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Friday, November 29, 2019
No Final RFS Rule Friday
Today (Friday) is when historically the Environmental Protection Agency would release it’s final Renewable Fuel Standard proposal. However, thanks to other changes pending in the rule, the EPA said earlier this week that the agency would review comments, and will seek to finish the rule this winter. The comment period for the proposed changes regarding small refinery exemptions closes today (Friday), which effectively puts the final rule on hold until the proposal is finalized. Corn and ethanol groups were busy earlier this week submitting comments to the EPA. Many say the proposal breaks a promise by President Donald Trump to make up for all lost demand created by the exemptions. The industry says more than four billion gallons of demand for biofuels has been lost due to retroactive small refinery exemptions for compliance years 2015 through 2018. National Corn Growers Association President Kevin Ross of Iowa states, “The proposed rule fails to provide the assurance needed that EPA’s practices for granting waivers will change going forward.”
Hoeven, Peterson, Meet with Sugar Growers Regarding Assistance
Lawmakers recently met with sugar producers to discuss needed relief efforts after a challenging growing season. North Dakota Senator John Hoeven, a Republican from North Dakota and chairman of the Senate Agriculture Appropriations Committee, along with House Agriculture Committee Chair Collin Peterson, a Minnesota Democrat, met with sugar producers earlier this week. They are working with Department of Agriculture undersecretary Bill Northey to secure disaster assistance funding for sugarbeet growers, while urging USDA to avoid any premature actions, including increasing sugar imports. Sugarbeet growers, who were impacted by severe weather, are facing unique circumstances as they work to recover, including the inability to complete harvest and budgeting constraints faced by the cooperative. The current disaster programs do not account for these constraints, which is why Hoeven and Peterson are working with USDA to secure disaster assistance. Hoeven says producers “have faced real challenges this harvest,” while Peterson says, “we’ll continue having conversations to see what can be done to address the concerns.”
Committee to Vote on FDA Nominee Next Week
The Senate Health Committee will vote on Stephen Hahn’s nomination to serve as Commissioner of the Food and Drug Administration next week. Tuesday, the committee will consider the nomination, among three others. If approved, the nominations would head for the full Senate for a final confirmation vote. During a hearing by the committee examining the nomination, Hahn briefly voiced his support for “clear, transparent, and understandable labeling” for dairy and dairy imitation products. The comments were welcomed by the National Milk Producers Federation, as NMPF CEO Jim Mulhern stated, “It’s heartening to hear” Hahn would “immediately examine this crucial unfinished business.” NMPF and others are seeking a labeling system that prohibits plant-based dairy imitators from using dairy marketing terms. Rules already do so, but FDA has not enforced them. Committee Chairman Lamar Alexander, a Republican from Tennessee, called Hahn an “impressive choice” to lead the FDA. Ranking member Patty Murray, a Democrat from Washington, demanded Hahn commit to putting science, data and families first.
Deere Reports 2019 Sales Increase
Deere & Company reports worldwide net sales and revenues increased five percent in both the fourth quarter and full year of 2019 to $9.8 billion and $39.2 billion. Deere reported fourth-quarter net income of $722 million, compared with net income of $785 million, in 2018. Agriculture and Turf sales increased for the quarter and full year of 2019 due to price realization and higher shipment volumes, partially offset by the unfavorable effects of currency translation. However, operating profit decreased for the quarter and year. Deere CEO John May says the performance “reflected continued uncertainties in the agricultural sector,” adding “trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment.” Deere's worldwide sales of agriculture and turf equipment are forecast to decline between five and ten percent for fiscal-year 2020. Industry sales of agricultural equipment in the U.S. and Canada are forecast to be down about five percent, driven by lower demand for large equipment.
Online Cheese Sales Set to Surpass Half a Billion Dollars in 2020
Online cheese sales are experiencing major growth. By the end of 2019, data shows that e-commerce sales will surge past $440 million. The 54 percent annual growth in online sales over the past four years signals that shoppers are embracing the convenience and variety available when ordering cheese online. Suzanne Fanning, Senior Vice President at Dairy Farmers of Wisconsin, says, "Consumer research shows that cheese aligns with on-trend food preferences because it is packed with protein and good fat." With the holidays being the peak shopping season for cheese, it is poised to be one of the hottest gifts this holiday season. The organization is encouraging consumers to buy Wisconsin cheese. A list of holiday gift baskets is available on the organization’s website. The collection includes twelve unique gift baskets that offer a variety of cheeses from top specialty retailers. Get free shipping nationwide on the entire collection from Black Friday to Cyber Monday at WisconsinCheese.com/gift-basket.
USDA ERS: Potatoes Top U.S. Vegetable Consumption
Potatoes rank number one among vegetables in terms of consumption, according to Department of Agriculture data. USDA’s Economic Research Service says that in 2017, 49.2 pounds of fresh and processed potatoes per person were available for Americans to eat after adjusting for losses. The loss-adjusted food availability data series takes per capita supplies of food available for human consumption and more closely approximates actual consumption by adjusting for some of the spoilage, plate waste, and other losses in restaurants and grocery stores, as well as at home. Loss-adjusted availability of fresh potatoes was 22.9 pounds per person in 2017, followed by frozen potatoes at 20.5 pounds per person, while canned and dehydrated potatoes, along with potato chips and shoestrings, totaled 5.9 pounds per person in 2017. Tomatoes came in second. While loss-adjusted canned tomato availability, at 16.1 pounds, leads fresh tomatoes, total tomato loss-adjusted availability, fresh and canned, came in second, at 28.7 pounds per person. Onions, lettuce, carrots and sweet corn finish the list of America’s top seven vegetable choices.
Washington Insider: Potential Digital Sales Tax Fight
You could be excused if you thought that the U.S., China trade fight was the main trade policy uncertainty these days, especially after Bloomberg reported this week that President Donald Trump told the press that “he’s holding up” the phase one deal. “We can’t make a deal that’s like, even,” Trump said, adding that he said as much to China’s President Xi Jinping. “We have to make a deal where we do much better, because we have to catch up,” he said.
Still, the report said that the president thinks a China deal is in the “final throes.”
However uncertain the China deal may be, it is not the only trade concern now bubbling up. The New York Times said on Wednesday that the “90-day pause in the taxation of technology companies and other corners of the digital economy had ended.” The report raised questions of whether the president would revive threats against French wine and other products.
The Times focused on the potential for an escalating battle between the U.S. and France over taxing digital services. It noted that President Trump “gave no indication this week” whether he planned to return to his threats to impose new tariffs on imported wine and other French products as a result.
French leaders voted earlier this year to impose a new tax on economic activity that takes place online and “crafted it in such a way that it would largely hit large American tech companies like Amazon and Facebook.” In response, the administration opened an investigation into whether “the tax posed a threat to national security and should be met with American tariffs on French products.”
The President made that threat in July. Soon after, the countries reached a 90-day agreement that paused the American retaliation, while leaders from wealthy countries including France and the United States pursued negotiations toward an international agreement on digital taxation.
The French tax was an effort to capture revenue from activities of companies that sell or advertise online to its citizens — an effort being considered by a growing number of countries outside America, including Britain, Italy and Canada, the Times said.
The Organization for Economic Cooperation and Development is spearheading negotiations between the countries as it tries to avoid “an arms race of sorts” over digital sales revenue that crosses borders. Participants have set an ambitious goal to reach an agreement in principle sometime next year and key negotiators will meet next month in Paris to continue the process.
A final global agreement has the potential to expand to cover large automakers and other multinational companies — not just tech firms — the Times said.
Some tax experts predict that the administration will extend the truce period, perhaps unofficially, until at least January when the OECD is expected to update the status of the negotiations. Others say the administration is likely to hold off as long as negotiations remain fruitful.
“Absent some sort of intervention from the president, it seems very unlikely that the U.S. will act on its investigation before seeing whether there is a satisfactory agreement at the OECD this coming January, and if such an agreement is reached, whether the French keep their promise and repeal their digital services tax,” said Itai Grinberg, an international tax policy professor at Georgetown University Law Center.
The President has made it known that he is unhappy with the French tax even though he has separate concerns about the tech companies that are threatened by it.
“I’m not a fan of those companies, but if anybody is going to tax those companies, it should be the USA,” the President said. “It shouldn’t be France and the European Union, who have really taken advantage of the United States.”
David Kautter, the Treasury Department’s assistant secretary for tax policy, said last week that any countermeasures against France would be determined by the U.S. Trade Representative. He said that discussions between the United States and France had been “substantive” and “meaningful,” but it was not clear when the two countries would resolve their differences over the matter.
“The administration adamantly opposes unilateral digital services taxes that are focused primarily on U.S. companies,” Kautter said. “We think the best way to resolve this issue is through multilateral discussions in the OECD. We are actively engaged in those discussions.”
Still, Kautter cautioned that the target date for reaching a broader agreement was not until the end of next year and that there were many complicated matters to address in that time.
So, we will see. This potential fight appears likely to be one more hot button trade issue to add to the several that concern other products in other areas, and which have the potential to become increasingly important, and which producers should watch closely as they evolve, Washington Insider believes.
Still, the report said that the president thinks a China deal is in the “final throes.”
However uncertain the China deal may be, it is not the only trade concern now bubbling up. The New York Times said on Wednesday that the “90-day pause in the taxation of technology companies and other corners of the digital economy had ended.” The report raised questions of whether the president would revive threats against French wine and other products.
The Times focused on the potential for an escalating battle between the U.S. and France over taxing digital services. It noted that President Trump “gave no indication this week” whether he planned to return to his threats to impose new tariffs on imported wine and other French products as a result.
French leaders voted earlier this year to impose a new tax on economic activity that takes place online and “crafted it in such a way that it would largely hit large American tech companies like Amazon and Facebook.” In response, the administration opened an investigation into whether “the tax posed a threat to national security and should be met with American tariffs on French products.”
The President made that threat in July. Soon after, the countries reached a 90-day agreement that paused the American retaliation, while leaders from wealthy countries including France and the United States pursued negotiations toward an international agreement on digital taxation.
The French tax was an effort to capture revenue from activities of companies that sell or advertise online to its citizens — an effort being considered by a growing number of countries outside America, including Britain, Italy and Canada, the Times said.
The Organization for Economic Cooperation and Development is spearheading negotiations between the countries as it tries to avoid “an arms race of sorts” over digital sales revenue that crosses borders. Participants have set an ambitious goal to reach an agreement in principle sometime next year and key negotiators will meet next month in Paris to continue the process.
A final global agreement has the potential to expand to cover large automakers and other multinational companies — not just tech firms — the Times said.
Some tax experts predict that the administration will extend the truce period, perhaps unofficially, until at least January when the OECD is expected to update the status of the negotiations. Others say the administration is likely to hold off as long as negotiations remain fruitful.
“Absent some sort of intervention from the president, it seems very unlikely that the U.S. will act on its investigation before seeing whether there is a satisfactory agreement at the OECD this coming January, and if such an agreement is reached, whether the French keep their promise and repeal their digital services tax,” said Itai Grinberg, an international tax policy professor at Georgetown University Law Center.
The President has made it known that he is unhappy with the French tax even though he has separate concerns about the tech companies that are threatened by it.
“I’m not a fan of those companies, but if anybody is going to tax those companies, it should be the USA,” the President said. “It shouldn’t be France and the European Union, who have really taken advantage of the United States.”
David Kautter, the Treasury Department’s assistant secretary for tax policy, said last week that any countermeasures against France would be determined by the U.S. Trade Representative. He said that discussions between the United States and France had been “substantive” and “meaningful,” but it was not clear when the two countries would resolve their differences over the matter.
“The administration adamantly opposes unilateral digital services taxes that are focused primarily on U.S. companies,” Kautter said. “We think the best way to resolve this issue is through multilateral discussions in the OECD. We are actively engaged in those discussions.”
Still, Kautter cautioned that the target date for reaching a broader agreement was not until the end of next year and that there were many complicated matters to address in that time.
So, we will see. This potential fight appears likely to be one more hot button trade issue to add to the several that concern other products in other areas, and which have the potential to become increasingly important, and which producers should watch closely as they evolve, Washington Insider believes.
Comment Period on EPA Supplemental RFS Plan Ends Today As 2019 SREs Are On File
The Environment Protection Agency (EPA) signaled last week via the unified agenda released November 20 that they would not be finalizing the 2020 biofuel and 2021 biodiesel levels under the Renewable Fuel Standard (RFS) by the November 30 deadline. Rather, the agency said they intended to file a final rule in December.
An EPA spokesman is now telling media outlets that the agency would finalize the plan “this winter.” The Winter Solstice arrives December 21, so EPA’s guidance in the regulatory agenda of issuing a final rule in December would certainly match what the EPA is telling media outlets.
Meanwhile, EPA has updated their data on small refinery exemptions (SREs). For the 2018 compliance year, EPA data shows 42 were submitted, 31 were approved and six were rejected. EPA data had previously shown three to have been withdrawn or declared ineligible. In late August, EPA data showed two were still labeled as pending.
As of November 21, EPA now shows 42 were requested, 31 were approved, six were denied, and now it has separated the declared ineligible or withdrawn categories. Those figures now show that two have been declared ineligible and three have been withdrawn and no petitions are shown as pending for the 2018 compliance year.
For the 2019 compliance year, EPA now lists 10 petitions for SREs having been received as of November 21, and all 10 are still shown as pending.
An EPA spokesman is now telling media outlets that the agency would finalize the plan “this winter.” The Winter Solstice arrives December 21, so EPA’s guidance in the regulatory agenda of issuing a final rule in December would certainly match what the EPA is telling media outlets.
Meanwhile, EPA has updated their data on small refinery exemptions (SREs). For the 2018 compliance year, EPA data shows 42 were submitted, 31 were approved and six were rejected. EPA data had previously shown three to have been withdrawn or declared ineligible. In late August, EPA data showed two were still labeled as pending.
As of November 21, EPA now shows 42 were requested, 31 were approved, six were denied, and now it has separated the declared ineligible or withdrawn categories. Those figures now show that two have been declared ineligible and three have been withdrawn and no petitions are shown as pending for the 2018 compliance year.
For the 2019 compliance year, EPA now lists 10 petitions for SREs having been received as of November 21, and all 10 are still shown as pending.
Fed Says US Agriculture Conditions Remain Strained
Conditions facing U.S. agriculture were “little changed overall” compared with late October, according to the Fed’s Beige Book, but conditions remain “strained by weather and low crop prices.”
The report, issued two weeks prior to the next rate-setting meeting for the Federal Reserve, also offers comments from individual Fed Districts.
The Chicago Fed indicated that “early frost and snow further delayed this year’s harvest and diminished yields.” Plus, there were concerns about crop quality. “Contacts noted that demand for pork from China had grown despite U.S. tariffs because African swine fever had decimated China's hog herd,” the Chicago Fed noted. “More generally, contacts reported a pickup in overall agricultural exports, with some noting that news on trade negotiations sounded promising for future exports. Farm incomes generally are expected to be down from last year, although government payments from the Market Facilitation Program will provide some support.”
The St. Louis Fed reported conditions were basically unchanged from the October report. “Production levels for corn, rice, and soybeans are expected to be significantly lower than in 2018, while that for cotton is expected to increase modestly,” the bank said. “District contacts continued to express concerns over depressed agriculture commodity prices.”
The Minneapolis Fed noted difficult conditions for the ag sector. “District agricultural conditions declined from an already weak position,” the report noted. “Roughly three in five lenders responding to the Minneapolis Fed's third-quarter (October) survey of agricultural credit conditions reported that farm incomes decreased in the third quarter relative to a year earlier, with a similar proportion reporting decreased capital spending.”
Similarly, the Kansas City fed noted conditions in ag remained “weak” and “agricultural credit conditions deteriorated slightly.”
The report, issued two weeks prior to the next rate-setting meeting for the Federal Reserve, also offers comments from individual Fed Districts.
The Chicago Fed indicated that “early frost and snow further delayed this year’s harvest and diminished yields.” Plus, there were concerns about crop quality. “Contacts noted that demand for pork from China had grown despite U.S. tariffs because African swine fever had decimated China's hog herd,” the Chicago Fed noted. “More generally, contacts reported a pickup in overall agricultural exports, with some noting that news on trade negotiations sounded promising for future exports. Farm incomes generally are expected to be down from last year, although government payments from the Market Facilitation Program will provide some support.”
The St. Louis Fed reported conditions were basically unchanged from the October report. “Production levels for corn, rice, and soybeans are expected to be significantly lower than in 2018, while that for cotton is expected to increase modestly,” the bank said. “District contacts continued to express concerns over depressed agriculture commodity prices.”
The Minneapolis Fed noted difficult conditions for the ag sector. “District agricultural conditions declined from an already weak position,” the report noted. “Roughly three in five lenders responding to the Minneapolis Fed's third-quarter (October) survey of agricultural credit conditions reported that farm incomes decreased in the third quarter relative to a year earlier, with a similar proportion reporting decreased capital spending.”
Similarly, the Kansas City fed noted conditions in ag remained “weak” and “agricultural credit conditions deteriorated slightly.”
Friday Watch List
Markets
Back from the Thanksgiving holiday, USDA will release its weekly report of grain export sales at 7:30 a.m. CST. Friday's grain and livestock futures open at 8:30 a.m. CST. Most U.S. grain futures close at 12:05 p.m. CST and livestock futures close at 12:15 p.m. CST. There are no other official reports, but traders will be interested in weather and any trade news.
Weather
Snow, ice and rain develops through the north-central U.S. region early Friday. This will become mostly snow later Friday or during Friday night into Saturday. Strong winds, heavy snow and ice tonight and Saturday will likely affect travel, transport, field activities and livestock in this area. Blizzard conditions may develop during this time. Some ice may also occur through the northwest Midwest later Friday or during Friday night. Mostly rain or showers through the eastern Plains, the southwest and central Midwest during this time frame. Strong winds but little rainfall through the west-central Plains winter wheat areas Friday, possible a risk to winter wheat. Drier through the eastern U.S. areas Friday.
Back from the Thanksgiving holiday, USDA will release its weekly report of grain export sales at 7:30 a.m. CST. Friday's grain and livestock futures open at 8:30 a.m. CST. Most U.S. grain futures close at 12:05 p.m. CST and livestock futures close at 12:15 p.m. CST. There are no other official reports, but traders will be interested in weather and any trade news.
Weather
Snow, ice and rain develops through the north-central U.S. region early Friday. This will become mostly snow later Friday or during Friday night into Saturday. Strong winds, heavy snow and ice tonight and Saturday will likely affect travel, transport, field activities and livestock in this area. Blizzard conditions may develop during this time. Some ice may also occur through the northwest Midwest later Friday or during Friday night. Mostly rain or showers through the eastern Plains, the southwest and central Midwest during this time frame. Strong winds but little rainfall through the west-central Plains winter wheat areas Friday, possible a risk to winter wheat. Drier through the eastern U.S. areas Friday.
Wednesday, November 27, 2019
2019 Trade Aid May Violate WTO Commitments
A recent independent report suggests U.S. trade aid in 2019 for farmers may surpass limits set in World Trade Organization commitments. The report for the American Enterprise Institute by Joe Glauber, a former Department of Agriculture Chief Economist, suggests the size of payments made to producers in 2019 may encourage other WTO members to challenge the payments. Glauber writes, a long-term concern is "how trade compensation comports with U.S. obligations in the WTO and, more generally, how it will affect future U.S. efforts to seek further reforms in the WTO.” President Donald Trump and his administration have approved the payments, roughly $28 billion, to offset any harm by other countries retaliating against the Trump trade agenda. Glauber says current WTO rules require that annual U.S. domestic supports that distort trade flows not exceed a maximum of $19.1 billion. Since the WTO disciplines went into effect in 1995, United States levels of support have remained in that annual limit.
NPPC: Improved Pork Trade with China can Lower Trade Deficit
Securing zero-tariff access to China for U.S. pork would be an economic boon for American agriculture, according to the National Pork Producers Council. Based on an analysis by Iowa State University Economist Dermot (Der-Muht) Hayes, NPPC says unrestricted access to the Chinese chilled and frozen market would reduce the overall trade deficit with China by nearly six percent, and generate 184,000 new U.S. jobs in the next decade. NPPC Tuesday launched a digital campaign to spotlight the importance of opening the Chinese market to U.S. pork as trade negotiations continue. According to Dr. Hayes’ analysis, U.S. pork would generate $24.5 billion in sales if U.S. pork gained unrestricted access to the world’s largest pork-producing nation over ten years. NPPC President David Herring says the analysis shows, "The U.S. pork industry is missing out on an unprecedented sales opportunity in China when it most needs an affordable, safe and reliable supply of its favored protein."
Canada Rail Strike Prompts Potash Mine Shutdown
Nutrien Ag Solutions says it will be forced to curtail production at its largest potash mine in Canada due to the CN Rail strike. Employees were sent notices this week, indicating the mine will be shut down for two weeks starting on December 2. The company says, "It is extremely disappointing that in a year when the agricultural sector has been severely impacted by poor weather and trade disputes, the CN strike will add further hardship to the Canadian agriculture industry.” The shutdown will continue despite the fact workers and CN Rail reached an agreement Tuesday. Nutrien is the world's largest provider of crop inputs and services, producing and distributing 27 million metric tons of potash, nitrogen and phosphate products worldwide. More than 3,000 CN rail employees are on strike, impacting agricultural shipments of grains, fertilizers and even propane for grain drying. A Fertilizer Canada official says an estimated $200 million to $300 million worth of fertilizer shipments will be impacted by the strike.
Organic Valley Unaffected by Dean Foods Bankruptcy
When Dean Foods filed for bankruptcy this month, questions surfaced regarding the status of partnerships with the company and the health of the dairy industry. However, Organic Valley, a Wisconsin-based organic cooperative, says it’s Organic Valley Fresh LLC joint venture, which represents a small fraction of its milk processing and distribution, falls outside of the Dean Foods filing. The cooperative says its members are "disheartened by Dean Foods' bankruptcy as it represents the many challenges dairy farmers face in getting their products to market." Organic Valley officials say the cooperative remains strong and innovations have bolstered the business overall. Dean Foods this month announced the chapter 11 bankruptcy filing, adding the company was in advanced talks with Dairy Farmers of America regarding a potential sale. The National Milk Producers Federation says Dean's bankruptcy is creating uncertainty for some producers, but "seen from another angle, it's just another disruption this sector will be able to withstand,” due to the strength of cooperatives and their dairy farmer-owners.
Ag Innovation Necessary to Address Climate Change
The American Seed Trade Association says agriculture innovation will help combat and mitigate the impacts of climate change. In comments submitted to the House Select Committee on the Climate Crisis, ASTA says, "The development and commercialization of innovative plant products is already playing a significant role in helping U.S. agriculture reduce greenhouse gas emissions. For U.S. agriculture to maximize its potential to reduce greenhouse gas emissions and increase carbon sequestration, several things are needed, according to ASTA, including additional private and public sector investment in agriculture research. The organization says agriculture also needs rational government policies regarding evolving innovation in the agriculture space, and programs that incentivize farmers to adopt conservation practices. The comments note plant breeders are helping through developing better and higher-yielding crop varieties. ASTA says, "It's critical we continue moving forward, through robust investment in agriculture research and development, to drive forward the next generation of innovative solutions to meet the new and emerging challenges of tomorrow."
USDA Announces Broadband Investments in Wyoming, Kansas
The Department of Agriculture this week announced two more investments as part of its new rural broadband effort. Natural Resources Conservation Service chief Matthew Lohr announced the $5.2 million investment for broadband infrastructure in Kansas as part of the Reconnect Pilot Program, while USDA also announced a $4.79 million investment in Wyoming. In Kansas, Wave Wireless, LLC will use the funding to deploy a fiber broadband network servicing more than 1,300 households. In Wyoming, the funds will improve and create broadband connections in the county of Sweetwater, benefiting roughly 320 homes. USDA received 146 applications this year requesting $1.4 billion in funding through the ReConnect Program. The funds enable the federal government to partner with the private sector and rural communities to build modern broadband infrastructure in areas with insufficient Internet service. Insufficient service is defined as connection speeds of less than ten Megabit download and one Megabit per second upload speeds. Additional investments will be made in the coming weeks.
Washington Insider: More Trouble With Romaine Lettuce
Amid all the alarms about the trade war, another threat is being highlighted this week by federal health and regulatory officials who are cautioning about romaine lettuce “of any kind harvested from the Salinas Valley.”
The danger is that the lettuce “may be contaminated with a particularly dangerous type of E. coli bacteria that has sickened 40 people in 16 states.” The warnings were highlighted by an unusual range of urban media, including the Washington Post and the New York Times, among others.
The warnings were stark — the Centers for Disease Control and Prevention and the Food and Drug Administration told consumers to throw away any romaine lettuce they may already have purchased. To be clear, they said “restaurants should not serve it, stores should not sell it, and people should not buy it, if it came from Salinas, a growing area in Northern California.” The warning covered products marketed in many forms, including “chopped, whole head, precut or part of a mix.”
Most romaine lettuce products are now labeled with a harvest location showing where they were grown, the Washington Post said and reported that “officials said to throw out lettuce if it doesn’t have a label specifying where it’s from.”
No deaths have been reported in this E. coli outbreak, but the strain is the same one that caused outbreaks linked to leafy greens and romaine lettuce in the last two years. Just two days before Thanksgiving last year, CDC issued an unusually broad alert, warning consumers to avoid eating romaine lettuce of any kind in response to an outbreak.
Of those who have been sickened in this outbreak by E. coli O157: H7, 28 people have been hospitalized, including five who have developed a type of kidney failure. This E. coli strain produces a Shiga toxin that can enter a person’s bloodstream and wreak havoc on kidney function. Symptoms of infection include vomiting, painful cramps and diarrhea that is often bloody.
The largest number of cases reported so far has been in Wisconsin, with 10 cases, the Post said. Other cases have been reported in Arizona, California, Colorado, Idaho, Illinois, Maryland, Michigan, Minnesota, Montana, New Jersey, New Mexico, Ohio, Pennsylvania, Virginia, and Washington. The report said that FDA and states are tracing the source of the romaine lettuce eaten by the ill consumers, but that “no common grower, supplier, distributor, or brand of romaine lettuce has been identified.”
The Post also said that “whole genome sequencing shows the strain in romaine lettuce tested by the Maryland Health Department is closely related genetically to the E. coli found in sick people from several locations. And it noted that USDA has a list of 35 recalled products sold under different brand names and “use by” dates from Oct. 29, 2019 to Nov. 1, 2019.
At this time, there is no recommendation for consumers or retailers to avoid using or selling romaine harvested from places other than Salinas, or labeled as indoor, or hydroponically- or greenhouse-grown, FDA officials said.
Convenience salads, from tubs of prewashed baby spinach to bags of chopped romaine, are regularly implicated in foodborne illness outbreaks, the Post said. Last year, an outbreak that began in March from chopped, bagged, as well as whole heads of romaine was the largest E. coli outbreak in more than a decade, killing five people and sickening more than 200 others in three dozen states.
Food safety experts have said those convenience greens carry an extra risk because they come in contact with more people and machinery before they arrive on your plate. Contamination can occur on the farm from birds flying overhead or when low-lying fields flood with contaminated water. E. coli can also be spread by farmworkers who don’t wash their hands or via farm equipment that has manure on it.
Once the greens are picked, they move to packaging plants where they may be exposed to more workers and more equipment. Products from multiple farms is often bagged in the same facility, which further increases the odds of cross-contamination.
The problem with lettuce is that it is usually consumed fresh without being cooked or otherwise prepared in ways that can kill bacteria. In addition special testing ahead of distribution is both difficult and costly since the amounts of produce involved can be very large.
At the same time, food borne illness outbreaks are extremely damaging to the fresh food industry as well as to the credibility of the entire food supply system. Regulators have recently been given new authorities to take steps to insure the safety of the food supply and need to take extraordinary steps as necessary to carry out those directions, Washington Insider believes.
The danger is that the lettuce “may be contaminated with a particularly dangerous type of E. coli bacteria that has sickened 40 people in 16 states.” The warnings were highlighted by an unusual range of urban media, including the Washington Post and the New York Times, among others.
The warnings were stark — the Centers for Disease Control and Prevention and the Food and Drug Administration told consumers to throw away any romaine lettuce they may already have purchased. To be clear, they said “restaurants should not serve it, stores should not sell it, and people should not buy it, if it came from Salinas, a growing area in Northern California.” The warning covered products marketed in many forms, including “chopped, whole head, precut or part of a mix.”
Most romaine lettuce products are now labeled with a harvest location showing where they were grown, the Washington Post said and reported that “officials said to throw out lettuce if it doesn’t have a label specifying where it’s from.”
No deaths have been reported in this E. coli outbreak, but the strain is the same one that caused outbreaks linked to leafy greens and romaine lettuce in the last two years. Just two days before Thanksgiving last year, CDC issued an unusually broad alert, warning consumers to avoid eating romaine lettuce of any kind in response to an outbreak.
Of those who have been sickened in this outbreak by E. coli O157: H7, 28 people have been hospitalized, including five who have developed a type of kidney failure. This E. coli strain produces a Shiga toxin that can enter a person’s bloodstream and wreak havoc on kidney function. Symptoms of infection include vomiting, painful cramps and diarrhea that is often bloody.
The largest number of cases reported so far has been in Wisconsin, with 10 cases, the Post said. Other cases have been reported in Arizona, California, Colorado, Idaho, Illinois, Maryland, Michigan, Minnesota, Montana, New Jersey, New Mexico, Ohio, Pennsylvania, Virginia, and Washington. The report said that FDA and states are tracing the source of the romaine lettuce eaten by the ill consumers, but that “no common grower, supplier, distributor, or brand of romaine lettuce has been identified.”
The Post also said that “whole genome sequencing shows the strain in romaine lettuce tested by the Maryland Health Department is closely related genetically to the E. coli found in sick people from several locations. And it noted that USDA has a list of 35 recalled products sold under different brand names and “use by” dates from Oct. 29, 2019 to Nov. 1, 2019.
At this time, there is no recommendation for consumers or retailers to avoid using or selling romaine harvested from places other than Salinas, or labeled as indoor, or hydroponically- or greenhouse-grown, FDA officials said.
Convenience salads, from tubs of prewashed baby spinach to bags of chopped romaine, are regularly implicated in foodborne illness outbreaks, the Post said. Last year, an outbreak that began in March from chopped, bagged, as well as whole heads of romaine was the largest E. coli outbreak in more than a decade, killing five people and sickening more than 200 others in three dozen states.
Food safety experts have said those convenience greens carry an extra risk because they come in contact with more people and machinery before they arrive on your plate. Contamination can occur on the farm from birds flying overhead or when low-lying fields flood with contaminated water. E. coli can also be spread by farmworkers who don’t wash their hands or via farm equipment that has manure on it.
Once the greens are picked, they move to packaging plants where they may be exposed to more workers and more equipment. Products from multiple farms is often bagged in the same facility, which further increases the odds of cross-contamination.
The problem with lettuce is that it is usually consumed fresh without being cooked or otherwise prepared in ways that can kill bacteria. In addition special testing ahead of distribution is both difficult and costly since the amounts of produce involved can be very large.
At the same time, food borne illness outbreaks are extremely damaging to the fresh food industry as well as to the credibility of the entire food supply system. Regulators have recently been given new authorities to take steps to insure the safety of the food supply and need to take extraordinary steps as necessary to carry out those directions, Washington Insider believes.
Big Impact If China Cuts Its Tariff On US Pork
A trade agreement that eliminates China’s 72% tariff on U.S. pork could reduce the bilateral trade deficit by nearly 6% and generate 184,000 new American jobs over the next decade, according to Iowa State University economist Dermot Hayes for the National Pork Producers Council.
U.S. pork producers see a potential $24.5 billion market in China within 10 years if the Trump administration can gain unrestricted trade access after the Asian country’s hog herd has been devastated by African swine fever. The projection was based on a “best-case scenario” in which China drops all tariffs and barriers to pork imports, including speeding up customs processing to allow for imports of chilled pork.
Hayes projected that without tariffs, China would import 35% of its pork — a level similar to Mexico and Australia after they concluded free-trade agreements — and U.S. producers would capture half that market.
U.S. pork producers see a potential $24.5 billion market in China within 10 years if the Trump administration can gain unrestricted trade access after the Asian country’s hog herd has been devastated by African swine fever. The projection was based on a “best-case scenario” in which China drops all tariffs and barriers to pork imports, including speeding up customs processing to allow for imports of chilled pork.
Hayes projected that without tariffs, China would import 35% of its pork — a level similar to Mexico and Australia after they concluded free-trade agreements — and U.S. producers would capture half that market.
US Ag Exports Seen Rebounding While Another Import Record Forecast By USDA
Increased values for U.S. pork, soybean and dairy exports helped fuel an increase in the forecast for U.S. agricultural exports for Fiscal Year (FY) 2020 with another record seen for U.S. ag imports, according to USDA.
China remains a prominent factor in the U.S. agricultural export outlook. U.S. soybean exports are forecast to total $18 billion in FY 2020, up from USDA’s prior forecast they would be valued at $16.8 billion. The updated FY 2020 outlook is above the FY 2019 level of $16.9 billion, but shy of the FY 2018 mark of $21.7 billion. However, soybean export volumes for FY 2020 are seen holding at 48.3 million metric tons, down from 56.9 million metric tons in FY 2019.
The value of U.S. pork exports is seen at $6.7 billion, up $400 million from the prior outlook at sharply higher than the FY 2019 result of $5.5 billion. China is also a factor in that outlook, with USDA noting the rise is “largely due to demand from China.”
U.S. ag imports are now put at $132 billion, up from $129 billion and above the record of $131 billion in FY 2019. Imports also set new records in FY 2017 ($119.1 billion) and FY 2018 ($127.5 billion).
Much of the increase is seen for fresh fruits and vegetables and grain products, USDA said. “Fresh fruit imports are raised $1.7 billion to $15 billion, largely due to increased deliveries of avocados, berries, and melons from Mexico,” USDA detailed.
The aforementioned export and import forecasts would result in a trade balance of $7 billion, one billion less than USDA expected in August, but up from the $4.5 billion mark in FY 2019, the smallest U.S. ag trade black ink since FY 2006.
China remains a prominent factor in the U.S. agricultural export outlook. U.S. soybean exports are forecast to total $18 billion in FY 2020, up from USDA’s prior forecast they would be valued at $16.8 billion. The updated FY 2020 outlook is above the FY 2019 level of $16.9 billion, but shy of the FY 2018 mark of $21.7 billion. However, soybean export volumes for FY 2020 are seen holding at 48.3 million metric tons, down from 56.9 million metric tons in FY 2019.
The value of U.S. pork exports is seen at $6.7 billion, up $400 million from the prior outlook at sharply higher than the FY 2019 result of $5.5 billion. China is also a factor in that outlook, with USDA noting the rise is “largely due to demand from China.”
U.S. ag imports are now put at $132 billion, up from $129 billion and above the record of $131 billion in FY 2019. Imports also set new records in FY 2017 ($119.1 billion) and FY 2018 ($127.5 billion).
Much of the increase is seen for fresh fruits and vegetables and grain products, USDA said. “Fresh fruit imports are raised $1.7 billion to $15 billion, largely due to increased deliveries of avocados, berries, and melons from Mexico,” USDA detailed.
The aforementioned export and import forecasts would result in a trade balance of $7 billion, one billion less than USDA expected in August, but up from the $4.5 billion mark in FY 2019, the smallest U.S. ag trade black ink since FY 2006.
Wednesday Watch List
Markets
Wednesday before Thanksgiving is loaded with reports, starting with U.S. GDP, weekly jobless claims and durable goods orders at 7:30 a.m. CST. U.S. personal incomes and pending home sales are out at 9 a.m. The U.S. Energy Department releases weekly energy inventories at 9:30 a.m., including ethanol. Natural gas inventory is set for later in the morning, followed by the Fed's Beige Book at 1 p.m. CST. U.S. grain and livestock futures close at normal times on Wednesday and open again Friday at 8:30 a.m. CST.
Weather
Snow, ice and rain along with strong winds lingers over the northern Midwest early Wednesday while later in the day it should be drier. A new storm is taking shape over the western U.S. with widespread rain and snow expected mainly west of the Rockies. A minor disturbance will bring rain and mixed precipitation to New Mexico and west Texas mainly this afternoon. Drier elsewhere in the key U.S. growing areas. Impacts to travel, transport and harvesting today the Midwest due to recent and current snow, rain and wind. Impacts to travel and harvesting due to yesterday's snow through the northern portion of the central Plains region. Impacts to travel in many areas west of the Rockies.
Wednesday before Thanksgiving is loaded with reports, starting with U.S. GDP, weekly jobless claims and durable goods orders at 7:30 a.m. CST. U.S. personal incomes and pending home sales are out at 9 a.m. The U.S. Energy Department releases weekly energy inventories at 9:30 a.m., including ethanol. Natural gas inventory is set for later in the morning, followed by the Fed's Beige Book at 1 p.m. CST. U.S. grain and livestock futures close at normal times on Wednesday and open again Friday at 8:30 a.m. CST.
Weather
Snow, ice and rain along with strong winds lingers over the northern Midwest early Wednesday while later in the day it should be drier. A new storm is taking shape over the western U.S. with widespread rain and snow expected mainly west of the Rockies. A minor disturbance will bring rain and mixed precipitation to New Mexico and west Texas mainly this afternoon. Drier elsewhere in the key U.S. growing areas. Impacts to travel, transport and harvesting today the Midwest due to recent and current snow, rain and wind. Impacts to travel and harvesting due to yesterday's snow through the northern portion of the central Plains region. Impacts to travel in many areas west of the Rockies.
Tuesday, November 26, 2019
Trump Twitter Tirade on USMCA Inaction
The president once again took to Twitter to lash out at House Democrats over their inaction on the U.S.-Mexico-Canada Trade Agreement. President Trump placed the blame for leaving USMCA squarely on Speaker Nancy Pelosi and House Democrats for leaving USMCA “dead in the water.” USMCA isn’t the only legislation that’s awaiting action as the House and Senate are both out of session for the Thanksgiving break. There aren’t many days left on the congressional schedule in 2019. Politico says Democrats are expected to conduct negotiations with U.S. Trade Representative Robert Lighthizer by phone this week. However, the House’s impeachment process and yet another government shutdown deadline looming will likely take up a lot of that remaining time on Capitol Hill through December. The good news for USMCA proponents is Mexico passed a budget for 2020 that includes more money for overhauling its labor laws. That could give some reassurance to House Democrats and U.S. labor groups, who’ve been worried that Mexico wouldn’t follow through on its labor commitments under the three-nation trade agreement. It’s been one of the biggest sticking points that’s held up Congressional ratification.
Commission says Mexican Tomato Imports Threaten Domestic Production
The U.S. International Trade Commission ruled Friday that Mexican tomato imports threaten local production. That decision comes after the U.S. Commerce Department had already determined that Mexican tomatoes were likely to be sold at an unfairly low price as they were dumped into the U.S. market. The Florida Tomato Exchange asked for a dumping investigation shortly after the U.S. and Mexico signed a new trade deal. The Florida group says the ITC’s decision gives credibility to its long-standing concerns about Mexican imports. The Mexican-based Fresh Produce Association of the Americas says it is disappointed in the decision, saying that rising Mexican imports simply reflects growing demand by U.S. consumers for Mexico’s produce. Mexican officials say, “Consumers prefer vine-ripened tomatoes, and this is why (U.S.) domestic gassed-green tomatoes continue to lose market share in the U.S.” The ITC ruling means that the recently negotiated tomato suspension agreement is still in effect. The deal will bring much-heavier inspection requirements for tomatoes entering the U.S. If the deal is ended for any reason, the U.S. will then impose a 21-percent duty on Mexican tomatoes, which account for nearly half the tomatoes sold in the U.S.
“Phase Two” U.S. and China Agreement not Imminent
U.S. and Beijing officials, lawyers, and other trade experts all tell Reuters that a “phase two” trade deal between the U.S. and China is nowhere near imminent. The two largest economies in the world are still having trouble getting the phase one deal signed. Back in October, U.S. President Trump said he expects to quickly start on phase two negotiations after the phase one deal is completed. The phase two trade deal would focus on the U.S. accusations that China steals U.S. intellectual property by forcing U.S. companies to transfer technology to Chinese rivals. Reuters says things like the 2020 presidential election, phase one deal difficulties, combined with the president’s reluctance to work with other countries to pressure China into playing by World Trade Organization rules are starting to dampen hopes for a more ambitious agreement in the future. Officials in Beijing have already commented publicly that they won’t start discussions on a phase two agreement until after the 2020 election because they want to see if Trump wins a second term. Reuters reported last week that signing the phase one agreement has the potential to slide into 2020.
Rural Mainstreet Index Rises Again
The Creighton University Rural Mainstreet Index for October climbed above growth-neutral. The index is a monthly survey of bank CEOs in rural areas of a 10-state region that depends on agriculture and/or energy. The index rose to 51.4 in October, up from 50.1 in September. While the reading is still weak, it’s the highest reading since last June. It’s the third time in the last four months that the index came in above growth neutral. Doctor Ernie Goss of Creighton says, “Federal agriculture crop support payments and somewhat higher grain prices have boosted the Rural Mainstreet Index slightly above growth neutral for the month. Even with that said, almost three of four bank CEOs reported continuing negative impacts from the trade war.” By way of comparison, the farmland and ranchland price index for October slumped to a weak 40.3 from September’s 43.1. It’s the lowest reading since last March and the 71st-straight month that the index has been below growth neutral. The October farm equipment-sales index improved to 39.7 in October, up from 35.9 in September.
Bill will Help Preserve Family Farms
A bill introduced in the House of Representatives last week will help more farm families continue operating their farms after the death of a loved one. The Preserving Family Farms Act of 2019 is sponsored by Jimmy Panetta of California and Jackie Warlorski of Indiana and has the full support of the American Farm Bureau Federation. “Farm and ranch families often face a significant financial burden when they have to pay estate taxes,” says AFB President Zippy Duvall. “Farm families should be able to pay based on how their land is used, rather than its potential value as commercial property, such as a shopping center.” The legislation will give more families hope they can hold onto their farm when a loved one passes away. The bill modernizes the special use valuation provision of the estate tax. This valuation allows the property to be appraised as farmland rather than its development value when determining estate taxes. Increasing the amount of farmland or ranchland that can be valued at agriculture value rather than development value would help protect family-owned farm and ranch businesses by assessing estate taxes on the actual value of the businesses they’ve spent decades building. “We strongly urge members of the House to co-sponsor this important bill,” Duvall says.
Brazil says the U.S. will Open to Beef Imports Soon
Brazilian officials tell Bloomberg it’s a matter of “if, not when,” the U.S. will reopen its market to Brazil’s meat exports. The trade and foreign relations secretary for Brazil’s Agriculture Ministry says, “We are 100 percent confident that it will happen. Our meat has the necessary quality to be exported to the U.S. Our meat’s quality is not an issue.” No date has been set in stone yet as to when the U.S. will begin accepting imports from Brazil. The U.S. has several questions about the current state of Brazil’s beef industry. Brazil provided additional answers and is now waiting for the U.S. to finish its analysis of those answers. As recently as October, the U.S. informed Brazil it would keep the ban on fresh-beef imports in place. The U.S. suspended imports from the largest economy in Latin America back in 2017. American inspectors found Brazilian beef to contain blood clots and lymph nodes. Brazil said the findings were abscesses that came about from a reaction to components of a foot-and-mouth disease vaccine. Because of that incident, Brazil reduced the vaccine dosage and made changes to the product’s compound.
Washington Insider: Phase Two China Trade Prospects Fading
Tea leaf reading has always been both difficult and dangerous during times of political turmoil and the current moment is no exception, Reuters said earlier this week.
At a time when most pundits are focused on the likelihood of a “phase one” deal that avoids more and bigger tariffs along with continued pressure on the economy from trade uncertainty, Reuters is suggesting that an ambitious “phase two” trade deal between the United States and China is looking less likely as the two countries struggle to complete a phase one agreement.
Although in October, President Donald Trump told the press in a joint conference with Chinese vice premier Liu He that he “expected to quickly dive into a second phase” once phase one had been completed. But hold-ups in getting the first-stage done along with “the White House’s reluctance to work with other countries to pressure Beijing” are dimming hopes for anything more ambitious in the near future, Reuters said.
The 16-month trade war with China has thrown U.S. businesses and farmers into turmoil, disrupted global supply chains and been a drag on economies worldwide. Failure to address a key reason it was started is already raising questions about whether the sacrifice has been worth it — especially as many of Beijing’s trade practices widely seen as unfair remain unaddressed, Reuters said.
In addition, last week Reuters reported that the signing of a phase one deal could slide into next year as the two countries tussle over Beijing’s demand for more extensive tariff rollbacks.
Representative Jim Costa, D-Calif., who sits on two key agricultural committees, also reported to the Congress last week that “pragmatic” Chinese sources had described significant hurdles to the agreements and a lack of focus by the administration.
White House spokesmen say the administration’s main priority is to secure a “big phase one announcement,” locking in big-ticket Chinese purchases of U.S. ag goods that can be touted as an important win during the coming re-election campaign.
After that, China could recede somewhat on the president’s policy agenda as he turns to domestic issues, the official said. “As soon as we finish phase one we’re going to start negotiating phase two,” a second administration official said. “As far as timing around when a phase two deal could be completed, that’s not something I can speculate on.”
Reuters said that the White House initially laid out ambitious plans to restructure the United States’ relationship with China. But many of these critical concerns will not be addressed in the phase one agreement, which focuses on China agricultural product buys, tariff roll backs, and includes some intellectual property pledges. “That’s the easy stuff,” said Costa. The harder issues are “industrial espionage, copyrights, privacy and security issues.”
Further complicating the issue, the administration’s economic advisers are split: some are pushing for a quick phase one deal to appease markets and business executives, others want the focus to be “a more comprehensive agreement,” Reuters said.
Beijing officials, meanwhile, are balking at pursuing larger structural changes to managing China’s economy and are anxious not to appear to be kowtowing to U.S. interests.
Both China and the United States have a clear interest in getting a phase one deal completed relatively soon to soothe markets and assuage domestic policy concerns, said Matthew Goodman, a former U.S. government official and trade expert at the Center for Strategic and International Studies.
“I think phase one probably will happen because both presidents want it,” Goodman said at a Congressional briefing last week. But he said China was less willing now to make structural changes that might have been possible in the spring. “They’re not going to do those things,” he said.
The United States needs better coordination with its allies to pressure China to make urgently needed structural changes, including ending the forced transfer of technology and better intellectual property protections, trade experts and former officials say.
Europe and other U.S. allies have been reluctant to join Washington’s pressure campaign on Beijing, partly due to frustration with the administration’s focus on unilateral action and in part due to their reliance on Chinese investment.
“We need an international coalition to successfully attack phase two,” said Kellie Meiman Hock, managing partner at McLarty Associates, a trade consulting group in Washington.
So, we will see. Clearly the trade talks with China are a major priority for the administration and for many industry groups including agriculture. However, the administration has set high goals for containing trade practices that are seen as unfair—and can expect substantial criticism if it does not focus systematically in those areas — efforts producers should watch closely as they emerge, Washington Insider believes.
At a time when most pundits are focused on the likelihood of a “phase one” deal that avoids more and bigger tariffs along with continued pressure on the economy from trade uncertainty, Reuters is suggesting that an ambitious “phase two” trade deal between the United States and China is looking less likely as the two countries struggle to complete a phase one agreement.
Although in October, President Donald Trump told the press in a joint conference with Chinese vice premier Liu He that he “expected to quickly dive into a second phase” once phase one had been completed. But hold-ups in getting the first-stage done along with “the White House’s reluctance to work with other countries to pressure Beijing” are dimming hopes for anything more ambitious in the near future, Reuters said.
The 16-month trade war with China has thrown U.S. businesses and farmers into turmoil, disrupted global supply chains and been a drag on economies worldwide. Failure to address a key reason it was started is already raising questions about whether the sacrifice has been worth it — especially as many of Beijing’s trade practices widely seen as unfair remain unaddressed, Reuters said.
In addition, last week Reuters reported that the signing of a phase one deal could slide into next year as the two countries tussle over Beijing’s demand for more extensive tariff rollbacks.
Representative Jim Costa, D-Calif., who sits on two key agricultural committees, also reported to the Congress last week that “pragmatic” Chinese sources had described significant hurdles to the agreements and a lack of focus by the administration.
White House spokesmen say the administration’s main priority is to secure a “big phase one announcement,” locking in big-ticket Chinese purchases of U.S. ag goods that can be touted as an important win during the coming re-election campaign.
After that, China could recede somewhat on the president’s policy agenda as he turns to domestic issues, the official said. “As soon as we finish phase one we’re going to start negotiating phase two,” a second administration official said. “As far as timing around when a phase two deal could be completed, that’s not something I can speculate on.”
Reuters said that the White House initially laid out ambitious plans to restructure the United States’ relationship with China. But many of these critical concerns will not be addressed in the phase one agreement, which focuses on China agricultural product buys, tariff roll backs, and includes some intellectual property pledges. “That’s the easy stuff,” said Costa. The harder issues are “industrial espionage, copyrights, privacy and security issues.”
Further complicating the issue, the administration’s economic advisers are split: some are pushing for a quick phase one deal to appease markets and business executives, others want the focus to be “a more comprehensive agreement,” Reuters said.
Beijing officials, meanwhile, are balking at pursuing larger structural changes to managing China’s economy and are anxious not to appear to be kowtowing to U.S. interests.
Both China and the United States have a clear interest in getting a phase one deal completed relatively soon to soothe markets and assuage domestic policy concerns, said Matthew Goodman, a former U.S. government official and trade expert at the Center for Strategic and International Studies.
“I think phase one probably will happen because both presidents want it,” Goodman said at a Congressional briefing last week. But he said China was less willing now to make structural changes that might have been possible in the spring. “They’re not going to do those things,” he said.
The United States needs better coordination with its allies to pressure China to make urgently needed structural changes, including ending the forced transfer of technology and better intellectual property protections, trade experts and former officials say.
Europe and other U.S. allies have been reluctant to join Washington’s pressure campaign on Beijing, partly due to frustration with the administration’s focus on unilateral action and in part due to their reliance on Chinese investment.
“We need an international coalition to successfully attack phase two,” said Kellie Meiman Hock, managing partner at McLarty Associates, a trade consulting group in Washington.
So, we will see. Clearly the trade talks with China are a major priority for the administration and for many industry groups including agriculture. However, the administration has set high goals for containing trade practices that are seen as unfair—and can expect substantial criticism if it does not focus systematically in those areas — efforts producers should watch closely as they emerge, Washington Insider believes.
China Clears Large Number of US Poultry Facilities For Import
USDA has released a list of 172 facilities that are now approved to export poultry to China, continuing the process of reopening the Chinese market to U.S. poultry.
U.S. facilities approved by FSIS for export to China must be listed on the General Administration of Customs of the People’s Republic of China (GACC) website, FSIS noted, “before slaughtering and processing poultry and poultry products for export to China. U.S. facilities can only export to China poultry that are slaughtered and further processed after the facility has been added to the GACC website.”
U.S. facilities approved by FSIS for export to China must be listed on the General Administration of Customs of the People’s Republic of China (GACC) website, FSIS noted, “before slaughtering and processing poultry and poultry products for export to China. U.S. facilities can only export to China poultry that are slaughtered and further processed after the facility has been added to the GACC website.”
USDA Releases Clarification On Definitions For Export Sales Rules On Pork, Beef
USDA Monday published its final rule on clarifications to the Export Sales reporting system in the Federal Register, after the Foreign Agricultural Service (FAS) “received informal inquiries whether exports of different types of beef and pork carcasses must be reported under the regulations.”
The final rule notes now there is a footnote to the appendix of items covered under the systems relative to “fresh, chilled or frozen muscle cuts/whether or not boxed” for beef and pork. “For greater clarity, ‘muscle cuts’ includes carcasses, whether whole, divided in half or further sub-divided into individual primals, sub-primals, or fabricated cuts, with or without bone,” the footnote explains. “Carcasses which are broken down, boxed, and sold as a complete unit are muscle cuts. Total weight of carcasses reported may include minor non-reportable items attached to carcasses (e.g., hooves attached to carcasses). Meats removed during the conversion of an animal to a carcass (e.g., variety meats such as beef/pork hearts, beef tongues, etc.) are not muscle cuts nor are items sold as bones practically free of meat (e.g., beef femur bones) or fat practically free of meat (e.g., pork clear plate) removed from a carcass.”
The rule was effective when published as it is “a final rule without prior notice and opportunity for comment.”
USDA had signaled the update was coming in the regulatory agenda released last week and FAS had previously indicated it was going to update guidance to the trade on pork and beef reporting requirements under the export sales reporting system.
The final rule notes now there is a footnote to the appendix of items covered under the systems relative to “fresh, chilled or frozen muscle cuts/whether or not boxed” for beef and pork. “For greater clarity, ‘muscle cuts’ includes carcasses, whether whole, divided in half or further sub-divided into individual primals, sub-primals, or fabricated cuts, with or without bone,” the footnote explains. “Carcasses which are broken down, boxed, and sold as a complete unit are muscle cuts. Total weight of carcasses reported may include minor non-reportable items attached to carcasses (e.g., hooves attached to carcasses). Meats removed during the conversion of an animal to a carcass (e.g., variety meats such as beef/pork hearts, beef tongues, etc.) are not muscle cuts nor are items sold as bones practically free of meat (e.g., beef femur bones) or fat practically free of meat (e.g., pork clear plate) removed from a carcass.”
The rule was effective when published as it is “a final rule without prior notice and opportunity for comment.”
USDA had signaled the update was coming in the regulatory agenda released last week and FAS had previously indicated it was going to update guidance to the trade on pork and beef reporting requirements under the export sales reporting system.
Tuesday Watch List
Markets
Financial traders will pay attention to a report on U.S. new home sales and an index of U.S. consumer confidence, both due out at 9 a.m. CST Tuesday. Any news about a possible limited trade agreement with China gets traders' attention as do the latest weather forecasts with U.S. corn still in the fields.
Weather
Moderate to heavy snow and wind spread from northeast Colorado and northwest Kansas across much of Nebraska, through the northwest portion of the Midwest region Tuesday into Wednesday. This is likely to greatly affect travel, transport and any late-season field work. Winter storm warnings have been issued for much of this area. A high wind warning is also in effect for the southwest Plains region today. Rain or showers will occur through the balance of the Midwest and in the Delta associated with this storm. Drier weather through East Coast states and also in the Northern Plains region. Snow, ice and rain in the western U.S. and the central Rockies region. In South America, rain yesterday in Argentina and today in Brazil will maintain favorable growing conditions for corn and soybeans. Temporary planting delays.
Financial traders will pay attention to a report on U.S. new home sales and an index of U.S. consumer confidence, both due out at 9 a.m. CST Tuesday. Any news about a possible limited trade agreement with China gets traders' attention as do the latest weather forecasts with U.S. corn still in the fields.
Weather
Moderate to heavy snow and wind spread from northeast Colorado and northwest Kansas across much of Nebraska, through the northwest portion of the Midwest region Tuesday into Wednesday. This is likely to greatly affect travel, transport and any late-season field work. Winter storm warnings have been issued for much of this area. A high wind warning is also in effect for the southwest Plains region today. Rain or showers will occur through the balance of the Midwest and in the Delta associated with this storm. Drier weather through East Coast states and also in the Northern Plains region. Snow, ice and rain in the western U.S. and the central Rockies region. In South America, rain yesterday in Argentina and today in Brazil will maintain favorable growing conditions for corn and soybeans. Temporary planting delays.
Monday, November 25, 2019
Phase One Trade Agreement may be Heading to 2020
U.S. legislation supporting Hong Kong protesters didn’t stop China’s trade chief from making a phone call recently to invite U.S. negotiators to a new round of trade talks. The Wall Street Journal says U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin (Muh-NOO-chin) were invited to Beijing for more face-to-face trade negotiations. While it wasn’t immediately clear if U.S. officials said yes to the invitation, the Wall Street Journal says U.S. trade officials were willing to meet with their Chinese counterparts. The U.S. Trade Representative’s office has yet to respond to requests for comment. The report on the Chinese invitation comes shortly after U.S. legislation on Hong Kong had threatened to push trade talks between the world’s biggest economies off track. Last week, the U.S. House of Representatives passed two bills intended to show support for protesters in Hong Kong. Beijing then accused the U.S. of interfering in its domestic affairs. Trade experts and people close to the Trump Administration say the limited trade agreement could be pushed into next year, news which is not good for U.S. agriculture. The U.S. and China have both imposed tariffs totaling billions of dollars on each other’s goods.
Doubt Growing on USMCA Passing in 2019
Speaker of the House Nancy Pelosi appears doubtful that the U.S.-Mexico-Canada Trade Agreement will be passed this year. After she met with U.S. Trade Representative Robert Lighthizer and House Ways and Means Committee Chair Richard Neal last week, there was no deal and not much time left on the legislative clock. “We’ve made progress,” she said after leaving the 90-minute meeting. “I think we’re narrowing our differences.” She said earlier in the day that they’ll still have several steps to take even after they finally reach an agreement. The clock is ticking. Last Thursday was the last day before the House takes its Thanksgiving break. The Trump Administration and some Democrats hoped to strike a deal before the week-long recess to give lawmakers time in December to take up the pact. The House only has eight days of official session left in the 2019 calendar year. Lawmakers will stay on for an extra week in December to resolve budget issues and avoid a government shutdown.
Michigan Joins Four Other States as Cage-Free
A new law says the 15 million egg-laying hens in Michigan’s poultry flocks will have to lay their eggs in cage-free housing systems before 2025. An Associated Press report says Michigan Lt. Governor Garlin Gilchrist (GILL-krist) signed the legislation last week as Governor Gretchen Whitmer is on a trade trip to Israel. The law also prohibits non-cage-free eggs from being sold in Michigan starting in 2025. Gilchrist says the measure ensures Michigan standards for animal welfare are among the strongest in the U.S. At the same time, he says the law ensures egg producers can thrive. Under an older law, each hen was going to have to be confined in a one-square-foot space by April. The new law says each hen has to be housed in a cage-free system by the end of 2024. Michigan is the fifth state and the largest egg-producing state to adopt a cage-free law. The bill is part of a broader update of the state’s animal industry laws. Large restaurant and grocery chains like McDonald’s, Walmart, and Kroger have said they’ll only buy eggs from cage-free farms by 2025.
Farmers Employing More Farm Workers, Paying Higher Wages than in 2018
U.S. farmers are hiring more laborers than they were a year ago and they’re paying higher wages too. The U.S. Department of Agriculture issued a new report saying that farm operators directly employed 809,000 workers during the week of October sixth. That’s three percent higher than the same time last year. The USDA says farmers paid an average gross wage of $15.02 per hour during the same week in October, four percent more than last year. Field laborers averaged $14.38 per hour, which is five percent higher than last year. Livestock workers earned an average of $13.77 per hour, which is three percent higher than last year. The combined livestock and field worker wages average $14.21 per hour, four percent higher than last year. The report says the 2019 all-hired worker annual average gross wage rate comes in at $14.91 per hour, five percent higher than in 2018. The 2019 field worker’s annual average gross wage rate was at $14.11 per hour, six percent higher than the annual average in 2018. Field workers in Oregon and Washington were among the highest-paid this year, averaging $16.56 per hour, up from $15.62 last year.
Feed Industry says China still has Partial U.S. Poultry Ban in Place
The American Feed Industry Association says China’s lifting of its ban on U.S poultry imports is only a “partial” lifting. The association has received official confirmation from USDA’s Animal and Plant Health Inspection Service that the announcement only includes poultry imports for human consumption. It doesn’t include other poultry products, such as those used in pet foods. At this time, the import restriction for pet foods with poultry products is still in effect. The association says there’s no difference in the risk of introducing poultry diseases between importing poultry for human or animal consumption. AFIA says it is “extremely disappointed to learn that China is implementing only a partial lifting of the ban and we look forward to working with APHIS and the Office of the U.S. Trade Representative to rectify the situation.” AFIA’s President and CEO, Constance Cullman, says, “China is a valuable market for the entire U.S. animal food industry, for exports of feed, feed ingredients, and value-added products such as meat and poultry.”
Hoeven, Peterson Ask USDA to Help Sugar Grower
Senate Ag Appropriations Chair John Hoeven (HOH-vehn) of North Dakota and House Ag Committee Chair Collin Peterson of Minnesota asked the USDA to assist to sugar growers in the Red River Valley. Producers in both states were unable to harvest their crops because of severe weather. The Hagstrom Report says USDA Undersecretary Bill Northey recently made a trip to those areas to see how producers were hit by a wet fall and early snowstorm. Hoeven says, “This has been an unprecedented year of challenges in farm country and we’re working to do all we can to support our producers.” He says sugar growers in the Red River Valley left 118,000 acres of sugar beets unharvested, which is one-third of their entire planted crop. Peterson says, “A tough harvest season has challenged sugar beet growers more than anyone would have anticipated. We’re committed to working with USDA to see if they have a way to access help.” USDA recently announced that the domestic sugar crop was smaller than anticipated due to weather problems. That means the agency expects it will allow an increase in imports.
Washington Insider: Edging Closer to Spending Bill
The Hill is reporting this week that top negotiators from the House and Senate have reached a long-stalled deal on top-line spending levels for the fiscal 2020 bills.
The report cited House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., and Senate Appropriations Committee Chairman Richard Shelby, R-Ala., who say they have settled on “302(b)s,” which set the top-line number for each of the 12 government funding bills.
The Friday night agreement marks a “breakthrough” for the government funding negotiations and comes after days of behind-the-scenes horse trading, including back-and-forth funding offers, between Senate Republicans and House Democrats as they hunted for a path to a deal.
In the meantime, Congress passed another very short-term spending bill last week, giving lawmakers until Dec. 20 to prevent a shutdown. To do that, they'll either need to pass the fiscal 2020 bills or another continuing resolution.
Although the House has passed 10 of the 12 Fiscal Year (FY) 2020 bills and the Senate has passed four, lawmakers hadn't been able to reach a final deal on any of them “as they awaited the deal on the top-line numbers.”
Shelby and Lowey said they want to pass each of the 12 funding bills by Dec. 20. That gives them less than a month — roughly 15 session days — to iron out the details of the bills and get them through both chambers.
"The subcommittees are getting to work immediately in an effort to pass all 12 bills before the CR expires on Dec. 20," The Hill reported.
The deal on subcommittee allocations adheres to the defense and nondefense caps agreed to as part of a two-year budget deal announced in July. Under that agreement, overall defense spending was $738 billion for fiscal 2020, while nondefense spending was $632 billion.
The agreement between Shelby and Lowey does not resolve all of the remaining issues, including the “looming fight over the border wall, The Hill said. The House included no money for new border barriers in its Department of Homeland Security bill, while the Senate included $5 billion for the border in DHS as well as an additional $3.6 billion that could be reprogrammed from military projects to the border,” The Hill said.
Democrats are also eager to block President Trump from reprogramming funds for the wall under emergency powers, a major sticking point with Republicans.
Now it is up to the subcommittees to try to work out several tough policy differences, including the wall. "Individual funding items are being left to the subcommittees in keeping with long-standing committee practice," The Hill reported.
In addition, other policy fights — including policies related to abortion and the number of Immigration and Customs Enforcement beds—are significant potential roadblocks for negotiators as they draft the FY 2020 bills.
While many members have been skeptical that it would be possible to pass 12 appropriations bills by the new December deadline, The Hill says its sources expressed optimism that the timeline was achievable. Lowey and Shelby’s ability to strike a deal on the allocations had been a major stumbling block for weeks. Appropriators had noted that without a deal before Thanksgiving, the new deadline was “ambitious.”
“If they can get those numbers done, I still think we have time to get those bills done before the end of the year when we get back,” Rep. Tom Cole, R-Okla., an appropriator, said ahead of the announcement of the deal last week.
Senate Minority Leader Charles Schumer, D-N.Y., warned the President to stay out of the funding negotiations as lawmakers head toward the Dec. 20 deadline.
"On the first path, President Trump stays out of our way and gives Congress the space to work together and find an agreement," he said. "On the second path, President Trump stomps his feet, makes impossible demands and prevents his party, the Republicans, from coming to a fair arrangement."
So, we will see. It appears now that numerous members prefer the newly proposed budget levels to those that would be used if another CR is required. At the same time, the remaining time is very short and several of the potential remaining issues are highly contentious. These talks include very high stakes and should be watched closely by producers as they proceed, Washington Insider believes.
The report cited House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., and Senate Appropriations Committee Chairman Richard Shelby, R-Ala., who say they have settled on “302(b)s,” which set the top-line number for each of the 12 government funding bills.
The Friday night agreement marks a “breakthrough” for the government funding negotiations and comes after days of behind-the-scenes horse trading, including back-and-forth funding offers, between Senate Republicans and House Democrats as they hunted for a path to a deal.
In the meantime, Congress passed another very short-term spending bill last week, giving lawmakers until Dec. 20 to prevent a shutdown. To do that, they'll either need to pass the fiscal 2020 bills or another continuing resolution.
Although the House has passed 10 of the 12 Fiscal Year (FY) 2020 bills and the Senate has passed four, lawmakers hadn't been able to reach a final deal on any of them “as they awaited the deal on the top-line numbers.”
Shelby and Lowey said they want to pass each of the 12 funding bills by Dec. 20. That gives them less than a month — roughly 15 session days — to iron out the details of the bills and get them through both chambers.
"The subcommittees are getting to work immediately in an effort to pass all 12 bills before the CR expires on Dec. 20," The Hill reported.
The deal on subcommittee allocations adheres to the defense and nondefense caps agreed to as part of a two-year budget deal announced in July. Under that agreement, overall defense spending was $738 billion for fiscal 2020, while nondefense spending was $632 billion.
The agreement between Shelby and Lowey does not resolve all of the remaining issues, including the “looming fight over the border wall, The Hill said. The House included no money for new border barriers in its Department of Homeland Security bill, while the Senate included $5 billion for the border in DHS as well as an additional $3.6 billion that could be reprogrammed from military projects to the border,” The Hill said.
Democrats are also eager to block President Trump from reprogramming funds for the wall under emergency powers, a major sticking point with Republicans.
Now it is up to the subcommittees to try to work out several tough policy differences, including the wall. "Individual funding items are being left to the subcommittees in keeping with long-standing committee practice," The Hill reported.
In addition, other policy fights — including policies related to abortion and the number of Immigration and Customs Enforcement beds—are significant potential roadblocks for negotiators as they draft the FY 2020 bills.
While many members have been skeptical that it would be possible to pass 12 appropriations bills by the new December deadline, The Hill says its sources expressed optimism that the timeline was achievable. Lowey and Shelby’s ability to strike a deal on the allocations had been a major stumbling block for weeks. Appropriators had noted that without a deal before Thanksgiving, the new deadline was “ambitious.”
“If they can get those numbers done, I still think we have time to get those bills done before the end of the year when we get back,” Rep. Tom Cole, R-Okla., an appropriator, said ahead of the announcement of the deal last week.
Senate Minority Leader Charles Schumer, D-N.Y., warned the President to stay out of the funding negotiations as lawmakers head toward the Dec. 20 deadline.
"On the first path, President Trump stays out of our way and gives Congress the space to work together and find an agreement," he said. "On the second path, President Trump stomps his feet, makes impossible demands and prevents his party, the Republicans, from coming to a fair arrangement."
So, we will see. It appears now that numerous members prefer the newly proposed budget levels to those that would be used if another CR is required. At the same time, the remaining time is very short and several of the potential remaining issues are highly contentious. These talks include very high stakes and should be watched closely by producers as they proceed, Washington Insider believes.
Grassley Waiting On EPA’s Next Move On Ethanol Targets
Sen. Chuck Grassley, R-Iowa, again met with President Donald Trump on the issue of biofuel policy, but said he wants to see EPA’s final plan before he is willing to say that the agency will live up the pledge on making sure that 15 billion gallons of conventional ethanol get used.
“I left the meeting satisfied that the president was saying the same thing — and [EPA Administrator Andrew] Wheeler heard him say it — said we got to produce 15 billion gallons,” Grassley said.
Grassley said he told Trump that EPA’s actions since a September meeting on the topic “leaves a lot of questions whether or not we are going to get the 15 billion gallons that we said we were going to get.”
“I left the meeting satisfied that the president was saying the same thing — and [EPA Administrator Andrew] Wheeler heard him say it — said we got to produce 15 billion gallons,” Grassley said.
Grassley said he told Trump that EPA’s actions since a September meeting on the topic “leaves a lot of questions whether or not we are going to get the 15 billion gallons that we said we were going to get.”
China’s Xi Insists Country Wants Phase One Deal With US
Chinese President Xi Jinping said the country wants to reach an initial trade deal with the U.S. but also was not afraid to retaliate if need be. "We want to work for a 'phase one' agreement on the basis of mutual respect and equality," Xi said at an international forum in Beijing organized by Bloomberg. "When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want."
He also commented that China has a “positive attitude” on the trade talks. Xi met with former U.S. Secretary of State Henry Kissinger Friday, with Xinhua reporting Xi stated that the two sides need to boost communications when it comes to strategic issues so as to avoid misunderstandings.
Chinese diplomat Wang Yi Wang Yi said on Friday the U.S. needs to meet China halfway and should promote healthy and stable development of bilateral relations.
Meanwhile, the South China Morning Post quoted Ian Bremmer of the Eurasia Group political consulting firm as saying the Hong Kong issue will not impact the trade deal provided things do not escalate. “I was with Liu He two nights ago, it was very clear to me in his level of, not confidence but certainly hopefulness, and cautious optimism that we will move to a phase one deal and that Hong Kong was not going to play into that,” Bremmer stated. "President Trump has made it clear that he is not going to talk about Hong Kong, and not allow it to interfere as long as they are discussing trade."
President Donald Trump today told Fox Business News that “We have a deal potentially, very close, he [Chinese President Xi Jinping] wants to make it much more than I want to make it, I am not anxious to make it,” As for Hong Kong, Trump said the U.S. has to “stand with Hong Kong, but I am also standing with President Xi.”
He also commented that China has a “positive attitude” on the trade talks. Xi met with former U.S. Secretary of State Henry Kissinger Friday, with Xinhua reporting Xi stated that the two sides need to boost communications when it comes to strategic issues so as to avoid misunderstandings.
Chinese diplomat Wang Yi Wang Yi said on Friday the U.S. needs to meet China halfway and should promote healthy and stable development of bilateral relations.
Meanwhile, the South China Morning Post quoted Ian Bremmer of the Eurasia Group political consulting firm as saying the Hong Kong issue will not impact the trade deal provided things do not escalate. “I was with Liu He two nights ago, it was very clear to me in his level of, not confidence but certainly hopefulness, and cautious optimism that we will move to a phase one deal and that Hong Kong was not going to play into that,” Bremmer stated. "President Trump has made it clear that he is not going to talk about Hong Kong, and not allow it to interfere as long as they are discussing trade."
President Donald Trump today told Fox Business News that “We have a deal potentially, very close, he [Chinese President Xi Jinping] wants to make it much more than I want to make it, I am not anxious to make it,” As for Hong Kong, Trump said the U.S. has to “stand with Hong Kong, but I am also standing with President Xi.”
Monday Watch List
Markets
USDA's weekly report of grain export inspections will be released at 10 a.m. CST Monday, as usual, but don't be surprised if trade is quiet ahead of Thursday's Thanksgiving holiday. With corn still in the fields, USDA announced Monday's 3 p.m. Crop Progress report will not be the final one in 2019, as originally scheduled. More Monday reports will follow until harvest gets closer to finishing.
Weather
Snow and some mixed precipitation from eastern North Dakota through northern Minnesota during Monday. Snow and rain through the Pacific Northwest with snow through the north and central Rockies region into western Nebraska. Little of note elsewhere in the key U.S. crop and livestock areas Monday . Favorable for the delayed harvests of corn and soybeans and mostly favorable for winter wheat. In South America, rain and thunderstorms have developed in the central Argentina corn and soybean belt while in Brazil it will be drier and warmer Monday. Mostly favorable conditions for planting and developing crops at this time.
USDA's weekly report of grain export inspections will be released at 10 a.m. CST Monday, as usual, but don't be surprised if trade is quiet ahead of Thursday's Thanksgiving holiday. With corn still in the fields, USDA announced Monday's 3 p.m. Crop Progress report will not be the final one in 2019, as originally scheduled. More Monday reports will follow until harvest gets closer to finishing.
Weather
Snow and some mixed precipitation from eastern North Dakota through northern Minnesota during Monday. Snow and rain through the Pacific Northwest with snow through the north and central Rockies region into western Nebraska. Little of note elsewhere in the key U.S. crop and livestock areas Monday . Favorable for the delayed harvests of corn and soybeans and mostly favorable for winter wheat. In South America, rain and thunderstorms have developed in the central Argentina corn and soybean belt while in Brazil it will be drier and warmer Monday. Mostly favorable conditions for planting and developing crops at this time.
Friday, November 22, 2019
Ag Exports Projected to fall $5.2 Billion in 2019
The Department of Agriculture projects the fiscal year 2019 U.S. agricultural trade balance to fall to $5.2 billion. USDA’s Economic Research Service projects exports at $134.5 billion, and imports at $129.3 billion, leaving a $5.2 billion surplus, the lowest since fiscal year 2006. Unlike overall U.S. trade in goods and services, U.S. trade in the agricultural sector consistently runs at a surplus. Although agricultural exports have increased in value since 2016, the value of imports has risen at a slightly faster rate, leading to a declining trade balance. Compared to the previous outlook in May 2019, exports were revised down by $2.5 billion, while imports were raised by $0.3 billion. The decline in expected export value was primarily due to lowered expectations for corn and soybean exports. For imports, the increase in the forecast was due in part to an increase in the expected value of horticultural imports, such as fruits and vegetables. Initial projections for fiscal year 2020 suggest a small recovery in the agricultural trade balance to $8.0 billion.
China Phase One Delays Continue, China Claims Talks on Track
Promised for mid-November, reports this week suggest an agreement and signing of the so-called phase one trade deal with China faces delays until mid-December. However, China maintains that the talks are on track. A Chinese government spokesperson told reporters this week “China is willing to work with the United States to resolve each other’s core concerns," adding the "external rumors" regarding the unraveling of the agreement are not true. China has invited the United States to Beijing for talks, possibly next week before the Thanksgiving holiday. Chinese officials suggested the deal could be signed in early December. Despite the claims by China, markets appear to sluggish on any trade news, seemingly growing tired of delayed promises of agreements and little progress. President Donald Trump says the phase-one agreement would include $40-50 billion worth of U.S. ag trade to China over a two-year period. U.S. farm exports to China reached nearly $20 billion before the trade war began, but since fell roughly 50 percent.
Farm Bureau Calls for Improvements to Ag Labor Bill
While many farm groups seem pleased with the House labor bill, the American Farm Bureau Federation says it falls short of a long-term solution. AFBF President Zippy Duvall says that "While welcome, these changes unfortunately fall short of assuring that American producers will be able to keep their farms going." Changes made to the Farm Workforce Modernization Act before introduction improve the ability of farmers to retain H-2A workers, take a small step toward protecting farmers from frivolous litigation, and add a study to examine whether the H-2A program affects U.S. farmers’ ability to compete with foreign ag imports. However, AFBF says the key amendments not included in the bill would ensure a fair and competitive wage rate and limitations on the use of federal courts to solve workplace grievances. Duvall says that “once Congress passes legislation, no one will have an appetite to revisit the issue and simply put, this bill’s approach is not yet good enough.”
Hahn Pledges Transparent Dairy Labeling in Confirmation Hearing
The National Milk Producers Federation welcomed comments made during a confirmation hearing of President Donald Trump’s nominee to lead the Food and Drug Administration. The hearing briefly touched on dairy labeling transparency. NMPF and others are seeking a labeling system that prohibits plant-based dairy imitators from using dairy marketing terms. Rules already do so, but FDA has not enforced them. Hahn voiced his support for “clear, transparent, and understandable labeling for the American people.” Hahn says, “people need this so that they can make the appropriate decisions for their health and for their nutrition.” NMPF President and CEO Jim Mulhern says, “It’s heartening to hear the nominee pledge that an FDA under his leadership will immediately examine this crucial unfinished business.” The comments by Hahn came before the Senate Health Committee. Committee Chairman Lamar Alexander, a Republican from Tennessee, called Hahn an “impressive choice” to lead the FDA. Ranking member Patty Murray, a Democrat from Washington, demanded Hahn commit to putting science, data and families first.
New Motor Oil Made with High Oleic Soybean Oil Now Available on Amazon
America’s drivers have a new choice that unites performance and sustainability at a competitive cost, according to the United Soybean Board. Biosynthetic® Technologies’ biobased synthetic motor oil, using high oleic soybean oil from U.S. soybeans, is now on commercial shelves. USB Director Mike Korth, a Nebraska Farmer, says, “Soy-based motor oil is another great opportunity to drive demand for U.S. soybeans" and meet consumer sustainability demands. Biosynthetic Technologies’ motor oil is also recognized as a USDA Certified Biobased Product in the United States Department of Agriculture’s BioPreferred Program. The company will market both 5W-20 and 5W-30 through Amazon.com and direct from their website. The product is available for purchase and use immediately. Biosynthetic is also offering farmers a limited-time 20 percent discount to purchase the synthetic oil. They can use code BioTrialFarm available only at motoroil.biosynthetic.com through January 31. USB and USDA have supported the soy-based, drop-in synthetic alternative to petroleum-based motor oil, calling the oils well-suited for high-temperature automotive and industrial applications.
Farm Bureau Survey: Thanksgiving Dinner Cost Rises Only a Penny
An annual survey finds the Thanksgiving Day dinner average cost this year for ten is $48.91, less than $5.00 per person. The American Farm Bureau Federation’s 34th annual survey on Thanksgiving Day meal items increased just once cent from last year. The centerpiece on most Thanksgiving tables, the turkey, costs slightly less than last year, at $20.80 for a 16-pound bird. That’s roughly $1.30 per pound, down four percent from last year. Survey results show retail turkey prices are the lowest since 2010. Although the overall average cost of the meal was about the same this year, there were some price changes for individual items. In addition to turkey, foods that showed slight price declines include cubed bread stuffing and canned pumpkin pie mix. Foods showing modest increases this year included dinner rolls, sweet potatoes and milk. Meanwhile, despite the growing popularity of prepared foods, 92 percent of Americans celebrate Thanksgiving at home or at a family member’s home and most cook their entire meal at home, according to the survey.
Washington Insider: Cautious Optimism on China Deal
Bloomberg is reporting this week that China’s chief trade negotiator indicated he was “cautiously optimistic” about reaching a phase one deal with the U.S. in spite of “warnings of the dangers of escalating the tariff war” by experts.
Vice Premier Liu He commented in a speech in Beijing on Wednesday ahead of the Bloomberg New Economy Forum. He also said he had invited his U.S. counterpart, U.S. Trade Representative Robert Lighthizer, to travel to China for talks this month but noted that “the invitation hasn’t yet been accepted.”
On Thursday, former U.S. Secretary of State Henry Kissinger said America and China were in the “foothills of a Cold War,” and warned that the conflict could be worse than World War I if left to run unconstrained. Later in the day, former Treasury Secretary Henry Paulson also warned of the perils of decoupling the world’s two largest economies.
President Donald Trump announced a “phase one” deal a month ago, but since that time, markets have been whipsawed by comments from both sides, first indicating progress, and then the opposite.
The latest potential hurdle came after Liu made his dinner-time comments, when the U.S. House voted 417-1 for legislation supporting Hong Kong protesters that has already been unanimously approved by the Senate. The President said earlier that he plans to sign the bill, Bloomberg said.
Liu also explained China’s plans for reforming state enterprises, opening up the financial sector, and enforcing intellectual property rights, issues at the core of U.S. demands for change in China’s economic system. However, in a separate comment, he told one of the attendees that he was “confused” about the U.S. demands but was confident the first phase of an agreement could be completed nevertheless.
Liu’s remarks cushioned declines in stocks in Asia, Europe and the U.S. as investors weighed the impact of the House bill on relations between the world’s two largest economies.
U.S. and Chinese trade negotiators will continue communicating closely and work toward a phase one deal, Ministry of Commerce spokesman Gao Feng said at a briefing in Beijing on Thursday. Responding to questions including whether the two sides agreed on agricultural purchases and tariff removal, as well as a media report on the timetable for a deal, Gao said related rumors were not accurate. It was unclear exactly what he was referring to.
If efforts to reach a phase one deal fail before Dec. 15, the White House has threatened to impose 15% tariffs on some $160 billion in imports from China.
While the Hong Kong bill is a negative factor for the phase one deal, China still may be able to reach an agreement with the U.S. this year, said Zhang Yansheng, who previously worked at the National Development and Reform Commission, the country’s top economic planning body.
“The optimistic view is that the phase-one deal can be reached within this year – but a more pessimistic one is that the first phase will be dragged to some point next year,” said Zhang, who is now chief researcher at the China Center for International Economic Exchanges.
Kissinger, 96, said he hoped trade negotiations would provide an opening to political discussions between the two countries.
“Everybody knows that trade negotiations, which I hope will succeed and whose success I support, can only be a small beginning to a political discussion that I hope will take place,” he said.
Kissinger spoke hours after Chinese Vice President Wang Qishan addressed the NEF, saying his country was committed to peace and would follow through on policy changes despite facing challenges at home and abroad.
“Between war and peace, the Chinese people firmly choose peace,” he said. “We should abandon the zero-sum thinking and Cold War mentality.”
The Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
Meantime, Paulson called on China to open more and said the U.S. should resist the temptation to delist Chinese firms from U.S. exchanges, calling it a “terrible idea.” Both countries should determine the rules of the road for high-end technology such as 5G, he said.
“There will be some natural decoupling,” Paulson said. “But the delusions of a wholesale, comprehensive decoupling and an economic iron curtain will leave our countries, and the world, worse off. We need to avoid that outcome.”
After almost two years of negotiations and escalations – and plenty of false dawns – trade negotiators from the U.S. and China are making progress in key areas, Bloomberg said.
The negotiating teams are using their failed May proposal as a benchmark for how much a phase-one deal covers of the once-near agreement and how much tariffs will be removed as part of the initial deal. There’s been signs of a thawing on other fronts. The U.S. Commerce Department has started approving some suppliers’ applications for licenses to do business with China’s Huawei Technologies Co., partially reopening access to one of the biggest buyers of U.S. technology.
However, Charlene Barshefsky, who negotiated China’s entry into the WTO, said that “No outcome is inevitable but two decades of careful management of the relations between China and the West have run its course.”
So, we will see. The positive signals from China are certainly welcome in spite of the remaining large areas of uncertainty to be addressed. These are very important fights that producers should watch closely as they emerge, Washington Insider believes.
Vice Premier Liu He commented in a speech in Beijing on Wednesday ahead of the Bloomberg New Economy Forum. He also said he had invited his U.S. counterpart, U.S. Trade Representative Robert Lighthizer, to travel to China for talks this month but noted that “the invitation hasn’t yet been accepted.”
On Thursday, former U.S. Secretary of State Henry Kissinger said America and China were in the “foothills of a Cold War,” and warned that the conflict could be worse than World War I if left to run unconstrained. Later in the day, former Treasury Secretary Henry Paulson also warned of the perils of decoupling the world’s two largest economies.
President Donald Trump announced a “phase one” deal a month ago, but since that time, markets have been whipsawed by comments from both sides, first indicating progress, and then the opposite.
The latest potential hurdle came after Liu made his dinner-time comments, when the U.S. House voted 417-1 for legislation supporting Hong Kong protesters that has already been unanimously approved by the Senate. The President said earlier that he plans to sign the bill, Bloomberg said.
Liu also explained China’s plans for reforming state enterprises, opening up the financial sector, and enforcing intellectual property rights, issues at the core of U.S. demands for change in China’s economic system. However, in a separate comment, he told one of the attendees that he was “confused” about the U.S. demands but was confident the first phase of an agreement could be completed nevertheless.
Liu’s remarks cushioned declines in stocks in Asia, Europe and the U.S. as investors weighed the impact of the House bill on relations between the world’s two largest economies.
U.S. and Chinese trade negotiators will continue communicating closely and work toward a phase one deal, Ministry of Commerce spokesman Gao Feng said at a briefing in Beijing on Thursday. Responding to questions including whether the two sides agreed on agricultural purchases and tariff removal, as well as a media report on the timetable for a deal, Gao said related rumors were not accurate. It was unclear exactly what he was referring to.
If efforts to reach a phase one deal fail before Dec. 15, the White House has threatened to impose 15% tariffs on some $160 billion in imports from China.
While the Hong Kong bill is a negative factor for the phase one deal, China still may be able to reach an agreement with the U.S. this year, said Zhang Yansheng, who previously worked at the National Development and Reform Commission, the country’s top economic planning body.
“The optimistic view is that the phase-one deal can be reached within this year – but a more pessimistic one is that the first phase will be dragged to some point next year,” said Zhang, who is now chief researcher at the China Center for International Economic Exchanges.
Kissinger, 96, said he hoped trade negotiations would provide an opening to political discussions between the two countries.
“Everybody knows that trade negotiations, which I hope will succeed and whose success I support, can only be a small beginning to a political discussion that I hope will take place,” he said.
Kissinger spoke hours after Chinese Vice President Wang Qishan addressed the NEF, saying his country was committed to peace and would follow through on policy changes despite facing challenges at home and abroad.
“Between war and peace, the Chinese people firmly choose peace,” he said. “We should abandon the zero-sum thinking and Cold War mentality.”
The Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
Meantime, Paulson called on China to open more and said the U.S. should resist the temptation to delist Chinese firms from U.S. exchanges, calling it a “terrible idea.” Both countries should determine the rules of the road for high-end technology such as 5G, he said.
“There will be some natural decoupling,” Paulson said. “But the delusions of a wholesale, comprehensive decoupling and an economic iron curtain will leave our countries, and the world, worse off. We need to avoid that outcome.”
After almost two years of negotiations and escalations – and plenty of false dawns – trade negotiators from the U.S. and China are making progress in key areas, Bloomberg said.
The negotiating teams are using their failed May proposal as a benchmark for how much a phase-one deal covers of the once-near agreement and how much tariffs will be removed as part of the initial deal. There’s been signs of a thawing on other fronts. The U.S. Commerce Department has started approving some suppliers’ applications for licenses to do business with China’s Huawei Technologies Co., partially reopening access to one of the biggest buyers of U.S. technology.
However, Charlene Barshefsky, who negotiated China’s entry into the WTO, said that “No outcome is inevitable but two decades of careful management of the relations between China and the West have run its course.”
So, we will see. The positive signals from China are certainly welcome in spite of the remaining large areas of uncertainty to be addressed. These are very important fights that producers should watch closely as they emerge, Washington Insider believes.
USDA To Issue Final Rule On Export Sales Reporting Of Pork, Beef
The fall 2019 regulatory agenda released by the Trump administration Wednesday included a notice that USDA intends to issue a final rule in December, which will clarify export sales reporting requirements.
“The final rule would amend the Export Sales Reporting Requirements Regulation to clarify certain definitions as they relate to beef and pork, which are subject to this regulation to ensure accuracy of the weekly U.S. Export Sales report,” the notice said.
This appears to be aimed at addressing details on things like the specific cuts that are to be reported to USDA and the timeline for making those reports to USDA.
The most-recent sales data did show that nearly one half of the total for U.S. pork sales to foreign buyers were “late reported” sales.
“The final rule would amend the Export Sales Reporting Requirements Regulation to clarify certain definitions as they relate to beef and pork, which are subject to this regulation to ensure accuracy of the weekly U.S. Export Sales report,” the notice said.
This appears to be aimed at addressing details on things like the specific cuts that are to be reported to USDA and the timeline for making those reports to USDA.
The most-recent sales data did show that nearly one half of the total for U.S. pork sales to foreign buyers were “late reported” sales.
McConnell Chides House Democrats For Giving AFL-CIO Big Role In USMCA Process
Senate Majority Leader Mitch McConnell, R-Ky., on Wednesday argued that Democrats are giving AFL-CIO President Richard Trumka too much sway in talks on the U.S.-Mexico-Canada Agreement (USMCA).
“How ironic. We are talking about a trade deal that would create more American jobs, and Democrats are considering outsourcing their judgment to Big Labor special interests — who, to my recollection, have not supported a single major trade deal in living memory,” McConnell said on the Senate floor.
This comes after Trumka met with House Democrats on USMCA, noting that changes are still needed in the trade deal to get his union to back the deal.
Meanwhile, Mexico’s Congress delayed the government’s 2020 spending bill, which includes proposed funds to implement the labor reforms required under the USMC
“How ironic. We are talking about a trade deal that would create more American jobs, and Democrats are considering outsourcing their judgment to Big Labor special interests — who, to my recollection, have not supported a single major trade deal in living memory,” McConnell said on the Senate floor.
This comes after Trumka met with House Democrats on USMCA, noting that changes are still needed in the trade deal to get his union to back the deal.
Meanwhile, Mexico’s Congress delayed the government’s 2020 spending bill, which includes proposed funds to implement the labor reforms required under the USMC
Friday Watch List
Markets
On the Friday before Thanksgiving, it is reasonable to expect quiet trade in ag futures, but there are a few items to note. An index of U.S. consumer sentiment is due out at 9 a.m. CST, followed by USDA's monthly cattle on-feed and cold storage reports at 2 p.m. A possible trade meeting is brewing with China and any comments or related news will get attention.
Weather
Rain and snow are in the Southern Plains, and rain from the far Southern Plains to the eastern Great Lakes, will be the areas of precipitation Friday. Drier conditions will be in place elsewhere.
On the Friday before Thanksgiving, it is reasonable to expect quiet trade in ag futures, but there are a few items to note. An index of U.S. consumer sentiment is due out at 9 a.m. CST, followed by USDA's monthly cattle on-feed and cold storage reports at 2 p.m. A possible trade meeting is brewing with China and any comments or related news will get attention.
Weather
Rain and snow are in the Southern Plains, and rain from the far Southern Plains to the eastern Great Lakes, will be the areas of precipitation Friday. Drier conditions will be in place elsewhere.
Thursday, November 21, 2019
GREEN Act Would Extend Renewable Energy Tax Incentives
A renewable energy bill includes biodiesel tax extenders, although the legislation’s future is uncertain. This week, California Democrat Mike Thompson introduced the Growing Renewable Energy and Efficiency Now, or GREEN Act, in the House of Representatives. Thompson says the bill will “build on existing tax incentives that promote renewable energy and increase efficiency.” The bill would extend the currently expired biodiesel tax credits through a multiyear extension. The legislation would keep the credit at its current rate of $1.00 per gallon for 2018 through 2021 but gradually reduce it to $0.33 per gallon by 2024. The National Biodiesel Board supports the legislation, as the industry seeks certainty. Since the start of the year, ten biodiesel plants have been forced to cut production or close and lay off workers due to policy uncertainty. However, the fate of the bill is unclear, as Democrats and Republicans clash over so-called “green” legislation and climate issues. Among other things, the bill would promote green energy technologies, increase energy efficiency, and support use of zero-emission transportation and infrastructure.
Growth Energy Celebrates New York’s Move to E15
Growth Energy calls New York's move to E15 a "major regulatory victory" that will open the nation's fourth-largest fuel market to E15 Under a rule finalized Wednesday by the New York Department of Agriculture. New York will become the newest state to allow the sale of E15, which is approved for all vehicles model year 2001 and newer. Growth Energy CEO Emily Skor says the organization “looks forward to working with retailers across the state to quickly get E15 into the market.” Over the last five years, Growth Energy has worked together with community leaders, retailers, farm advocates, and biofuel supporters across New York to push for an update to the state’s fuel regulations. Western New York Energy President and CEO Timothy Winters says the update “will allow more New York motorists to make their own decisions about purchasing renewable fuel blends.” Last month, American drivers topped 11 billion miles on E15, and adoption rates continue to rise following recent regulatory changes by the EPA to permit year-round sales of the fuel.
Farmers Receive 12 Cents of the Thanksgiving Food Dollar
Farmers and ranchers take home just 12.1 cents from every dollar that consumers spend on their Thanksgiving dinner meals, according to the National Farmers Union. NFU’s annual Farmer’s Share publication compares the retail food price of traditional holiday dinner items to the amount the farmer receives for each item they grow or raise. On average, farmers receive 14.6 cents of every food dollar consumers spend throughout the year, more than the recent study finds. NFU President Roger Johnson says, “We’re in the midst of the worst farm economic downturn in generations, and we’re hopeful the Farmer’s Share can help illustrate that fact to the general public.” Wheat farmers averaged a meager $0.03 on 12 dinner rolls that retail for $2.69. Dairy producers received only $1.66 from a $4.59 gallon of milk. And turkey growers, who raise the staple Thanksgiving dish, received just $0.06 per pound retailing at $1.49. Johnson says that $0.06 figure—while striking on its own—is particularly shocking when considering the fact that poultry integrators received $0.62 per pound.
Plant Response Biotech, Koch Biological Solutions Merge
Plant Response Biotech and Koch Biological Solutions, LLC. have combined operations to form Plant Response Biotech, Inc. The new venture will leverage both companies' complementary capabilities, assets and product offerings. Plant Response Biotech is a plant biotechnology company specializing in plant innate immunity, plant physiology and nutrient use efficiency. It has developed several product candidates which are approaching commercial launch status in the areas of drought tolerance and plant health. Koch Biological Solutions focuses on developing science-based, live microbial and biologically derived chemistries that improve plant performance at every stage of growth. Through various modes of action, their biological solutions perform directly on the plant or its environment to improve crop efficiency and nutrient uptake, maximizing yield potential. Tom Warner, chairman of the board for the new Plant Response Biotech, says of the move, "These companies are naturally complementary, and it made tremendous sense to bring the two together.” The new company will be headquartered in Raleigh, North Carolina, with operations in California and Spain.
USDA Invests in the Expansion of Rural Education and Health Care Access
The Department of Agriculture Wednesday announced a $42.5 million investment for education and telemedicine projects in parts of rural America. The effort will fund 133 projects in 37 states and two U.S. territories through the Distance Learning and Telemedicine grant program, benefiting 5.4 million rural residents. DJ LaVoy, USDA Deputy Under Secretary for Rural Development, says the program helps “rural residents to take advantage of economic, health care and educational opportunities without having to travel long distances.” The funded projects include $488,000 for Mississippi State University to update video conferencing equipment in 93 counties. USDA’s investment will enable participants in extension offices and experiment stations to deliver educational programming to interactive audiences. In Ohio, the Lisbon Exempted Village School District is receiving a $323,000 grant to create a distance learning network at eight sites within one county. The district will offer classes and behavioral health services to 850 students. Information on additional projects funded by the effort is online at www.rd.usda.gov.
Washington Insider: Pressure to Complete the New NAFTA
Pressures are building on Democrats from rural areas, many of whom face tough re-elections in 2020, Bloomberg is reporting this week. This group is “pushing their party leaders to complete the U.S., Mexico, Canada trade pact before the end of the year to give them a solid legislative achievement—but also to “undercut GOP criticism that they are doing nothing but impeachment.”
“It’s only going to get harder to make a good deal as we get closer and closer to the presidential election,” said Rep. Ben McAdams, D-Utah. “There’s a window right now to get it done.”
An agreement between House leaders and U.S. Trade Representative Robert Lighthizer is close to being done with enforcement provisions on labor and environment still being ironed out, Bloomberg said. AFL-CIO President Richard Trumka met with freshman Democrats on Tuesday morning to convey the message that it’s important to strengthen labor enforcement in the final deal.
Rep. Cindy Axne, D-Iowa, said she told Trumka that while she supported the enforcement of labor regulations, farmers and manufacturers in her district were hurting due to the trade war and tariffs, which a new trade agreement would alleviate.
“The longer we wait, [the more] it increases the pain the folks in Iowa like our farmers are getting right now,” she said.
Several lawmakers alluded to criticism that they were doing little besides impeachment. President Trump has branded them “Do-Nothing Democrats” despite the 100-plus bills the House passed this year, Bloomberg said.
“I was sent here by the people of my district to get things done and one of those big-ticket items is a solid trade deal with Mexico and Canada,” Rep. Anthony Brindisi, D-N.Y., said, leaving the meeting with Trumka. “That’s what my district wants and that’s what I’m trying to get towards.”
McAdams said an agreement might be “even more important now, in light of the impeachment inquiry, that we show our constituents that we are still moving forward legislation that is good for the public.”
Other lawmakers are working to calm the anxieties of the freshmen by emphasizing the need for not merely a good deal but one they can stand behind for decades.
Rep. Elissa Slotkin, D-Mich., said veteran House members warned her they were still facing negative reaction from their 1993 vote on NAFTA.
“The senior members are making it very clear that we all understand the stakes,” she said.
Rep. Jimmy Gomez, D-Calif., a member of the group of Democrats meeting with Lighthizer, said the freshmen haven’t been shy about making their needs known. “They’re feeling a lot of pressure,” he said. “But in the end, they still need a good agreement to vote for and something they don’t have to run away from.”
The trade deal still could get done before the end of the year, although it’s competing for attention and floor time with the impeachment inquiry and with work on an agreement on how to fund the government for the rest of Fiscal Year (FY) 2020. The House passed another continuing resolution Tuesday to fund the government until Dec. 20.
Draft language for the trade agreement is being exchanged, Gomez said, and added that the final language could be complete a few days after a final agreement is reached. “Anything is possible, to be honest with you,” he said.
So, we will see. Observers argue that work is progressing steadily on the new NAFTA, even though they say they recognize that pressure for speed is often the “enemy of a thoroughly vetted and refined final product.”
Nevertheless, there seems to be growing optimism regarding the evolving deal, so the process is one producers should continue to watch closely as it progresses, Washington Insider believes.
“It’s only going to get harder to make a good deal as we get closer and closer to the presidential election,” said Rep. Ben McAdams, D-Utah. “There’s a window right now to get it done.”
An agreement between House leaders and U.S. Trade Representative Robert Lighthizer is close to being done with enforcement provisions on labor and environment still being ironed out, Bloomberg said. AFL-CIO President Richard Trumka met with freshman Democrats on Tuesday morning to convey the message that it’s important to strengthen labor enforcement in the final deal.
Rep. Cindy Axne, D-Iowa, said she told Trumka that while she supported the enforcement of labor regulations, farmers and manufacturers in her district were hurting due to the trade war and tariffs, which a new trade agreement would alleviate.
“The longer we wait, [the more] it increases the pain the folks in Iowa like our farmers are getting right now,” she said.
Several lawmakers alluded to criticism that they were doing little besides impeachment. President Trump has branded them “Do-Nothing Democrats” despite the 100-plus bills the House passed this year, Bloomberg said.
“I was sent here by the people of my district to get things done and one of those big-ticket items is a solid trade deal with Mexico and Canada,” Rep. Anthony Brindisi, D-N.Y., said, leaving the meeting with Trumka. “That’s what my district wants and that’s what I’m trying to get towards.”
McAdams said an agreement might be “even more important now, in light of the impeachment inquiry, that we show our constituents that we are still moving forward legislation that is good for the public.”
Other lawmakers are working to calm the anxieties of the freshmen by emphasizing the need for not merely a good deal but one they can stand behind for decades.
Rep. Elissa Slotkin, D-Mich., said veteran House members warned her they were still facing negative reaction from their 1993 vote on NAFTA.
“The senior members are making it very clear that we all understand the stakes,” she said.
Rep. Jimmy Gomez, D-Calif., a member of the group of Democrats meeting with Lighthizer, said the freshmen haven’t been shy about making their needs known. “They’re feeling a lot of pressure,” he said. “But in the end, they still need a good agreement to vote for and something they don’t have to run away from.”
The trade deal still could get done before the end of the year, although it’s competing for attention and floor time with the impeachment inquiry and with work on an agreement on how to fund the government for the rest of Fiscal Year (FY) 2020. The House passed another continuing resolution Tuesday to fund the government until Dec. 20.
Draft language for the trade agreement is being exchanged, Gomez said, and added that the final language could be complete a few days after a final agreement is reached. “Anything is possible, to be honest with you,” he said.
So, we will see. Observers argue that work is progressing steadily on the new NAFTA, even though they say they recognize that pressure for speed is often the “enemy of a thoroughly vetted and refined final product.”
Nevertheless, there seems to be growing optimism regarding the evolving deal, so the process is one producers should continue to watch closely as it progresses, Washington Insider believes.
Farm Credit System Weathering Farm Income Situation
Officials from the Farm Credit System testified before a House Ag subcommittee Tuesday, telling the panel the ag lender is so far weathering the farm income difficulties.
Large payouts to farmers under the Market Facilitation Program (MFP) are providing help, officials said, but they noted that farm debt has grown some $41 billion in the last three years. The farm bill safety net programs are working as they should, officials said.
USDA next week will update its farm income forecast for 2019 and issue its outlook for 2020 and that is expected to continue to show that government payments are making up a greater share of U.S. farm income. But, conditions remain better than those seen in the 1980s.
Large payouts to farmers under the Market Facilitation Program (MFP) are providing help, officials said, but they noted that farm debt has grown some $41 billion in the last three years. The farm bill safety net programs are working as they should, officials said.
USDA next week will update its farm income forecast for 2019 and issue its outlook for 2020 and that is expected to continue to show that government payments are making up a greater share of U.S. farm income. But, conditions remain better than those seen in the 1980s.
FERC Approves Temporary Emergency Shipment of Propane to Midwest
Temporary emergency shipment of propane from Texas to the Midwest has been approved by the Federal Energy Regulatory Commission (FERC).
The pipeline company asking for the action said “record demand for propane is due to an unusual coincident increase in heating demand, resulting from unseasonably cold weather in the region, and crop drying demand.”
There were no comments or protests filed on the request and FERC determined the matter is accepted effective November 13.
In addition, FERC announced it will “initiate an alternative dispute resolution (ADR) process with pipeline companies, shippers and their representatives to explore actions FERC and industry can take to alleviate propane pipeline constraints in the Midwest.”
The pipeline company asking for the action said “record demand for propane is due to an unusual coincident increase in heating demand, resulting from unseasonably cold weather in the region, and crop drying demand.”
There were no comments or protests filed on the request and FERC determined the matter is accepted effective November 13.
In addition, FERC announced it will “initiate an alternative dispute resolution (ADR) process with pipeline companies, shippers and their representatives to explore actions FERC and industry can take to alleviate propane pipeline constraints in the Midwest.”
Thursday Watch List
Markets
As usual, 7:30 a.m. CST is a busy time Thursday with weekly grain export sales, weekly jobless claims and the U.S. Drought Monitor set for release. Early Thursday, the National Weather Service will have new forecast for December, in addition to its usual forecasts. U.S. existing home sales and leading index of U.S. indicators are out at 9 a.m., followed by natural gas storage at 9:30 a.m. and an update of U.S. propane supplies Thursday afternoon.
Weather
Thursday features rain and snow in the Midwest, disrupting harvest and transportation. Rain is also in store for portions of the Southern Plains, offering some moisture for winter wheat. In South America, rain is indicated over northeastern crop areas of Brazil.
As usual, 7:30 a.m. CST is a busy time Thursday with weekly grain export sales, weekly jobless claims and the U.S. Drought Monitor set for release. Early Thursday, the National Weather Service will have new forecast for December, in addition to its usual forecasts. U.S. existing home sales and leading index of U.S. indicators are out at 9 a.m., followed by natural gas storage at 9:30 a.m. and an update of U.S. propane supplies Thursday afternoon.
Weather
Thursday features rain and snow in the Midwest, disrupting harvest and transportation. Rain is also in store for portions of the Southern Plains, offering some moisture for winter wheat. In South America, rain is indicated over northeastern crop areas of Brazil.
Wednesday, November 20, 2019
USMCA 2019 Deadline Nears
Fewer and fewer days remain for Congress to pass the U.S.-Mexico-Canada Agreement in 2019. Washington is sending mixed signals on whether the deal can be completed this year. Some lawmakers have suggested the House stay in session an extra week, adding time to the calendar to wrap up business before Christmas. Meanwhile, last week, House Speaker Nancy Pelosi said a labor deal in USMCA was "imminent." However, President Donald Trump claimed this week Pelosi was holding up the trade deal to gather more votes in favor of impeaching Trump. Representative Richard Neal, who chairs the Democrats USMCA working group, last week suggested union support was within reach, adding “we need it.” AFL-CIO President Richard Trumka met with Pelosi and other Democrats Tuesday, while also vowing during an unrelated speech to not allow Democrats to fold on core issues. Trumka stated that until USMCA includes stronger labor standards, “there is still more work to be done,” according to Reuters. Democrats leaving the meeting were skeptical that an agreement could be reached this year.
U.S., South Korea Reach Agreement on Guaranteed Market Access for American Rice
The Trump administration Tuesday announced an agreement to allow U.S. rice more market access in South Korea. Under the agreement, Korea will provide access for 132,304 tons of U.S. rice annually, with an annual value of approximately $110 million. Korea also agreed to important disciplines to ensure transparency and predictability around the tendering and auctioning for U.S. rice. U.S. Trade Representative Robert Lighthizer says the announcement “will prove enormously beneficial for American producers.” Agriculture Secretary Sonny Perdue says the exports “are critical for the economic health of the U.S. rice industry,” as half of the U.S. rice crop is exported annually. Perdue called the announcement “another great testament of President Trump’s determination to expand export opportunities” for farmers and ranchers. The agreement gives the U.S. the greatest volume of guaranteed rice market access in Korea ever secured by the United States. Additionally, the agreement provides U.S. suppliers with enhanced disciplines related to the administration of the U.S. country-specific quota. The agreement will enter into force on January 1, 2020.
Midwest lawmakers Introduce Fair Trade Legislation
A group of Senators from the Upper-Midwest Tuesday introduced a bill to crack down on trade cheating. Legislators say the Play by the Rules Act will hold China accountable for ignoring trade rules and harming American workers. U.S. anti-dumping and countervailing duty laws are designed to stop trade partners from tipping the scales in their favor and forcing American workers to compete at a disadvantage. The rules are widely used and mostly followed by World Trade Organization members. However, nonmarket economies—like China—are engaged in a sophisticated and government-backed effort to avoid paying the duties required by the rules, according to the lawmakers. The bill provides the Commerce Department additional flexibility when reviewing anti-circumvention petitions filed against nonmarket economies like China. The flexibility will allow the Commerce Department to better combat China’s attempts to cheat U.S. workers and businesses. Senate Democrats Tammy Baldwin of Wisconsin, Debbie Stabenow of Michigan, along with Senate Republicans Shelley Moore Capito of West Virginia, and Bill Cassidy of Louisiana, introduced the bipartisan legislation.
Tyson to Reopen Kansas Beef Plant Next Month
Tyson will reopen a Kansas beef processing facility next month, following repairs prompted by an August fire that disrupted operations at the facility. This week, Tyson announced repairs at the Holcomb, Kansas facility are nearly complete, and efforts to resume beef processing are planned for the first week of December. The company expects the plant to be fully operational by the first week of January. The fire severely damaged a critical part of the plant containing the hydraulic and electrical systems that support the harvest floor and cooler areas. Reconstruction included completely replacing support beams and the roof, hydraulic piping and pumps, installing over 50,000 feet of new wiring and the reconstruction of all new electrical panel rooms and equipment. The fire disrupted cattle markets and processing as the facility reduced industry slaughter capacity by six percent. A Department of Agriculture Investigation into beef pricing practices following the fire should wrap up by the end of this year.
USDA Begins 2019 Organic Survey
The Department of Agriculture's National Agricultural Statistics Service will mail letters with survey codes this December to more than 22,000 organic producers. Specifically, the surveys target producers involved in certified or transitioning to certified organic farming for the 2019 Organic Survey. Each producer who self-reported organic farming in the 2017 Census of Agriculture will receive a unique survey code to respond conveniently online and to be represented in this once-every-five-year data. The 2019 Organic Survey results will expand on the 2017 Census of Agriculture data by looking at several aspects of organic agriculture during the 2019 calendar year, including production, marketing practices, income, expenses and more. Producers who receive the 2019 Organic Survey are required to respond by federal law, as this survey is part of the Census of Agriculture Program. The same federal law that requires response also requires NASS to keep all individual information confidential. The deadline for response is January 10, 2020. Results will be available in October 2020. For more information about the Organic Survey, visit www.nass.usda.gov.
E15 Summer Sales up 46 Percent
Growth Energy recently announced that summer sales of E15 increased 46 percent in 2019, compared to 2019, on a per-store basis. E15 contains 15 percent ethanol or another renewable biofuel and is now often sold as Unleaded 88 at the pump. Growth Energy CEO Emily Skor says the “explosive growth in summer sales” demonstrates consumers “will come back again and again,” to E15, once available and they know the benefits of the fuel. She says the industry expects to see interest from retailers and consumers alike continue to grow. 2019 also saw an increase in retailers offering E15. Led by Casey's, the retail industry added 149 stores over the summer months. The 2019 summer driving season was the first summer Unleaded 88 was sold without restriction, and the increase “underscored the fuel's popularity with drivers” who have logged more than 11 billion miles using E15. Earlier this month, Growth Energy announced NASCAR drivers surpassed 15 million miles using E15, since launching a partnership with the ethanol industry in 2011.
Washington Insider: Working to Avoid Another Congressional Shutdown
News from the Congress this week includes a Bloomberg article that focused on efforts to avoid another Congressional shutdown. The report said that House Democrats on Monday released a four-week spending bill negotiated with Republicans to avert at least temporarily a federal government shutdown on Friday.
The measure, which would extend funding through Dec. 20, would also keep the Export-Import Bank open through that date and would allow the Census Bureau to spend money at a higher rate to prepare for the 2020 head count, prevent an automatic cut to highway funding next year and provide the military with a 3.1% pay increase. The House announced plans to vote on the bill early this week, according to House Majority Leader Steny Hoyer, D-Md.
Senate Majority Leader Mitch McConnell, R-Ky., said that Republican-controlled chamber will also vote on the measure this week. Current funding runs out at the end of the day Thursday.
However, in spite of the high level of political tension just now, it appears that almost nobody wants another shutdown. For example, the White House has indicated that President Donald Trump is ready to sign the measure, McConnell said.
Elements of the Foreign Intelligence Surveillance Act set to expire on Dec. 15 would be extended through March 15, 2020 under the proposal. The provisions allow expanded authority to wiretap terrorism suspects and to examine business records related to terrorism investigations.
In addition, Senator Rand Paul, R-Ky., who opposes the FISA extension and single-handedly triggered a brief shutdown in the past, said Monday he doesn’t expect to block passage of the measure this week--although he hasn’t made a final decision.
The bill would extend funding for community health centers through Dec. 20 and increase funding to combat Ebola in Africa. It would also provide a payment to the widow of the late Maryland Representative Elijah Cummings, a standard practice.
The short-term spending measure is needed because Congress has failed to agree on any of the 12 annual spending bills needed to fund government agencies for the fiscal year that began Oct. 1.
House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Steven Mnuchin agreed in July on a $1.3 trillion budget cap for fiscal 2020, raising hopes that the 12 spending bills could be enacted quickly.
Instead, disputes over President Trump’s border wall have hampered the appropriations committees’ ability to set top spending levels for each of the 12 bills under the overall cap. The administration budget asked for $9 billion in new wall funding and Senate Republicans have proposed providing $5 billion, while House Democrats have vowed to provide no new money.
The two parties are also arguing over whether to replenish military accounts that the president raided earlier this year to fund the wall, a move that has been challenged in court and which Democrats argue was unconstitutional.
Pelosi and Mnuchin met last week with Senate Appropriations Chairman Richard Shelby, R-Ala., and House Appropriations Chairwoman Nita Lowey, D-N.Y., to try to break the impasse. Afterward, Lowey said the group is aiming for a deal on top spending levels by the end of this week, but talks have made little headway.
The White House has said the president would be willing to sign a stopgap spending bill as long as it doesn’t hinder the president’s executive authorities, including the ability to spend the transferred wall money.
So, we will see. Most of the Washington tea-leaf readers are being extremely cautious just now even though it appears that few, if any, are actively pushing for another shutdown fight. Still, these are certainly tense times and even the development of the annual budget should be watched closely as it proceeds, Washington Insider believes.
The measure, which would extend funding through Dec. 20, would also keep the Export-Import Bank open through that date and would allow the Census Bureau to spend money at a higher rate to prepare for the 2020 head count, prevent an automatic cut to highway funding next year and provide the military with a 3.1% pay increase. The House announced plans to vote on the bill early this week, according to House Majority Leader Steny Hoyer, D-Md.
Senate Majority Leader Mitch McConnell, R-Ky., said that Republican-controlled chamber will also vote on the measure this week. Current funding runs out at the end of the day Thursday.
However, in spite of the high level of political tension just now, it appears that almost nobody wants another shutdown. For example, the White House has indicated that President Donald Trump is ready to sign the measure, McConnell said.
Elements of the Foreign Intelligence Surveillance Act set to expire on Dec. 15 would be extended through March 15, 2020 under the proposal. The provisions allow expanded authority to wiretap terrorism suspects and to examine business records related to terrorism investigations.
In addition, Senator Rand Paul, R-Ky., who opposes the FISA extension and single-handedly triggered a brief shutdown in the past, said Monday he doesn’t expect to block passage of the measure this week--although he hasn’t made a final decision.
The bill would extend funding for community health centers through Dec. 20 and increase funding to combat Ebola in Africa. It would also provide a payment to the widow of the late Maryland Representative Elijah Cummings, a standard practice.
The short-term spending measure is needed because Congress has failed to agree on any of the 12 annual spending bills needed to fund government agencies for the fiscal year that began Oct. 1.
House Speaker Nancy Pelosi, D-Calif., and Treasury Secretary Steven Mnuchin agreed in July on a $1.3 trillion budget cap for fiscal 2020, raising hopes that the 12 spending bills could be enacted quickly.
Instead, disputes over President Trump’s border wall have hampered the appropriations committees’ ability to set top spending levels for each of the 12 bills under the overall cap. The administration budget asked for $9 billion in new wall funding and Senate Republicans have proposed providing $5 billion, while House Democrats have vowed to provide no new money.
The two parties are also arguing over whether to replenish military accounts that the president raided earlier this year to fund the wall, a move that has been challenged in court and which Democrats argue was unconstitutional.
Pelosi and Mnuchin met last week with Senate Appropriations Chairman Richard Shelby, R-Ala., and House Appropriations Chairwoman Nita Lowey, D-N.Y., to try to break the impasse. Afterward, Lowey said the group is aiming for a deal on top spending levels by the end of this week, but talks have made little headway.
The White House has said the president would be willing to sign a stopgap spending bill as long as it doesn’t hinder the president’s executive authorities, including the ability to spend the transferred wall money.
So, we will see. Most of the Washington tea-leaf readers are being extremely cautious just now even though it appears that few, if any, are actively pushing for another shutdown fight. Still, these are certainly tense times and even the development of the annual budget should be watched closely as it proceeds, Washington Insider believes.
Global Trade Is Set To Stay Weak As 2019 Draws To A Close
The World Trade Organization's trade barometer shows some stabilization for the global flow of goods, albeit at low levels.
The WTO's Goods Trade Barometer recorded signs of a pickup in export orders, container shipping and automobile shipments, offset by weakness in airfreight, and shipments of raw materials and electronic components.
This signals international trade is likely to end the year having risen at the slowest pace since 2009.
Trade flows have been weakened by several developments, including the U.S.-China trade war and a slowdown in the global automobile industry.
The WTO's Goods Trade Barometer recorded signs of a pickup in export orders, container shipping and automobile shipments, offset by weakness in airfreight, and shipments of raw materials and electronic components.
This signals international trade is likely to end the year having risen at the slowest pace since 2009.
Trade flows have been weakened by several developments, including the U.S.-China trade war and a slowdown in the global automobile industry.
Farmer Payments Continue to Add Up Via MFP
As USDA starts issuing the second round of payments under the 2019 Market Facilitation Program (MFP 2) this week, county FSA offices have been directed to prioritize processing the payments and wrap up that exercise by November 22. USDA said in a release the payments would go out from November 18-28.
As the second round of payments starts rolling, the payouts thus far under MFP 2 total $6.899 billion. That includes $6.58 billion for non-specialty crops, $69.7 million for specialty crops, and $252 million for livestock.
Midwest states and Texas lead the top states in terms of dollars received under the MFP 2 effort so far.
The second round of payments is expected to total around $3.6 billion.
As the second round of payments starts rolling, the payouts thus far under MFP 2 total $6.899 billion. That includes $6.58 billion for non-specialty crops, $69.7 million for specialty crops, and $252 million for livestock.
Midwest states and Texas lead the top states in terms of dollars received under the MFP 2 effort so far.
The second round of payments is expected to total around $3.6 billion.
Wednesday Watch List
Markets
In addition to weather and any news updates on trade with China, the U.S. Energy Department will release its weekly report of energy inventories, including ethanol, at 9:30 a.m. CST. At 1 p.m. CST, the Federal Reserve will release minutes from its most recent FOMC meeting, offering clues to future interest rate changes.
Weather
Wednesday will be dry across primary crop areas, offering one more day of favorable harvest conditions. The pattern turns wetter and colder with rain and snow Thursday. There is still almost one quarter of the U.S. corn crop still unharvested.
In addition to weather and any news updates on trade with China, the U.S. Energy Department will release its weekly report of energy inventories, including ethanol, at 9:30 a.m. CST. At 1 p.m. CST, the Federal Reserve will release minutes from its most recent FOMC meeting, offering clues to future interest rate changes.
Weather
Wednesday will be dry across primary crop areas, offering one more day of favorable harvest conditions. The pattern turns wetter and colder with rain and snow Thursday. There is still almost one quarter of the U.S. corn crop still unharvested.
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