Washington Insider: Child Care Programs in Biden's Agenda

One of the key features of the new family supports President Joe Biden is proposing is more generous tax credits for children. Bloomberg says that eligible families can expect their first monthly payments from the IRS in July – the recent pandemic relief law expanded and extended the Child Tax Credit to $3,600 this year for those under the age of six and $3,000 for those six and older.

"That will help more than 65 million children and help cut child poverty in half," Biden said during his joint address to Congress on Wednesday, urging lawmakers to back an extension. "We can afford it."

A number of congressional Democrats want to make that provision permanent. But, citing budgetary constraints, the White House has proposed an extension of the still-fledgling program until 2025, when Republican-supported tax cuts are due to expire. That sets up a fiscal cliff fight that supporters think will eventually make the payments permanent.

The Democrats have a broad coalition to "push back very hard against any future attempts to let the expansion expire," said Joshua McCabe, an assistant dean of social sciences at Endicott College and a senior fellow at the nonpartisan Niskanen Center.

Republicans are wary of raising capital gains taxes to pay for the program, arguing that doing so would stifle investment coming out of a recession. So Democrats may move ahead with budget reconciliation, which allowed them to pass the nearly $2 trillion relief and stimulus law earlier this year on a party line vote in the Senate.

That complicates the administration's plan to pay for the program using only tax hikes on the wealthy, Bloomberg notes However, taxing most capital gains at death is always a tricky political effort. For example, changing the taxation of property like residences, 401(k)s, or art passed on to next-of-kin or other inheritors tends to be extremely unpopular. Capping the tax on capital gains at death above a certain threshold – the way the estate tax works, which currently begins at $11.7 million – might not raise enough money to help pay for the cost of making the tax credit permanent.

A large group of senior Democrats say they don't want to take the chance on a temporary extension, citing prior laws that expired without extension. On a Tuesday press call, House Appropriations Committee Chairwoman Rosa DeLauro, D-Conn., pointed to the expiration of the assault weapons ban in 2004 as an example.

As a result, how Democrats would come up with the money to make the newly expanded credit permanent remains unclear, Bloomberg says. Sen. Michael Bennet, D-Colo., said Wednesday that the Democrats need to make the credit permanent now. "The president supports this goal, and we can't afford to wait to get it done," he said.

The Washington Post said this week that one way the White House officials could make increased family support spending permanent is to boost spending on enforcement at the Internal Revenue Service. The tax side of the family spending plan includes increasing the amount of capital gains paid by investors who earn more than $1 million annually, as well as increasing the top income tax rate.

But probably the single biggest source of new revenue in the plan comes from dramatically expanding the clout of the nation's tax agency. It seeks to beef up the number of agents and give the IRS new tools and technology to execute collections and crack down on avoidance. White House officials have eyed raising as much as $700 billion from toughening enforcement.

If approved, the coming White House proposal would represent a remarkable change to the IRS. The agency has been beset for more than a decade by problems from steep budget cuts and a growing list of responsibilities. It lost roughly 18,000 full-time positions after 2010, due primarily to cuts pushed by Republicans in Congress under President Barack Obama, with the number of auditors falling to lows unseen since the 1950s.

Those changes have hampered the IRS's ability to collect taxes even from those who legally owe them, particularly among the rich. Former IRS commissioner Charles Rossotti joined economists Larry Summers and Natasha Sarin in a recent analysis that found the tax agency could raise as much as $1.4 trillion in additional tax revenue with better data, technology and personnel.

White House officials learned during the process of drafting the American Families Plan that they could raise significantly more money from the plan than they initially anticipated, Bloomberg said.

Pinning a significant part of the plan on strengthening the nation's tax collector is not without its political and budgetary risks, however.

Republicans frequently attacked Obama's handling of the tax agency for what they called its excessive overreach, culminating in a major controversy over the agency's handling of conservative nonprofit groups. Some Republicans have expressed openness to increasing the IRS budget but are unlikely to go along with the increases proposed by the White House as it seeks to raise trillions of dollars in new revenue.

So, we will see. Liberal tax experts see Biden as capitalizing on an important opportunity to both combat inequality and raise government revenue. The richest 1 percent of Americans underreport more than one-fifth of their actual income, according to a National Bureau of Economic Research paper published last month. Audit rates for that richest 1% have fallen from about 8% in 2011 to 1.6% in 2019, the paper found. These are trends producers should watch very closely as they emerge, Washington Insider believes.

USTR Tai Lays Out More Of The Biden Trade Agenda

U.S. Trade Representative (USTR) Katherine Tai faced lawmaker questions Wednesday on trade policy plans by the Biden administration as she testified on the Fiscal Year (FY) 2022 budget plan for USTR.

She touted the four-month pause in tariffs between the U.S., UK and European Union (EU) as a significant move and stressed to lawmakers she was committed to ending the dispute that goes back more than 10 years.

As for the U.S.-China Phase One agreement, Tai indicated that she was looking forward to kicking off a top-to-bottom review of the agreement and China's compliance. "The picture is more nuanced than you might think, by just looking at the trade data," Tai told lawmakers. A top-level review meeting between the U.S. and China has not yet been scheduled, but Tai said such a session would be scheduled "soon."

Tai also pledged to use the enforcement mechanisms in the U.S.-Mexico-Canada Agreement (USMCA), noting she has raised compliance issues with her Mexican counterpart and the U.S. has already launched dispute settlement mechanisms on dairy with Canada. On matters regarding Mexican bans on imports of glyphosate and GMO corn and other ag-trade barriers, Tai said USTR is "looking at it in terms of what our options are to resolve these issues soon."

There was not perhaps a lot more information about the Biden trade plans than was known ahead of the meeting and it may be somewhat surprising that it appears USTR has either just started or will start a broad review of the Phase One agreement with China. This appears to underline that trade policy has not been a high focus for the Biden administration.

Biden Plan Carves Out Exemption For Ag Land, But Proposes Big Limit On 1031 Exchanges

The $1.8-trillion plan unveiled in a joint session of Congress Wednesday evening by President Joe Biden included proposed increases in the capital gains tax rates with an exception included for agricultural land.

USDA released an analysis, noting the plan would defer any tax liability on family farms "as long as the farm remains family-owned and operated." USDA also said assets subject to the $1 million-per-person exemption would continue to receive a step-up in basis when sold.

Only 2% of farms would owe any tax, and that would be on non-farm assets, USDA detailed. "No capital gains taxes at death for family farms. This plan includes a special protection for family-owned farms and businesses," USDA said. "It defers any tax liability on family farms as long as the farm remains family-owned and operated. No tax is due if the farm stays in the family. No one should have to sell a family farm they inherit to pay taxes and the President's tax reform guarantees that."

There would an exclusion on the first $2 million in capital gains for married couples. "This plan also excludes the first $2 million of gains per couple ($2.5 million if the farm also includes the family home) from capital gains tax and heirs continue to get step up in basis on those first $2 million in gains. If an heir decides to sell the family farm, the first $2 million in gains is tax free."

In a proposed change that will raise concerns for agriculture, the plan proposes dramatically curtail what are called 1031 exchanges which allow taxpayers to defer gains on real estate if they exchange that for a like property within six months of the sale. The plan would end the 1031 exchanges on real estate profits of more than $500,000.

Ag Businesses Report Favorable First Quarter Earnings

Earning reports topped headlines on Wall Street this week, and agriculture businesses seem to be doing well. Syngenta reported first-quarter sales of $7.1 billion, up 20 percent for the same period last year. BASF reported first-quarter sales were up 16 percent, to 19.4 billion euros, or $23.52 billion. AGCO reported sales for the first quarter were approximately $2.4 billion, an increase of 23.4 percent. Meanwhile, ADM reported first-quarter earnings of $689 million. The company says its Ag Services and Oilseeds sector achieved a record first quarter, with operating profits 84 percent higher year over year. Tractor Supply Company reported net sales for the first quarter of 2021 increased 42.5 percent to $2.79 billion from $1.96 billion in the first quarter of 2020. Finally, CME Group reports revenue of $1.3 billion for the first quarter of 2021. CME Group Chairman and Chief Executive Officer Terry Duffy says, "Trading volumes in Q1 have returned to pre-pandemic levels.”

NCBA Stands Ready to Fight for Sound Tax Policy

In his American Families Plan, President Joe Biden targets several provisions of the tax code to raise approximately $1.5 trillion in revenue over the next ten years. The National Cattlemen's Beef Association says those provisions must not burden the nation's farmers and ranchers. Biden's plan would repeal the deferral of gain for real estate, like-kind exchanges for gains greater than $500,000 and eliminate stepped-up basis for gains over $1 million, or $2.5 million per couple. According to the plan, the reform will be designed “with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business.” NCBA Senior Executive Director of Government Affairs Danielle Beck says, "When considering how to offset the cost of a comprehensive infrastructure package, it is essential that Congress preserve sound tax policies for family-owned agricultural operations." Beck adds, "We firmly believe that it would be irresponsible to pay for an infrastructure bill on the backs of farmers and ranchers."

Mexican Supreme Court Overturns Ban on U.S. Fresh Potato Imports

The Mexican Supreme Court ruled by a unanimous vote of five to zero in favor of overturning a 2017 lower court decision that blocked the importation of U.S. fresh potatoes. The ruling, cheered by the National Potato Council and Potatoes USA, marks the end of a decade-long legal process that began when Mexico's potato industry sued its government to prevent competition from imports. National Potato Council vice president of trade affairs, Jared Balcom, says, “This ruling is consistent with Mexico's obligations under the USMCA and the WTO.” Balcom adds the ruling represents a major step forward for the industry. Since it first allowed for the importation of fresh U.S. potatoes in 2003, Mexico has restricted those potatoes to a 26 kilometer-area along the U.S.-Mexico border. That restriction has violated Mexico's obligations under numerous trade agreements. In a statement, Agriculture Secretary Tom Vilsack says, “This decision is important for American agriculture and for positive bilateral relations between the United States and Mexico.”

USDA Announces Updates to Livestock Insurance Policies

The Department of Agriculture this week announced updates to livestock insurance policies for 2022 and beyond. USDA says the updates are designed to improve options for producers and to create additional opportunities for producers to participate. The changes include ensuring the Class Pricing Option remains available for purchase even when either the Class III or Class IV milk price is not published. USDA is also relaxing records requirements by allowing monthly total pounds of milk and milk components to be acceptable records instead of daily. The Livestock Gross Margin is available for cattle, dairy, and swine producers and provides protection against loss of gross margin, the market value of livestock minus feed costs. The changes include allowing producers to purchase coverage on a weekly basis instead of monthly. Risk Management Agency Acting Administrator Richard Flournoy says, “We strongly feel that these updates will benefit producers and their dairy and livestock operations in the years to come.”

USDA to Invest $31 Million for Restoration Work in Gulf States

The Department of Agriculture Thursday announced $31 million in funding to advance restoration work and improve water quality in the Gulf Coast states impacted by the Deepwater Horizon oil spill. The funds will support three priority programs and related project work approved by the Gulf Coast Ecosystem Restoration, or RESTORE Council, as part of a multi-year process of collaborative planning and public engagement throughout the Gulf. USDA's Forest Service and Natural Resources Conservation Service, along with state forestry agencies in Alabama, Florida and Mississippi, will leverage the funds to restore forest health, improve coastal ecosystems and provide technical and financial assistance to private landowners. The USDA-funded activities include the Gulf Coast Conservation Reserve Program, the Enhancing Gulf Waters through Forested Watershed Restoration Program, and the Apalachicola Regional Restoration Initiative. The RESTORE Council was established in 2012 by the RESTORE Act, a federal law enacted in response to the Deepwater Horizon oil spill.

Texas Ag Commissioner Joins Discrimination Lawsuit over COVID Relief

Texas Agriculture Commissioner Sid Miller this week joined a lawsuit against the federal government. Miller claims the COVID relief plan passed in March discriminates against white farmers and ranchers. Miller, a rancher himself, joined the lawsuit as a private citizen, not as a public official. The American Rescue Plan Act of 2021 offers relief to socially disadvantaged farmers and ranchers, which the plan defines as people of color. Miller’s complaint against the Department of Agriculture, according to the Texas Tribune, says the definition in the program fails to include “white ethnic groups that have unquestionably suffered” because of their ethnicity, such as those of Irish, Italian, German, Jewish and eastern European heritage. America First Legal, a conservative group that claims, “the radical left is using its power inside and outside of the government to destroy our country,” filed the lawsuit. The organization says the Constitution forbids government action that discriminates based upon race, alleging the Biden administration is “actively engaging in outright racial discrimination.”

Friday Watch List

Markets

The U.S. Labor Department's employment cost index for the first quarter and a report on U.S. personal incomes for March are both due out at 7:30 a.m. CDT Friday. The University of Michigan's consumer sentiment index of April is set for 9 a.m. CDT. Otherwise, traders will be watching the latest weather forecasts and any news of export sales.

Weather

Dry conditions will cover most primary crop areas Friday. Precipitation will focus in south Texas through the lower Delta with possible flooding. This pattern is generally favorable for fieldwork and planting; however, extreme wildfire threat covers the drought-affected northern Plains.

Biden Plan to Protect Farms from Elimination of Capital Gains Tax Breaks

Ahead of Wednesday night's joint session of Congress address by President Joe Biden, the White House released details of the American Families Plan. The bulk of the $1.8 trillion package focuses on education, direct support to low- and middle-income families and extending tax breaks to families with children. Biden plans to end other tax breaks to pay for the package, including stepped-up basis. However, Biden says, “The reform will be designed with protections so that family-owned businesses and farms will not have to pay taxes when given to heirs who continue to run the business.” American Farm Bureau Federation Economist Veronica Nigh recently explained, “A long-standing provision of U.S. tax law is that a capital gains tax is not imposed when assets are transferred at death to an heir. Furthermore, tax law allows the heir to increase their basis in the asset to fair market value without paying capital gains tax," which is referred to as a step-up in basis.

Farmers Find Barriers to Carbon Markets

Farmers are struggling to enter carbon markets. A new report from Reuters says a climate push from the Biden administration is sparking interest in farm-based carbon credits. Companies like Microsoft are purchasing credits and others like Bayer and Cargill have subsidized projects to incentivize farmers to reduce emissions. The Department of Agriculture is monitoring the success of the carbon markets with an eye on future farm bill programs. However, a Nebraska farmer told Reuters, "It's very new; it's still the wild west." Lukas Fricke is generating carbon credits for Microsoft but expects the $20 per credit to not cover the cost of expenses to participate. Much of the cost to companies purchasing credits goes towards verifying carbon-capture claims. Ecosystem Services Market Consortium executive director Debbie Reed says, “Until we get to a market where there is liquidity, we will continue to see projects without buyers, and we will continue to see buyers without the supply they need.” Her organization is investing in satellite and remote sensing technology to help lower verification costs.

Dairy Groups Announce Federal Milk Pricing Proposal

Four Midwestern dairy groups this week announced a Federal Milk Marketing Orders proposal. The proposal aims to create long-term stability in fluid milk pricing and reducing the likelihood of negative producer price differentials that cut into farmers' revenue last year during the pandemic. The proposal from the Dairy Business Association, Edge Dairy Farmer Cooperative, Minnesota Milk and Nebraska State Dairy Association comes after the groups began studying options early this year. They say the proposal, which they are calling "Class III Plus," aims to build upon the current pricing system, recent proposals by dairy cooperatives, and dairy farmer petitions to define a better Class I pricing system. The Class III Plus proposal would, among other things, tie the Class I fluid skim milk price to the Class III cheese skim milk price plus an adjuster and do away with advanced pricing, a cause of the negative Producer Price Differentials last year. The proposal is also revenue-neutral, therefore more equitable among farmers, processors and customers.

Dates Announced for Export Exchange 2022

Export Exchange will return next year, as organizers announced the event this week planned for October 12-14, 2022, in Minneapolis, Minnesota. The dates were announced in a joint statement, including U.S. Grains Council President and CEO Ryan LeGrand, Growth Energy CEO Emily Skor, and Renewable Fuels Association President Geoff Cooper. The statement says, "COVID dictated we cancel Export Exchange in 2020, and sadly, we have officially canceled it once again for 2021," while noting its return in 2022. The groups say Export Exchange allows overseas attendees the opportunity to build relationships with U.S. suppliers of distiller’s dried grains with solubles, or DDGS, corn, sorghum, barley and other commodities, resulting in hundreds of millions of dollars in grain sales. Export Exchange, the biennial event co-sponsored by the Council, RFA and Growth Energy, is expected to bring together 200 international buyers and end-users of coarse grains and co-products, with approximately 300 U.S. suppliers and agribusiness representatives.

USDA to Incentivize Purchase of Fruits and Vegetables under WIC

Participants in the Department of Agriculture’s Special Supplemental Nutrition Program for Women, Infants, and Children may soon see a temporary increase to their benefits. The increase will apply to the purchase of fruits and vegetables. With $490 million provided by the American Rescue Plan Act of 2021, USDA has offered the option of boosting the cash-value voucher benefit by more than three times the current amount for up to four months to provide additional relief during the pandemic. Agriculture Secretary Tom Vilsack says, “We need to promote nutrition security alongside food security to ensure all people at all times have access to nutritious foods.” The cash-value voucher allows participants to purchase fruits and vegetables as part of their WIC food package. Under normal circumstances, the monthly cash-value voucher is $9 per child and $11 for pregnant, postpartum, and breastfeeding women. The American Rescue Plan allows state agencies to temporarily provide up to $35 per child and adult, per month.

Biden to Nominate California Ag Official to USDA

President Joe Biden this week announced intent to nominate Jenny Moffit as Agriculture Department undersecretary for marketing and regulatory programs. Moffitt is Undersecretary at the California Department of Food and Agriculture, where she previously served as Deputy Secretary from 2015-18. Before that, Moffitt spent ten years as Managing Director at Dixon Ridge Farms, her family’s organic walnut farm and processing operation. The White House says, “As a farmer and policymaker, Moffitt has engaged with agricultural stakeholders on the critically important balance of sustaining our environment, strengthening our rural economies, and building healthy communities.” Agriculture Secretary Tom Vilsack adds, “Jenny says that growing up and working on the farm solidified the importance of taking care of the land and the people who farm it.” If confirmed, Moffitt will join a mission area that is focused on facilitating the domestic and international marketing of U.S. agricultural products, ensuring the health and care of animals and plants, and setting national and international standards.

Washington Insider: Expanded Family Plan Pushed

President Joe Biden unveiled a sweeping $1.8 trillion plan to expand educational opportunities and child care for families, funded in part by the largest tax increases on wealthy Americans in decades, Bloomberg is reporting today.

Called the American Families Plan, the president's third major legislative proposal combines $1 trillion in spending with $800 billion in tax cuts and credits for middle- and lower-income families.

The plan would make pre-kindergarten and community college free across the country, extend the child tax credit through 2025 and make permanent an expansion of the earned income tax credit to childless adults with low incomes, provide direct support to families for child care, finance teacher training and create a national paid family leave program Bloomberg says.

Biden's tax hikes include raising the top rate for individuals back to 39.6%, changing the treatment of capital gains so that wealthy people don't benefit from lower rates on their investment income, eliminating the "carried interest" provision that benefits fund managers, and greatly increasing funding for the Internal Revenue Service to enforce tax collection and audit wealthy taxpayers.

His proposals are uncertain in Congress, where Democrats hold a working Senate majority only by virtue of Vice President Kamala Harris's tie-breaking vote.

Ahead of Wednesday's speech, Sen. Joe Manchin, D-W.Va., said he expects an “aspirational” presentation that “gives you encouragement” on “how we should all unite and come together.”

"It'll be an upbeat speech," Manchin told reporters yesterday.

Manchin has publicly said Biden and congressional Democrats need to work with Republicans on a bipartisan infrastructure package rather than immediately trying to forge a partisan path ahead. He said yesterday he's satisfied Biden is doing his best so far.

"Sure, they can always do more but he has," Manchin said. "He's reaching out now, and even on this infrastructure bill, you haven't seen him double down and say we've got to pass it all in one big package."

Sen. Roger Wicker, R-Miss., also said bipartisan talks on an infrastructure bill are going well.

"We continue to be having conversation," Wicker told reporters on Tuesday. "There's a nice back and forth, an exchange of ideas. I think they're interested in our proposal."

Over the past 14 months, Congress passed three pandemic-relief packages that injected almost $5 trillion into the economy. The president will today make the case for an additional $1.8 trillion in spending and tax credits on initiatives from education and child care to paid family and medical leave.

And that's on top of $2.25 trillion in infrastructure, home health care and other outlays proposed last month. The raft of new spending would be funded by a host of tax hikes directed at corporations and wealthy Americans. It's all aimed at raising productivity, expanding the workforce and spreading the benefits of the U.S. economy more equitably.

There is no sign that Republicans will go along with any of Biden's proposal, leaving Speaker Nancy Pelosi, D-Calif., with a narrow majority and hardly any votes to spare. Bloomberg sees this as a potentially tight spot “if her Democratic rank-and-file members don't let up on their demands.”

In the Senate, expanding Biden's proposal could jeopardize the ability of Senate Majority Leader Chuck Schumer, D-N.Y., to get it through an evenly divided chamber using special "budget reconciliation" rules.

In the meantime, Biden urged Americans hesitant to get vaccinated against COVID-19 to reconsider, citing new federal guidance that inoculated people can begin socializing outdoors without masks. "Gathering with a group of friends in a park, going on a picnic -- as long as you're vaccinated and outdoors, you can do it without a mask," Biden said at the White House yesterday. "If you're vaccinated, you can do more things, more safely."

Roughly 141 million Americans have received at least one dose of a vaccine, according to the Bloomberg Vaccine Tracker, but the pace of vaccinations has dropped under 3 million a day despite abundant supply. "For those who haven't gotten their vaccine yet, especially if you're younger or thinking you don't need it, this is another great reason to go get vaccinated now." Biden said.

"Today is another day we can take a step back to the normalcy of before," said CDC Director Rochelle Walensky at a news briefing announcing the changes today. She pointed to a "really hopeful decline" of about 21% in the 7-day average for cases.

The CDC's new recommendations, which represent one of the most significant relaxations of guidelines since the pandemic began, are complex and wide-ranging. They come with almost 30% of Americans fully inoculated and with increases starting to slow in the daily coronavirus caseload. At the same time, the guidelines send a message that getting vaccinated may offer a clear route to a more normal lifestyle at a time when a large number of Americans remain hesitant.

Also President Biden has said he intends to send vaccines from the U.S. to India as that nation battles the worst COVID-19 surge on Earth – but he did not specify timing for a decision or shipments. He said he and Indian Prime Minister Narendra Modi had discussed "when we'll be able to send actual vaccines to India, which is my intention to do." In the meantime, the U.S. is shipping aid including the therapeutic drug remdisivir and machinery for vaccine manufacturing, he said.

So, we will see. This week has turned out to be highly political in its focus, and more than a few of the key trends are positive. Nevertheless, many risks remain and producers should watch current developments very closely as they emerge, Washington Insider believes.

New Trade Deals Continue as Question for Biden Administration

Wrapping up trade deals with the UK and Kenya remain open questions for the Biden administration, with a discussion between U.S. Trade Representative (USTR) Katherine Tai and UK Secretary of State for International Trade Liz Truss yielding no update on the pending trade deal.

Readouts of the session from the U.S. and UK noted the two discussed "issues of mutual importance," including "industrial subsidies, climate change, and the large civil aircraft dispute," the USTR readout said. But neither side made mention of the pending trade negotiations that were started under the Trump administration.

As for Kenya, Secretary of State Antony Blinken on Thursday will meet with Kenyan President Uhuru Kenyatta and Cabinet Secretary for Foreign Affairs Ambassador Raychelle Omamo. A U.S. State Department fact sheet released ahead of the meeting noted that two sides launched bilateral trade negotiations in July 2020. “The two sides are currently reviewing the negotiations before deciding the next steps,” the fact sheet noted.

The Biden administration has made clear that negotiating new trade deals is lower on their priority list on trade with more attention likely on enforcement of existing trade deals. It appears that is still the case.

Senate Agriculture Panel Met With USDA's Vilsack

Members of the Senate Agriculture Committee met with USDA Secretary Tom Vilsack Tuesday in what was an off-the-record session, according to Sen. Chuck Grassley, R-Iowa.

While not sharing what other lawmakers brought up or Vilsack's responses, Grassley told reporters he raised issues on "protecting farmers from corporations." He noted provisions in farm bills that addressed some of those issues and he called on USDA to “complete the work of Congress” on that front.

While he slipped and said that Sen. Amy Klobuchar, D-Minn., brought up biofuel assistance that Congress authorized in the December COVID aid plan, Grassley said his intention was to raise the issue as it is "very important" for his home state of Iowa which is "number one" in biofuel production. He noted that former USDA Secretary Sonny Perdue had told Congress he needed more authority to be able to provide financial assistance to biofuel producers which was provided in the COVID aid plan.

Thursday Watch List

Markets

USDA's weekly export sales report is due out at 7:30 a.m. CDT Thursday. Sales have been lower lately, but in case you haven't noticed, there's not a lot of excess corn or soybeans available. U.S. weekly jobless claims, the first estimate of first-quarter U.S. GDP and an update of the U.S. Drought Monitor are set for the same time. An index of pending home sales for March will be out at 9 a.m., followed by natural gas inventory at 9:30 a.m. CDT.

Weather

Moderate to heavy rain with some flooding is in store Thursday from the eastern Midwest southwest to southern Texas. Other primary crop areas will be dry. Wildfire threat in the northern Plains is noted for Friday.

Vilsack: No Land Grab or Beef Diet Limits

Ag Secretary Tom Vilsack says there’s no truth to the talk that the Biden Administration wants to take land away from people and discourage consumers from eating beef to help fight climate change. Vilsack says the president wants to protect 30 percent of the nation’s land by 2030 but doesn’t plan to use eminent domain to take possession of that land. The Hagstrom Report says Vilsack told ag journalists that the talk of a land grab is really off base. “There’s no intent to take away land from farmers,” he says. “The goal is to give farmers more opportunities.” Vilsack also talked about rumors that the Biden Administration plans to limit how much beef Americans eat. Vilsack says there is no effort in place to limit the intake of beef coming out of the White House or USDA. “In the political world, games get played, and issues get brought into play,” Vilsack says. The rumor seems to have started thanks to a University of Michigan study on beef. The study says cutting the intake of all animal-based foods by 50 percent and replacing that with equivalent quantities of plant-based food would decrease greenhouse gas emissions by 35 percent. “There’s no policy paper in the administration suggesting that people eat less meat,” he adds.

CME Group Raises Daily Price Limits on Grains

After a biannual review, the CME Group is expanding the daily price limits for the Chicago Board of Trade grain and soy futures, and the new limits go into effect on May 2. The new limits include 40 cents for corn, currently at a limit of 25 cents a bushel. Soybean limits are now one dollar per bushel, with the current limit at 70 cents. Soy Meal is up to $30 per short ton, soil oil is now 3.5 cents a pound, and soft and hard red wheat futures are both up to 45 cents per bushel. CME price limits represent the maximum price range permitted for a futures contract in each trading session. Price limits vary by product, as does what happens when a limit gets reached. “Some of the price limits are expanded by 50 percent,” says Jerry Gulke of the Gulke Group. “That’s a lot of volatility.” Gulke also tells Ag Web Dot Com that limit up and down on corn will now be 80 cents. That’s $160 per acre on 200-bushel corn. On 10,000 acres, gross income could move almost $1.5 million per day. Now that the trading limits have widened further, Gulke says it should give volatility a whole new meaning in future months.

Indiana Governor Defends Biofuel Producers and Farmers

On Monday night, Indiana Governor Eric Holcomb vetoed Senate Enrolled Act 303, legislation that would have stalled sales of homegrown biofuels in two ways: The first is by mandating confusing labels on E15 fuel dispensers and by muddying key regulations on retailers seeking to offer the lower-cost blend. Growth Energy CEO Emily Skor says her organization is deeply grateful to Governor Holcomb and Lt. Governor Crouch for listening to the concerns of Hoosier biofuel producers and standing up for rural families. “From the very start, SEA 303 got fueled by a wave of misinformation,” Skor says. “Hoosiers already enjoy legal access to lower-carbon, lower-cost E15 at 79 locations, and this veto is an important step toward ensuring greater competition at the pump, lower prices for drivers, and stronger markets for Indiana farmers.” Earlier this month, Growth Energy wrote a letter to Governor Holcomb asking that he veto the legislation, joining a chorus of ag and biofuel leaders in the state in opposition. State groups that worked to get the legislation vetoed included the Indiana Ethanol Producers Association, Indiana Corn Growers Association, the Indiana Ethanol Plant General Managers, and the Indiana Mayors and County Commissioners.

America Grows Act Introduced in the Senate

The America Grows Act of 2021 was introduced on Monday in the Senate. It would significantly increase U.S. public investment in agricultural research and development. The bill would increase funding for agricultural research by five percent every year on an inflation-adjusted basis at four USDA agencies over the next decade. Those agencies are the Agricultural Research Service, the Economic Research Service, the National Agricultural Statistics Service, and the National Institute of Food and Agriculture. Backers of the legislation say more support for agricultural research is badly needed. U.S. public funding has declined in real dollars since 2003, while investments in other forms of domestic research have risen dramatically. The U.S. has fallen far behind its major competitors like China and Brazil when it comes to agricultural research funding. However, the America Grows Act would help to reverse the trend and reassert American leadership on the global stage. A recent study in the American Journal of Agricultural Economics says agricultural research has one of the highest returns of any public investment, estimated at $17 for every $1 spent. Maintaining U.S. competitiveness is vital to ensuring abundant, affordable food supplies, as well as supporting the economy. Food and agriculture account for nearly $3 trillion of the U.S. GDP.

Export Inspections of Corn and Soybeans Rise While Wheat Drops

Week-to-week exports of corn and beans rose while wheat assessments declined. Corn inspections in the seven days ending on April 22 came in at 1.95 million tons. That’s up from 1.56 million metric tons the previous week and was almost double the 1.08 million tons two weeks ago. Soybean assessments last week totaled almost 224,000 metric tons, up from 222,065 tons the previous week. The USDA says that’s well below the 561,063 tons inspected during the same week a year earlier. Wheat inspections through April 22 totaled just over 564,000 tons, down from almost 626,700 a week before. Last week’s total, however, was up from the 506,700 tons assessed during the same week in 2020. Since the beginning of the marketing year on September 1, the USDA has inspected 41.2 million metric tons of corn for offshore delivery, well above the same period the year before. Soybean inspections since September are at 55.3 million metric tons, ahead of the 33.4 million tons inspected at the same point last year. Wheat assessments since the start of its marketing year on June 1 are at 22.6 million metric tons, just ahead of last year’s 22.5 million tons.

Renewable Fuel Credit Prices Climb to Highest Point Since 2013

The price of renewable fuel credits soared to its highest point on record early this week. Reuters says higher costs for soybean oil pushed up both renewable fuel and biomass-based credits. Renewable fuel credits for 2021 traded at $1.50 each, after trading at $1.44 in the previous session. Biomass-based credits traded at $1.58 each, up from $1.52 during the prior session. Both of those are the highest prices since Reuters began reporting the data for renewable fuel credits in 2013 and biomass-based credits in 2014. Front-month soybean oil, which can be used as a feedstock in biomass-based fuels like biodiesel, traded at 67.71 cents per pound on Tuesday, their highest point since 2008. The credits, known as RINs, rose at the same time the U.S. Supreme Court was hearing oral arguments for a case involving the Renewable Fuel Standard, which requires refiners to blend biofuels into their fuel mix each year or buy RINs from those that do. The Supreme Court’s decision around the case will likely heavily influence the future of the RFS and biofuels.

Washington Insider: Biden Taxes Collide with Political Reality

President Joe Biden is poised to unveil a plan that to raise taxes on the income, investments and estates of the wealthiest Americans to levels not seen in more than four decades--and that that move will trigger "intense debate in Congress about whether and how to address income inequality," Bloomberg reported.

Biden's "American Families Plan," itself featuring the biggest expansion of federal support for lower-income and middle-class Americans in decades, will be offset by a series of tax increases on the wealthy, administration officials say. The president will unveil his program during the Wednesday night State of the Union speech to Congress.

To pay for a bill that could top $1 trillion, Americans earning over $400,000 will face higher marginal income tax rates. Those taking in $1 million or more will get hit with a levy of up to 43.4% on their capital gains. The last time rates got close to that, Jimmy Carter was president.

Biden is also likely to propose increases in the number of Americans subjected to the estate tax. He campaigned on closing popular tax breaks including a provision that lets appreciated assets go untaxed when they are inherited, along with eliminating the carried-interest tax breaks – which let private equity managers cut their Internal Revenue Service bills.

Republicans are likely to oppose the tax increases en masse, but the White House is also risking a struggle with Democratic lawmakers. Some of those from New York, New Jersey and other high-tax states in particular were already mobilizing to demand relief for their constituencies even before Biden's official announcements. With the 50-50 Senate and a narrow margin in the House, long negotiations loom.

In the meantime, Republicans may be ready to back as much as $900 billion in infrastructure spending, according to a senior senator, Bloomberg says – though that would still cover less than half of Biden's proposal. "There's a deal to be done on infrastructure," Sen. Lindsey Graham, R-S.C., said on Sunday. Graham suggested "to not pay for some of the infrastructure spending immediately because I think it over time pays for itself."

There are other interesting proposals afoot--for example, President Biden is betting $100 billion he can deliver a lifeline to rural America, and a boost to the economy overall, by making high-speed internet available to all Americans. The plan could help millions, especially in agrarian states where the Democratic party's support is weakest. Estimating the precise impact, however, is seen as virtually impossible because no one truly knows how many Americans lack access to the internet.

In the meantime, there are other fights aplenty, Bloomberg thinks. One focuses on judges. However, the administration's aggressive timeline for vetting potential judges while seeking nominees who would bring experiential, racial, and gender diversity to the federal bench is proving difficult for several Democratic senators to meet, Bloomberg says,

The report notes that the once-a-decade battle to redraw the U.S. political map promises to be one of the most contentious ever when it kicks off this week, shadowed by the coronavirus pandemic and hindered by partisan divisions stoked during the Trump's presidency. The process has begun with the release from last year's constitutionally mandated count of every person living in the U.S., which happens every 10 years – numbers that are already emerging and are determining which states gain seats in the U.S. House of Representatives and which ones lose.

Meanwhile, an Arizona judge demanded more information about an audit of Maricopa County's 2020 general election results by a group called the Cyber Ninjas after the state's Democratic Party argued it was being conducted by "unqualified and completely unhinged actors." Superior Court Judge Christopher Coury in Phoenix ordered the auditors to release documents explaining their internal procedures.

Also, seven decades after the U.S. Supreme Court said the NAACP didn't have to give Alabama its membership list, so prominent liberal groups are in the unlikely position of supporting two conservative charities in a challenge to California's requirement that they disclose their top donors. In a Supreme Court argument set for this week, the Americans for Prosperity Foundation and the Thomas More Law Center will contend that California can't be trusted to keep the information private – and that it's opening up the groups' supporters to threats and harassment, much like Alabama once did to the NAACP.

After three months of vaccination across the U.S., a majority of American adults have gotten shots – and the effort will soon shift from mass inoculation to "mop-up," Bloomberg says. Over the next few weeks, what the vaccine campaign looks like is going to change dramatically.

Finally, President Biden is exploring the idea of a border adjustment tax that would slap a levy on imports from nations with weaker climate policies, according to John Kerry, the administration's special climate envoy. "President Biden, I know, is particularly interested in evaluating the border adjustment mechanism," Kerry said on Bloomberg TV. "He wants to look at that and see whether that's something that we need to deploy."

So, we will see. Clearly there are controversies to go around and a razor-thin and infinitely toxic climate over it all. A key will be whether the administration's rapid recovery hopes turn out to be true. Certainly, these are developments producers should watch closely as they emerge, Washington Insider believes.

Census Population Shifts Will Bring More Changes In Congress

US population growth was at its slowest level since the 1930s over the past decade, according to updated Census data released Monday. The changes in population will also shift political maps, with the long-running trend of the South and West gaining population -- and congressional representation -- at the expense of the Northeast and the Midwest, is still intact.

Texas has gained two more votes in Congress and the Electoral College for the next decade, while Colorado, Florida, Montana, North Carolina and Oregon each gained one seat, based on the first set of results from the 2020 Census released Monday.

The seven states losing one vote each: California, Illinois, Michigan, New York, Ohio, Pennsylvania and West Virginia.

Census will release data later this year that will outline growth in population centers that will assist states in redrawing congressional maps.

CFAP 2 Payouts Climb To $13.5 Billion

Payments under the Coronavirus Food Assistance Program 2 (CFAP 2) have reached $13.50 billion as of April 25, up from $13.45 billion the prior week.

Acreage-based payments now total $6.23 billion, livestock payments are at $3.43 billion, sales commodities total $2.57 billion, dairy is at $1.21 billion, and eggs/broilers payouts are at $57.29 million.

CFAP 1 payments are now at $10.56 billion, up from $10.55 billion the prior week.

As for the CFAP Additional Assistance program, no payout information has yet been made available from USDA even as the Farm Service Agency said that actions under CFAP include processing of CFAP AA payments. "USDA will finalize routine decisions and minor formula adjustments on applications and begin processing payments for certain applications filed for this program," according to FSA.

Wednesday Watch List

Markets

The latest weather forecasts and any news of an export sale continue to get quick attention from traders. The Energy Department's weekly inventory is due out at 9:30 a.m. CDT, including an update of last week's ethanol production. At 1 p.m. CDT, the Federal Reserve will conclude its two-day meeting and is expected to keep interest rates near zero.

Weather

Rain is in store across much of the central U.S. Wednesday, including a threat of flash flooding in the southeastern Plains and southern Midwest. Severe storm potential is also high in the far southern Plains and portions of the eastern Midwest. The rain will delay planting but offers favorable crop moisture. Drought areas of the northern Plains, Northwest and Canadian Prairies will be bypassed by this rain event.

Biofuels Coalition Readies for Oral Arguments in Supreme Court

In oral arguments scheduled for Tuesday morning, four agriculture and biofuel organizations will argue that the U.S. Supreme Court should affirm a unanimous 2020 decision from the U.S. Court of Appeals for the Tenth Circuit. The Tenth Circuit decision held that only small refineries that have remained continuously exempt from obligations under the Renewable Fuel Standard are eligible for future extensions of the compliance exemption. The four organizations comprising the Biofuels Coalition—the Renewable Fuels Association, the National Corn Growers Association, National Farmers Union, and the American Coalition for Ethanol—will share time during Tuesday’s oral arguments with the U.S. Department of Justice, which will be representing the U.S. Environmental Protection Agency. EPA announced in February that it supports the Tenth Circuit’s decision. The coalition claims that the EPA had exceeded its authority in creating new exemptions, stating, “The Tenth Circuit Court’s ruling is consistent with the Clean Air Act, congressional intent, and the purpose of the RFS.”

U.S. Department of Agriculture Announces Key Staff Appointments

The Department of Agriculture last week announced the names of individuals who will hold senior positions in Washington, D.C. Karama Neal was named Administrator for the Rural Business-Cooperative Service. Most recently, Neal served as president of Southern Bancorp Community Partners. Mike Schmidt was named senior advisor in the Office of the Secretary. Previously, Schmidt served as senior advisor for USDA’s Farm Production and Conservation Mission Area since January 20, 2021.  Lisa Ramirez was named Director of the Office of Partnerships and Public Engagement. She most recently served as the Chief Innovative Officer for the Lubbock Independent School District in Lubbock, Texas. Finally, Doug McKalip was named senior advisor in the Office of the Secretary. Most recently, McKalip was a senior advisor for the Animal and Plant Health Inspection Service. Agriculture Secretary Tom Vilsack says they will “play an integral role in our mission to create a department that represents and serves all Americans, addresses the climate crisis, builds new and fair markets for American producers, and rebuilds rural America.”

Dairy Farmers to Seek Emergency USDA Hearing on Class I Mover Reform

The National Milk Producers Federation’s Board of Directors voted last week to request an emergency USDA hearing on a Federal Milk Marketing Order proposal. The proposal, NMPF says, would restore fairness for farmers in the Class I fluid milk price mover. The endorsement of the board, which represents dairy farmers and cooperatives nationwide, follows approval from the organization’s Executive Committee. The NMPF plan would ensure that farmers recover lost revenue and establish more equitable distribution of risk among dairy farmers and processors. The current mover was adopted in the 2018 farm bill and intended to be revenue neutral while facilitating increased price risk management by fluid milk bottlers. But the new Class I mover contributed to disorderly marketing conditions last year during the height of the pandemic and cost dairy farmers over $725 million in lost income. NMPF’s proposal would help recoup the lost revenue and ensure that neither farmers nor processors are disproportionately harmed by future significant price disruptions.

Beef. It’s What’s For Dinner. Brand Launches Sustainability Campaign

The Beef. It’s What’s for Dinner. brand, managed by National Cattlemen’s Beef Association, launched a new beef campaign highlighting real beef farmers and ranchers. Consumers will be invited to learn more about how cattle farmers and ranchers around the country are employing sustainable practices to care for the land and produce high-quality beef. Recent scientific research funded by the Beef Checkoff shows that due to decades of continuous improvement efforts on farms and ranches around the country, the U.S. is the leader in sustainable beef production. According to the Environmental Protection Agency, greenhouse gas from beef cattle only represents two percent of emissions in the United States. Additionally, 90 percent of what cattle eat is forage and plant leftovers that people can’t eat. The campaign will come to life in various ways, including new advertising, an interactive map on BeefItsWhatsForDinner.com, a series of interviews showcasing sustainability from farm to table on local TV and radio stations, influencer partnerships and content partnerships.

USDA to Provide Critical Nutrition Assistance to 30M+ Kids Over the Summer

The Department of Agriculture Monday announced a new effort funded by the American Rescue Plan to provide adequate nutrition to more than 30 million children over the summer. The effort expands the Pandemic Electronic Benefit Transfer, or P-EBT benefits. USDA says summer months are difficult for low-income children because they lack access to school meals that fill a nutrition gap during the school year. This summer, USDA will offer P-EBT benefits to low-income children of all ages. Agriculture Secretary Tom Vilsack says, “The expansion of P-EBT benefits over the summer is a first-of-its-kind, game-changing intervention to reduce child hunger in the United States.” P-EBT was established in March 2020 to provide food dollars to families to make up for meals missed when schools have closed due to COVID-19. The program was set to expire on September 30, 2021, but through the American Rescue Plan Act, benefits are now available for the duration of the pandemic, including during the summer months.

Fuel Prices Reach 2019 Seasonal Price Level

The nation’s average price of gasoline is again on the rise, posting a slight 0.4 cent per gallon rise from a week ago to $2.87 per gallon, according to GasBuddy. The national average now stands 2.0 cents higher than a month ago and $1.13 per gallon higher than a year ago. The national average price of diesel has fallen 0.3 cents in the last week and stands at $3.07 per gallon. Nationally, gas prices now match the average prices seen on the same dates in 2019. GasBuddy’s Patrick De Haan says, “perhaps we may see additional upside as most states in the nation have finished the transition to EPA-mandated summer gasoline.” While gasoline demand did dip last week for the third straight, it was yet another small decline, and as temperatures continue to warm ahead of summer. The Energy Information Administration last week reported a key headline- implied gasoline demand rose over 9 million barrels for the first time since last August- a metric that has weakened over the last few weeks.

Washington Insider: Worried About Dollar Outlook

Bloomberg is reporting this week that the most popular currency trade at the beginning of the year has splintered now as Wall Street takes to opposing sides on the outlook for the fate of the dollar in the world's pandemic recovery.

JPMorgan Asset Management and T. Rowe Price see the dollar weakening as U.S. economic exceptionalism wanes, while PineBridge Investments expects it to strengthen. Currencies from the euro to the Brazilian real – which suffered in the first quarter – have attempted rallies this month leaving the greenback sitting at a closely-watched technical crossroads.

"You have that idiosyncratic U.S. rates outperformance story being offset by the global cyclical upswing and by expensive valuations on the dollar," said Ian Samson, a multi-asset fund manager at Fidelity International in Hong Kong, who is long the currency against the euro. "We see significant crosswinds blowing the dollar in different directions."

While most on Wall Street called for a weaker dollar in January, the world's reserve currency went on a run that left speculative funds scrambling to cover some $30 billion of net short positions as Treasury yields climbed and expectations of rate hikes were brought forward. That trade soured this month, with the Bloomberg Dollar Spot Index slipping 2.3%. A break of the uptrend in place from its first quarter would point the way to further downside.

This week's policy assessment by the Federal Reserve, which has held firm against hawkish expectations, could lend weight to bears. At the crux of dollar forecasts is expectations for the pace of recovery in the world's biggest economy.

Credit Suisse Strategist Tantia discusses the outlook for Asian markets and why his firm changed their negative view on the U.S. dollar to neutral. As the world strives to break free from the bruising economic effect of coronavirus restrictions, the U.S. has inoculated more citizens than any other country, giving it an edge in the race to re-open. Coupled with the Biden administration's multi-trillion-dollar fiscal stimulus and a Fed that's allowing inflation to overshoot, it's spurring the likes of PineBridge Investments to predict more dollar gains.

"U.S. Treasury yields could see another leg higher once we see some inflation come back," with their premium over peers supporting the dollar, said Omar Slim, portfolio manager at PineBridge in Singapore. "Our view is that the dollar will retain a strengthening bias this year."

Ten-year U.S. yields surged more than 80 basis points this year to 1.77% in March, the highest since before the pandemic. While the benchmark stood at 1.58% Monday, it remains well above this year's low of around 0.90%.

"Positive U.S. data might very easily kick-start a dollar rally again," wrote Commerzbank AG currency strategist Thu Lan Nguyen in a note last week. "So for now U.S. dollar bears should make sure that they don't get excited too soon."

But not everyone is convinced the U.S. will continue outpacing peers. For JPMorgan Asset's Thushka Maharaj, its exceptionalism is set to fade as other nations catch-up on vaccine roll-outs and economic re-openings in the second half of the year.

The London-based strategist is keeping tabs on developed markets like Europe, the U.K. and Japan, and sees the euro outperforming the dollar in the medium term. “We are expecting the rebound in these economies to mirror what we are seeing in the U.S. right now,” she said.

Signs abound this trend is underway. Coronaviruses cases are rising in all regions except Europe, the World Health Organization said on Tuesday. The European Union is unleashing a new immunization drive to cover the bulk of its population within a few months, while on the economic front, recent PMI data have beaten expectations.

The euro has climbed about 3% from a four-month low in March and broke through the key $1.20 level last week. However, some favor other currencies to best the greenback. T. Rowe's Thomas Poullaouec sees more gains for Australia's risk-sensitive dollar as China's economy rebounds from the pandemic and demand for commodities rise.

Aberdeen Standard Investments' Edwin Gutierrez is watching for opportunities to boost exposure to riskier developing currencies as "the rest of the world catches up on the vaccine roll-out."

In the meantime, vocal bears continue to warn about long-term headwinds for the dollar. "Beyond the near term, we continue to see a structurally negative outlook for the U.S. currency," wrote Goldman Sachs Group Inc. strategists including Zach Pandl in a note Tuesday. "The dollar is still substantially overvalued."

Rise in Cost of Eating Out Now Seen Higher for 2021

The cost of eating out will be a little higher than previously forecast by USDA for 2021, but forecasts for overall food price inflation and grocery store prices were kept at prior marks by USDA's Economic Research Service (ERS).

Food away from home (restaurant) prices are now expected to increase from 2.5% to 3.5% in 2021 compared with 2020, ERS said, up from 2% to 3% forecast as the increase in March. The higher forecast was "driven by increases in prices for food from 'limited service' vendors (locations where customers pay at the register before eating)," ERS said.

Food prices overall so far in 2021 have shown increases compared with 2020, with restaurant prices up 3.7% in March from year ago while food at home (grocery store) prices are up 3.3% from year ago. So far in 2021, food at home prices are up 1% and food away from prices are up 2.3%, while the CPI for all food is up 1.6%.

New WTO Chief Cautions China Cannot be Made to Feel Targeted

Chinese cooperation on trade reforms is most likely to come if it is not made to feel targeted by other countries, according to Ngozi Okonjo-Iweala, the director-general of the World Trade Organization.

Several countries have been pushing for reforms on industrial subsidies and state-owned enterprises used by China, with those countries saying the policies distort global trade.

"We also have to show China is not being targeted... When China feels it is being targeted, and it's only about China, you get a lot of resistance," Okonjo-Iweala told a European Commission conference. "The dealings I have had with China have been very constructive and I think that if we put the facts on the table about the negative spillovers from such industrial subsidies and share them with China ... they will be willing to look at that."

The WTO is working with the World Bank, International Monetary Fund and the Organization for Economic Co-Operation and Development (OCED) to "put some objective facts on the table," the WTO chief remarked.

This comes as the U.S. has continued to seek to build support with allies to take on China's actions on trade and economic policies.

Tuesday Watch List

Markets

Tuesday has an index of U.S. consumer confidence set for 9 a.m. CDT, but no other official reports. Traders will keep a close eye on the latest weather forecasts and watch for any export sales news.

Weather

Tuesday will be very warm, humid and windy over the central and southern U.S. Precipitation will focus on the Northern Plains and northern Midwest with scattered light showers. This combination will favor additional row crop planting progress. Strong thunderstorms with locally heavy rain and potential severe intensity are in store from the southeastern Plains through the southern and eastern Midwest Tuesday evening and Wednesday.

Biden Pledges 50 Percent Cut in U.S. Emissions By 2030

During a virtual Earth Day summit with other world leaders, President Joe Biden pledged to cut U.S. greenhouse gas emissions in half by 2030. A DTN article says biofuel groups are relieved after the president’s plan talked about very low carbon, new generation renewable fuels to help achieve rapid emission reductions in both the auto fleet and aviation. Biofuel groups had expressed concern that the president’s infrastructure plan relied too heavily on electric vehicles. Ag Secretary Tom Vilsack says the reality is the country will be using combustion engines for some time into the future. “We know that biofuels have a better greenhouse gas impact or footprint than petroleum-based fuels,” Vilsack says. “To the extent that we can increase our biofuel blends, that’s going to take us closer to our reduction goals.” Renewable Fuels Association CEO Geoff Cooper says biofuels have already made a significant impact on carbon reduction, lowering emissions by almost one billion tons since 2008. Brian Jennings, CEO of the American Coalition for Ethanol, says the initiative could potentially expand biofuel markets around the globe for American producers. “Other countries have initiated national ethanol policies as a part of their initiatives to decarbonize transportation fuels, and American biofuel producers are ready to play a much bigger role in meeting the targets domestically and around the world,” Jennings says.

Biden’s 30X30 Proposal Causing Concern Among U.S. Agriculture

The American Farm Bureau Federation is one of many ag groups calling on the Biden Administration to act responsibly when it comes to conservation. Biden’s goal to conserve at least 30 percent of U.S. land and water by 2030, commonly known as “30X30,” is raising many questions. A letter to the administration makes three key requests: that the administration provides clarity on the initiative; that the effort recognizes voluntary conservation efforts already underway; and that the administration seeks input from farmers and ranchers. “This ‘30X30’ goal has received a great deal of attention in farming and ranching communities across the country,” writes American Farm Bureau President Zippy Duvall. “America’s agriculturalists are asking whether their good work will be recognized by the administration.” The letter points out that farmers and ranchers have voluntarily enrolled more than 140 million acres of private land into federal and non-federal conservation programs. That’s a landmass larger than the size of New York and California combined. “We ask that you move swiftly to provide clarification about your intentions, and when you do, make sure to invite public comments because farmers and ranchers are leaders in conservation and deserve to get heard,” Duvall adds.

Soy-Based Innovation Clears Air and Helps Respiration

A new soy-based dust suppressant is now available for roads, construction sites, farms, and many more uses. It offers a sustainable choice for rural, urban, and business communities to improve air quality for people, pets, livestock, and crops. As part of the marketing effort, a new video shows how this innovation can help reduce dust on rural gravel roads near farms across the nation. BioBlend Renewable Resources EPIC EL dust suppressant is the latest industrial use product to enter the market after getting research funding from the United Soybean Board and the North Dakota Soybean Council. EPIC EL is made from soybean oil as well as glycerin, a coproduct of biodiesel production. “The soybean checkoff is driving demand for U.S. soy through innovative and sustainable industrial use products,” says Dan Farney, USB Chair and a soybean farmer from Illinois. “A long-lasting soy-based dust suppressant is a natural choice for farmers, county engineers, and government agencies, as well as businesses in rural and urban areas, to improve air quality, traffic safety, and sustainability.” Because EPIC EL is an odorless water-soluble product, it offers environmental benefits compared to the salt-based mixtures commonly used to control dust that trigger concerns about soil leaching and equipment corrosion.

Cargill Building New Canola Plant in Canada as Demand Soars

Cargill is building a new $350 million canola plant in Saskatchewan, Canada, to take advantage of the booming demand for the oilseed. Canola futures recently hit record highs, and soybeans reached multi-year highs as demand for canola to process into vegetable oil and animal feed is greater than the available supply. Refiners are also planning to produce renewable diesel from canola and soybeans to comply with Canadian government mandates and several U.S. states to manufacture cleaner-burning fuels. “There’s going to continue to be a strong pull in countries like China, from a food perspective,” says Jeff Vassart, president of Cargill’s Canadian unit. “We do see demand increasing for renewable diesel too, and we’re going to make sure we get positioned for it.” The new plant in Regina, Saskatchewan, will have the capacity to crush one million tons of canola every year. Reuters says the plant is expected to start working in early 2024 and will create 50 full-time jobs. Cargill will also be modernizing its two canola crush facilities in Alberta and Saskatchewan to increase volume. Canada’s canola stocks will drop to their lowest point in eight years sometime later this summer, but Cargill still plans to crush at a strong pace.

Corn Export Sales Rise While Beans and Wheat Drop

The USDA says export sales of soybeans and wheat dropped week-to-week while corn sales rose. Soybean sales in the seven days ending on April 15 were reported at only 64,300 metric tons, down 29 percent from the previous week but up 25 percent from the prior four-week average. Japan was the big buyer at 58,200 metric tons. China kept the total from going higher by canceling cargoes of 51,200 tons while an unnamed country canceled 37,200 tons. Sales for the 2021-2022 marketing year totaled 315,300 metric tons. Exports for the week dropped to a marketing-year low of 226,400 metric tons, a 45 percent drop week-to-week. Wheat sales also dropped, falling to 240,200 metric tons, still up 55 percent from the prior four-week average. Mexico was the top buyer at 137,500 metric tons. Sales for the 2021-2022 marketing year came in at 373,800 metric tons. Exports in the seven days through April 15 tallied 561,000 metric tons, 20 percent higher than the previous week. Corn sales rose to 387,500 metric tons, 18 percent higher than the previous week. However, that’s down 75 percent from the previous four-week average. Mexico was the top corn buyer at 366,300 metric tons. Weekly exports totaled 1.61 million metric tons, which was 12 percent lower than the prior week.

Farm Progress Returning to Live Events in 2021

Farm Progress will return to hosting live events with the Farm Progress Show in Decatur, Illinois, August 31-September 2, and Husker Harvest Days in Grand Island, Nebraska, September 14-16. A survey done by Readex Research indicated that 84 percent of past show attendees will go to the show in person or plan to attend if their schedule allows it. The industry hasn’t come together in person since early 2020, so groundbreaking product introductions and technological advances haven’t been seen in over 18 months. Farm Progress says its entire team is working to ensure that the agriculture community can reconnect in meaningful and safe ways when they return to these yearly events. The All-Secure Guidelines, a transparent and vetted industry-wide collection of health and safety policies, will provide direction during the upcoming shows and make sure that all attendees and exhibitors will be safe and healthy. Central Illinois farmer Chase Brown tells Farm Progress that “It’s exciting to get out to see and touch the newest equipment, but also to interact with not only exhibitors but fellow farmers.”

Washington Insider: Fight Over Taxes Increases

The Hill is reporting this week that lawmakers are digging in for a "bitter fight over tax increases" that President Joe Biden is expected to propose in the coming days – which he says are necessary to pay for expensive infrastructure and family support bills.

The expected proposals, which largely hew to his campaign promises, would raise the corporate tax rate from 21% to 28%, implement a minimum corporate tax, nearly double taxes on investment gains for the wealthiest and tweak inheritance laws.

The announced corporate tax plans would cover a $2.3 trillion infrastructure plan dealing with transport, broadband, water and electricity. Capital gains and other proposals are being finalized ahead of next week's rollout of a so-called family infrastructure plan focusing on early education and home care that could run as high as $1.5 trillion.

Republicans, whose signature achievement under the Trump administration was a 2017 tax bill that cut taxes significantly are continuing to excoriate the proposals. "This is another economic blunder by the Biden Administration," said Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, which deals with taxation.

This time, President Biden is also confronting blowback from progressives such as Sen. Bernie Sanders, I-Vt., who are pushing for the corporate tax rate to return to its 2017 level of 35%. "We need a progressive tax system based on the ability to pay, not a regressive tax system that rewards the wealthy and the well connected," Sanders said in late March. Progressives want Biden to use the extra cash to pay for expanded health coverage.

Republicans are also torn between sacrificing their most recent crowning legislative achievement and proving that they are not obstructionists to popular proposals from a popular president.

A recent survey conducted by The New York Times and Survey Monkey found that two out of three American voters support Biden's American Jobs Plan, The Hill said. The White House has portrayed itself as open to negotiations on pay-fors, though Republicans remain skeptical after the president dismissed their COVID-19 offers and passed his last $1.9 trillion plan with only Democratic support.

"It's the beginning of a discussion," White House press secretary Jen Psaki said Thursday, adding that Biden's red line was his campaign promise to not raise taxes for people making under $400,000 a year.

Moderate Democratic Sen. Joe Manchin of West Virginia has said he prefers a negotiated bipartisan solution, but has drawn a line in the sand, arguing that corporate tax increase should not go beyond 25%.

Republicans presented their $568 billion infrastructure counter-offer Thursday and ruled out any corporate tax increases arguing that the bill should be funded through user fees and already-appropriated funds from the last COVID-19 relief measure.

Sen. Shelly Moore Capito, R-W.Va, who led the effort for the GOP response, said that increasing corporate rates was out of the question. "I think that's a non-negotiable red line," she said. "For me personally, that's a non-starter." But Republicans face an uphill battle with that approach, The Hill says.

"It definitely should be raised, because the break that they got from the Republicans was totally untoward and these corporations should be paying their fair share of taxes," Sen. Mazie Hirono D-Hawaii, said.

Senate Finance Committee Chairman Ron Wyden, D-Ore., said Democrats couldn't accept Capito's red line. "Their idea is that the biggest of the big corporations should not pay one penny in taxes," he said Thursday. "It's pretty hard to get to a bipartisan approach from that. You know, I always try to find common ground, but that's gonna be a stretch."

Republicans backing Capito's counterproposal agreed with Biden on one thing: They don't want to raise the gas tax, despite a push by big business groups hoping to stave off a corporate tax hike.

Complicating things further, a group of House Democrats have insisted that they will vote down any proposal that doesn't roll back limits on the state and local tax deduction, known as SALT.

The GOP tax law limited the deduction to $10,000, a move that largely affected the wealthy in blue states such as California and New York.

But eliminating the deduction would raise the price of legislation by $130 billion, half of which would accrue to millionaires. Progressive Reps. Alexandria Ocasio-Cortez, D-N.Y., and Kathleen Rice, D-N.Y., were the only New York Democrats not to sign onto the SALT letter.

Market watchers believe that ultimately Democrats will moderate their asks in order to secure support for passing their bills, whether that requires simply satisfying moderates such as Manchin for a budget reconciliation bill, or persuading 10 Republican Senators to join them in passing legislation through regular order.

A Thursday analysis from Goldman Sachs predicted that Biden's plans to raise capital gains from 20% to 39.6% on high earners would likely end up closer to 28%. "While it is possible that Congress might pass the proposal in its entirety, we think a moderated version is more likely in light of the razor-thin majorities in the House and Senate," analyst Jan Hatzius noted.

So, we will see. The tax plan will be a hard ask for both parties, and certainly is one producers should watch closely as they proceed this summer, Washington Insider believes.

Former USDA Secretary Perdue Being Considered As Leader Of University Of Georgia

Atlanta TV station Fox 5 is reporting that the University System of Georgia is considering former USDA Secretary Sonny Perdue to become the next chancellor.

The station reported that a group of students is planning to protest the consideration of Perdue to lead the university system in the state.

"Students Against Sonny" has published a petition on Change.org and plans to hold a protest this week in front of the Board of Regents building in Atlanta.

USDA's Vilsack: Administration 30x30 Plan Not a 'Land Grab'

The Biden administration's 30x30 plan to protect 30% of U.S. lands and ocean territory by 2030 not a "land grab," according to USDA Secretary Tom Vilsack.

The secretary told reporters, "This is not about land grabs, this is really about utilizing public lands and private working lands in a commitment to conservation." He said the department is reaching out to farmers for their suggestions about how to achieve the "30x30" and other goals, but that "there's no intention to take something away from folks," rather the moves are focused on encouraging adoption of climate-smart practices.

He also said the action to increase acreage levels enrolled in the Conservation Reserve Program (CRP) will not increase market prices for commodities.

But the National Grain and Feed Association (NGFA) cautioned that "drastically" increasing CRP could result in negative climate impacts. Mike Seyfert, president and CEO of the NGFA, said, "NGFA believes CRP should be targeted at the most environmentally sensitive portions of farms, and avoid enrollment of whole farms or large tracts of productive farmland. Programs that drastically increase acreage idling in the United States send market signals to competitors to plant more acres, resulting in negative climate and environmental impacts. We look forward to hearing additional details from USDA and working with the department to ensure this acreage is targeted for the most substantial environmental benefits while preserving U.S. agricultural productivity and competitiveness."

Monday Watch List

Markets

Traders will start a new week examining the latest weather forecasts, watching for a report on March durable goods orders at 7:30 a.m. CDT and will pause at 8 a.m. to see if USDA has an export sale announcement. At 10:00 a.m. CDT, USDA will have its weekly report of grain export inspections, followed by Crop Progress at 3 p.m. CDT.

Weather

Monday features very warm to hot and dry conditions over much of the central and southern U.S. This combination favors spring planting along with bringing stress to winter wheat. Red Flag wildfire warnings cover much of the Southern Plains. We'll also see widely scattered light showers in the Northern Plains with little to no easing of drought.

Senate Ag Committee Advances Growing Climate Solutions Act

The Senate Agriculture Committee quickly advanced the Growing Climate Solutions Act Thursday morning. Via a voice vote, the committee approved the legislation, sending it on to the full Senate for consideration. Committee Chair Debbie Stabenow states, “On Earth Day, our committee came together in a bipartisan way to pass the Growing Climate Solutions Act.” Ranking member John Boozman says the bill "demonstrates what can be accomplished if we take a bipartisan approach to legislating." The bill creates a structure at the U.S. Department of Agriculture to help farmers and foresters scale-up climate-oriented practices and benefit from emerging new sources of farm revenue. The bill was reintroduced on Tuesday with the support of 42 Senators and over 70 agricultural and environmental organizations. Agriculture groups are supportive of the legislation. Growth Energy CEO Emily Skor says, "The Growing Climate Solutions Act rightly rewards farmers for climate-smart practices and provides important guidelines for success.”

NACD Announces Climate Action Task Force

The National Association of Conservation Districts Thursday announced the formation of a Climate Action Task Force. The Task Force will assess current and emerging climate policy opportunities and make recommendations to NACD’s leadership. The goal is to utilize the technical knowledge and expertise of conservation districts as part of the U.S. solution to climate change. NACD President Michael Crowder says, “It’s important to keep locally-led conservation at the forefront of U.S. climate mitigation efforts to set strong direction that also serves the needs of local communities.” President Crowder selected NACD Immediate Past President Tim Palmer to lead the task force. Palmer says, “The task force members have a keen knowledge – from different perspectives – of how utilizing continuously refined and emerging practices can help our soils and ecosystems produce climate benefits.” NACD says conservation practices that are trusted and familiar to landowners can play a critical role in climate change mitigation and healthy farm, ranch, tribal and forestry economies.

NMPF Supports Labeling Integrity Through DAIRY PRIDE Act

The National Milk Producers Federation commended lawmakers for reintroducing the DAIRY PRIDE Act. The legislation, NMPF says, would bring clear, accurate labeling information for consumers and end harmful mislabeling of dairy foods for plant-based products. The legislation requires the U.S. Food and Drug Administration to enforce its own existing standards of identity on imitation dairy products after decades of inaction. Senators Tammy Baldwin, a Wisconsin Democrat, and James Risch, an Idaho Republican, introduced a Senate version of the bill, and a companion bill was introduced in the House. NMPF President and CEO Jim Mulhern states, “FDA is responsible for the integrity and safety of our nation’s food, medicine, and medical devices, and it’s crucial that it enforce its own standards and requirements.” Standards of identity legally define what constitutes a specific food or food product, requiring the food product to carry certain qualities. When enforced, these legal standards protect consumers by helping to ensure the integrity of their food.

White House Launches Drought Relief Working Group

The White House this week announced the formation of an Interagency Working Group to address worsening drought conditions in the West and ongoing water shortages. The Working Group will be co-chaired by the Departments of the Interior and Agriculture. Agriculture Secretary Tom Vilsack states, "With our interagency Working Group, we will collaborate with Tribes, agricultural producers, landowners, and rural communities to build regional resilience to drought." Interior Secretary Deb Haaland says, “We are committed to using every resource available” to accomplish their goal. The Working Group will work to identify immediate financial and technical assistance for impacted irrigators and Tribes. Development of longer-term measures to respond to climate change and build more resilient communities and protect the natural environment will also be a priority, including through President Biden’s proposed American Jobs Plan and through a recommitment to strengthening the National Drought Resilience Partnership. Formed in 2013, the NDRP brings together federal agencies to build long-term drought resilience.

USDA Invests $487 Million in Rural Water, Energy, and Biofuel Infrastructure

The Department of Agriculture celebrated Earth Day Thursday by announcing a $487 million infrastructure investment to help communities in 45 states. USDA says the funding will help communities build back better and stronger while prioritizing climate-smart solutions and environmental stewardship. USDA is making the investments under the Water and Environmental Program, the Rural Energy for America Program, the Electric Loan Program and the Higher Blends Infrastructure Incentive Program. The investments include $374 million through the Water and Waste Disposal Loan and Grant Program to modernize rural drinking water and wastewater infrastructure in 31 states. The funding also includes $78 million in renewable energy infrastructure in 30 states through the Rural Energy for America Program, and $17.4 million in loans in New Mexico and South Dakota through the Electric Loan Program. Finally, USDA is using $18.4 million in 20 states through the Higher Blends Infrastructure Incentive Program to build infrastructure to help expand the availability of higher-blend renewable fuels by approximately 218 million gallons per year.

Electric Car Sales Up 81 Percent

Sales growth of both electric and hybrid vehicles outpaced overall market performance in the first quarter of 2021. Electrified vehicles - automobiles featuring large battery packs and electric motors in the propulsion system - accounted for 7.8 percent of the total U.S. market, up from 4.8 percent in the first quarter of 2021. Cox Automotive and Kelley Blue Book released the data that finds electrified vehicle sales growth of 81 percent far outpaced industry growth. Sales of electric vehicles - battery only - grew by 44.8 percent year over year, reaching nearly 100,000 sales in the quarter, which is a record. Sales of hybrid vehicles outpaced both the market and electric vehicles, doubling to more than 200,000 in the quarter. Hybrid sales are increasing more quickly as sales of hybrid and plug-in hybrid vehicles jumped by 106 percent in the first quarter of the year. The overall automobile market increased by 11.4 percent in the quarter.

Washington Insider: Investment Fights and How to Pay

Bloomberg is reporting this week that key Senate Republicans are already planning to participate in a revived system of earmarking congressional funds for local projects although their conference left in place a non-enforceable ban on the practice.

The conference kept its non-binding ban on earmarks in its Wednesday meeting on caucus rules, members said. Democrats have said they plan to bring back a limited version of earmarks, which hadn't been used in a decade. Now, it appears that at least some Senate Republicans are planning to join in the process, as well.

Senate Appropriations Vice Chairman Richard Shelby, R-Ala., said it'll be up to individual members to decide if they want to participate. He said he was confident that "the new system of earmarks won't get the bad reputation it had before it was banned in 2011."

"If you don't want an earmark don't ask for one," Shelby said of this week's decision. "Even if you ask for one, you might not get one, because the old earmark days, they're gone. They're going to have to be meritorious, they're going to have to be substantive in nature, and meaningful for us to really even consider it."

Sen. Shelley Moore Capito, R-W.Va., ranking member of the Senate Environment and Public Works Committee and of the Senate Appropriations Homeland Security Subcommittee said she'll consider possible earmarks. "I'm going to look seriously at earmarking," she told reporters. "If I can make my voice heard and be specific on it, and mindful of the transparency, I don't have a problem with it."

Sen. Susan Collins, R-Maine, ranking member of the Senate Appropriations Transportation-HUD Subcommittee, also told reporters she plans to submit earmark requests.

Members expected to vote on a proposal to remove the conference's ban on earmarks but didn't complete that vote on Wednesday, instead opting to leave the "symbolic ban" in place and let members decide for themselves how to legislate.

"I certainly hope that every member of the Republican conference complies with what the conference rules say," Sen. Ted Cruz, R-Texas, an earmark critic, told reporters. "Can a member choose to act differently? Sure."

In the meantime, Senate Republicans say they are working on an infrastructure counteroffer in an effort by conservatives to push the Biden administration to narrow the scope of its package and pay for it with user fees rather than a corporate tax hike.

Republicans have discussed a ballpark figure of $600 billion to $800 billion, rather than the $2.25 trillion proposal by Biden. They've also pushed back on Biden's call for an increase in the corporate tax rate from 21% to 28% as they push to have their bill paid for with user fees.

The anticipated announcement is closer to the beginning of negotiations than the end, Bloomberg opines. Capito, who has led the effort to assemble a Republican counteroffer, said it's "an opening bid" in discussions with the White House. "This is an honest bid and a negotiation," she told reporters on Wednesday. "And I just want them to know that we want to be at the table."

Capito will join Commerce, Science, and Transportation ranking member Roger Wicker, R-Miss., Energy and Natural Resources ranking member John Barrasso, R-Wyo., and Banking, Housing, and Urban Affairs ranking member Pat Toomey, R-Pa., to announce the plan at a coming press conference, likely before the end of this week.

Wicker called the new proposal "a very viable plan," in his remarks to reporters.

Plans to pay for the spending are continuing to be a major divide between Republicans and Democrats. President Biden has said the bill's costs must be offset and proposed a corporate tax hike for upper bracket taxpayers to achieve that. Republicans argue that is a nonstarter.

"We're not interested in raising taxes," Capito told reporters. "We think that people that use our infrastructure are a lot of the solution. There's a lot of private money out there."

Bloomberg also noted that advocacy groups from states across the U.S. are urging Congress to "evenly" fund transit and highways in the next surface transportation reauthorization bill. The effort, convened by the National Campaign for Transit Justice, is expected to kick off today with letters sent to federal lawmakers from at least 13 states.

In additional budget discussions, the White House told lawmakers the administration's goal is to send a full budget proposal for fiscal 2022 by Memorial Day, May 31, House Budget Chair John Yarmuth, D-Ky., told reporters Wednesday. That will help kick off a late start to the congressional budget process, he said.

Yarmuth noted that lawmakers are doing preliminary work on a budget resolution, but thinks it will be June by the time the budget portion of the process is finished "because of delays on the White House's end."

Members have discussed simply deeming a budget outline to allow appropriators to start their work, Yarmuth said. "Deeming" a resolution sets the top-line spending figures without going through the full process of adopting a budget resolution.

So, we will see. It is clear that solutions to the question of how to pay for new federal investments will continue to be a hard, nearly impossible sticking point. Whether or not the administration can rely sufficiently on targeted, high bracket taxpayers and avoid new taxes for the middle class will be increasingly important; an issue producers should watch closely as these investment debates intensify, Washington Insider believes.

Senators Again Push EPA To Restore The 'Integrity' Of The RFS

EPA is being called on to set the 2021 and 2022 Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard (RFS) to require "conventional renewable fuel volumes of at least 15 billion gallons per year, as required by statute, along with the court-ordered 500 million gallons illegally waived from 2016 standards and increase biodiesel, advanced, and cellulosic volumes."

The lawmakers told EPA Administrator Michael Regan that "restoring the integrity of the RFS and expanding market opportunities for renewable fuels should remain a core part of our plans to assist in the economic recovery of rural America and further reduce emissions from the transportation sector." The lawmakers also called on EPA to update their modeling on greenhouse gas (GHG) emissions reductions.

The lawmakers also took issue with those refiners indicating they cannot comply with the RFS for 2021, noting the extension of the compliance deadlines for 2019 and 2020 and pointing out that action is in addition to the prior administration granting small refinery exemptions (SREs) that "undercut renewable fuels."

They also sought to counter arguments that high prices for Renewable Identification Numbers (RINs) are threatening the viability of refiners, pointing out that there are many ways refiners can show compliance with the RFS. They called on EPA to "reject requests" to waive or reduce RVOs and continue the commitment to "support farmers and rural communities by upholding and restoring confidence in the RFS."

The letter was signed by 12 bipartisan Midwest Senators, including Chuck Grassley, R-Iowa, Amy Klobuchar, D-Minn., Debbie Stabenow, D-Mich., and others.