester, which established mandatory cuts. It would also suspend the debt ceiling until July 2021 – after the 2020 elections.
Savings of around $77 billion would be achieved through small spending reductions for Medicare after FY 2027 and fees collected by Customs and Border Protection (CBP), with both helping to offset the cost of the package. The Trump administration had originally sought $150 billion in spending offsets but faced opposition on that front from House Speaker Nancy Pelosi, D-Calif.
The agreement must still be passed by both houses of Congress and signed by President Donald Trump. Pelosi and Sen. Chuck Schumer, D-N.Y., both pledged to quickly bring the deal to a floor vote, and Senate Majority Leader Mitch McConnell, R-Ky., said he intends to hold a floor vote on the package before the August recess.
Tuesday, July 23, 2019
Washington Insider: EU Counts on US Elections to Constrain US Trade Policy Options
Bloomberg is reporting this week that some European Union officials think that the threats of U.S. tariffs on Europe’s auto industry and other measures are “very much alive,” but that the U.S. President will be less trigger-happy the closer he gets to the 2020 election. The logic is that he’d risk a voter backlash if the EU retaliated by targeting U.S. exports, notably farm products.
At this time, the “awkward EU-U.S. truce” is held together by the prospect of a big trade accord in the future. To preserve the status quo, one EU proposal would “slow-walk the negotiations,” pushing them deeper into the campaign on the expectation that the administration will be too focused on his re-election to escalate tensions with Europe.
In order to convey the impression that talks are moving forward, the EU would make limited concessions on peripheral issues such as aligning regulatory standards, Bloomberg said. The bigger goal is a reset of trans-Atlantic relations after the election--effectively a high-stakes diplomatic bet.
Bloomberg argues that the strategy carries an element of risk as Trump could always defy expectations and turn up the heat on the EU just as the election nears unleashing more protectionist measures in a bid to play to his core voters.
Still, this proposal is seen as one among a range of options floating around Europe now and while it is not official EU policy, it coincides with a delicate transition at the EU’s power center, Bloomberg says.
Incoming European Commission President Ursula von der Leyen, an ally of German Chancellor Angela Merkel, is signaling she won’t back off the EU’s forceful strategy of defending its commercial interests and upholding the global trading order.
Von der Leyen’s plan is “to convince our friends from the U.S. that it’s better to find a good compromise and work together,” she told Bloomberg recently.
In the past, the U.S. has shown a “willingness to use a variety of mechanisms in an attempt to reduce its trade deficit,” and has already hit the EU with tariffs on steel and aluminum exports; punitive measures were based on an obscure Cold War-era law that gives the president latitude to impose levies on grounds of national security--a justification rejected by the EU.
The EU retaliated with tariffs on about $3.1 billion of politically sensitive U.S. goods from motorcycles to bourbon. However, that barely scratches the surface of what the conflict could escalate into, Bloomberg says.
The President has until November to decide whether to impose duties of as much as 25% on $350 billion in cars and car parts brought into the U.S. each year exceeding the tariffs imposed on $250 billion worth of Chinese imports. The EU has earmarked $22 billion of U.S. products to retaliate against.
The U.S. has readied a separate list of tariffs on $25 billion of EU goods, of which it expects to hit $11 billion in retaliation for illegal subsidies the bloc provided to Toulouse, France-based Airbus SE. The Trump administration is waiting for the World Trade Organization to rule as early as this summer on the amount of damages. The EU has a similar case pending against Boeing Co. and has readied retaliatory tariffs.
U.S. Trade Representative Robert Lighthizer has indicated that Washington could impose retaliatory tariffs or other trade limits on France or any other country that taxes digital revenues of large companies, which would hit tech giants from Facebook Inc. to Alphabet Inc.’s Google.
Some European officials view the U.S. tariff threats as an effort to force EU countries to include agriculture in the trade negotiations, which began after Trump and European Commission President Jean-Claude Juncker met at the White House last year.
The EU plan hinges on the extent to which Trump perceives that he needs to keep core voters in U.S. farm states happy, even as they feel the brunt of the trade conflict. China’s retaliatory tariffs on U.S. farm goods have dented agriculture incomes and disrupted global trade flows, pushing American farmer sentiment to the lowest levels of his presidency, Bloomberg says.
In Washington, the two sides agreed to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” then disagreed in public about what was said.
EU Trade Commissioner Cecilia Malmstrom said after the meeting last July that she was in the room and the outcome, “without doubt,” was “that agriculture would not be in.”
U.S. Ambassador to the EU Gordon Sondland has said the EU “misrepresented” the discussion. Juncker explicitly said agriculture would be included in the negotiations but that it would be left out of the public statement after the talks to provide the EU political cover, Sondland said.
The EU is an extremely tough negotiator and has protected its highly intrusive policies for decades against U.S. pressures—and the U.S. already has a major fight going with China, although it seems to have great confidence in its reliance on tariffs to gain access. Clearly, this is another battle producers should watch closely as it proceeds, Washington Insider believes.
At this time, the “awkward EU-U.S. truce” is held together by the prospect of a big trade accord in the future. To preserve the status quo, one EU proposal would “slow-walk the negotiations,” pushing them deeper into the campaign on the expectation that the administration will be too focused on his re-election to escalate tensions with Europe.
In order to convey the impression that talks are moving forward, the EU would make limited concessions on peripheral issues such as aligning regulatory standards, Bloomberg said. The bigger goal is a reset of trans-Atlantic relations after the election--effectively a high-stakes diplomatic bet.
Bloomberg argues that the strategy carries an element of risk as Trump could always defy expectations and turn up the heat on the EU just as the election nears unleashing more protectionist measures in a bid to play to his core voters.
Still, this proposal is seen as one among a range of options floating around Europe now and while it is not official EU policy, it coincides with a delicate transition at the EU’s power center, Bloomberg says.
Incoming European Commission President Ursula von der Leyen, an ally of German Chancellor Angela Merkel, is signaling she won’t back off the EU’s forceful strategy of defending its commercial interests and upholding the global trading order.
Von der Leyen’s plan is “to convince our friends from the U.S. that it’s better to find a good compromise and work together,” she told Bloomberg recently.
In the past, the U.S. has shown a “willingness to use a variety of mechanisms in an attempt to reduce its trade deficit,” and has already hit the EU with tariffs on steel and aluminum exports; punitive measures were based on an obscure Cold War-era law that gives the president latitude to impose levies on grounds of national security--a justification rejected by the EU.
The EU retaliated with tariffs on about $3.1 billion of politically sensitive U.S. goods from motorcycles to bourbon. However, that barely scratches the surface of what the conflict could escalate into, Bloomberg says.
The President has until November to decide whether to impose duties of as much as 25% on $350 billion in cars and car parts brought into the U.S. each year exceeding the tariffs imposed on $250 billion worth of Chinese imports. The EU has earmarked $22 billion of U.S. products to retaliate against.
The U.S. has readied a separate list of tariffs on $25 billion of EU goods, of which it expects to hit $11 billion in retaliation for illegal subsidies the bloc provided to Toulouse, France-based Airbus SE. The Trump administration is waiting for the World Trade Organization to rule as early as this summer on the amount of damages. The EU has a similar case pending against Boeing Co. and has readied retaliatory tariffs.
U.S. Trade Representative Robert Lighthizer has indicated that Washington could impose retaliatory tariffs or other trade limits on France or any other country that taxes digital revenues of large companies, which would hit tech giants from Facebook Inc. to Alphabet Inc.’s Google.
Some European officials view the U.S. tariff threats as an effort to force EU countries to include agriculture in the trade negotiations, which began after Trump and European Commission President Jean-Claude Juncker met at the White House last year.
The EU plan hinges on the extent to which Trump perceives that he needs to keep core voters in U.S. farm states happy, even as they feel the brunt of the trade conflict. China’s retaliatory tariffs on U.S. farm goods have dented agriculture incomes and disrupted global trade flows, pushing American farmer sentiment to the lowest levels of his presidency, Bloomberg says.
In Washington, the two sides agreed to “work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” then disagreed in public about what was said.
EU Trade Commissioner Cecilia Malmstrom said after the meeting last July that she was in the room and the outcome, “without doubt,” was “that agriculture would not be in.”
U.S. Ambassador to the EU Gordon Sondland has said the EU “misrepresented” the discussion. Juncker explicitly said agriculture would be included in the negotiations but that it would be left out of the public statement after the talks to provide the EU political cover, Sondland said.
The EU is an extremely tough negotiator and has protected its highly intrusive policies for decades against U.S. pressures—and the U.S. already has a major fight going with China, although it seems to have great confidence in its reliance on tariffs to gain access. Clearly, this is another battle producers should watch closely as it proceeds, Washington Insider believes.
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