USDA Comments on CFAP and CFAP-AA

Posted on 02/25/2021 7:21 AM

USDA Secretary Vilsack to hold presser today; sends first ‘tweet’ that shows his focus


In Today’s Digital Newspaper


Market Focus:
• Treasury yield climbs to highest in a year
• Powell sees selloff as "statement of confidence" in economic outlook
• Powell again says economy has a long way to go
• ECB concerned rapid rise in yields could damage recovery
• Average rate on 30-year fixed mortgage rose to highest level since November

• Treasury market suggests coming bump in U.S. inflation will run out of steam swiftly
• Short PPP window for small businesses starts
• Estimated number of global crypto users has passed 100 million
• Rebound in North America’s lumber markets isn’t reaching the forests
• Ag demand update

Slow arrival of beans in China again expected to slow crushing
• Ukraine brings in soybeans from Brazil
• Australian weather bureau: La Niña conditions to shift to neutral in months ahead
• Kazakhstan bans foreign ownership of farmland
• New study finds natural ASF mutation less deadly, but also harder to detect
• Brazilian ranchers opposed to cattle imports from Paraguay
• Afghanistan latest to report bird flu


Policy Focus:
• Farm Bureau asks Vilsack to extend deadline for CFAP
• Vilsack spokesman: Review of CFAP-AA ongoing
• Crop Insurance Coalition urges Congress not to cut crop insurance
• Infrastructure push generates concerns over cost, bipartisanship
• Deese hopes to make case for higher corporate taxes


Biden Administration Personnel

• Vilsack to hold presser today
• Vilsack at USDA, sends first ‘tweet’ that shows his agenda
• Senate vote today on Granholm to lead DOE
• Biden to put Tanden in another post should her nomination fail.


China Update:
• China comments about Biden’s critical supply chain review
• Australia’s barley farmers finds other markets after China trade dispute
• Modest boost in Chinese corn plantings likely in 2021


Trade Policy:
• USTR nominee Tai: China both rival and partner
* WTO members looking to fix dormant system for resolving trade disputes


Energy & Climate Change:

• ERCOT CEO: Texas’ electric grid was ‘minutes’ away from complete failure
• USPS upsets environmental activists by buying gas trucks, few EVs
• Republicans warn Fed Chairman Powell re: climate
• Romney signals he’s open to carbon tax and dividend
• Biden-Trudeau talk climate plan

Coronavirus Update:
• Study: Pfizer vaccine overwhelming effective against virus


Other Items of Note:
• Russia sees chance to resurrect 2015 Iranian nuclear deal
• Khashoggi report expected today
• U.S. border de-control
• Blame all this gov’t spending on President Lincoln?




Equities today: Global stock markets were mostly higher overnight. U.S. stock indexes are pointed toward mixed openings. Asian markets ended with gains. Europe was mostly higher at midday.


     U.S. equities yesterday: The Dow finished up 406.93 points, 1.29%, at a record 31,944.28 (its 10th closing high this year). The Nasdaq rose 70.94 points, 0.53%, at 13,536.14. The S&P 500 rose 38.99 points, 1.00%, at 3,920.36.


On tap today:


     Economic reports and events:

     • U.S. jobless claims are expected to fall to 845,000 in the week ended Feb. 20 from 861,000 a week earlier. Follow our coverage here. (8:30 a.m. ET)
     • U.S. gross domestic product is expected to increase at a 4.2% annual pace in the fourth quarter, a slight upward revision from the previously reported 4% gain. (8:30 a.m. ET)
     • U.S. durable goods orders for January are expected to rise 1% from the prior month. (8:30 a.m. ET)
     • U.S. pending-home sales for January are expected to decline 0.5% from a month earlier. (10 a.m. ET)
     • Kansas City Fed's February manufacturing survey is expected to fall to 15 from 17 a month earlier. (11 a.m. ET)
     • Federal Reserve speakers: Atlanta’s Raphael Bostic at a banking outlook webinar at 8:30 a.m. ET, Kansas City’s Esther George on the economy and monetary policy at 9:30 a.m. ET, St. Louis’s James Bullard on the economy and monetary policy at 10:30 a.m. ET, Vice Chairman Randal Quarles on stress tests at 11:10 a.m. ET, Mr. Bostic on the economy at 12 p.m. ET, and New York’s John Williams at the One Hundred Black Men of New York webinar at 3 p.m. ET.


     Ag reports and events:

     • USDA Weekly Export Sales report, 8:30 a.m. ET.
     • Tai confirmation hearing. Senate Finance Committee hearing on nomination of Katherine Tai for U.S. trade representative, 10 a.m. ET
     • Climate change hearing. House Agriculture Committee hearing, "Climate change and the U.S. agriculture and forestry sectors," 12:30 p.m. ET.
    • USDA inspector general Phyllis Fong is lead witness at annual House Appropriations subcommittee hearing on her office's work, 10 a.m. ET.
    • Food Price Outlook, noon ET.
    • International Grains Council releases monthly Grain Market Report, London.


Fed Chairman doubles down. Fed head Jay Powell told the House Financial Services Committee on Wednesday that the Fed is in no rush to raise interest rates or begin trimming its $120 billion in monthly bond purchases (about 7% of GDP on an annualized basis). He also doesn't see any indication inflation could race out of control. While prices might pick up in the coming months, Powell said those increases are expected to be temporary given supply chain constraints.


     Powell emphasized his view that the economy has a long way to go in the recovery and signs of prices rising won’t necessarily lead to persistently high inflation. “Our policy is accommodative because unemployment is high and the labor market is far from maximum employment,” he told the House Financial Services Committee yesterday, in his second day of testimony to Congress. “It’s true that some asset prices are elevated by some measures.” Powell pointed to the example of car prices rising because of a chip shortage and supply-chain constraints in the tech industry. “That doesn’t necessarily lead to inflation because inflation is a process that repeats itself year over year over year,” he said, rather than a one-time surge.


Average rate on a 30-year fixed mortgage rose to 2.81% last week, its highest level since November.




Treasury market suggests that a coming bump in U.S. inflation will run out of steam swiftly. Some analysts note this has implications for fans of gold or cryptocurrencies who fret about runaway inflation.




Short PPP window for small businesses starts. A new Biden administration policy designed to help the smallest businesses obtain pandemic relief loans arrives amid slowing demand for the aid program, prompting some lenders to question how effective it’ll be in upping targeted activity. Starting yesterday, for the next two weeks only businesses with fewer than 20 employees can apply for forgivable Paycheck Protection Program loans so they wouldn’t have to compete with larger ones with roughly half the program’s allocated funds up for grabs.


     PPP small


Market perspectives:


     • Outside markets: The U.S. dollar index is lower early today. Government bond yields are trending up, with the yield on the benchmark U.S. 10-year Treasury note presently fetching 1.444%, a one-year high. Oil prices extended gains for a fourth session to reach the highest levels in more than 13 months.

     •  Crude oil futures are firmer ahead of the U.S. trading start after larger gains in Wednesday action. U.S. crude is trading around $63.55 per barrel and Brent around $66.50 per barrel. Prices edged up in Asian trading, with U.S. crude up 14 cents at $63.36 per barrel and Brent up 21 cents at $66.39 per barrel.


     • Estimated number of global crypto users has passed 100 million — and boomers are now getting drawn to bitcoin too, reports find. The bitcoin boom has attracted millions of investors from all age ranges, according to two reports. Meanwhile, Michael Saylor, the CEO of the business intelligence software firm MicroStrategy, is a big believer in Bitcoin and urges companies to diversify their assets by shifting corporate cash into the cryptocurrency. Yesterday, MicroStrategy announced a billion-dollar Bitcoin purchase.


     • Rebound in North America’s lumber markets isn’t reaching the forests. While saw mills are running close to capacity to meet demand from the resurgent housing sector, the Wall Street Journal reports (link), noting that timber growers across the U.S. South have gained nothing from the run-up in prices for finished lumber. The gap is one sign of how sharp swings in demand and supply have undercut traditional patterns in commodities markets. The problem for timber growers, the article details, is that so many trees have been planted between the Carolinas and Texas that mills are paying the lowest prices in decades for logs. The log-lumber divergence has been painful for growers but highly profitable for forest-products companies that have been buying mills in the South. Experts say it could be another decade, and maybe two, before enough trees are felled to balance supply with demand, even with mills sawing at capacity.




     • Ag demand: Jordan issued a new tender to buy 120,000 MT of milling wheat from optional origins. The country purchased just 60,000 MT in its tender yesterday for 120,000 MT of the grain.


Items in Pro Farmer's First Thing Today include (Link to subscribe to FTT):

     • Slow arrival of beans in China again expected to slow crushing
     • Ukraine brings in soybeans from Brazil
     • Australian weather bureau: La Niña conditions to shift to neutral in months ahead
     • Kazakhstan bans foreign ownership of farmland
     • New study finds natural ASF mutation less deadly, but also harder to detect
     • Brazilian ranchers opposed to cattle imports from Paraguay
     • Afghanistan latest to report bird flu




—  Farm Bureau asks Vilsack to extend deadline for CFAP. It didn’t take long for American Farm Bureau Federation President Zippy Duvall to ask USDA Secretary Tom Vilsack to extend the deadline to apply for the Coronavirus Food Assistance Program (CFAP). The current deadline is this Friday, Feb. 26, but in a letter to Vilsack, Duvall said, “The recent Regulatory Freeze Pending Review on all new and pending executive actions, though common during a change in administration, has created confusion for farmers and ranchers with respect to eligibility and the application process for the Coronavirus Food Assistance Program — Additional Assistance. Although Farm Service Agency offices continued to accept applications during the regulatory freeze, some farmers may have interpreted the implementation suspension to mean that the program was being modified or potentially terminated.” The letter noted severe weather, which impacted travel conditions and created broadband disruptions, may have also impacted farmers’ ability to complete the application process. AFBF is asking USDA to extend the deadline to apply for assistance by at least 30 days after the regulatory review is completed. Link to Duvall letter to Vilsack.


     Matt Herrick, a Vilsack spokesman, said “The review of CFAP-AA is ongoing, and we anticipate a decision in the weeks ahead. It’s important to note that payments for CFAP-2 continue; payments from December sign-ups went out as scheduled even just last week. The CFAP Additional Assistance program (CFAP-AA) is under review. FSA is eliminating the deadline on CFAP-AA and [will] continue to accept applications during the evaluation period so that, once a determination is made on the direction, we are ready to act. FSA will provide at least an additional 30 days for producers to sign up after any decision is announced. We remain focused on helping producers who have been hurt by Covid-19 market disruptions, trade disputes and extreme weather. A number of members of Congress, farmers and organizations have reached out to identify gaps in the previous rounds of assistance and USDA welcomes this input during the evaluation period. What we’re doing now is listening and gathering feedback so that we get help to as many producers as possible without focusing on one group or geography at the expense of another.”


— Crop Insurance Coalition urges Congress not to cut crop insurance. Fifty-eight partners of the Crop Insurance Coalition — including farmers, lenders, agricultural input providers, and conservation groups — have sent letters to lawmakers and the Biden administration opposing cuts to crop insurance during the upcoming fiscal year 2022 budget process. “Even in good years, farmers need access to a strong and secure federal crop insurance program, a program that farmers have described time and again as a critical linchpin of the farm safety net,” the letter said. “The strength and predictability of the program is only more critical given the uncertainty that characterizes the production agriculture sector. USDA and Congress have taken extraordinary ad hoc measures over the past three years to ensure the financial security of rural America. It would only serve to undercut these efforts to propose harmful changes to a crop insurance program that provides predictable, within-budget assistance to farmers in a way that helps lenders continue to support America’s farmers and ranchers. It is the certainty of the crop insurance program that provides critical reassurance to lenders.” Link to one of the coalition’s letters.


— Infrastructure push generates concerns over cost, bipartisanship. Members of both political parties are aiming for a bipartisan infrastructure package, even as some Democrats discuss a scope that could lose Republican support. House Transportation and Infrastructure Chair Peter DeFazio (D-Ore.) said that Democrats are working on a “transformative bill” that will include policy changes but didn’t elaborate. “I don’t think you’re going to see a status quo bill out of either the House or the Senate,” he said yesterday.


— Deese hopes to make case for higher corporate taxes. National Economic Council Director Brian Deese says he is hopeful that White House can make the case for a higher corporate tax rate as beneficial for the nation’s economy. “Traditionally we have seen differences of opinion in the business community” on corporate tax rates, Deese told MSNBC. In a time of “disparate outcomes” there’s “a broader recognition that we need to do what’s right for the economy as a whole,” Deese said



—  USDA Secretary Vilsack to hold presser today. Vice President Kamala Harris virtually swore in Tom Vilsack late Wednesday as the USDA secretary. Joining Vilsack in person were Christie Vilsack, his wife, and his son Jess and daughter-in-law Kate and grandchildren Jake, Caroline and Amelia and — virtually — his son Doug, daughter-in-law Janet Lopez Vilsack and grandchildren Cassin and Ana. Vilsack is expected to hold a press event today.


— Vilsack at USDA, sends first ‘tweet.’ USDA Secretary Tom Vilsack promptly went on social media, sending the following out via Twitter: “40+ years as a public servant and I’m finally sending my first tweet! Honored to serve our nation once again alongside USDA’s dedicated public servants.” His page notes the following of Vilsack: “Secretary of Agriculture. Let’s transform our food system, ensure equity, end the pandemic & nutrition insecurity, & rebuild rural economies.”


— Senate vote today on Granholm to lead DOE. The Senate is expected to vote just after midday today on the nomination of former Michigan Governor Jennifer Granholm to lead the Department of Energy (DOE). Her nomination is expected to easily clear after 18 Republicans joined Democrats in invoking cloture on the nomination.


— Biden to put Tanden in another post should her nomination fail. The Biden administration will find another role for Neera Tanden, the president’s pick for budget director, should her controversial nomination fail in the Senate, White House Chief of Staff Ron Klain said yesterday. Klain said Biden is continuing to support Tanden as head of the Office of Management and Budget but his comments marked the first time a senior administration official described contingency plans if her nomination collapses.


     Two Senate committees postponed scheduled votes on Biden’s nomination of Tanden, raising further doubts that she can garner enough support to be confirmed by the chamber.




— China comments about Biden’s critical supply chain review. Biden on Wednesday issued an executive order mandating a 100-day review of critical product supply chains in the U.S., focused on semiconductors, key minerals and materials, active pharmaceutical ingredients and advanced batteries like the ones used in electric vehicles. Chinese Foreign Ministry spokesman Zhao Lijian said the measures would "not help solve domestic problems" and only harm global trade. "China believes that artificial efforts to shift these chains and to decouple is not realistic. We hope the U.S. will earnestly respect market laws and free trade rules and uphold the safety and reliability and stability of global supply chains." While the order doesn't directly call out China or any specific country, White House officials have said an overreliance on Beijing for critical goods was a key risk. The Biden administration may also work with a "carrot and stick" approach, meaning financial incentives for companies that manufacture items domestically or limiting some imports for those who don't.


     In a letter to Biden, Sens. Marco Rubio (R-Fla.) and Chris Coons (D-Del.) recommended he invoke the Defense Production Act to "incentivize or, if necessary, require American companies to retain their domestic capacities during this time."


— Australia’s barley farmers, China’s first target in a broadening trade dispute, are looking to new markets, showing the limits of Beijing’s trade pressure. Link to the reasons why via a WSJ article.


— Modest boost in Chinese corn plantings likely in 2021. China will likely boost corn plantings by 667,000 hectares (1.65 million acres) in 2021, the country’s ag ministry forecast today. The country’s latest supply and demand update showed the country planted 41.82 million hectares (103.34 million acres) to corn in 2020-21. The ministry also said the country plans to set up a live hog reserve mechanism to stabilize production.


U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link




— Tai pledges work on USMCA enforcement, addressing China as USTR. The Senate Finance Committee today will hear from Katherine Tai, President Joe Biden’s choice to be U.S. Trade Representative (USTR), and her prepared remarks offer some insight into focus should she be confirmed to that role. Link to Tai statement.


     Tai pledged her first focus will be on helping the U.S. recover from the pandemic and the “economic crisis.” USTR’s role in that is to “build out strong supply chains that will get our economy back on track.”


     The longer-term focus will be on making sure that trade benefits all U.S. citizens, not just consumers.


      Trade policy enforcement. “I will make it a priority to implement and enforce the renewed terms of our trade relationship with Canada and Mexico. Too often in the past, Congress and the administration came together to finalize and pass a trade agreement. But then other urgent matters arose, and we all moved on.” She noted the U.S.-Mexico-Canada Agreement (USMCA) is an opportunity to “break that trend” as it is an “important step in reforming our approach to trade.”


     She did not specify issues with the WTO but said that she would “prioritize rebuilding our international alliances and partnerships.”


     Tai also focused on China, labeling them “simultaneously a rival, a trade partner, and an outsized player whose cooperation we’ll also need to address certain global challenges.” Having previously been the chief enforcer at USTR on China’s unfair trade practices, Tai said there must be a “strategic and coherent plan for holding China accountable to its promises and effectively competing with its model of state-directed economics” and backed Biden’s call to build a “a united front of US allies” when dealing with China. “We must remember how to walk, chew gum and play chess at the same time.”


     Tai will face questions on labor issues relative to trade and on specific trade matters that are expected to include issues with Mexico over potatoes and more.  


— World Trade Organization member countries are looking to fix a dormant system for resolving trade disputes, with new Director-General Ngozi Okonjo-Iweala promising to propose changes this year. An impasse has led to a backlog of cases, many involving the U.S., and removed an important tool for enforcing rules. Link for details via the WSJ.




—  ERCOT CEO says Texas’ electric grid was ‘minutes’ away from complete failure. The electric grid in Texas was literally minutes away from a complete failure overnight on Feb. 15 as a winter storm hit the state, Electric Reliability Council of Texas (ERCOT) CEO Bill Magness told the ERCOT board of directors Wednesday. As power generators tripped offline as temperatures dropped, ERCOT had more than 35 gigawatts of capacity unavailable, prompting ERCOT to order the state’s electricity provides to cut 5 gigawatts of power to customers. But the situation worsened as the frequency of the grid dropped below the normal level of 60 hertz, a condition which existed for four minutes — nine minutes of duration would have damaged power generators and other equipment that would have caused the entire grid to fail. At the peak, more than 52 gigawatts out of around 108 gigawatts were out of commission.


— USPS upsets environmental activists by buying gas trucks, few EVs. The U.S. Postal Service (USPS) currently plans for just 10% of its new truck fleet to be electric, Postmaster General Louis DeJoy said yesterday, upsetting environmentalists who say the move flies in the face of a White House executive order to electrify the government’s vehicles. DeJoy’s comments in a hearing before a House committee comes the day after the service announced that Wisconsin-based maker of military trucks had won a delayed contract to switch out the USPS’s fleet.


— Republicans warn Fed Chairman Powell re: climate changes. Republican lawmakers are warning Federal Reserve Chairman Jerome Powell to tread carefully around the issue of climate change. In hearings in the House and Senate over the past two days, Republicans on Powell to stick to the Fed's mandate, in which they don’t see climate change included. "As noble as the goals might be, issues such as climate change, racial inequality are simply not the purview of our central bank,” said Sen. Pat Toomey (R-Pa.), the top Republican on the Senate Banking Committee, during an oversight hearing with Powell yesterday. Should the Fed go beyond that mandate, as Republicans say Democratic lawmakers and President Biden want it to, the GOP lawmakers fear it would jeopardize investments in fossil fuel companies.


     “I do worry that injecting climate risk scenarios into stress tests could perpetuate the trend of the de-banking legally operating businesses like fossil fuels,” said Rep. Andy Barr, a Kentucky Republican who chairs the House Financial Services subcommittee on oversight and investigations, during a full committee hearing Wednesday morning. Barr led a letter with dozens of his GOP colleagues to Powell in December raising alarm at recent moves from the Fed dipping its toes into climate change discussions. That included the Fed’s formal joining of a network of global central banks working to address climate change risks and promote clean energy investments. Barr and other Republican lawmakers are warning the Fed against incorporating climate change into its financial stress tests. Even if the Fed doesn’t direct banks to drop fossil fuel investments, they may be inclined to do so “to satisfy the spirit of the tests,” Barr told Powell during the hearing. “I would like the Fed to keep in mind that choking off capital to fossil energy will not only produce the kind of reliability challenges we saw last week in Texas, it will undermine the Fed’s maximum employment mandate,” Barr said.


     The Fed recently created a new Supervision Climate Committee to build on its climate work, recruiting Kevin Stiroh of the New York Federal Reserve to lead the effort.


   Powell, in response to questions from Barr and others, said the Fed was in the very early stages of examining how climate change affects financial markets. He reiterated several times that the Fed members are not “climate policymakers,” and aren’t seeking to weigh in on how capital is allocated.


— Romney signals he’s open to carbon tax and dividend. Sen. Mitt Romney (R-Utah) came close to endorsing a carbon tax that would return the revenue to taxpayers. “I’m very open to a carbon tax, carbon dividend, where there’s a tax on oil companies and coal companies and so forth,” Romney said at the DealBook DC Policy Project hosted by the New York Times. Romney noted the funds that are raised from the tax go to taxpayers so they could pay for the costs of the higher price of energy. Romney suggested he was newly motivated by recent comments from Bill Gates who has said “don’t play around the edges” on addressing climate change. “He is suggesting a major investment at the federal level in new technology, carbon capture, perhaps, nuclear energy and so forth,” Romney said. Romney said he was open to ideas that would enable that innovation to happen. “The carbon tax, carbon dividend, is such an idea,” he said.


— Biden-Trudeau talk climate plan. Canada and the U.S. are working on joint environment plans that could include singling out countries with weaker climate laws, Prime Minister Justin Trudeau said. The Canadian leader said in an interview with Bloomberg News that his country’s plans to deepen climate cooperation with the U.S. will include complementary policies that take “into account the emissions profiles of industrial competitors around the world.”




 Summary: Global cases of Covid-19 are at 112,629,748 with deaths approaching 2.5 million at 2,499,202, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 28,336,188 with 505,899 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 66,464,947 doses administered, 20,607,261 have been fully vaccinated, or 6.30% of the U.S. population.

       Link to Covid Case Tracker
       Link to Our World in Data


— ‘Real-world’ study finds Pfizer vaccine 94% effective. The Pfizer Covid-19 vaccine proved 94% effective in a huge real-world study published on Wednesday that involved 1.2 million people in Israel, confirming the power of mass immunization campaigns to end the coronavirus pandemic. The Israeli study, published in the New England Journal of Medicine, also showed there is likely a strong protective benefit against infection, a crucial element in breaking onward transmission. “This is the first peer-reviewed large-scale evidence for the effectiveness of a vaccine in real world conditions,” said Ben Reis, a researcher at Harvard Medical School and one of the paper’s authors.


     Meanwhile, Pfizer and BioNTech have started a small study to see whether a third dose of their authorized Covid-19 vaccine would increase its effectiveness against new variants, such as the strain first identified in South Africa.


— Russia sees a chance to resurrect the 2015 Iranian nuclear deal and is proposing a synchronized approach including “concrete” steps by the Biden administration to help Iran and the U.S. break their deadlock, the country’s top negotiator said. “There’s a chance now that hasn’t existed for a long time,” Deputy Foreign Minister Sergei Ryabkov said in an interview yesterday in Moscow. “We have to try and use it.”


— Khashoggi report expected today. The U.S. is set to release a declassified intelligence assessment today that is expected to name Saudi Crown Prince Mohammed bin Salman as the instigator of the plot to kill and dismember Saudi critic and Washington Post columnist Jamal Khashoggi in the Saudi consulate in Istanbul in 2018. In order to provide a slight cushion to the blow, White House press secretary Jen Psaki said U.S. President Joe Biden will hold his first phone call with Saudi King Salman “soon.” Previous reports had indicated the call would take place yesterday. Speaking after a classified briefing in 2018, Sen. Bob Corker (R-Tenn.) — who has since left the Senate — was clear in his evaluation. “There is zero question in my mind that the crown prince directed the murder and was kept apprised of the situation all the way through,” he said. His colleague, Sen. Lindsay Graham (R-S.C.), went further. “There’s not a smoking gun, there’s a smoking saw,” Graham said.


— U.S. border de-control. President. Biden revoked most immigration restrictions that former President Donald Trump imposed in response to the pandemic. Separately, a federal judge blocked the administration’s planned 100-day pause on most deportations.


— Blame all this gov’t spending on President Lincoln? On this day in 1862, Pres. Abraham Lincoln signed the Legal Tender Act, putting the U.S. government in the business of printing paper money. Previously, most money had been printed privately by local banks.



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