CCC funding | ERS, NIFA relocation funds | MFP-2 payments | RFS changes | Biodiesel | USMCA | China | Ag research | Fracking | Hemp
Sen. John Hoeven (R-N.D.) is chairman of the Senate Ag Appropriations Subcommittee, the purse string for the ag policy sector. As a former and popular governor of North Dakota, Hoeven is experienced and articulate at responding quickly to a host of key issues impacting the business of agriculture. That was clearly evident in an interview we held with the senator late Wednesday morning. The following are the questions Farm Journal's John Herath and Pro Farmer Washington Policy Analyst Jim Wiesemeyer asked and Hoeven's responses, both edited for time and clarity — you can hear the entire interview Friday on the DC Signal-to-Noise podcast:
— CCC replenishment funding: Regarding Rep. Collin Peterson (D-Minn.), House Ag Chairman, saying it was “Senate leadership” that began the stipulations on replenishing Commodity Credit Corporation (CCC) funding (link to Agri-Talk interview).
Hoeven: “As you know, we sent a letter over from the Republican appropriators in the Senate, including Senator McConnell (R-Ky.), as well as Richard Shelby (R-Ala.), who's the chairman [Senate Appropriations), and the letter says very clearly that we want to make sure that the CCC is reimbursed so that we can make sure that there's no interruption in Market Facilitation Program (MSP) payments.” Link to letter.
Note: Today, Rep. Mike Conaway (R-Texas), ranking on the House Ag Committee, said, “House Republicans fully agree with their Senate colleagues. House Democratic leadership should abandon their efforts to inflict undue harm on America’s farmers and ranchers.”
— Peterson warned the CCC funding stipulation is an issue Democrats are handing to Republicans: In an interview with Joel Heitkamp (link), Peterson said near the end of the interview that he had met with House Speaker Nancy Pelosi (D-Calif.) and told her she was handing an issue to the Republicans. Where do you see this issue going... will the stipulation language eventually be stripped?
Hoeven: “We have to replenish the account on an annual basis as we have a limit of $30 billion. And so that's what we're bumping into. We want to make sure that we address that so that we don't have any interruption. In the end, it's not just the MFP payments, because other farm programs are funded through that CCC account. So, what we're talking about is addressing that $30 billion cap so that we don't have a gap, particularly now when our farmers are facing real challenges with commodity prices and trade agreements and everything else. So that's what we're addressing. And if there was any confusion on where the Senate is, I think we addressed that in the letter, so I hope that the House will make sure to allow us to address that account and make sure we don't have an interruption.”
Bottom line: Hoeven signaled the Republicans want full funding for CCC with no stipulations.
— Funding for USDA to relocate the ERS and NIFA. The Senate Appropriations Committee bill for FY 2020 funding for agriculture includes $25 million for moving expenses for the relocation of USDA's Economic Research Service (ERS) and the National Institute of Food and Agriculture (NIFA), yet the House has refused to pay for the relocation. What is the outlook for this funding? Link to summary of Senate bill.
Hoeven: “There's any number of things not just in our bill, but in the other appropriations bills that are going to have to be ironed out. But the key is we keep the process moving. So yes, we have the $25 million there for the move for NIFA and ERS. There is some opposition to it. But the key is that we moved the bills through the Senate process, which is bipartisan. Obviously, we'll have to go to conference with the House, so we can hammer that out there. And that's going to be part of any number of things that there will be some back and forth until we get to a final product. So, let's keep the process moving. And that will be one of those things that we negotiate either later on or ultimately in conference with the House.”
— MFP-2 payments. Are you hearing from North Dakota producers that they've had any glitches signing up for the program? USDA says 400,000 farmers have signed up so far and 300,000 have been paid... about $1 billion a week have been paid thus far.
Hoeven: “I want to be careful that maybe there are some issues out there, but I have not been apprised of them if there are. North Dakota State Executive Director Brad Thykeson is very good. And usually if there's a problem, he would get a hold of me. But obviously, I hope it's going well. And if there's anything we need to do to make sure that it does, we stand ready to do it.”
Note: USDA sources say overall the program is operating smoothly. However, there have been some delays relative to several issues, but software glitches are not that significant. Some issues surfaced regarding alfalfa, where some farmers did not certify those acres last year. Other issues have focused on farm ownership/operation changes.
— What can you say relative to coming biofuel boost changes for the Renewable Fuel Standard (RFS) program? President Trump has promised to satisfy the biofuels industry over small refinery exemptions. What are you hearing at this point? Are we close to a deal being done? And what are you hearing is going to be included in that deal?
Hoeven: “I must be careful not to get out in front of the process. Obviously, we're trying to get something put together here. I think it is progressing. The administration has said they are going to address it. They've been working through it; they still have a couple meetings, at least one [more] meeting I know that they want to have, and then I think they will be bringing something out soon. And I'm hopeful that it will be something that the industry thinks works. The challenge is to get something that works with the RFS, but also for the petroleum industry... they're concerned about the small refinery waiver. So, it's hitting that right balance, so you are not undermining the program. The administration's been working on this very diligently, including [USDA Secretary] Sonny Perdue, and others, and the president as well. And I think they're going to have something out pretty soon.”
— If the coming RFS details are along the lines reported by Pro Farmer and now others are in the final announcement, would that be good news for corn and soybean producers and the biofuels industry?
Hoeven: “Yes. I have been part of those discussions. I don't want to get into the process. But yes, it would be good news.”
— Does a final RFS deal have to include full reallocation for the gallons of biofuels that have been waived so far?
Hoeven: “It's going to address that, I think, in a way that works. It's not final yet but at this point, it seems to be tracking. I just can't get into specifics. At least in some discussions to this point, it will work in a reasonable way. But we're not there yet. So, I guess I have to be a little careful about getting more specific.”
— Do you think the lapsed soybean biodiesel tax incentive program will be extended?
Hoeven: “That would be part of a tax extender package. And we don't know that, but that's a provision that would likely be in a tax extension package. When it passes is hard for me to predict if it gets done this year. We're working on a package that we hope gets done this year.”
— Will the U.S.-Mexico-Canada Agreement (USMCA) pass both the House and Senate this calendar year?
Hoeven: “I'm glad you brought it up, because we must keep talking about this. There's no reason not to move that right now. And we stand ready in the Senate to pass it. We're anxious to get it. It has to start in the House. We need to get the House to move on it. I think [U.S. Trade Representative] Robert Lighthizer has really bent over backwards in negotiations with the House Speaker (Pelosi) and has tried to be very accommodating. Before the August congressional recess, the signals we were getting were that the House would move it in September. Well, we're well into September. I'm concerned, but there's no reason not to move it. It helps us with two huge trading partners. The word I am getting is this fall (USMCA vote timing), but the clock's ticking. So, let me put it this way: I sure hope it is voted on, and I am doing everything I can to push it on.”
— Regarding U.S./China trade talks, have you talked with White House officials and USTR Robert Lighthizer lately on the next steps?
Hoeven: “Yeah, that's pretty much a regular conversation right now. It seems to be going the right way. I think in terms of ag and I have a huge interest in energy as well, because we're such a big energy producer now in North Dakota. But it's good for the whole country, too. I think the agreement terms of ag and energy can be a good one. That's not the sticking point. I think the sticking point is the enforcement issue. Some of the national security issues relative to Huawei is another. The negotiations are continuing, and they seem to be getting more positive. So it's hard to predict this stuff. But right now it does seem to be going better. We need to get to it as soon as we can. And a good agreement that, of course, helps our farmers and ranchers. I keep pushing on the trade negotiators in terms of saying, 'Hey, look, this is something that needs to get done.' As soon as we can, we are getting some progress in other areas. We have Taiwan today... a signing ceremony that's $3.6 billion in purchases of some key crops, soybeans, corn, wheat, beef. We have the Japanese agreement in principle, which could get signed next week. Again, that's really good for some key crops like corn and wheat and beef. We have the beef agreement with the EU. We need to get the NAFTA replacement going. So, all of these are important, but we must keep it moving.”
— Regarding funding for agricultural research, some say we are not keeping up with what is needed for public funding for remaining competitive in the ag research area. Are you comfortable with the funding level for fiscal year 2020?
Hoeven: “It's an absolute priority. Look what we've done with ag research. It's mind boggling in terms of disease, risk resistance, but also the productivity and the ability to grow crops in places we've never been able to do it before. I come from western North Dakota, and if you'd have told me that when I was a kid growing up, that we were going to grow crops out there, I would have said, 'No way' because we barely have enough moisture to raise good, small grains, and so on and so forth. And so, it's amazing what research has done. I have to plug North Dakota State University... they're just unbelievable. We do provide a small increase [in funding] this year. I'm always going to push for more research funding, because as you can tell, I'm a huge fan.”
— Were you surprised that so many Democratic presidential candidates want to ban fracking, especially in light of recent oil field and facility attacks in Saudi Arabia?
Hoeven: “Yeah, it just doesn't make any sense. I mean, we're producing far more energy, both oil and natural gas, with far less environmental impact, because essentially, we go down vertically, and then we drill horizontally, underground. So, whereas you might have had to drill numerous wells over miles and miles, now you've got one footprint, and you go underground for two-, three-mile laterals in multiple directions. So, you actually have more energy with better environmental stewardship and reducing CO2 emissions as we increasingly bring natural gas to market as well. And then, it's not just an economic issue. It's a foundational industry that helps every other industry, including agriculture, with low-cost energy, and it is a national security issue as well. Look what's going on in the Middle East. Can you imagine what would be going on if we weren't producing all the energy, we are now in terms of what the reaction would be, what the spike in energy prices would be. Instead, we're handling it and we can actually, hopefully not only keep our sanctions on but hopefully get our European allies to work with us to try to stop Iran's blind activities.”
— Hemp is important in North Dakota and is popular in some other farm states. What are you hearing from your constituency relative to the hemp industry ahead?
Hoeven: “People are pretty excited about it. Sen. [Jeff] Merkley (D-Ore.), my ranking member on Ag appropriations, said that he thinks it's going to be a billion-dollar crop in Oregon this year, which startled me. I thought, wow. But there's a lot of interest because there's so many different uses: the oil, the fiber, everything else. The key is to keep USDA moving on it for the rules and regulations. We do include some things in our [appropriations] bill... funding to keep that process moving for farmers.”