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Tuesday, March 31, 2020
Rep. Harder Seeks Ag Advisor on White House Coronavirus Task Force
One lawmaker wants an ag expert on the White House Coronavirus Task Force. U.S. Representative Josh Harder, a Democrat from California, recently penned a letter to the Trump administration asking that the task force include someone who can represent agriculture. Specifically, Harder says appointing a member that can “knowledgeably advocate on behalf of our producers, consumers and distributors” will ensure families have access to the food they need during the pandemic. The letter states farmers are already seeing the impact of the COVID-19 pandemic, including volatile markets, and losing the certainty of a healthy workforce, along with potential shortages of personal protective equipment. Representative Harder’s office has heard concerns from agriculture about the availability of masks and gloves for workers as well as the availability of migrant labor. Harder says he has also heard from consumers concerned about bare shelves at supermarkets. Having an agriculture representative on the task force, Harder says, “will help to ensure all these concerns are addressed.”
Consumers Increase Online Grocery Orders During Outbreak
Consumers are ordering more goods and groceries online during the COVID-19 pandemic. Grocery Dive, a web-based grocery industry publication, reports 31 percent of U.S. households have used online grocery services over the past month. Out of those surveyed, 26 percent of consumers report using grocery delivery and pick-up services for the first time, and 39 percent of 60 and older consumers say the same. The report is based on a survey of more than 1,600 U.S. adults. The pandemic may permanently alter consumer activity, as buyers are seeking to avoid crowds at grocery stores to follow social distancing guidelines. However, current pick-up and delivery infrastructure is not meeting the demands. Amazon’s Prime Pantry temporarily shut down, and many grocery stores offering the services are scheduling appointments days after the order, compared with same day or next day options. Meanwhile, last week, several online providers, including DoorDash, announced they would waive delivery fees for shoppers 60 and older.
USDA Announces No Actions Under Feedstock Flexibility Program
The Department of Agriculture Commodity Credit Corporation announced Monday it does not expect to purchase and sell sugar under the Feedstock Flexibility Program for crop year 2019, which runs from October 1, 2019, to September 30, 2020. The CCC is required by law to quarterly announce estimates of sugar to be purchased and sold under the Feedstock Flexibility Program based on crop and consumption forecasts. Federal law allows sugar processors to obtain loans from USDA with maturities of up to nine months when the sugarcane or sugar beet harvest begins. On loan maturity, the sugar processor may repay the loan in full or forfeit the collateral sugar to USDA to satisfy the loan. Congress reauthorized the Feedstock Flexibility Program in the 2018 Farm Bill as an option to avoid sugar forfeitures. USDA's March 10, 2020, World Agricultural Supply and Demand Estimates report projects that fiscal year 2020 U.S. ending sugar stocks are unlikely to lead to forfeitures.
USDA Extends ReConnect Application Deadline to April 15
The Department of Agriculture has extended the deadline for ReConnect Pilot Program applications to April 15. Deputy undersecretary for Rural Development Bette Brand announced the extension Monday, saying the move is “in light of the COVID-19 National Emergency.” The extension allows rural businesses, cooperatives, and communities extra time to apply for assistance that will help bring high-speed broadband connectivity to rural communities. USDA received 146 applications between May 31, 2019, and July 12, 2019, requesting $1.4 billion in funding across all three ReConnect Program funding products, 100 percent loan, 100 percent grant, and loan-grant combinations. USDA is reviewing applications and announcing approved projects on a rolling basis. Additional investments in all three categories will be made in the coming weeks. These grants, loans and combination 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.
State Beef Councils Win Major Legal Victory
The Beef Checkoff program and fifteen grassroots-led state beef councils won a major court victory last week. The United States District Court of Montana ruled in favor of USDA and the Montana Beef Council in the matter of R-CALF vs. Sonny Perdue and USDA. The National Cattlemen’s Beef Association praised the court’s decision, which ends a legal battle that has spanned more than three years and interrupted beef promotion functions in Montana. NCBA says the case had threatened local input and promotion efforts at the state level across the country. NCBA CEO Colin Woodall says the victory “goes a long way toward ensuring” Beef Checkoff investments continue. He says the foundation of the Beef Checkoff has always been state beef councils that collect checkoff funds and determine how those investments are used for research, marketing and promotion efforts in individual states. Woodall emphasized that NCBA will continue to stand with state beef councils whose work is crucial to the beef industry.
National Average Gas Price Drops Below $1.99
GasBuddy reports the U.S. national average for gasoline has fallen to $1.99 per gallon, the first time since March 23, 2016. The national average could even dip to $1.49 by mid-April, the lowest since 2004, with potentially hundreds of stations pushing their price to 99 cents per gallon for the first time since the early 2000’s. Gasoline prices have continuously dropped nationwide since February 20, 2020 as the coronavirus crushes the demand for oil and lockdowns reduce driving and keep Americans home. More than half of U.S. states are currently seeing average prices less than $2 per gallon. In the last week, 99 cent prices have shown up at various times in Kentucky, Tennessee, Oklahoma, Wisconsin and Missouri and more could join in the days and weeks ahead. An additional drop of 25-65 cents is possible in most states, while West Coast states, including California, could see prices drop 50 cents to a dollar per gallon over the next few weeks.
Washington Insider: Next Phase in Virus Relief
The shock from the COVID-19 attack on the U.S. population and economy has been so large and threatening that politicians are actively searching for more relief beyond the current measures.
The Hill is reporting this week that “Democrats are keen on including additional direct payments to Americans in the next coronavirus response bill to provide financial stability as the pandemic ravages the economy.”
The report says that numerous Democratic lawmakers have offered proposals for more generous payments than those included in the $2 trillion measure signed into law Friday. That was the third coronavirus bill the President signed recently and lawmakers are already starting to discuss their priorities for a “phase four” measure.
“Still, much of the discussion is uncertain because it’s driven by the trajectory of the disease,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.
The newest bipartisan measure signed into law contained several provisions aimed at helping individuals and businesses cover their expenses during the pandemic. In addition to the one-time checks, unemployment insurance received a boost and small businesses can now access forgivable loans if they retain their workers.
Treasury Secretary Steven Mnuchin said he expects the relief will arrive within three weeks. By then, Democrats might already be giving shape to a fourth coronavirus relief bill, The Hill said.
Speaker Nancy Pelosi, D-Calif., has made several comments backing enhanced direct payments. For example, a proposal released by House Democrats on Monday called for one-time cash payments of $1,500 for both adults and children, which is more generous than the payments in the current law.
“We had bigger direct payments in our bill,” Pelosi said during a press conference Thursday. “I don't think we’ve seen the end of direct payments.”
Numerous other Democratic lawmakers are proposing multiple rounds of payments to help Americans weather the pandemic.
Reps. Ro Khanna, D-Calif., and Tim Ryan, D-Ohio, offered a plan that would provide most Americans with monthly checks for six months which Congress could renew for an additional six months if the outbreak continues to weigh on the economy.
“I think it’s important for mental health and economic health for people to know they have something to lean on,” Ryan said last week.
Sens. Cory Booker, D-N.J., Michael Bennet, D-Colo., and Sherrod Brown, D-Ohio, earlier this month proposed immediate payments of $2,000 per person with additional payments of smaller amounts if the economic turmoil persists.
Other Democrats who have floated multiple direct payments include House Financial Services Committee Chairwoman Maxine Waters of California and prominent freshman progressive Rep. Rashida Tlaib, D-Mich.
In addition to additional relief checks, Democrats have expressed an interest in expanding the earned income tax credit and the child tax credit — two refundable credits benefiting low- and middle-income families — as part of future coronavirus legislation. Many Democrats, including Brown and House Ways and Means Committee Chairman Richard Neal, D-Mass., have long had an interest in expanding the credits and argue that doing so now would give families additional assistance.
Democrats aren’t the only ones who have suggested there should be more than one round of cash assistance. Sen. Josh Hawley, R-Mo., has introduced a bill that would provide monthly payments to families during times of economic distress or school closures as a result of the coronavirus.
A spokesman for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said that it’s too soon to know what will be included in the next relief package. Grassley played a key role in the checks that were included in phase three.
Economic policy experts are cautioning that several factors will play into whether Congress creates additional direct payments, such as how long the outbreak persists and how effective and popular the checks and loans in the phase current package turn out to be.
Doug Holtz-Eakin, a former Congressional Budget Office director and now president of the right-leaning American Action Forum, said that if the business loans are effective in keeping workers on payrolls, there won’t be a need for more checks — but that the odds of Congress passing additional checks go up if the current supports don’t succeed in preventing further layoffs and business closures.
But Adam Ruben — director of Economic Security Project Action, which advocates for a “cost-of-living refund” — said he doesn’t think additional cash payments would be a tough sell if some parts of the country recover faster than others. He said many people were struggling financially even before the coronavirus outbreak.
“A single check is a fundamental misunderstanding of this health crisis,” Ruben said. “Public health experts are predicting that this will be a marathon, and Americans need money in their wallets to sustain them.”
So, we will see. The massive response by the government appears to be popular now, but may well be less than totally effective — especially if the virus’ impacts turn out to be even worse than expected. These are trends producers should watch closely as they emerge, Washington Insider believes.
The Hill is reporting this week that “Democrats are keen on including additional direct payments to Americans in the next coronavirus response bill to provide financial stability as the pandemic ravages the economy.”
The report says that numerous Democratic lawmakers have offered proposals for more generous payments than those included in the $2 trillion measure signed into law Friday. That was the third coronavirus bill the President signed recently and lawmakers are already starting to discuss their priorities for a “phase four” measure.
“Still, much of the discussion is uncertain because it’s driven by the trajectory of the disease,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.
The newest bipartisan measure signed into law contained several provisions aimed at helping individuals and businesses cover their expenses during the pandemic. In addition to the one-time checks, unemployment insurance received a boost and small businesses can now access forgivable loans if they retain their workers.
Treasury Secretary Steven Mnuchin said he expects the relief will arrive within three weeks. By then, Democrats might already be giving shape to a fourth coronavirus relief bill, The Hill said.
Speaker Nancy Pelosi, D-Calif., has made several comments backing enhanced direct payments. For example, a proposal released by House Democrats on Monday called for one-time cash payments of $1,500 for both adults and children, which is more generous than the payments in the current law.
“We had bigger direct payments in our bill,” Pelosi said during a press conference Thursday. “I don't think we’ve seen the end of direct payments.”
Numerous other Democratic lawmakers are proposing multiple rounds of payments to help Americans weather the pandemic.
Reps. Ro Khanna, D-Calif., and Tim Ryan, D-Ohio, offered a plan that would provide most Americans with monthly checks for six months which Congress could renew for an additional six months if the outbreak continues to weigh on the economy.
“I think it’s important for mental health and economic health for people to know they have something to lean on,” Ryan said last week.
Sens. Cory Booker, D-N.J., Michael Bennet, D-Colo., and Sherrod Brown, D-Ohio, earlier this month proposed immediate payments of $2,000 per person with additional payments of smaller amounts if the economic turmoil persists.
Other Democrats who have floated multiple direct payments include House Financial Services Committee Chairwoman Maxine Waters of California and prominent freshman progressive Rep. Rashida Tlaib, D-Mich.
In addition to additional relief checks, Democrats have expressed an interest in expanding the earned income tax credit and the child tax credit — two refundable credits benefiting low- and middle-income families — as part of future coronavirus legislation. Many Democrats, including Brown and House Ways and Means Committee Chairman Richard Neal, D-Mass., have long had an interest in expanding the credits and argue that doing so now would give families additional assistance.
Democrats aren’t the only ones who have suggested there should be more than one round of cash assistance. Sen. Josh Hawley, R-Mo., has introduced a bill that would provide monthly payments to families during times of economic distress or school closures as a result of the coronavirus.
A spokesman for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said that it’s too soon to know what will be included in the next relief package. Grassley played a key role in the checks that were included in phase three.
Economic policy experts are cautioning that several factors will play into whether Congress creates additional direct payments, such as how long the outbreak persists and how effective and popular the checks and loans in the phase current package turn out to be.
Doug Holtz-Eakin, a former Congressional Budget Office director and now president of the right-leaning American Action Forum, said that if the business loans are effective in keeping workers on payrolls, there won’t be a need for more checks — but that the odds of Congress passing additional checks go up if the current supports don’t succeed in preventing further layoffs and business closures.
But Adam Ruben — director of Economic Security Project Action, which advocates for a “cost-of-living refund” — said he doesn’t think additional cash payments would be a tough sell if some parts of the country recover faster than others. He said many people were struggling financially even before the coronavirus outbreak.
“A single check is a fundamental misunderstanding of this health crisis,” Ruben said. “Public health experts are predicting that this will be a marathon, and Americans need money in their wallets to sustain them.”
So, we will see. The massive response by the government appears to be popular now, but may well be less than totally effective — especially if the virus’ impacts turn out to be even worse than expected. These are trends producers should watch closely as they emerge, Washington Insider believes.
FSA Extending Loan Deadlines
USDA's Farm Service Agency (FSA) announced it is relaxing its loan-making process and adding flexibilities for servicing direct and guaranteed loans to provide credit to producers in need.
“We recognize that farm loans are critical for annual operating and family living expenses, emergency needs and cash flow through times like this," FSA Administrator Richard Fordyce said in a statement. "FSA is working to find and use every option and flexibility to provide producers with credit options and other program benefits.”
The difficulties linked to the coronavirus situation a prompting a host of actions across government that are aimed at streamlining activities for businesses and giving some leeway as they grapple with the virus’ impacts.
“We recognize that farm loans are critical for annual operating and family living expenses, emergency needs and cash flow through times like this," FSA Administrator Richard Fordyce said in a statement. "FSA is working to find and use every option and flexibility to provide producers with credit options and other program benefits.”
The difficulties linked to the coronavirus situation a prompting a host of actions across government that are aimed at streamlining activities for businesses and giving some leeway as they grapple with the virus’ impacts.
RFA Hits EPA for Delaying Action on 10th Circuit Court Ruling
The EPA announcement March 27 that it would “develop an appropriate implementation and enforcement response to the 10th Circuit’s decision in RFA [Renewable Fuels Association] v. EPA once appeals have been resolved and the court’s mandate has been issued,” has been greeted with criticism by RFA.
The EPA statement is an “attempt to kick the can on nationwide application of the 10th Circuit Court decision has nothing to do with COVID-19 and everything to do with politics,” RFA President and CEO Geoff Cooper said in a statement. “There is absolutely no reasonable justification for delaying implementation of the court’s decision. The court has already ‘issued a mandate’ and remanded three improperly granted exemptions back to the agency to resolve.”
While labeling EPA’s decision to not appeal the court decision a correct one, Cooper said that equated to a decision that they will abide by the ruling. “What are they waiting for,” he asked.
Rehearing of the case at the behest of the refiners affected by the ruling is unlikely to see the matter overturned, Cooper stressed. “There is no rationale for EPA to wait for the courts to respond to the refiners’ hollow request for a rehearing before moving forward with adoption of the decision. In any event, given the unanimous and thoughtful decision by the 10th Circuit panel that heard the case, we are confident that the ruling is going to be upheld,” he said.
The EPA statement is an “attempt to kick the can on nationwide application of the 10th Circuit Court decision has nothing to do with COVID-19 and everything to do with politics,” RFA President and CEO Geoff Cooper said in a statement. “There is absolutely no reasonable justification for delaying implementation of the court’s decision. The court has already ‘issued a mandate’ and remanded three improperly granted exemptions back to the agency to resolve.”
While labeling EPA’s decision to not appeal the court decision a correct one, Cooper said that equated to a decision that they will abide by the ruling. “What are they waiting for,” he asked.
Rehearing of the case at the behest of the refiners affected by the ruling is unlikely to see the matter overturned, Cooper stressed. “There is no rationale for EPA to wait for the courts to respond to the refiners’ hollow request for a rehearing before moving forward with adoption of the decision. In any event, given the unanimous and thoughtful decision by the 10th Circuit panel that heard the case, we are confident that the ruling is going to be upheld,” he said.
Tuesday Watch List
Markets
Tuesday has a report on U.S. consumer confidence at 9 a.m. CDT. For grain markets, the main attention will be on USDA's survey of planting intentions and report of March 1 grain stocks, set for 11 a.m. CDT. Traders continue to be attentive to coronavirus statistics, weather and any trade news.
Weather
Rain and snow are in store for the interior Northwest Tuesday, while the Delta and Mid-South will see light to moderate rain. Other primary crop areas will be mainly dry. The Delta and Mid-South continue to have saturated soils and flood potential with repeated rain. The northwestern snow system crosses into the Northern Plains during the next couple days, bringing stress to livestock and hindering delayed corn harvest. Some field work is possible elsewhere, notably in the central and Southern Plains.
Tuesday has a report on U.S. consumer confidence at 9 a.m. CDT. For grain markets, the main attention will be on USDA's survey of planting intentions and report of March 1 grain stocks, set for 11 a.m. CDT. Traders continue to be attentive to coronavirus statistics, weather and any trade news.
Weather
Rain and snow are in store for the interior Northwest Tuesday, while the Delta and Mid-South will see light to moderate rain. Other primary crop areas will be mainly dry. The Delta and Mid-South continue to have saturated soils and flood potential with repeated rain. The northwestern snow system crosses into the Northern Plains during the next couple days, bringing stress to livestock and hindering delayed corn harvest. Some field work is possible elsewhere, notably in the central and Southern Plains.
Monday, March 30, 2020
House Approves Coronavirus Relief Bill
The House of Representatives approved the Coronavirus Aid, Relief, and Economic Security (CARES) Act on Friday. The bill, which the Senate had already approved 96-0, now goes to President Donald Trump, who’s already promised to sign it. The Hagstrom Report says the measure passed the House by voice vote, with just a few voices in opposition. Democrats in the House praised Senate Democrats and House leadership for making changes in the bill, while House Ways and Means Ranking Member Kevin Brady says, “Senate Democrats, aided by (House) Speaker Nancy Pelosi, recklessly delayed this bill for days and used this crisis to try and advance a frivolous political agenda. That failed, while the Senate found unanimous, if not perfect, ground.” Mike Rogers of Alabama told the House that the bill was particularly important to rural hospitals that need to buy supplies and build infrastructure to provide medical information and advice online. Washington state Republican Dan Newhouse told his colleagues before the vote that the bill would “support hardworking farmers and ranchers who provide food for the nation.” Pelosi herself called for a large vote so that Americans would realize the government is there to help.
USDA Accepts Over 3.4 Million Acres in General CRP Signup
USDA Secretary Sonny Perdue says his agency accepted over 3.4 million acres into the general Conservation Reserve Program signup that recently wrapped up. It’s the first general signup for enrollments since 2016. County offices will begin to notify producers with accepted acres no later than April 3. “The Conservation Reserve Program is one of our nation’s largest conservation endeavors and is critical in helping producers better manage their operations while conserving valuable natural resources,” Perdue says. “The program celebrates its 35th anniversary this year and we’re quite pleased to see one of our largest signups in many years.” For the past 3.5 decades, the CRP has addressed multiple concerns while ensuring the most competitive offers are selected by protecting fragile and environmentally-sensitive lands, improving water quality, enhancing wildlife populations, providing pollinator forage habitat, sequestering carbon in soil and enhancing soil productivity. Seventy percent of the nation’s land is privately owned, and America’s farmers and ranchers have stepped up to protect the environment and natural resources through this program. Farmers and ranchers get an annual rental payment for establishing long-term, resource-conserving plant species, such as approved grasses or trees, to help control soil erosion, improve water quality, and enhance wildlife habitat on cropland.
State Department to Accelerate H-2A Approvals
The U.S. State Department will speed up approvals of H-2A farmworkers by waiving interviews for many applicants. An Agri-Pulse report says the move is applauded by many of the country’s major ag groups, who were worried that embassy cutbacks due to the coronavirus outbreak would leave farmers without the labor they need to run their operations. Late last week, the State Department said consular officers have the option to go ahead and “waive the visa interview for first-time and returning H-2A applicants who have no potential ineligibility.” The State Department’s expansion of the waiver process also quadruples the period in which returning workers may qualify to have their interview waived. That timeframe used to be a year, but applicants who’ve had visas expire anytime during the last four years now won’t need to be interviewed if they are applying for the same visa classification and didn’t need an interview the last time they applied. A State Department document says the new approval process will only be valid during the current calendar year. The Western Growers’ Association issued a statement saying that the move will ease the flow of guest workers into the country during a time when our farmers are doubling their effort to provide the country with safe, healthy, affordable, and abundant food.
Valero Closing Down Two Ethanol Plants
U.S. fuel ethanol producer and refiner Valero is shutting down two of its ethanol plants, one in Nebraska and the other in Iowa. They’re also declaring “force majeure” (mah-ZHURE) on shipments for dried distillers’ grains or corn purchases, which means they won’t be able to meet contracted demands because of unforeseeable conditions. The force majeure is because of a lack of storage availability for corn or ethanol as demand for fuel drops and storage remains limited due to the excess supply. The coronavirus outbreak is causing Americans to drive considerably less than usual, so the low demand and excess supply are forcing Valero to close plants in Albion, Nebraska, and Albert City, Iowa. An Independent Commodity Intelligence Services website article says the supply of fuel ethanol remains ample while some producers are switching to industrial ethanol production as demand from that sector continues to climb. The state of the summer driving season is also uncertain, which is limiting fuel demand. The peak demand for fuel ethanol is during the summer. Fuel ethanol demand is almost cut in half as the people who account for 45 percent of the overall demand are currently on stay-at-home-orders in the U.S., with those order numbers continuing to climb.
Less than Half of U.S. Dairy Farms Signed up for DMC
Fewer dairy farmers chose to opt into the Dairy Margin Coverage Program that was authorized in the 2018 Farm Bill. At the beginning of this year, the forecast was for an improving dairy economy and the USDA prediction tool that showed either low or no DMC payments this year. However, the rapidly-evolving situation brought on by the COVID-19 outbreak is a reminder about how important safety net programs can be in agriculture. DMC is a voluntary, insurance-style program that makes payments when the national average income-over-feed-cost margin falls below a coverage level selected by each farmer. Coverage is available from $4 a hundredweight to as much as $9.50 per hundredweight. At the time of the 2020 program year signup, the all-milk price was expected to remain well above the levels of the previous four years. Projections had the price as high as $19 a hundredweight during 2020. Like other industries, dairy has been hit by the pandemic. Class 3 and Class 4 milk futures have sharply declined. One bright spot is fluid milk sales. Those numbers have jumped higher as Americans shift food dollars away from restaurants and more into at-home spending on food.
Farm Machinery Giants Feeling the Pinch of Coronavirus Fallout
Tractors would likely be moving at a quicker rate this year as farmers across rural America need to replace some aging machines. However, Bloomberg says there is very little movement of farm machinery in the U.S., plus European production is being hampered by shortages across the industry supply chain. Trade war uncertainties and low crop prices kept farmers from shelling out cash to replace their implements. Now the uncertainty brought on by the COVID-19 pandemic is only making matters worse as no one can say for certain how long it will last or how much it will damage the economy. Both Deere & Co and AGCO Corporation say they’ll be cutting back their operations. The move by Deere comes just a month after it announced an unexpected boost in earnings and maintained its early-year positive outlook for stabilization in the ag economy. Now that they can’t forecast the future with as much confidence, the company has changed direction. Large-tractor sales are already down 50 percent below their peak level, which Bloomberg says is normally a sign that farmers have a significant need to replace their equipment. As the U.S. shuts down to stem the spread of the coronavirus, Deere will be reducing some operations and closing others. In Europe, production has already been significantly reduced or suspended in several AGCO facilities as the virus spreads across the continent.
Washington Insider: What’s Ahead for the Economy
The national media certainly is uncertain about the economic future these days. For example, the New York Times emphasized the “might of the Federal Reserve” is on display, but noted that it is now dealing with a virus, which seems almost impossible to understand.
The report began with a look at recent trends in the equities markets and said, “After weeks of dropping like a stone, the stock market began to catapult upward” last week. By the market close on Thursday, the Dow had risen more than 20% from its nadir on Monday — enough, in technical terms, to qualify as a bull market, NYT said.
The article allows that it is largely “pointless” to try to explain moment-to-moment financial market moves since they “usually amount to little more than random noise.” Still, it thinks there are exceptions and “this may be one of those times.”
Among the myriad, and often spurious, explanations for the market’s abrupt change of mood, the NYT found an explanation: the Fed. And it found a financial expert who agreed. He is Edward Yardeni, an independent Wall Street economist who has published a new and exquisitely timed book.
Yardeni says that “The Fed decided it had to really shock and awe the markets and it did the job. You can see the results yourself. He notes that the Fed announced that it would, essentially, take whatever actions were needed to restore stability in the markets, as well as the economy. Referring to the unorthodox monetary policies that the Fed put into effect to combat the global financial crisis of 2007-08, he said the new policy amounted to “quantitative easing to infinity and beyond.”
He said that the Fed’s new policies are so large, and operate on so many fronts, that they are difficult even to catalog. In addition to lowering short-term interest rates to nearly zero, it will buy Treasury securities, government agency securities and corporate bonds. Beyond that, the newly enacted fiscal stimulus package will enable it to increase its already immense firepower by as much as $4 trillion.
An extremely confident Jerome Powell, the Fed chair, sent out a clear message on the “Today” show on Thursday, saying: “When it comes to this lending, we’re not going to run out of ammunition.”
The Times interpreted that statement as a challenge—"fight the Fed and you will face a virtually limitless financial arsenal.” No wonder traders were stunned into submission, it said. In the face of the Fed’s intention to bolster the markets, they stopped dumping stocks and began to gobble them up.
Yet any central bank’s ability to turn an entire economy around is severely limited under any circumstances, the Times cautioned. In the face of a pandemic and what increasingly looks like a severe global recession, even the Fed can provide only partial remedies.
Still, money is flowing into credit markets, which had threatened to seize up as they did in the last financial crisis. The pricing of exchange-traded bond funds—mutual funds that trade all day like stocks—has returned to a semblance of normality, thanks to the Fed’s intervention in the bond market. And riskier assets like stocks have received a therapeutic jolt, now that the Fed has made it absolutely clear that it will do whatever it takes.
In addition, Yardeni pointed out that double-digit gains in stock prices over just a few days may already be enough to have fundamentally shifted traders’ approach to stocks. The Fed acted, and the stock market “just took off,” he said. He added that it was quite possible that the “market has already reached a bottom.”
However, that is a fundamental question for investors, the Times cautions, and says it finds that likelihood doubtful and that it is unwilling to assume that the worst is over in the markets, because there may well be “terrible events” just ahead.”
On Thursday morning, for example, the Labor Department announced that 3.28 million Americans had filed for unemployment benefits in a single week — up from the previous record by a factor of nearly five. And next week’s number could be worse.
Also last week’s reports indicate that the pandemic is still in its early stages and its severity is only beginning to be measured. Economists at JPMorgan Chase now predict that the decline in gross domestic product in the United States will be more than 10% in the current quarter and more than 25% from April through June. How steep the drop in GDP will actually be is anybody’s guess, but it will be certainly be bad.
Whether the stock market, which gave up ground on Friday, can rise in the face of such calamities seems highly questionable, while the performance of the federal government has so far been less than inspiring.
“If we don’t get the pandemic under control,” Yardeni said, “I don’t know what the Fed is going to do about it.” I hope we don’t have to find out. The Fed’s intervention has been comforting, but awesome as it may be, the Fed can’t beat the coronavirus.
So, we will see. The effectiveness of the new efforts to “level” the impacts of the pandemic are extremely important and the combined health and economic policies should be watched very closely by producers as their impacts emerge Washington Insider believes.
The report began with a look at recent trends in the equities markets and said, “After weeks of dropping like a stone, the stock market began to catapult upward” last week. By the market close on Thursday, the Dow had risen more than 20% from its nadir on Monday — enough, in technical terms, to qualify as a bull market, NYT said.
The article allows that it is largely “pointless” to try to explain moment-to-moment financial market moves since they “usually amount to little more than random noise.” Still, it thinks there are exceptions and “this may be one of those times.”
Among the myriad, and often spurious, explanations for the market’s abrupt change of mood, the NYT found an explanation: the Fed. And it found a financial expert who agreed. He is Edward Yardeni, an independent Wall Street economist who has published a new and exquisitely timed book.
Yardeni says that “The Fed decided it had to really shock and awe the markets and it did the job. You can see the results yourself. He notes that the Fed announced that it would, essentially, take whatever actions were needed to restore stability in the markets, as well as the economy. Referring to the unorthodox monetary policies that the Fed put into effect to combat the global financial crisis of 2007-08, he said the new policy amounted to “quantitative easing to infinity and beyond.”
He said that the Fed’s new policies are so large, and operate on so many fronts, that they are difficult even to catalog. In addition to lowering short-term interest rates to nearly zero, it will buy Treasury securities, government agency securities and corporate bonds. Beyond that, the newly enacted fiscal stimulus package will enable it to increase its already immense firepower by as much as $4 trillion.
An extremely confident Jerome Powell, the Fed chair, sent out a clear message on the “Today” show on Thursday, saying: “When it comes to this lending, we’re not going to run out of ammunition.”
The Times interpreted that statement as a challenge—"fight the Fed and you will face a virtually limitless financial arsenal.” No wonder traders were stunned into submission, it said. In the face of the Fed’s intention to bolster the markets, they stopped dumping stocks and began to gobble them up.
Yet any central bank’s ability to turn an entire economy around is severely limited under any circumstances, the Times cautioned. In the face of a pandemic and what increasingly looks like a severe global recession, even the Fed can provide only partial remedies.
Still, money is flowing into credit markets, which had threatened to seize up as they did in the last financial crisis. The pricing of exchange-traded bond funds—mutual funds that trade all day like stocks—has returned to a semblance of normality, thanks to the Fed’s intervention in the bond market. And riskier assets like stocks have received a therapeutic jolt, now that the Fed has made it absolutely clear that it will do whatever it takes.
In addition, Yardeni pointed out that double-digit gains in stock prices over just a few days may already be enough to have fundamentally shifted traders’ approach to stocks. The Fed acted, and the stock market “just took off,” he said. He added that it was quite possible that the “market has already reached a bottom.”
However, that is a fundamental question for investors, the Times cautions, and says it finds that likelihood doubtful and that it is unwilling to assume that the worst is over in the markets, because there may well be “terrible events” just ahead.”
On Thursday morning, for example, the Labor Department announced that 3.28 million Americans had filed for unemployment benefits in a single week — up from the previous record by a factor of nearly five. And next week’s number could be worse.
Also last week’s reports indicate that the pandemic is still in its early stages and its severity is only beginning to be measured. Economists at JPMorgan Chase now predict that the decline in gross domestic product in the United States will be more than 10% in the current quarter and more than 25% from April through June. How steep the drop in GDP will actually be is anybody’s guess, but it will be certainly be bad.
Whether the stock market, which gave up ground on Friday, can rise in the face of such calamities seems highly questionable, while the performance of the federal government has so far been less than inspiring.
“If we don’t get the pandemic under control,” Yardeni said, “I don’t know what the Fed is going to do about it.” I hope we don’t have to find out. The Fed’s intervention has been comforting, but awesome as it may be, the Fed can’t beat the coronavirus.
So, we will see. The effectiveness of the new efforts to “level” the impacts of the pandemic are extremely important and the combined health and economic policies should be watched very closely by producers as their impacts emerge Washington Insider believes.
State Department Shifts H-2 Visa Process
After having suspended visa processing at embassies March 20, the State Department announced it is still continuing to process returning H-2 visas and will now allow consulates to waive in-person H-2 interviews on first-time and returning H-2 applicants “that have not apparent ineligibility or potential eligibility.”
The interview waiver can also apply to those whose previous visas expired within the last 48 hours and did not require a waiver of ineligibility to the last time they applied if they are applying for the same classification as their prior visa.
“We anticipate the vast majority of otherwise-qualified H-2 applicants will now be adjudicated without an interview,” the State Department said.
USDA Secretary Sonny Perdue welcomed the move relative to H-2A visa applicants that work in throughout the ag sector.
The interview waiver can also apply to those whose previous visas expired within the last 48 hours and did not require a waiver of ineligibility to the last time they applied if they are applying for the same classification as their prior visa.
“We anticipate the vast majority of otherwise-qualified H-2 applicants will now be adjudicated without an interview,” the State Department said.
USDA Secretary Sonny Perdue welcomed the move relative to H-2A visa applicants that work in throughout the ag sector.
EPA Addresses Court Ruling On RFS Exemptions
EPA has finally issued comments relative to the situation with small refinery exemptions (SREs) in the wake of the 10th Circuit Court ruling, which invalidated three SREs issued for the 2016 compliance year.
“EPA does not intend to unilaterally revisit or rescind any previously granted small refinery exemptions issued for prior compliance years,” the agency said as it announced other fuel-related actions. “As noted in the temporary policy on COVID-19 Implications for EPA's Enforcement and Assurance Program, issued yesterday (March 26), EPA is focused on protecting our employees and ensuring continued protection of public health and the environment from acute or imminent threats during the COVID-19 pandemic.”
Given that stance, EPA said that investigating and initiating enforcement actions against prior SRE recipients “is a low priority for the agency.”
EPA further said it “intends to develop an appropriate implementation and enforcement response to the 10th Circuit’s decision in RFA v. EPA once appeals have been resolved and the court’s mandate has been issued.”
On the 2019 compliance deadline of March 31 for obligated parties to demonstrate compliance with the Renewable Fuel Standard (RFS), EPA said, “In a forthcoming action, EPA intends to extend the RFS compliance date for small refineries to provide them with additional flexibility.”
“EPA does not intend to unilaterally revisit or rescind any previously granted small refinery exemptions issued for prior compliance years,” the agency said as it announced other fuel-related actions. “As noted in the temporary policy on COVID-19 Implications for EPA's Enforcement and Assurance Program, issued yesterday (March 26), EPA is focused on protecting our employees and ensuring continued protection of public health and the environment from acute or imminent threats during the COVID-19 pandemic.”
Given that stance, EPA said that investigating and initiating enforcement actions against prior SRE recipients “is a low priority for the agency.”
EPA further said it “intends to develop an appropriate implementation and enforcement response to the 10th Circuit’s decision in RFA v. EPA once appeals have been resolved and the court’s mandate has been issued.”
On the 2019 compliance deadline of March 31 for obligated parties to demonstrate compliance with the Renewable Fuel Standard (RFS), EPA said, “In a forthcoming action, EPA intends to extend the RFS compliance date for small refineries to provide them with additional flexibility.”
Monday Watch List
Markets
Fresh back from the weekend, traders will check the latest coronavirus statistics and the trends of late, have been discouraging. Weather, trade news and any new comments from Saudi Arabia on oil production will get attention. A report on pending home sales will be released at 9 a.m. CDT, followed by USDA's report of weekly export inspections at 10 a.m. CDT.
Weather
Most primary crop areas will be dry Monday, allowing for soil drying and continued draining of excessive moisture. Some light rain will form in the Southern Plains and in the Northwest. A more active pattern is in store for Tuesday and Wednesday with rain in the Delta and a rain-snow combination in the Northern Plains. There is no new major flood threat at this time.
Fresh back from the weekend, traders will check the latest coronavirus statistics and the trends of late, have been discouraging. Weather, trade news and any new comments from Saudi Arabia on oil production will get attention. A report on pending home sales will be released at 9 a.m. CDT, followed by USDA's report of weekly export inspections at 10 a.m. CDT.
Weather
Most primary crop areas will be dry Monday, allowing for soil drying and continued draining of excessive moisture. Some light rain will form in the Southern Plains and in the Northwest. A more active pattern is in store for Tuesday and Wednesday with rain in the Delta and a rain-snow combination in the Northern Plains. There is no new major flood threat at this time.
Friday, March 27, 2020
Administration Won’t Drop Tariffs to Boost Economy
Previous reports have suggested administration officials were considering suspending tariffs to stimulate the U.S. economy. However, the top trade adviser for the White House, Peter Navarro, says the Trump administration isn’t considering that right now. A Marketplace Dot Org report says tariffs are taxes on imported goods that American companies and consumers always wind up paying. The head of the Coalition for a Prosperous America says a lot of the duties were first implemented because many imports were being subsidized or otherwise traded unfairly, injuring American companies and their ability to do business. Economists ranging from the Federal Reserve through the private sector have compared how much the tariffs have benefited the economy against how much difficulty they bring as well. “Tariffs cause more losers than winners,” says Dan North, senior economist for a group that provides trade credit insurance. “it’s a significant drag on the economy, especially in the current environment.” Mary Lovely, a professor of economics at Syracuse University, says a suspension would be aimed at U.S. manufacturers that import the items needed to assemble new goods.
Farm Futures Survey says Farmers Planting More Corn in 2020
It looks like U.S. farmers are upping the number of corn acres going into the ground during spring planting. The newest Farm Futures survey shows farmers will plant 96.4 million acres of corn during the 2020 planting season. That’s the second-highest number of intended acres after farmers put a record 97.3 million acres of corn in the ground during 2012. The Farm Futures number is more than two million acres higher than the most recent USDA projection in February of 94 million acres. Farm Futures points out that a lot of things have changed between the two forecasts. The coronavirus pandemic hit, upending the global economy. The increased economic uncertainty, historically cheap input costs, as well as weaker soybean demand from China all appear to have made corn the optimal choice among somewhat limited options for Midwest farmers. Farm Futures estimates that soybean plantings will total 82.7 million acres, almost three million less than the USDA estimate of 85 million, which also came out in February. The survey estimates that farmers will plant 45.8 million acres of wheat, higher than USDA’s estimate of 45.0. Farm Futures also estimates that farmers will plant 11.7 million acres of cotton, less than the USDA estimate of 12.5 million.
FSA Services Available by Phone Appointment Only
USDA’s Farm Service Agency county offices are open only by a phone appointment until further notice because of the COVID-19 outbreak. FSA staff are available to continue helping agricultural producers with program signups, loan servicing, and other important actions. Also, the FSA is relaxing the loan-making process and adding flexibilities for servicing direct and guaranteed loans to provide credit to producers in need. Program delivery staff will continue to come to the FSA office, but they’ll work with producers by phone and other online tools whenever possible. “FSA programs and loans are critical to America’s farmers and ranchers, and we want to continue our work with customers while taking precautionary measures to help prevent the spread of coronavirus,” says FSA Administrator Richard Fordyce. “We recognize that farm loans are critical for annual operating and family living expenses, as well as emergency needs and cash flow through times like this. FSA is working to find and use every option and flexibility to provide producers with credit options and other program benefits.”
Farmers, Rural Businesses, Brace for a Possible Recession
Rural counties are in a fragile spot economically after years of weakness in farming and manufacturing, as well as a weaker recovery since the Great Recession. The COVID-19 pandemic has pressured the U.S. economy to the point that it’s facing another downturn. Politico says the pandemic has put a dent in global trade and U.S. commodity prices. It’s the latest economic challenge for farmers and ranchers after being hit by years of tariffs and weather challenges. “These are ‘black swan’ events, the kinds of things that you can’t plan for,” says John Newton, chief economist for the American Farm Bureau. “It’s a shock to the economy that we will recover from, it’s just a matter how long the drag will be on this.” Mark Scanlan is senior vice president of agriculture and rural policy with the Independent Community Bankers of America. Scanlan says, “It’s not just the farmers, it’s the Main Street businesses that they’re doing business with, the people that are employed by the processing and distribution chain.” Rural demographics could make it even more of a challenge to eventually bounce back, because the most isolated rural counties saw the biggest population loss and have the highest poverty rates.
Hoarding is Pushing the Price of Eggs and Milk Higher
Panic buying and hoarding supplies is pushing wholesale egg prices in the Midwest to their all-time high. The Des Moines Register says prices for other staples like milk, beef, and even ice cream have gone higher as well. Joe Kerns is president of an agricultural consulting company in Ames, Iowa, who says the Midwest isn’t short on supplies, it’s abnormally-high demand that’s causing the price jump. Because of the uncertainty surrounding the coronavirus outbreak, consumers in Iowa and across the U.S. are piling way more than the usual amount of groceries in their shopping carts. That unusually-high demand level is driving prices higher. Kerns says it’s not a surprise because as restaurant dining rooms are closed, more people are cooking in their homes. Some grocers are seeing as much as six times the normal demand for eggs, which is temporarily clearing out shelves. Processor are struggling to fill orders that are coming in at a rapid pace. Stores in Iowa and across the country say they’re seeing increased prices from their suppliers as they keep working to make sure their shelves stay filled with staple products.
U.S. Seed Companies Taking Steps to Meet Farmer Needs
American Seed Trade Association President Andy LaVigne (Luh-VEEN) says the U.S. seed industry is committed to meeting farmer and consumer demand for food. The association says its top commitment is ultimately ensuring that America’s families have ongoing access to a healthy, safe, and affordable food supply as America continues to deal with the impacts of COVID-19. “The seed industry plays a foundational role in the production of the food, feed, forage, clothing, fuel, and other agricultural products to help sustain a sound and balanced economy,” LaVigne says. “As we head into spring planting season right in the middle of the global pandemic, America’s seed companies are working hard to make sure farmers, ranchers, and homeowners, will have access to the quality seed they need to ensure a successful year.” He also says U.S. seed companies have put into place the necessary practices to comply with COVID-19 recommendations from the U.S. Centers for Disease Control and Prevention as they continue to deliver seed during this challenging time. “We appreciate the tireless efforts of American producers who are on the frontlines every day,” LaVigne adds. “We’re also grateful for the strong support and communication from Secretary Perdue and his team to ensure America’s families have ready access to nutritious food, both now and into the future.”
Washington Insider: Virus Relief Bill
The Senate unanimously (96-0) passed the coronavirus relief bill this week and it was sent to the House where it is expected to pass today, the Washington Post says. At least some of its many details are emerging, Bloomberg reports.
As almost everyone knows the plan would include about $2 trillion in aid, including $500 billion in loans and cash assistance for individuals, companies, states and cities. Also emerging are some of the strings that were attached to avoid problems with earlier bailout packages.
For example, companies receiving government loans would be subject to a ban on stock buybacks “through the term of the loan plus one additional year.” They also would be required to limit executive bonuses and take steps to protect workers – and Treasury would be required to disclose the terms of loans or other aid. A new Treasury inspector general would oversee the program.
The bill is largely a win for the retail, hotel and restaurant industries that had initially viewed lawmakers as favoring the airline industry, Bloomberg said. “We see it as an important win,” said Austen Jensen of the Retail Industry Leaders Association said. “Yes, airlines are in a tough spot, but the retail industry is equally in a difficult position.”
Struggling U.S. airlines would be eligible to receive federal loans and direct cash assistance amounting to about $25 billion of each. The cash assistance for payrolls is expected to eliminate the risk of near-term bankruptcies, JPMorgan analyst Jamie Baker said in a report Wednesday.
Other transportation winners include rail and transit operators. Amtrak would get $1.02 billion to cover virus-related revenue losses and support state-funded routes. State and local transit agencies would get $25 billion for operating and capital expenses.
The bill also carves out more than $350 billion in aid for small businesses, mainly guaranteed loans through the Small Business Administration and banks. The loans could be forgiven provided the businesses meet certain requirements including limiting reductions in pay and layoffs, though with more flexibility for employers than the original Senate bill.
The package also would provide direct payments to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child.
Democrats were able to insert a change from a previous version to allow low-income taxpayers the full $1,200 payment. The initial plan would have given smaller checks, or in some cases, no money at all, to very-low income people, Bloomberg said.
Unemployment insurance payments are to be bolstered and recipients would be eligible to receive those funds for an average of four months, up from three in the prior GOP plan. It also would extend eligibility to the self-employed and workers in the gig economy such as drivers for Uber Technologies Inc.
The legislation calls for $117 billion for hospitals and veterans’ health care, as well as $16 billion for personal protective equipment, ventilators and other medical supplies for federal and state response efforts. It also includes $11 billion for vaccines, therapeutics, diagnostics and other medical needs, and at least $250 million to improve the capacity of health-care facilities to respond to medical events, according to a summary by the Senate Appropriations Committee.
The bill also would require insurers to cover tests for Covid-19 and require labs to post cash prices on public websites. Vaccines or other preventive services would be covered without cost-sharing.
Also, many U.S. homeowners and businesses hit hard by coronavirus could get relief from making their monthly mortgage payments. Borrowers with loans insured by government agencies such as the Federal Housing Administration and the Department of Veterans Affairs would be eligible for “forbearance.” Consumers whose mortgages are backed by Fannie Mae and Freddie Mac would also be eligible to skip payments.
U.S. regulators have already mandated relief for borrowers facing financial hardships due to coronavirus, in addition to suspending foreclosures and evictions through the end of April and in some cases longer. Under the Senate bill, borrowers would be eligible for 60 days of forbearance if they can demonstrate virus-related financial stress. The relief can be extended for 30 days up to four times.
Commercial borrowers with federally backed loans could potentially skip payments for at least 30 days with a possible extension of up to 60 additional days.
The stimulus package includes up to $23.5 billion in farm aid and would provide $9.5 billion in emergency funds for agriculture, including livestock producers and growers of specialty crops such as fruits and vegetables. And it would authorize $14 billion in new borrowing authority for the USDA’s Commodity Credit Corp. Agriculture groups including the American Farm Bureau Federation, the United Fresh Produce Association and livestock groups had sought aid in the stimulus package.
A coronavirus relief fund with $150 billion would be created for states, cities and other local governments. Additional funds will be set aside for territories, tribal governments and other entities.
Democrats sought to add funding for clean energy but in the end funds for both clean and conventional energy were scuttled. However, the issue could arise later as Congress takes up additional coronavirus-related legislation in coming weeks.
So, we will see. The legislation being considered is criticized by many for being too large and by others for being too small—even as the need for assistance was dramatized by the increase in unemployment from 3.5% to 5.5% this week and numbers of virus cases continued to grow. Clearly, this is a crisis that producers should watch closely as it intensifies, Washington Insider believes.
As almost everyone knows the plan would include about $2 trillion in aid, including $500 billion in loans and cash assistance for individuals, companies, states and cities. Also emerging are some of the strings that were attached to avoid problems with earlier bailout packages.
For example, companies receiving government loans would be subject to a ban on stock buybacks “through the term of the loan plus one additional year.” They also would be required to limit executive bonuses and take steps to protect workers – and Treasury would be required to disclose the terms of loans or other aid. A new Treasury inspector general would oversee the program.
The bill is largely a win for the retail, hotel and restaurant industries that had initially viewed lawmakers as favoring the airline industry, Bloomberg said. “We see it as an important win,” said Austen Jensen of the Retail Industry Leaders Association said. “Yes, airlines are in a tough spot, but the retail industry is equally in a difficult position.”
Struggling U.S. airlines would be eligible to receive federal loans and direct cash assistance amounting to about $25 billion of each. The cash assistance for payrolls is expected to eliminate the risk of near-term bankruptcies, JPMorgan analyst Jamie Baker said in a report Wednesday.
Other transportation winners include rail and transit operators. Amtrak would get $1.02 billion to cover virus-related revenue losses and support state-funded routes. State and local transit agencies would get $25 billion for operating and capital expenses.
The bill also carves out more than $350 billion in aid for small businesses, mainly guaranteed loans through the Small Business Administration and banks. The loans could be forgiven provided the businesses meet certain requirements including limiting reductions in pay and layoffs, though with more flexibility for employers than the original Senate bill.
The package also would provide direct payments to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child.
Democrats were able to insert a change from a previous version to allow low-income taxpayers the full $1,200 payment. The initial plan would have given smaller checks, or in some cases, no money at all, to very-low income people, Bloomberg said.
Unemployment insurance payments are to be bolstered and recipients would be eligible to receive those funds for an average of four months, up from three in the prior GOP plan. It also would extend eligibility to the self-employed and workers in the gig economy such as drivers for Uber Technologies Inc.
The legislation calls for $117 billion for hospitals and veterans’ health care, as well as $16 billion for personal protective equipment, ventilators and other medical supplies for federal and state response efforts. It also includes $11 billion for vaccines, therapeutics, diagnostics and other medical needs, and at least $250 million to improve the capacity of health-care facilities to respond to medical events, according to a summary by the Senate Appropriations Committee.
The bill also would require insurers to cover tests for Covid-19 and require labs to post cash prices on public websites. Vaccines or other preventive services would be covered without cost-sharing.
Also, many U.S. homeowners and businesses hit hard by coronavirus could get relief from making their monthly mortgage payments. Borrowers with loans insured by government agencies such as the Federal Housing Administration and the Department of Veterans Affairs would be eligible for “forbearance.” Consumers whose mortgages are backed by Fannie Mae and Freddie Mac would also be eligible to skip payments.
U.S. regulators have already mandated relief for borrowers facing financial hardships due to coronavirus, in addition to suspending foreclosures and evictions through the end of April and in some cases longer. Under the Senate bill, borrowers would be eligible for 60 days of forbearance if they can demonstrate virus-related financial stress. The relief can be extended for 30 days up to four times.
Commercial borrowers with federally backed loans could potentially skip payments for at least 30 days with a possible extension of up to 60 additional days.
The stimulus package includes up to $23.5 billion in farm aid and would provide $9.5 billion in emergency funds for agriculture, including livestock producers and growers of specialty crops such as fruits and vegetables. And it would authorize $14 billion in new borrowing authority for the USDA’s Commodity Credit Corp. Agriculture groups including the American Farm Bureau Federation, the United Fresh Produce Association and livestock groups had sought aid in the stimulus package.
A coronavirus relief fund with $150 billion would be created for states, cities and other local governments. Additional funds will be set aside for territories, tribal governments and other entities.
Democrats sought to add funding for clean energy but in the end funds for both clean and conventional energy were scuttled. However, the issue could arise later as Congress takes up additional coronavirus-related legislation in coming weeks.
So, we will see. The legislation being considered is criticized by many for being too large and by others for being too small—even as the need for assistance was dramatized by the increase in unemployment from 3.5% to 5.5% this week and numbers of virus cases continued to grow. Clearly, this is a crisis that producers should watch closely as it intensifies, Washington Insider believes.
More Actions Urged on Dairy
USDA should use its Section 32 authority to purchase additional dairy products in a bid to support the struggling dairy industry and meet rising food assistance needs as the nation grapples with the COVID-19 pandemic, Vermont’s congressional delegation urged in a March 24 letter to USDA Secretary Sonny Perdue.
The coronavirus crisis is hitting the U.S. dairy industry hard and the National Milk Producers Federation (NMPF) is looking to USDA to help stabilize prices and provide aid to struggling farmers along with Vermont’s congressional delegation.
USDA should “immediately exercise its Section 32 authority to purchase additional dairy products for distribution through The Emergency Food Assistance Program (TEFAP),” the lawmakers urged. The economic effects of the COVID-19 pandemic are expected to increase strain on the charitable food system, and the purchases will “will help ensure those in need receive critical nutrition during this challenging period,” they said.
A key issue the dairy industry is concerned about relates the level of school closures that have taken place, reducing milk demand and that may well be demand that will be lost for the sector.
The coronavirus crisis is hitting the U.S. dairy industry hard and the National Milk Producers Federation (NMPF) is looking to USDA to help stabilize prices and provide aid to struggling farmers along with Vermont’s congressional delegation.
USDA should “immediately exercise its Section 32 authority to purchase additional dairy products for distribution through The Emergency Food Assistance Program (TEFAP),” the lawmakers urged. The economic effects of the COVID-19 pandemic are expected to increase strain on the charitable food system, and the purchases will “will help ensure those in need receive critical nutrition during this challenging period,” they said.
A key issue the dairy industry is concerned about relates the level of school closures that have taken place, reducing milk demand and that may well be demand that will be lost for the sector.
State Department Taking Action to Speed H2 Visa Situation
The U.S. Department of State and the Department of Homeland Security have decided to authorize temporary waivers for in-person interviews for eligible H-2 visa applicants. This applies to both H-2A and H-2B visas.
“Temporarily waiving in-person interviews for H-2 visa applicants streamlines the application process and helps provide steady labor for the agriculture sector during this time of uncertainty,” USDA Secretary Sonny Perdue said in a statement. “H-2 labor is vital to the economy and food security of America – our farmers and producers depend on these workers to continue to feed and clothe the world.”
It is not clear if the State Department action applies to only returning visa holders or if the process will help seed the new visa applicants.
“Temporarily waiving in-person interviews for H-2 visa applicants streamlines the application process and helps provide steady labor for the agriculture sector during this time of uncertainty,” USDA Secretary Sonny Perdue said in a statement. “H-2 labor is vital to the economy and food security of America – our farmers and producers depend on these workers to continue to feed and clothe the world.”
It is not clear if the State Department action applies to only returning visa holders or if the process will help seed the new visa applicants.
Friday Watch List
Markets
Increasing coronavirus statistics remain a top concern for markets with everything else a distant second on Friday. Reports on U.S. personal incomes and consumer spending are due out at 7:30 a.m. CDT, followed by an index of consumer sentiment at 9 a.m. Other market interests include weather, trade news and any new comments from Saudi Arabia about oil production.
Weather
Showers and thunderstorms will extend from the central Plains to the eastern Midwest Friday. Rain will be locally heavy in the eastern Midwest with a threat of flash flooding. Other crop areas will be dry. The rain area expands through the remainder of the Midwest and into the Northern Plains Friday night and Saturday, with moderate to locally heavy totals. Flood threat will be high due to rain falling on saturated soils, notably in northern and eastern crop areas.
Increasing coronavirus statistics remain a top concern for markets with everything else a distant second on Friday. Reports on U.S. personal incomes and consumer spending are due out at 7:30 a.m. CDT, followed by an index of consumer sentiment at 9 a.m. Other market interests include weather, trade news and any new comments from Saudi Arabia about oil production.
Weather
Showers and thunderstorms will extend from the central Plains to the eastern Midwest Friday. Rain will be locally heavy in the eastern Midwest with a threat of flash flooding. Other crop areas will be dry. The rain area expands through the remainder of the Midwest and into the Northern Plains Friday night and Saturday, with moderate to locally heavy totals. Flood threat will be high due to rain falling on saturated soils, notably in northern and eastern crop areas.
Thursday, March 26, 2020
Stimulus Package Includes Ag Provisions
The $2 trillion stimulus package includes billions of dollars for U.S. agriculture. A quick analysis by the American Farm Bureau Federation shows agriculture is set to receive $49 billion. Of that, $14 billion is provided to the Department of Agriculture’s Commodity Credit Corporation, and $15.8 billion is provided to the Supplemental Nutrition Assistance program. Meanwhile, $9.5 billion is provided to the office of the Secretary for livestock and specialty crops, and $8.5 billion is provided for Child Nutrition Programs. Additionally, the funding includes $450 million for commodity assistance, $100 million for broadband grants, and $25 million for distance learning and telemedicine efforts. The agreement opens the door for a potential third round of Market Facilitation Payments through the Commodity Credit Corporation, originally created to help farmers as the Trump administration carries out its trade agenda. Funding an additional round of payments through the program is a request from many groups in agriculture.
NCGA Issues Steps to Manage COVID-19 on the Farm
A guide by the National Corn Growers Association offers tips to manage COVID-19 on the farm. Farmers are preparing for spring planting, which means activity levels are increasing on the farm for things like field preparation and on-farm deliveries. NCGA says limiting interactions and exposure is a good idea to limit exposure and risk related to COVID-19, as it is critical to practice biosecurity for your family, your employees, the public, and animals. NCGA recommends farmers identify and coordinate a drop-off location for supplier deliveries to the farm. If possible, set this up away from high traffic areas and housing. Further instruction includes practicing distancing with delivery drivers, log all deliveries and utilize a visitor's log for everyone entering the farm. NCGA recommends farmers prepare on-farm workers and family members, and to sanitize contact surfaces around the farm, including door handles and knobs, floor mats, steering wheels and other commonly contacted surfaces. Additionally, it is recommended that all farms have Continuity of Business plans, to keep operations running smoothly in case of any disruption.
Coalition Welcomes Decision Not to Seek Re-Hearing of SRE Ruling
Ethanol and farm groups welcomed the Trump administration’s decision not to seek a re-hearing of a recent ruling that struck down certain small refinery exemptions. The exemptions under the Renewable Fuel Standard “vastly exceeded” Environmental Protection Authority in granting exemptions from 2016 and 2017 RFS requirements for three refineries, according to the court. The challenge was brought against EPA in May 2018 by the Renewable Fuels Association, National Corn Growers Association, American Coalition for Ethanol and National Farmers Union in response to the massive demand destruction caused by the Agency’s use of SREs. In the wake of the decision not to seek a re-hearing, the four groups called upon the EPA to immediately apply the court decision nationwide. The group states, “With this key milestone now behind us, we look forward to EPA applying the Tenth Circuit decision nationwide to all SRE petitions, beginning with the 25 pending petitions for 2019 exemptions.”
Kind Asks Trump to Expedite Tariff Exclusion Process
A letter to the Trump Administration from three lawmakers asks the President to temporarily suspend tariffs or at least greatly expedite the tariff exclusion process. Representative Ron, a Democrat from Wisconsin, and others, signed the letter, which states, “Immediate tariff relief will have numerous positive effects, including reducing disruptions to existing supply chains and easing the economic burden on our companies and their workers.” The letter says tariff duties continue to threaten the economic well-being of families across the country and the viability of the health care, manufacturing, retail, and food sectors. The lawmakers are seeking a temporary reprieve from President Donald Trump, not permanent action. The letter says, “it is important to note that we are not asking for permanent rollbacks at this time. Instead, we are asking for you to provide temporary relief for our constituents during this public health crisis.” Joining Kind in the letter was Democratic Representatives Suzan DelBene of Washington and Terri Sewell of Alabama.
Canada Announces Support Programs for Agriculture
Canadian Prime Minister Justin Trudeau this week announced new measures to support farmers and agri-food businesses in Canada facing financial hardship due to the impacts of the COVID-19 pandemic. Farm Credit Canada will receive support from the Government that will allow for an additional $5 billion in lending capacity to producers, agribusinesses, and food processors. This will offer increased flexibility to farmers who face cashflow issues and to processors who are impacted by lost sales, helping them remain financially strong. In addition, all eligible farmers who have an outstanding Advance Payments Program loan due on or before April 30 will receive a Stay of Default, allowing them an additional six months to repay the loan. This measure, which represents $173 million in deferred loans, will help keep more money in farmers' pockets during these critical months. The Advance Payments Program is a financial loan guarantee program that provides producers easy access to credit through cash advances.
Ethanol Industry Employs Significant Amount of Veterans
A new study shows America's ethanol industry employs a significantly larger share of military veterans than any other segment of the energy industry. Nearly one in five ethanol industry employees is a veteran at 19 percent, compared to a national average of six percent across all sectors of the workforce, according to the 2020 U.S. Energy and Employment Report published by the National Association of State Energy Offices and Energy Futures Initiative. Per 100 workers, the ethanol industry employs more than twice as many veterans as the petroleum, natural gas, nuclear, coal, and wind energy sectors. Across all energy segments, veterans comprise nine percent of the U.S. energy sector's workforce, slightly above the national average. RFA President and CEO Geoff Cooper, an Army veteran who attained the rank of Captain, says, “The ethanol industry is a perfect fit for thousands of veterans across the country.” With ethanol jobs currently at risk due to the COVID-19 pandemic, and other factors, Cooper said the report serves as a timely reminder that the ethanol industry is a crucial employer of veterans.
Washington Insider: The Food Supply is Safe
Amid widespread concerns about threats from the coronavirus, Food Safety News (FSN) is carrying a report by Frank Yiannas, deputy FDA commissioner for food policy and responses. Yiannas notes that a critical and specific part of FDA’s mission is safeguarding the human and animal food supply including “helping to ensure that our food is not contaminated at any point during its journey along the supply chain.”
He notes that the COVID-19 threat is a “new frontier” but wants to assure consumers that it does not threaten the U.S. food supply.
Unlike foodborne gastrointestinal viruses like norovirus and hepatitis A that make people ill through contaminated food, COVID-19 is spread mainly from person to person and causes respiratory, not gastrointestinal illnesses, he says. He emphasizes that “foodborne exposure to this virus is not known to be a route of transmission.”
As a result, he says, the agency does not anticipate that food products would need to be recalled or withdrawn from the market “for reasons related to the outbreak.”
This is true, he says, even if a person who works in a human or animal food facility is confirmed to be positive for the COVID-19 virus.
Food production and manufacturing are dispersed throughout the U.S., Yiannas says and notes that he is not aware of any widespread disruptions of the supply chains which “remain strong.” The FDA is working closely with food manufacturers and grocery stores to insure that they continue to insure normal flows of products, he says.
He also says that the shortages that have been reported are “localized” and tend to reflect sharp increases in demand rather than a lack of production capacity — and that they have been “generally overcome quickly.”
Yiannas notes that FDA Commissioner Dr. Stephen Hahn announced last week that the agency has postponed most foreign inspections through April — mainly because of restrictions on travel and concerns about the safety of FDA’s investigators. In the meantime, FDA is using its other tools and authorities to help ensure the safety of imported foods, including inspections at the ports of entry and the use of PREDICT, its risk-based import screening tool.
FDA also has issued guidance on its intentions to temporarily delay audits of requirements for supplier verification under the FDA Food Safety Modernization Act. These audits are designed to confirm compliance with safety standards but travel restrictions will likely prevent receiving facilities and importers from obtaining them for the immediate future.
For verification that would include a domestic or foreign onsite audit, facilities are expected to temporarily select an alternative way to verify compliance with food safety standards, such as sampling and testing, or food safety records reviews.
Yiannas further notes that FDA is helping protect workers in food facilities against infections and problems they may have getting to and from work with curfews and quarantines in certain places. He says that there are significant requirements for human food facilities to maintain clean and sanitized facilities and food contact surfaces and that workers are required to practice frequent hand washing and glove changes before and after preparing food.
Yiannas notes that FDA is working closely with the food industry and existing state, local, and international regulatory partners are required to monitor and mitigate any impact on food safety and food access for the American public. This includes working with local, state and federal officials, and industry, to help ensure that food workers can get to and from their jobs in communities where curfews and shelter-in-place directives are enforced.
Yiannas focuses heavily on consumer safety and confidence in food supplies and assures FSN that the agency will continue efforts to make sure that consumers have access to the foods they need for themselves, their families and their livestock.
In the flurry of media talk about all things related to the virus outbreak, there have been occasional but urgent questions about food safety among those “sheltering in place.” The FSN comments by Yiannas seem timely and likely to be useful to answer a number of these, Washington Insider believes.
He notes that the COVID-19 threat is a “new frontier” but wants to assure consumers that it does not threaten the U.S. food supply.
Unlike foodborne gastrointestinal viruses like norovirus and hepatitis A that make people ill through contaminated food, COVID-19 is spread mainly from person to person and causes respiratory, not gastrointestinal illnesses, he says. He emphasizes that “foodborne exposure to this virus is not known to be a route of transmission.”
As a result, he says, the agency does not anticipate that food products would need to be recalled or withdrawn from the market “for reasons related to the outbreak.”
This is true, he says, even if a person who works in a human or animal food facility is confirmed to be positive for the COVID-19 virus.
Food production and manufacturing are dispersed throughout the U.S., Yiannas says and notes that he is not aware of any widespread disruptions of the supply chains which “remain strong.” The FDA is working closely with food manufacturers and grocery stores to insure that they continue to insure normal flows of products, he says.
He also says that the shortages that have been reported are “localized” and tend to reflect sharp increases in demand rather than a lack of production capacity — and that they have been “generally overcome quickly.”
Yiannas notes that FDA Commissioner Dr. Stephen Hahn announced last week that the agency has postponed most foreign inspections through April — mainly because of restrictions on travel and concerns about the safety of FDA’s investigators. In the meantime, FDA is using its other tools and authorities to help ensure the safety of imported foods, including inspections at the ports of entry and the use of PREDICT, its risk-based import screening tool.
FDA also has issued guidance on its intentions to temporarily delay audits of requirements for supplier verification under the FDA Food Safety Modernization Act. These audits are designed to confirm compliance with safety standards but travel restrictions will likely prevent receiving facilities and importers from obtaining them for the immediate future.
For verification that would include a domestic or foreign onsite audit, facilities are expected to temporarily select an alternative way to verify compliance with food safety standards, such as sampling and testing, or food safety records reviews.
Yiannas further notes that FDA is helping protect workers in food facilities against infections and problems they may have getting to and from work with curfews and quarantines in certain places. He says that there are significant requirements for human food facilities to maintain clean and sanitized facilities and food contact surfaces and that workers are required to practice frequent hand washing and glove changes before and after preparing food.
Yiannas notes that FDA is working closely with the food industry and existing state, local, and international regulatory partners are required to monitor and mitigate any impact on food safety and food access for the American public. This includes working with local, state and federal officials, and industry, to help ensure that food workers can get to and from their jobs in communities where curfews and shelter-in-place directives are enforced.
Yiannas focuses heavily on consumer safety and confidence in food supplies and assures FSN that the agency will continue efforts to make sure that consumers have access to the foods they need for themselves, their families and their livestock.
In the flurry of media talk about all things related to the virus outbreak, there have been occasional but urgent questions about food safety among those “sheltering in place.” The FSN comments by Yiannas seem timely and likely to be useful to answer a number of these, Washington Insider believes.
US Grocery Store Price Increases Remain Subdued As COVID-19 Uncertainty Arrives
Difficult economic times ahead for the U.S. are poised to unfold with the COVID-19 situation, but consumers are still not faced with sticker shock at the grocery store, according to the latest update from USDA.
USDA looks for overall U.S. food prices are forecast to increase in 2020 by 1.5% to 2.5% compared with 2019, nearly in line with the increase of 1.9% registered for 2019.
Grocery store prices are forecast to increase from 0.5% to 1.5%, in line with the increase of 0.9% in 2019. Food at home (grocery store) prices have a 20-year average increase of 2%. The increase of 0.9% in 2019 was the biggest rise at the grocery store since prices rose 1.2% in 2015.
Food away from home (restaurant) prices for 2020 are now seen rising from 1.5% to 2.5%, down from the month-ago outlook for prices for eating out to rise by 2% to 3%. The increase now forecast by USDA would be considerably under the 20-year average of 2.8%.
USDA looks for overall U.S. food prices are forecast to increase in 2020 by 1.5% to 2.5% compared with 2019, nearly in line with the increase of 1.9% registered for 2019.
Grocery store prices are forecast to increase from 0.5% to 1.5%, in line with the increase of 0.9% in 2019. Food at home (grocery store) prices have a 20-year average increase of 2%. The increase of 0.9% in 2019 was the biggest rise at the grocery store since prices rose 1.2% in 2015.
Food away from home (restaurant) prices for 2020 are now seen rising from 1.5% to 2.5%, down from the month-ago outlook for prices for eating out to rise by 2% to 3%. The increase now forecast by USDA would be considerably under the 20-year average of 2.8%.
Senators Call for Actions on Trade Amid COVID-19 Pandemic
With the COVID-19 situation expected to extract a heavy toll on the U.S. economy, a group of Senate Finance Committee Republicans are calling on President Donald Trump to take several actions on the trade front, including tariff waivers on medical products and broadening the tariff exemptions.
“One area where you have immediate tools at your disposal to decrease the economic harm from COVID-19 is trade policy,” said the lawmakers in the letter spearheaded by Senate Finance Committee Chairman Chuck Grassley, R-Iowa. They noted that one area where there are “immediate tools” to “decrease the economic harm from COVID-19 is trade policy.”
The lawmakers called on Trump to work with other countries to limit or remove trade restrictions on medical products needed in the COVID-19 fight. Lawmakers want the president to consider tariff relief on medical devices, to provide a temporary deferral for companies on duty collections, extending expanding tariff relief on Section 301 tariffs and to not take any new measures that “would create uncertainty or undue difficulty for American workers, families, farmers, ranchers, and businesses, and asking our global trading partners to do the same.”
“One area where you have immediate tools at your disposal to decrease the economic harm from COVID-19 is trade policy,” said the lawmakers in the letter spearheaded by Senate Finance Committee Chairman Chuck Grassley, R-Iowa. They noted that one area where there are “immediate tools” to “decrease the economic harm from COVID-19 is trade policy.”
The lawmakers called on Trump to work with other countries to limit or remove trade restrictions on medical products needed in the COVID-19 fight. Lawmakers want the president to consider tariff relief on medical devices, to provide a temporary deferral for companies on duty collections, extending expanding tariff relief on Section 301 tariffs and to not take any new measures that “would create uncertainty or undue difficulty for American workers, families, farmers, ranchers, and businesses, and asking our global trading partners to do the same.”
Thursday Watch List
Markets
Thursday morning has the usual lineup of reports at 7:30 a.m. CDT: weekly export sales, U.S. jobless claims, and an update of the U.S. Drought Monitor. Fourth-quarter U.S. GDP will also be released, followed by U.S. natural gas inventory at 9:30 a.m. USDA's quarterly hogs and pigs report is set for 2 p.m. CDT and will also compete for attention with weather, trade news and the latest coronavirus statistics.
Weather
Very warm, dry and windy conditions Thursday will lead to notable wildfire threats and stress to winter wheat in the Southern Plains. Elsewhere, light rain and snow will occur in the north-central Plains, with light rain in the northern Midwest. Rain expands into more of the Midwest Friday, with severe storms possible. Temperatures will be well above normal in central and southern areas and near to below normal north.
Thursday morning has the usual lineup of reports at 7:30 a.m. CDT: weekly export sales, U.S. jobless claims, and an update of the U.S. Drought Monitor. Fourth-quarter U.S. GDP will also be released, followed by U.S. natural gas inventory at 9:30 a.m. USDA's quarterly hogs and pigs report is set for 2 p.m. CDT and will also compete for attention with weather, trade news and the latest coronavirus statistics.
Weather
Very warm, dry and windy conditions Thursday will lead to notable wildfire threats and stress to winter wheat in the Southern Plains. Elsewhere, light rain and snow will occur in the north-central Plains, with light rain in the northern Midwest. Rain expands into more of the Midwest Friday, with severe storms possible. Temperatures will be well above normal in central and southern areas and near to below normal north.
Wednesday, March 25, 2020
Implementation of China Agreement Continues
Implementation of the Phase One Agreement continues, according to the Department of Agriculture and the U.S. Trade Representative’s office. In a news release Tuesday, the two announced continued progress in the implementation of the agriculture-related provisions. Among the recent actions, both countries signed a regionalization agreement that, in the event of a detection of highly pathogenic avian influenza or virulent Newcastle disease in a particular region of the United States, China will allow U.S. poultry exports from unaffected areas. China also notified the U.S. of proposed maximum residue levels for three hormones commonly used in U.S. beef production. U.S. beef producers, for the first time since 2003, will have access to nearly all beef products into China. U.S. pork producers will also be able to significantly expand the types of pork products shipped to China. China also updated its list of U.S. facilities eligible to export distillers dried grains with solubles, and the U.S. Food and Drug Administration published a notice to facilitate the registration of animal feed manufacturing facilities for export to China.
Agriculture Groups Call on Lawmakers to Support Farmers
A group of agriculture organizations is calling on Congress to expand the Department of Agriculture's borrowing authority under the Commodity Credit Corporation. The groups say Congress must act to ensure the CCC has the authority and funding to assist farmers and ranchers facing serious cash flow challenges during the coronavirus pandemic. The letter, addressed to both Senate and House leaders reads, "Farmers, ranchers and the supply chain that support them will not let Americans down during this unprecedented crisis, and they are asking the same of you." The organizations say, "Millions of producers will need help with cash flow given the rapid and unanticipated decline in commodity prices, the likely closures of ethanol processing plants, the effective elimination of direct-to-consumer sales and decline in full-service restaurant and school meal demand." Groups representing food, fuel and fiber signed on to the letter, including the American Farm Bureau Federation. The groups say Congress must ensure the CCC has ample authority and funding to help farmers and ranchers survive during this emergency.
NMPF Thanks USDA for Coronavirus Response, Outlines Dairy Needs
Dairy farmers welcome the response by the Department of Agriculture to the coronavirus crisis, but say more relief is needed. The National Milk Producers Federation sent a letter to Agriculture Secretary Sonny Perdue detailing the needs of dairy farmers during the crisis. NMPF President and CEO Jim Mulhern says in the letter, “The demand shock experienced by our entire economy is turning what initially looked to dairy farmers like the first decent year in the last five into one of potentially widespread economic devastation." Dairy farmers expect to face price declines and unstable demand over the next several months, as joblessness rises, schools remain closed, and farm and dairy processing operations face unprecedented logistical challenges. In its letter, NMPF said it looks forward to working with the USDA in program implementation, trade facilitation and other areas, but said additional remedies will be needed. Those include additional dairy product purchases, compensation for milk disposal, and reopening of signup in the Dairy Margin Coverage program.
United Fresh Urges Congress to Take Immediate Action
Produce suppliers are looking for federal assistance, as many industry sectors seek relief from the impact of the coronavirus outbreak. The United Fresh Produce Association, representing the fresh produce supply chain, has requested urgent action by Congress to mitigate the challenges facing the sectors that have been impacted most severely. The immediate impact felt by the fresh produce supply chain is $5 billion for exposure for lost inventory and risk to growers, $1 billion a week in lost sales, and tens of thousands employee furloughed, according to the organization. Those recommendations include the establishment of a $1 billion fund, to address claims filed by foodservice distributors who have outstanding expenditures to grower-shippers. However, the group says the need may skyrocket to $5 billion. The group also requests USDA Immediately make an additional $1 billion available to help meet the needs of schools and all emergency feeding sites. Finally, they request the federal government provide $225 million funding for the Supplemental Nutrition for Women, Infants, and Children to accommodate a temporary increase to the cash-value voucher benefits.
TFI Urges Governors to List Industry as Critical
The Fertilizer Institute is urging state governors to follow federal guidelines and list the fertilizer industry as essential service and critical infrastructure. TFI says in a letter to governors, the declaration will “ensure that American agriculture can remain operable and continue to provide food security.” TFI represents fertilizer manufacturers, transporters, wholesalers, importers, brokers and retailers. The fertilizer industry supports nearly 500,000 American jobs and has an economic impact of over $130 billion annually. The letter says the next six to eight weeks will be crucial to its members and their farmer customers, as they conduct spring planting activities. TFI says the timely delivery of plant nutrients to American farmers is critical to their ability to produce food, fuel, and fiber. In order to get plant nutrients to the farm, the fertilizer industry relies on a safe and efficient transportation network, including rail carriers, ports, barges, pipelines, and trucks. In addition, the ability to move products across the borders of Canada and Mexico is also an important part of the fertilizer supply chain.
Fund Launched to Help Farmers Affected by the COVID-19 Crisis
American Farmland Trust Tuesday announced a fund to help farmers affected by the coronavirus crisis. Announced on National Ag Day, the fund will award eligible farmers with cash grants of up to $1,000 each to help them weather the current storm of market disruptions caused by the COVID-19 crisis. The initial focus will be on farms that sell at farmers markets or to restaurants, caterers, schools, stores, or makers who use farm products. That focus could change over time as the negative impacts of the crisis become more widespread within U.S. agriculture. A new report estimates that local and regional food systems could lose up to $1.3 billion between just March and May of this year. While all farmers and ranchers will likely be seriously impacted by the market disruptions caused by the coronavirus pandemic, the organization says, "some farmers are losing their primary markets because people can't eat in restaurants or shop at farmers markets." The Farmer Relief Fund program details can be found at www.farmland.org/relief.
Washington Insider: The Fed and Whatever It Takes
As of mid-day Tuesday, there was no firm deal yet on the expected federal economic bailout. However, there was a modest amount of information regarding efforts by the central bank to keep money flowing in the economy.
The Fed announcement on Monday had “lots of bureaucratic jargon and an alphabet soup of acronyms,” the Times said. However, at its core, “it was making a simple promise—to use the full range of tools to support households, businesses and the U.S. economy overall.”
Most of the efforts the central bank described fall under the broad category of “buying debt,” the Times said — policies the Fed already has in motion through purchases of vast quantities of Treasury bonds — debt issued by the federal government — and mortgage debt backed by government agencies like Fannie Mae and Freddie Mac.
Still, this week’s announcement went further, promising to keep buying “in the amounts needed to support smooth market functioning.” It also expanded programs that will support debt issued by companies, state and local governments, and other entities (though it won’t buy municipal debt directly).
The basic problem the Fed is trying to solve is that financial markets—particularly the bond market—have nearly frozen up in recent days. By promising to buy debt, the Fed is trying to get markets working again.
The report identifies two categories of American businesses--companies like airlines, hotel chains and cruise ship operators, that have seen their revenue more or less wiped out by the pandemic. Congress might step in to bail some of those companies out but there isn’t much that the Fed can do for them.
Instead, the Fed will focus on businesses that are basically healthy but are threatened by the freeze-up in financial markets. Some have been insulated from the outbreak’s effects but rely on debt as part of their normal operations. Others have lost business because of the virus but could survive if they could borrow to cover their expenses.
“If these corporations don’t have financing or they’re losing their access to credit, it means they’re going to have to close their doors and lay off workers,” said Michelle Meyer, chief U.S. economist for Bank of America Merrill Lynch. Those impacts make the recession spirals deeper and more prolonged.”
The Times noted that “ordinarily, the Fed fights an economic slowdown by lowering interest rates.” But ultralow interest rates don’t do any good if no one will lend money, or if lenders demand a huge premium. That’s what was starting to happen in recent days. Julia Coronado, president of MacroPolicy Perspectives, an economic consultancy said. “If corporations can’t get cash and mortgage markets aren’t functioning, your low rates don’t translate to households and businesses.”
By buying up government bonds and other safe assets, the Fed is trying to give investors sufficient confidence to put their money back into the bond market, which in turn should allow its interest-rate policies to work as intended.
A lot of what the Fed is doing is taken from the 2008-9 playbook used by Chairman Ben Bernanke. The Fed bought Treasury notes and mortgage bonds then, though in the past it has always put a dollar figure on its bond-buying programs. It took the extreme uncertainty of the current moment to push the Fed to pledge open-ended stimulus, the Times said. The central bank is also reviving several other programs that made their debut during the last crisis.
But policymakers are also taking novel steps. Most important, the Fed will effectively lend money directly to large corporations, something it has never done before. The central bank framed the program as “bridge financing” to help otherwise healthy companies keep their doors open and their workers employed during a period of disruption.
The Times notes that sales have abruptly dried up for restaurants, bars, independent retailers and other small businesses, and few have the savings to survive more than a few weeks without revenue. Moreover, small businesses can’t sell stock or issue debt to raise the cash to keep going. So, the Fed said on Monday that it would establish the Main Street Business Lending Program to encourage lending to small and medium-size businesses.
The Fed released few details, but said that it expects to soon. Economists said the move looked at least partly like an effort by the Fed to reassure the public that it wasn’t favoring big businesses over small ones. “I think the Fed is well aware of the optics and the messaging,” Coronado said. “It’s not always clear to people that buying billions in mortgage securities helps them, even though it does.”
Earlier, the Fed, along with other financial regulators announced new steps intended to encourage banks and other lenders to cut borrowers some slack during the pandemic. The regulators basically said to go ahead and modify loans to help businesses survive. “They will not criticize institutions for doing so in a safe and sound manner.”
In addition, there is a consensus among economists that until the outbreak is brought under control, both economic and monetary policy offer limited tools for government intervention — uncertainties that will continue to haunt policy makers and which should be watched closely by producers and others as the season advances, Washington Insider believes.
The Fed announcement on Monday had “lots of bureaucratic jargon and an alphabet soup of acronyms,” the Times said. However, at its core, “it was making a simple promise—to use the full range of tools to support households, businesses and the U.S. economy overall.”
Most of the efforts the central bank described fall under the broad category of “buying debt,” the Times said — policies the Fed already has in motion through purchases of vast quantities of Treasury bonds — debt issued by the federal government — and mortgage debt backed by government agencies like Fannie Mae and Freddie Mac.
Still, this week’s announcement went further, promising to keep buying “in the amounts needed to support smooth market functioning.” It also expanded programs that will support debt issued by companies, state and local governments, and other entities (though it won’t buy municipal debt directly).
The basic problem the Fed is trying to solve is that financial markets—particularly the bond market—have nearly frozen up in recent days. By promising to buy debt, the Fed is trying to get markets working again.
The report identifies two categories of American businesses--companies like airlines, hotel chains and cruise ship operators, that have seen their revenue more or less wiped out by the pandemic. Congress might step in to bail some of those companies out but there isn’t much that the Fed can do for them.
Instead, the Fed will focus on businesses that are basically healthy but are threatened by the freeze-up in financial markets. Some have been insulated from the outbreak’s effects but rely on debt as part of their normal operations. Others have lost business because of the virus but could survive if they could borrow to cover their expenses.
“If these corporations don’t have financing or they’re losing their access to credit, it means they’re going to have to close their doors and lay off workers,” said Michelle Meyer, chief U.S. economist for Bank of America Merrill Lynch. Those impacts make the recession spirals deeper and more prolonged.”
The Times noted that “ordinarily, the Fed fights an economic slowdown by lowering interest rates.” But ultralow interest rates don’t do any good if no one will lend money, or if lenders demand a huge premium. That’s what was starting to happen in recent days. Julia Coronado, president of MacroPolicy Perspectives, an economic consultancy said. “If corporations can’t get cash and mortgage markets aren’t functioning, your low rates don’t translate to households and businesses.”
By buying up government bonds and other safe assets, the Fed is trying to give investors sufficient confidence to put their money back into the bond market, which in turn should allow its interest-rate policies to work as intended.
A lot of what the Fed is doing is taken from the 2008-9 playbook used by Chairman Ben Bernanke. The Fed bought Treasury notes and mortgage bonds then, though in the past it has always put a dollar figure on its bond-buying programs. It took the extreme uncertainty of the current moment to push the Fed to pledge open-ended stimulus, the Times said. The central bank is also reviving several other programs that made their debut during the last crisis.
But policymakers are also taking novel steps. Most important, the Fed will effectively lend money directly to large corporations, something it has never done before. The central bank framed the program as “bridge financing” to help otherwise healthy companies keep their doors open and their workers employed during a period of disruption.
The Times notes that sales have abruptly dried up for restaurants, bars, independent retailers and other small businesses, and few have the savings to survive more than a few weeks without revenue. Moreover, small businesses can’t sell stock or issue debt to raise the cash to keep going. So, the Fed said on Monday that it would establish the Main Street Business Lending Program to encourage lending to small and medium-size businesses.
The Fed released few details, but said that it expects to soon. Economists said the move looked at least partly like an effort by the Fed to reassure the public that it wasn’t favoring big businesses over small ones. “I think the Fed is well aware of the optics and the messaging,” Coronado said. “It’s not always clear to people that buying billions in mortgage securities helps them, even though it does.”
Earlier, the Fed, along with other financial regulators announced new steps intended to encourage banks and other lenders to cut borrowers some slack during the pandemic. The regulators basically said to go ahead and modify loans to help businesses survive. “They will not criticize institutions for doing so in a safe and sound manner.”
In addition, there is a consensus among economists that until the outbreak is brought under control, both economic and monetary policy offer limited tools for government intervention — uncertainties that will continue to haunt policy makers and which should be watched closely by producers and others as the season advances, Washington Insider believes.
CCC Funding Key in COVID-19 Aid Plans
Funding for the Commodity Credit Corporation (CCC) and potentially increasing the USDA’s borrowing authority for CCC remains an issue in the efforts to put together a third COVID-19 aid package.
The proposal that has been in the initial Senate plan would refund the CCC back to $30 billion and add $20 billion in additional borrowing authority.
That is being eyed as a way for USDA to address impacts that have been seen in the ag industry from the COVID-19 situation, particularly for cattle producers.
The COVID aid plan generated by House Democrats lacks the CCC refunding and increase in the borrowing authority.
The proposal that has been in the initial Senate plan would refund the CCC back to $30 billion and add $20 billion in additional borrowing authority.
That is being eyed as a way for USDA to address impacts that have been seen in the ag industry from the COVID-19 situation, particularly for cattle producers.
The COVID aid plan generated by House Democrats lacks the CCC refunding and increase in the borrowing authority.
FSIS Offers Temporary Labeling Instructions on COVID-19 Shifts
The shift of products from food service to retail establishments as the COVID-19 situation is disrupting supply chains has prompted USDA’s Food Safety and Inspection Service (FSIS) to issue some temporary guidelines that will allow the product shifts to take place.
FSIS emphasized that the labeling flexibilities “apply to product that has already been produced” and any products currently being produced are still “expected to meet all requirements” for labeling.
The action by FSIS addresses the potential lack of nutrition labeling for food intended for distribution to hotels, restaurants, or similar institutions (HRI) that may be repackaged and resold to retail consumers.
Under the flexibilities announced by FSIS, “product produced at a federal establishment typically intended for distribution to [HRI] will have modified labels applied by the federal establishment so that the products can now be sold at retail. The label would be required to bear all required features. FSIS will not object to the use of labels without nutrition labeling,” the agency said, even if the establishment does not meet an exemption under law, “provided the labels do not bear any nutrition claims.”
Products in protective coverings are eligible for the temporary flexibilities announced by FSIS for the next 60 days starting on March 23, 2020, the service said.
FSIS emphasized that the labeling flexibilities “apply to product that has already been produced” and any products currently being produced are still “expected to meet all requirements” for labeling.
The action by FSIS addresses the potential lack of nutrition labeling for food intended for distribution to hotels, restaurants, or similar institutions (HRI) that may be repackaged and resold to retail consumers.
Under the flexibilities announced by FSIS, “product produced at a federal establishment typically intended for distribution to [HRI] will have modified labels applied by the federal establishment so that the products can now be sold at retail. The label would be required to bear all required features. FSIS will not object to the use of labels without nutrition labeling,” the agency said, even if the establishment does not meet an exemption under law, “provided the labels do not bear any nutrition claims.”
Products in protective coverings are eligible for the temporary flexibilities announced by FSIS for the next 60 days starting on March 23, 2020, the service said.
Wednesday Watch List
Markets
Wednesday starts with a February report of U.S. durable goods orders at 7:30 a.m. CDT. Given recent sharp drops in energy prices, the Energy Department's weekly inventory report will get plenty of attention at 9:30 a.m., including numbers for ethanol. U.S. and South American weather, any trade news and the latest coronavirus statistics will also be noticed.
Weather
Light rain and snow will cross the Northern Plains and northern Midwest Wednesday. Other primary crop areas will be dry, with a notable warmer trend in many central and southern areas. Wildfire danger will be high in the southwestern Plains due to warm, dry and windy conditions. The generally drier trend will also allow for some easing of very wet soils ahead of spring fieldwork.
Wednesday starts with a February report of U.S. durable goods orders at 7:30 a.m. CDT. Given recent sharp drops in energy prices, the Energy Department's weekly inventory report will get plenty of attention at 9:30 a.m., including numbers for ethanol. U.S. and South American weather, any trade news and the latest coronavirus statistics will also be noticed.
Weather
Light rain and snow will cross the Northern Plains and northern Midwest Wednesday. Other primary crop areas will be dry, with a notable warmer trend in many central and southern areas. Wildfire danger will be high in the southwestern Plains due to warm, dry and windy conditions. The generally drier trend will also allow for some easing of very wet soils ahead of spring fieldwork.
Tuesday, March 24, 2020
Perdue: USDA Actively Monitoring Commodity Markets
Agriculture Secretary Sonny Perdue says the Department of Agriculture is "actively monitoring all commodity markets and the flow of food." The comments on Twitter come as a reply to industry requests last week that USDA protects commodity markets from manipulation. Perdue says, "We are paying special attention to the difference in prices from the farm gate to the grocery shelf." The National Cattlemen's Beef Association sent a letter to Perdue last week, along with lawmakers, urging relief for cattle producers stemming from COVID-19. The coronavirus sent cattle markets lower, at a time when consumer demand has increased. NCBA states, "This price disturbance has created tremendous uncertainty in the cattle industry, and has come at a time when cattle producers are singularly focused on maintaining adequate supply to meat and food processors.” The organization says, “it is critical that cattle producers are empowered to maintain operational certainty as they work to ensure our nation’s food security during this crisis.”
USDA NASS Reports Remain on Schedule
The Department of Agriculture’s National Agricultural Statistics Service statistical reports remain on schedule amid the COVID-19 pandemic, including the March 26 Hogs and Pigs and March 31 Prospective Plantings reports. NASS reports the agency also continues to collect data for all upcoming reports, asking farmers and ranchers to complete their surveys online, if they don’t already respond that way. To protect the health and safety of producers, partners, and employees, NASS has suspended in-person data collection at least until April 3, 2020. NASS Administrator Hubert Hamer says, “We are making every effort to produce the U.S. crop, livestock, and economic statistics that the nation counts on, but to do that responsibly, we are following guidance to slow the spread of coronavirus.” Ensuring that responses are returned on time means little or no additional outreach is needed. USDA says online response is faster and more convenient for producers. To respond online at agcounts.usda.gov, producers will need their unique 17-digit survey code from the questionnaire or letter received in the mail.
USMEF Applauds Expanded Access to China
A recent move to expand pork and beef access to China will benefit U.S. producers and exporters, according to the U.S. Meat Export Federation. The Department of Agriculture’s Food Safety and Inspection Service recently updated its Export Library for China to reflect expanded access for U.S. beef and pork. The changes were among the provisions negotiated in the U.S.-China Phase One trade agreement. U.S. Meat Export Federation President and CEO Dan Halstrom says with much broader access for U.S. beef, "the U.S. industry is well-positioned to expand its presence in the largest and fastest-growing beef market in the world." U.S. pork and beef still face retaliatory duties in China, but a tariff exclusion process implemented by the Chinese government earlier this month is providing some level of relief. USMEF states that while elimination of all retaliatory duties is still the best way for China to level the playing field for U.S. red meat, the exclusion process is expanding opportunities for importers and the U.S. industry.
Gas Prices Continue to Plummet
For the fourth straight week, the national average price of gasoline has fallen, plummeting 12.8 cents over the last week to $2.08 per gallon, according to GasBuddy. The average price of diesel, meanwhile, fell 6.5 cents to $2.66 per gallon. Gas prices have spent virtually all of March marching lower, with the drop continuing as the coronavirus destroys oil demand globally, according to Patrick DeHaan of GasBuddy. DeHaan says, “there’s plenty more room for prices to drop, putting 99 cents per gallon prices as a strong possibility for perhaps many more stations than we previously anticipated.” Crude oil prices have continued to be under heavy selling pressure due to the coronavirus’ effects on global demand for products including gasoline, diesel and jet fuel. Additionally, a meeting March 5 by OPEC and Russia on how to stem the previous decline in oil resulted not in a production cut, but a feud between the two, with Saudi Arabia and Russia both saying they were going to raise oil production.
DFA Dean Foods Deal Withdrawn
Dairy Farmers of American and Dean Foods announced the withdrawal of a plan for DFA to purchase Dean assets. DFA remains in the running to purchase Dean assets, but the move allows for a competitive bidding process. In a statement, Dean Foods says, "by avoiding unnecessary litigation regarding procedure and bid protections for DFA, all parties involved, including DFA, will focus on developing competitive and value-maximizing bids." The Kansas City Business Journal Reports DFA, based in Kansas City, remains in the running to buy the nation's largest milk processor, but it no longer has an inside track. Dean Foods filed for Chapter 11 bankruptcy in November, and will have its assets sold in a court-administered auction process. In February, DFA made an offer to buy Dean Foods for $425 million-plus the assumption of various liabilities. Officials with Dean and DFA said Friday that they mutually agreed to withdraw the request that DFA's bid be considered the baseline.
USDA Announces New World Agriculture Outlook Board Chair
Chief Economist Robert Johansson Monday announced the appointment of Dr. Mark Jekanowski as the World Agricultural Outlook Board Chairman. Jekanowski is currently acting Board chairman and will assume his new duties on March 29. Johansson says Jekanowski brings “extensive experience in domestic and global agricultural commodity markets and deep understanding of the World Agricultural Board and its unique mission Jekanowski will be responsible for leading the development and release of the monthly World Agricultural Supply and Demand Estimates report. He will also serve as program chairman for USDA’s largest annual meeting, the Agricultural Outlook Forum. Jekanowski joined the World Agricultural Outlook Board in 2019 as deputy chairman. Before that, he was with USDA's Economic Research Service (ERS), first serving as chief of the Crops Branch, and later as deputy director for the ERS commodity outlook program. Previously, Jekanowski was a senior vice president and head of the Washington office of Informa Economics.
Washington Insider: Humanitarian Crisis in Iran
Almost everything is about the virus these days, but some of the news is deeply nuanced. For example, the U.S. is being pressed to ease sanctions on the Islamic Republic of Iran, but is pushing back, Bloomberg says.
Iran has reported more than 1,800 deaths from the pandemic and its leaders and some aid groups say America’s crushing “maximum pressure” campaign against it is worsening a humanitarian disaster. The U.S. says it stands ready to help Iran — although it simultaneously blames the crisis on the regime’s mismanagement.
“U.S. sanctions are not preventing aid from getting to Iran,” Brian Hook, the State Department’s point person on Iran issues, said. “The ayatollah has vast resources at his personal disposal. We have broad exemptions that allow for the sale of medicines and medical devices by U.S. persons or from the United States to Iran.”
However, finding companies that are willing to navigate U.S. rules in an effort to sell to Iran but sidestep punishing American sanctions has been difficult since the U.S. administration began ratcheting up pressure in 2018. That makes it even harder to get purely humanitarian goods into the country, said Tara Sepehri Far, a researcher in the Middle East and North Africa division of Human Rights Watch.
“These exemptions have failed to offset the strong reluctance of U.S. and European companies and banks to risk incurring sanctions and legal action by exporting or financing exempted humanitarian goods,” said Sepehri Far. “We saw letters by banks and companies refusing to conduct humanitarian trade with Iran.”
Iranian President Hassan Rouhani on Monday dismissed U.S. overtures as dishonest and he called the Trump administration “terrorists in the true sense of the word” for subjecting his country to relentless sanctions while expressing an interest in helping.
Secretary of State Mike Pompeo retorted that the “regime ignored repeated warnings from its own health officials, and denied its first death from the coronavirus for at least nine days.” He asserted that the number of cases and deaths in Iran is “far higher than the regime admits.”
Jarrett Blanc, a senior fellow at the Carnegie Endowment for International Peace and a former State Department coordinator for Iran nuclear implementation under President Barack Obama, said that previous U.S. administrations would typically send officials to Europe and Asia to help ease the path to humanitarian aid by clarifying how the exemptions work.
President Donald Trump on Sunday suggested his offers for assistance to Iran — as well as North Korea — to combat the virus are genuine, saying “Iran is really going through a difficult period with respect to this.”
Yet some members of the Trump administration have speculated in private that with all the challenges Iran faces — the sanctions, a teetering economy, disputed elections and animosity over the violent suppression of protests — the coronavirus epidemic might be the thing that pushes the regime from power at last.
And, even as the outbreak has spread in Iran, the U.S. has continued to impose more restrictions, targeting a group of companies involved in the petrochemical trade and a handful of nuclear scientists in successive measures this month, Bloomberg says. The U.S. administration says its sanctions are aimed at pressuring Iran’s leadership into abandoning its nuclear program, ending support for groups in the region such as Hezbollah and halting the development of ballistic missiles.
China and Russia — former partners in the 2015 Iran nuclear deal that the U.S. administration abandoned — have stepped up calls for the U.S. to relax its sanctions. While that’s not surprising, there are signs that European countries are increasingly crossing the sanctions threshold and helping Iran where they can, according to one Western diplomat in Tehran. That’s because the U.S. stance amid the crisis is frustrating many European Union nations, the diplomat said.
Pakistan’s Prime Minister Imran Khan also urged the U.S. to lift sanctions after his country’s coronavirus cases surged when Pakistani pilgrims returned from Iran last week. The two nations share a long land border.
Even before the coronavirus outbreak, the U.S. was at odds with other world powers, who disagreed with the president’s decision to pull out of the nuclear deal in 2018 and reimpose sanctions.
The UK has quietly prodded the Trump administration to ease sanctions because of the crisis, the Guardian reported, without saying where it obtained the information. On March 17, Iran granted temporary release to British-Iranian Nazanin Zaghari-Ratcliffe, who has been in jail in Tehran since 2016.
Humanitarian organizations, unwilling to pick a public fight with a top contributor, are quietly trying to get supplies into Iran despite U.S. restrictions.
Iranians say that their economy is weak and unable to cope with the humanitarian toll because of the U.S. sanctions. Last week, Iran turned to the International Monetary Fund for the first time since the 1960s for aid, though Ali Vaez, the Crisis Group’s Iran project director, said the U.S. may try to block the IMF loan in order to keep up the pressure on the regime.
“Countries like Italy and South Korea, who were not hampered by sanctions, found it difficult to contain and fight the outbreak,” he said. “Iran is now fighting it, albeit belatedly, with one hand tied behind its back by sanctions. Its failures, partly due to sanctions, will affect everyone else in the region and beyond.”
So, we will see. It will be politically difficult for the administration to ease its sanctions on Iran, but also difficult to ignore humanitarian claims — issues that have the potential to raise tensions in an already tense region, Washington Insider believes.
Iran has reported more than 1,800 deaths from the pandemic and its leaders and some aid groups say America’s crushing “maximum pressure” campaign against it is worsening a humanitarian disaster. The U.S. says it stands ready to help Iran — although it simultaneously blames the crisis on the regime’s mismanagement.
“U.S. sanctions are not preventing aid from getting to Iran,” Brian Hook, the State Department’s point person on Iran issues, said. “The ayatollah has vast resources at his personal disposal. We have broad exemptions that allow for the sale of medicines and medical devices by U.S. persons or from the United States to Iran.”
However, finding companies that are willing to navigate U.S. rules in an effort to sell to Iran but sidestep punishing American sanctions has been difficult since the U.S. administration began ratcheting up pressure in 2018. That makes it even harder to get purely humanitarian goods into the country, said Tara Sepehri Far, a researcher in the Middle East and North Africa division of Human Rights Watch.
“These exemptions have failed to offset the strong reluctance of U.S. and European companies and banks to risk incurring sanctions and legal action by exporting or financing exempted humanitarian goods,” said Sepehri Far. “We saw letters by banks and companies refusing to conduct humanitarian trade with Iran.”
Iranian President Hassan Rouhani on Monday dismissed U.S. overtures as dishonest and he called the Trump administration “terrorists in the true sense of the word” for subjecting his country to relentless sanctions while expressing an interest in helping.
Secretary of State Mike Pompeo retorted that the “regime ignored repeated warnings from its own health officials, and denied its first death from the coronavirus for at least nine days.” He asserted that the number of cases and deaths in Iran is “far higher than the regime admits.”
Jarrett Blanc, a senior fellow at the Carnegie Endowment for International Peace and a former State Department coordinator for Iran nuclear implementation under President Barack Obama, said that previous U.S. administrations would typically send officials to Europe and Asia to help ease the path to humanitarian aid by clarifying how the exemptions work.
President Donald Trump on Sunday suggested his offers for assistance to Iran — as well as North Korea — to combat the virus are genuine, saying “Iran is really going through a difficult period with respect to this.”
Yet some members of the Trump administration have speculated in private that with all the challenges Iran faces — the sanctions, a teetering economy, disputed elections and animosity over the violent suppression of protests — the coronavirus epidemic might be the thing that pushes the regime from power at last.
And, even as the outbreak has spread in Iran, the U.S. has continued to impose more restrictions, targeting a group of companies involved in the petrochemical trade and a handful of nuclear scientists in successive measures this month, Bloomberg says. The U.S. administration says its sanctions are aimed at pressuring Iran’s leadership into abandoning its nuclear program, ending support for groups in the region such as Hezbollah and halting the development of ballistic missiles.
China and Russia — former partners in the 2015 Iran nuclear deal that the U.S. administration abandoned — have stepped up calls for the U.S. to relax its sanctions. While that’s not surprising, there are signs that European countries are increasingly crossing the sanctions threshold and helping Iran where they can, according to one Western diplomat in Tehran. That’s because the U.S. stance amid the crisis is frustrating many European Union nations, the diplomat said.
Pakistan’s Prime Minister Imran Khan also urged the U.S. to lift sanctions after his country’s coronavirus cases surged when Pakistani pilgrims returned from Iran last week. The two nations share a long land border.
Even before the coronavirus outbreak, the U.S. was at odds with other world powers, who disagreed with the president’s decision to pull out of the nuclear deal in 2018 and reimpose sanctions.
The UK has quietly prodded the Trump administration to ease sanctions because of the crisis, the Guardian reported, without saying where it obtained the information. On March 17, Iran granted temporary release to British-Iranian Nazanin Zaghari-Ratcliffe, who has been in jail in Tehran since 2016.
Humanitarian organizations, unwilling to pick a public fight with a top contributor, are quietly trying to get supplies into Iran despite U.S. restrictions.
Iranians say that their economy is weak and unable to cope with the humanitarian toll because of the U.S. sanctions. Last week, Iran turned to the International Monetary Fund for the first time since the 1960s for aid, though Ali Vaez, the Crisis Group’s Iran project director, said the U.S. may try to block the IMF loan in order to keep up the pressure on the regime.
“Countries like Italy and South Korea, who were not hampered by sanctions, found it difficult to contain and fight the outbreak,” he said. “Iran is now fighting it, albeit belatedly, with one hand tied behind its back by sanctions. Its failures, partly due to sanctions, will affect everyone else in the region and beyond.”
So, we will see. It will be politically difficult for the administration to ease its sanctions on Iran, but also difficult to ignore humanitarian claims — issues that have the potential to raise tensions in an already tense region, Washington Insider believes.
FSIS Makes Several Changes to US Export Policies For China
USDA’s Food Safety and Inspection Service (FSIS) late last week unveiled a host of changes in the U.S. export library for meat products to China reflecting terms of the phase-one agreement.
Most of the actions detailed by FSIS involve the moves made by China to remove the age limit on beef and the setting of maximum residue limits (MRLs) on beef hormones. The guidance also reminded exporters are urged to “to work closely with their importer regarding Chinese standards of meat and poultry products intended for export to China.”
Meanwhile, China has indicated it will move away from a nationwide ban on imports of U.S. poultry should the U.S. experience a case of avian influenza, another component of the phase-one agreement between the two countries.
Most of the actions detailed by FSIS involve the moves made by China to remove the age limit on beef and the setting of maximum residue limits (MRLs) on beef hormones. The guidance also reminded exporters are urged to “to work closely with their importer regarding Chinese standards of meat and poultry products intended for export to China.”
Meanwhile, China has indicated it will move away from a nationwide ban on imports of U.S. poultry should the U.S. experience a case of avian influenza, another component of the phase-one agreement between the two countries.
USTR Defends Tariffs on China, But Seeks Input on Potential Exemptions
The Office of the U.S. Trade Representative (USTR) is defending the imposition of tariffs on China under Section 301 of U.S. trade law, noting they have exempted several “critical products” like ventilators, oxygen masks, and nubilators and issued tariffs exemptions on large numbers of health-related products.
U.S. imports of all critical medical and pharmaceutical products were up over 20 percent since 2017, before Section 301 tariffs were imposed, USTR said.
However, they announced they have now opened a new docket for the public, businesses and government agencies to submit comments “if they believe further modifications to the 301 tariffs may be necessary. This comment process does not replace the current exclusion process and supplements that process.
Submissions are limited to comments on products subject to the tariff actions and relevant to the medical response to the coronavirus.”
U.S. imports of all critical medical and pharmaceutical products were up over 20 percent since 2017, before Section 301 tariffs were imposed, USTR said.
However, they announced they have now opened a new docket for the public, businesses and government agencies to submit comments “if they believe further modifications to the 301 tariffs may be necessary. This comment process does not replace the current exclusion process and supplements that process.
Submissions are limited to comments on products subject to the tariff actions and relevant to the medical response to the coronavirus.”
Tuesday Watch List
Markets
Tuesday has a report on February new home sales set for 9 a.m. CDT. Traders will be keeping watch over the latest coronavirus news, a possible stimulus bill from Congress and the latest Fed moves. Weather remains important, as always and traders will also show interest in any news pertaining to South American ports.
Weather
Tuesday will feature shower and thunderstorm activity in the southern Midwest, northern Delta and Mid-South. Spring fieldwork will be delayed in these areas. Other crop areas will be dry, offering some chances for fieldwork along with delayed northern corn harvest.
Tuesday has a report on February new home sales set for 9 a.m. CDT. Traders will be keeping watch over the latest coronavirus news, a possible stimulus bill from Congress and the latest Fed moves. Weather remains important, as always and traders will also show interest in any news pertaining to South American ports.
Weather
Tuesday will feature shower and thunderstorm activity in the southern Midwest, northern Delta and Mid-South. Spring fieldwork will be delayed in these areas. Other crop areas will be dry, offering some chances for fieldwork along with delayed northern corn harvest.
Monday, March 23, 2020
State Department will Keep Processing Seasonal Ag Worker Visas
The U.S. State Department said late last Thursday that it will keep processing visas for seasonal workers. That statement came shortly after an announcement that it would suspend routine visa services in most countries indefinitely. The Wall Street Journal says the reversal came as lawmakers asked the administration to do whatever it could to keep seasonal workers available for U.S. agriculture. Farmers warned that suspending access to immigrant labor, much of which comes from Mexico, could threaten their livelihoods and the productivity of U.S. agriculture. Seasonal labor makes up as much as ten percent of the workforce for farmers. And it isn’t just agriculture that needs foreign labor. Other industries that specifically rely on Mexican labor include fisheries and resorts. A State Department spokeswoman says they are well aware of the importance of the H-2 program to the economy and the food security of the United States. “We are reviewing all possible options,” she says. The state department initially decided to suspend routine visa processing in most countries worldwide in response to the coronavirus pandemic. Department officials have said the most likely approvals will come for returning workers who qualify to skip a visa interview.
Agriculture Among Nation’s Most Critical Industries
The Department of Homeland Security affirmed just how important agriculture is to the U.S., especially during a pandemic like the coronavirus outbreak. DHS says public health, law enforcement, food and agriculture, defense, and 12 other industries are “critical,” and should keep to their usual work schedules to help respond to the outbreak. The guidance from DHS is designed to help limit potential confusion as some state and local governments implement various curfews or bans on large gatherings to slow the spread of the coronavirus. Over 60 groups that represent the food, beverage and consumer packaged goods asked for uniform guidance on what businesses are exempt from those restrictions. The National Council of Farmer Cooperatives applauded the move, saying, “As we face an unprecedented crisis, Americans will continue to be able to find nutritious food on store shelves.” It also provides much-needed reassurance for our farmers as planting season gets underway. A release from the NCFC says, “America’s co-ops and their farmer-owners stand ready to play their part in the nation’s food supply chain. As we’ve seen so many times in American history, our farmers and ranchers will rise to meet the challenge.”
Tyson says Meat Supply will be Restocked Soon
Grocery store shelves will soon be restocked with meat products in “another week or so.” Politico says that announcement comes from Tyson Foods CEO Noel White after a recent surge in demand for meat products. The U.S. has ample food supplies for those staying home under “social distancing” policies. White says Tyson has made changes to its processing facilities to increase supplies for grocery stores instead of restaurants. “Once we are able to replenish supplies, which is probably going to take another week or so, then I think we’ll be back in better equilibrium between supply and demand,” White says. Grocery stores’ meat orders were significantly higher than usual through last week after demand began to shift away from restaurants. Slaughterhouses are running at maximum capacity, even on weekends. The North American Meat Institute, which represents major meatpackers, says the industry is taking steps to keep operations running at normal or increased capacity. Companies are also enhancing benefits like paid sick leave and access to health care to treat or detect the virus. Some of the enhancements include waiving copays or deductibles.
NCBA Asks Capitol Hill about Help for Cattle Producers
National Cattlemen’s Beef Association Vice President of Government Affairs Ethan Lane says NCBA has been working hard to help cattle producers through the challenges of COVID-19. “As the country reels both economically and emotionally from the spread of COVID-19,” Lane says, “we have worked hard to ensure that cattle producers remain able to focus on the national infrastructure priority of keeping high-quality beef available to consumers.” Lane also says meeting the challenge requires federal officials at the Departments of Agriculture, Transportation, Interior, Treasury, and more to have a full understanding of how their product gets from the pasture to the plate, and his organization is happy to tell that story. He says COVID-19 has dealt a challenging hand to producers across the country. The resulting highly-volatile markets can’t be allowed to force America’s ranching families out of business just when consumers need them the most. “in order to combat this burden, NCBA has actively engaged leaders in the U.S. House and Senate to ensure that relief funds from any aid package reach these struggling cattle producers directly.” The NCBA says it’s important that any relief avoids the lasting market-altering effects of a price-support program, which some members of the Senate have advocated for.
Ethanol Industry Feeling the Strain of COVID-19
Many ethanol plants have cut their production over the last week, or they’ve entirely shut down as the coronavirus outbreak cuts into fuel consumption. Reuters says the drop in consumption at the pump has hit margins to refine the corn-based fuel hard. Renewable Fuels Association Chief Executive Geoff Cooper says he expects ethanol production to fall even further. He’s asking the Environmental Protection Agency to ease the strain on the industry by not granting any more of the small refinery waivers from the nation’s biofuels mandate. The coronavirus spread has disrupted business, travel, and daily life. Governments around the world are urging people to stay indoors to help limit the potential spread of the outbreak, which has put a big damper on fuel demand. Margins to produce ethanol have dropped considerably, causing plants to begin looking at a combination of shutdowns and layoffs. An ethanol refiner from Claremont, Minnesota, says they’re doing everything they can to make sure they’ll weather and survive the economic storm, “but it’s definitely going to be ugly.”
Thefts and Scams Targeting Cattle Producers are Rising
The COVID-19 outbreak has already hit the cattle markets hard. However, that’s not the only threat to ranchers’ livelihoods out there. Scott Williamson is Executive Director for Law Enforcement with the Texas and Southwestern Cattle Raisers Association. He says thefts and scams targeting cattlemen are on the rise. “Economic and industry distress always increase the number of desperate people that will take fraudulent, dishonorable, and criminal actions,” he says. “You may feel like you need to be in a hurry to sell some cattle before it gets worse, or hurry to buy cattle while the prices are low. Slow down because con men and thieves are taking advantage of this situation.” It’s especially important to be careful when buying and selling over the internet. Williamson received a call from a cattleman that had purchased a truckload of cows represented as one thing, but when they arrived, the truckload was something else entirely. Unfortunately, the buyer had already wired the money. He says it’s important to verify the person you want to do business with is a trusted source. When selling, use something like an escrow service or online payment system. Never accept any check worth more than the sale’s value. Never issue payment until the items are received, unless you have complete trust in the seller.
Washington Insider: Dealing with the Coronavirus Economic Threat
There is broad agreement among U.S. economists now that the economic downturn will be severe with the main unknowns the length of contagion and the economic policy response.
Still, Bloomberg notes that many analysts and investors are taking heart from signs of revival in the original epicenter of the coronavirus – China – and predicting a second-half upturn in the U.S. after the contagion hopefully subsides.
There also are strong signs of agreement in Congress and the administration regarding a large stimulus package, although the Senate leadership announced on Sunday that there were still some main details to be worked out.
As early as last weekend, President Trump and others had expressed confidence that they would be able to close on a coronavirus economic-relief plan that the top White House economic adviser, Larry Kudlow said, would provide a $2 trillion boost to the U.S. economy.
The economic measure is intended to “keep companies together, keep workers paid, so they can live and sustain,” President Trump said earlier in the week. On Saturday, Larry Kudlow told reporters as he arrived for White House talks that the spending bill itself is expected to total $1.3 trillion to $1.4 trillion, plus additional loans that would eventually be paid back, for a total economic impact of about $2 trillion.
“The package is coming in at about 10% of GDP. It’s very large,” Kudlow said.
Press reports indicate that Treasury Secretary Mnuchin and Senate Democrats have been working closely to expand the GOP’s basic economic building blocks to provide the Democratic votes needed to pass both chambers of Congress and gain the President’s signature. “The building blocks of this thing are pretty much in place,” said No. 2 Senate Republican John Thune of South Dakota.
A $1.4 trillion third-stage package would be dramatically higher than the 2008 economic rescue plan that was designed to address the banking-based financial crisis. That package included $700 billion – and would be valued at $841 billion in today’s dollars.
“This is going to be the largest, when it’s concluded, relief package in history,” Sen. Bob Menendez, D-N.J., said. “So yes, speed is necessary. But getting this done right so that it actually has the effect that we want is equally as important.”
One detail that was being discussed on Sunday was a push by Democrats to fund an increase in weekly unemployment benefits by about $600 across the board. Though states administer unemployment compensation, the federal government has provided additional funds to temporarily expand it in the past, including the aftermath of the 2008-2009 financial crisis.
That portion is intertwined with the GOP Senate plan to provide $1,200 in tax rebates to most individuals. Mnuchin has proposed two $1,000 checks for individuals at a cost of about $500 billion – substantially more generous than the GOP bill. Lower income filers are expected to receive the highest rebate benefit, rather than a tiered one that gradually increased, as in the original Senate GOP proposal.
A second tough issue involved Democrats’ agreement with the Treasury Department’s push to expand the Federal Reserve’s authority for an emergency credit facility to be managed by Treasury that Democrats want to be much broader than the administration’s proposal to backstop large companies and expand the Fed’s legal authority to support distressed state and local governments, something Republicans object to.
“I don’t think we should be bailing out governments right now,” said Sen. Richard Shelby, R-Ala., chairman of the Senate Appropriations Committee and former chair of the Senate Banking Committee. “We should be trying to get to mitigate the economic fallout and find a solution to the health situation.”
In addition, a group of airlines said in a letter to congressional leaders Saturday that they won’t furlough workers through the end of August if Congress provides $29 billion in grants. The letter pushes back on the Senate Republican proposal to give them $58 billion in loans, with no grants. The industry initially requested $29 billion in grants and $29 billion in loans.
It wasn’t immediately clear whether the $1.4 trillion figure cited by Kudlow on Saturday included a $45.8 billion supplemental spending proposal from the White House. It includes $8.3 billion for the Department of Defense to protect service members, about $11.5 billion for the Department of Health and Human Services, and $3.4 billion for the Centers for Disease Control and Prevention.
House Democrats have pushed for the supplemental to be included in this “phase three” bill, but they also believe the request was not big enough, House Appropriations spokesman Evan Hollander said. “One of the goals in this package is to do everything we can to not have to do a phase four,” said GOP Senator Kevin Cramer of North Dakota. “That’s why I think you’re going to see a really big bill.”
So, we will see. It is true that some of the remaining details that need to be agreed before the deal is fully complete are quite sensitive – but there does appear to be strong political support for the overall massive relief package of the type being prepared. Certainly, this is an economic intervention that is far larger than those in the past and deserves close scrutiny as the Congress and administration prepares to try to deal with this new pandemic threat, Washington Insider believes.
Still, Bloomberg notes that many analysts and investors are taking heart from signs of revival in the original epicenter of the coronavirus – China – and predicting a second-half upturn in the U.S. after the contagion hopefully subsides.
There also are strong signs of agreement in Congress and the administration regarding a large stimulus package, although the Senate leadership announced on Sunday that there were still some main details to be worked out.
As early as last weekend, President Trump and others had expressed confidence that they would be able to close on a coronavirus economic-relief plan that the top White House economic adviser, Larry Kudlow said, would provide a $2 trillion boost to the U.S. economy.
The economic measure is intended to “keep companies together, keep workers paid, so they can live and sustain,” President Trump said earlier in the week. On Saturday, Larry Kudlow told reporters as he arrived for White House talks that the spending bill itself is expected to total $1.3 trillion to $1.4 trillion, plus additional loans that would eventually be paid back, for a total economic impact of about $2 trillion.
“The package is coming in at about 10% of GDP. It’s very large,” Kudlow said.
Press reports indicate that Treasury Secretary Mnuchin and Senate Democrats have been working closely to expand the GOP’s basic economic building blocks to provide the Democratic votes needed to pass both chambers of Congress and gain the President’s signature. “The building blocks of this thing are pretty much in place,” said No. 2 Senate Republican John Thune of South Dakota.
A $1.4 trillion third-stage package would be dramatically higher than the 2008 economic rescue plan that was designed to address the banking-based financial crisis. That package included $700 billion – and would be valued at $841 billion in today’s dollars.
“This is going to be the largest, when it’s concluded, relief package in history,” Sen. Bob Menendez, D-N.J., said. “So yes, speed is necessary. But getting this done right so that it actually has the effect that we want is equally as important.”
One detail that was being discussed on Sunday was a push by Democrats to fund an increase in weekly unemployment benefits by about $600 across the board. Though states administer unemployment compensation, the federal government has provided additional funds to temporarily expand it in the past, including the aftermath of the 2008-2009 financial crisis.
That portion is intertwined with the GOP Senate plan to provide $1,200 in tax rebates to most individuals. Mnuchin has proposed two $1,000 checks for individuals at a cost of about $500 billion – substantially more generous than the GOP bill. Lower income filers are expected to receive the highest rebate benefit, rather than a tiered one that gradually increased, as in the original Senate GOP proposal.
A second tough issue involved Democrats’ agreement with the Treasury Department’s push to expand the Federal Reserve’s authority for an emergency credit facility to be managed by Treasury that Democrats want to be much broader than the administration’s proposal to backstop large companies and expand the Fed’s legal authority to support distressed state and local governments, something Republicans object to.
“I don’t think we should be bailing out governments right now,” said Sen. Richard Shelby, R-Ala., chairman of the Senate Appropriations Committee and former chair of the Senate Banking Committee. “We should be trying to get to mitigate the economic fallout and find a solution to the health situation.”
In addition, a group of airlines said in a letter to congressional leaders Saturday that they won’t furlough workers through the end of August if Congress provides $29 billion in grants. The letter pushes back on the Senate Republican proposal to give them $58 billion in loans, with no grants. The industry initially requested $29 billion in grants and $29 billion in loans.
It wasn’t immediately clear whether the $1.4 trillion figure cited by Kudlow on Saturday included a $45.8 billion supplemental spending proposal from the White House. It includes $8.3 billion for the Department of Defense to protect service members, about $11.5 billion for the Department of Health and Human Services, and $3.4 billion for the Centers for Disease Control and Prevention.
House Democrats have pushed for the supplemental to be included in this “phase three” bill, but they also believe the request was not big enough, House Appropriations spokesman Evan Hollander said. “One of the goals in this package is to do everything we can to not have to do a phase four,” said GOP Senator Kevin Cramer of North Dakota. “That’s why I think you’re going to see a really big bill.”
So, we will see. It is true that some of the remaining details that need to be agreed before the deal is fully complete are quite sensitive – but there does appear to be strong political support for the overall massive relief package of the type being prepared. Certainly, this is an economic intervention that is far larger than those in the past and deserves close scrutiny as the Congress and administration prepares to try to deal with this new pandemic threat, Washington Insider believes.
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