USMCA | U.S./China trade | RFS | MFP | Farmer safety net | Dairy | Meat alternatives | Future of ag
Pushing for approval of the U.S.-Mexico-Canada Agreement (USMCA), chiding Democrats for a report on USDA’s trade aid efforts, laying out his views on the future of U.S. biofuel policy and how the current farmer safety-net provisions in the 2018 Farm Bill were formulated correctly to address usual market circumstances are among the key issues that House Ag Committee Ranking Member Mike Conaway (R-Texas) addressed in an interview in his personal Capitol Hill office.
— USMCA: Getting the USMCA pact approved in the House is one of those must-do issues, Conaway believes, noting he thinks it is time for House Speaker Nancy Pelosi (D-Calif.) to put it up for a vote. “Nancy Pelosi must get it done, period,” Conaway bluntly stated. “She's waffled; she's rope-a-doped. She's done all she needs to do to appease the few folks who think it's a bad idea, but it's now time to get it done.” Asked if he thinks it will be approved by the House yet in 2019, Conaway noted The “canary in the coal mine” for him on the matter is an unnamed friend in Laredo, Texas. That friend, Conaway said, told him “yes” when Conaway asked him that question “point blank,” adding the friend is closer to Pelosi than is Conaway.
Regarding Pelosi’s comments on wanting to get to “yes” on the pact, Conaway said, excitedly, “That’s what a rope-a-dope means! But yes, just get it done!” He continued that Pelosi just needs to go to “her team” and say, “’America needs to get this done.’ And you have enough people that need this done… enough that politically, it’s comfortable.”
Regarding Democratic concerns over enforcement of labor provisions in USMCA, Conaway said, with some exasperation, “We have got to put the deal in place. Before it can be enforced, you gotta have some time go by and they [Democrats] can't have it both ways. You can't say ‘I want it to be enforced,’ and yet don't let time go by to see whether it is actually an issue.” Mexico has already changed their law and are ready to enforce it, Conaway said.
If USMCA is not passed in 2019, Conaway simply said that would be a “shame on her (Pelosi).”
Conaway agreed, however, that a key development so far is that the AFL-CIO has not yet outright rejected the USMCA pact.
NAFTA pullout? Should President Donald Trump move ahead on his threat to pull out of the NAFTA agreement, Conaway lamented that would add “to the uncertainty that is facing our farmers and ranchers across this country.” Either it is NAFTA or USMCA, he stated. “No question USMCA is a lot better across the board,” he stated. But to get out of NAFTA altogether, he warned, is a “train wreck. I hope Speaker Pelosi sees that.”
— U.S./China trade war, talks: Uncertainty has been spurred by the U.S./China trade battles and the U.S. exit from the Trans-Pacific Partnership (TPP) agreement, Conaway noted.
Conaway revealed he brings up the China trade issues with U.S. Trade Representative Robert Lighthizer “every chance I get.” The top U.S. trade official is in a spot that is sort of like a yo-yo, Conaway observed, as things on the trade front are “up and down all the time, and apparently he thrives on that.” In talking with one career staffer at the Office of the U.S. Trade Representative (USTR) about the China situation, Conaway said he expressed concern that the two sides appeared close to an agreement in May and then China backed away. “She said, ‘Trust me, they will be back,’” he noted, “and they are.” Now that the 70th anniversary observations are over in China, Conaway said, China has come back with commitments to purchase $40 billion to $50 billion in U.S. ag goods. “They are tough, just tough” (the American negotiators), he noted.
Now the key is what farm products are involved, Conaway said, adding that it doesn’t necessarily solve the MFP needs for everybody. If pork is included, Conaway pointed out that given the African swine fever situation, “that’s self-serving. They have got to feed themselves.”
But once the allocations are known, Conaway said the focus then will be “that they (farm products) actually get bought and shipped … and delivered. And paid for!”
— Trade policy uncertainty has spawned the Market Facilitation Program (MFP) payments made for 2018 production and now the MFP 2 payments for 2019 where 50% of the projected amount has been paid. That leaves two more installments each of 25% of the projected payment — one to be made in November and one in January. Asked if those should be made, Conaway said “every one of the MFP payments is needed. The 2019 crop has been marketed for the most part,” he observed. If for some reason the second round of MFP payments are not made, Conaway said he would be “stunned.” It’s likely a a third round of MFP may also be needed, but we’ll have to see how things develop on the trade front. He noted, “obviously our producers, bankers and creditors would appreciate knowing that cash flow” is coming.
Asked if he had an update on the report USDA is to provide to the House and Senate Ag Committees on the MFP program, Conaway became more animated and/or exasperated. “The Democrats in the House pick this fight… they picked a hostage that once they realized they had it, they wanted to give it back immediately. When Democrats realized they were in a “terrible circumstance,” Conaway said, “in order to save face they came up with this goofy report.” Conaway said that his view has been that “USDA has been transparent and open throughout every step of this.” Having to do the report, he noted, means that it takes away from “legitimate good things they should be doing, as opposed to this nonsense report.” Conaway’s conclusion: “I am not waking up in the morning saying, ‘Are they going to send me that report on the MFP today? I can’t wait to read it cover to cover.’”
— Safety-net programs. Asked if the need for the MFP program demonstrates that the farm bill safety net programs like the Ag Risk Coverage (ARC) and Price Loss Coverage (PLC) are not adequate, Conaway said, “I would argue that the safety program was to address one set of circumstances. And this trade disruption was not a part of that narrative.” Not only has the trade issue with China been key, but also the situation with Japan after the U.S. pulled out of TPP. “I would argue … as long as we've got this risk and threat to rural America, the MFP needs to stay in place.”
As for whether he would retain existing safety net programs if writing a new farm bill today, Conaway said, “I think I would.”
— Regarding USTR and U.S. trade policy, Conaway gave high marks for their actions on trade. He specified that U.S. Ag Trade Negotiator Gregg Doud has done a great job for U.S. agriculture. Conaway said he had Doud speak to farmers at an ag legislative summit in San Angelo, Texas, in August. “There were probably about 40 producers in the crowd, and Gregg’s one of them.” And, Conaway said, Doud also keeps the Ag panel in the loop. “Gregg comes up all the time and talks to us and keeps us up to speed,” he said.
— Biofuel policy has become a point of contention in Washington, revealing a wide chasm between biofuel supporters and some refiners. “This is people’s livelihoods,” Conaway observed. “I understand they’re (farmers and biofuel producers) hot and this is a big deal.” Noting he is a certified public accountant (CPA) by profession, Conaway said he would “like to know just exactly what is the number of gallons used versus the 15 billion gallons” of conventional ethanol that is to be used. (Note: Link to testimony on this topic Tuesday by Geoff Cooper, President and CEO of the Renewable Fuels Association, during a House hearing on the RFS.)
“But beyond where we are right now, any future investment ought to be market driven,” Conaway said. “Let’s do what we need to do to protect the current investment and production. But, any growth in that demand beyond where it is right now ought to be based on market principles and not some sort of an artificial demand by mandates.” That has to be a key component moving forward, he observed, “because we incentivized them to put that in, and we don’t want to cut the legs out from under them on a program that is set up to drive that investment.”
Interestingly, Conaway stated, “This is going to shock you: I represent the producers of crude oil. I've never, ever had a producer talk to me about ethanol. Really.” He noted he does not have any refineries in his district. Asked if he is talking to different folks than Sen. Ted Cruz (R-Texas) is relative to the RFS, Conaway said, Cruz “is talking to the refiners.” But Conaway also pointed out that Valero, one of the largest refiners, is also a large ethanol producer. “They do both,” he added.
The Renewable Fuel Standard (RFS) authority currently expires after 2022, and that should be a topic included in a report contained in the 2018 Farm Bill (Chapter 12) for a report on U.S. agriculture in 2050. “Absolutely that should be in there,” Conaway commented, also noting that the report should have a component of what agriculture will look like in 2035, given the pace of change in the ag sector.
"The pace of change right now with precision agriculture and big data is very fast," he stated. “All of the stuff that is happening out there, including resource constraints around the world such as water, those things are going to happen whether or not we continue to bioengineer food sources and seeds.”
— Regarding the report on the future of U.S. agriculture to 2050, Conaway said there is a “funding problem” with the report that will take a 15- to 30-year look at agriculture. He added that USDA Secretary Sonny Perdue wants to do the study as well. “And like a lot of studies we asked him to do, this one actually would be informative.” There will be three billion more people on earth by 2050, he detailed. “How will we feed them? So how this plays out makes this a very timely report.”
— 2018 Farm Bill: Overall implementation of the 2018 Farm Bill “has gone really well,” Conaway said, especially when the funding for implementation is considered. There was $120 million for implementation of the 2014 Farm Bill, he detailed, but only $15 million for the 2018 Farm Bill. “It could have been $25 million, but my Senate colleagues thought they had a better place to spend the money.
— Asked what issues his Texas farmers and constituents are talking about, Conaway said the impeachment inquiry situation is one of them. “They're just tired of it; 12 months to election. They say, ‘Let us see what happens.’” But he also says those in his district think “Democrats have overplayed their hands.” But he pointed out that his congressional district is “the second most Republican district in the United States, and they are weary of [impeachment].”
Other areas his Texas constituents focus on are trade deals, border security and immigration. “They want something done on infrastructure,” he added, noting that both Democrats and Republicans “want something here, but we can’t get to the end zone.”
On infrastructure, Conaway expressed frustration that whenever Trump mentions infrastructure, “it seems that Pelosi calls the White House and makes the president mad!”
On immigration, Conaway said he believes that an ag-specific immigration measure is one that should be able to be supported. “If you look at agricultural labor… most Americans are okay with us importing that labor.” Despite that view, Conaway lamented, “there’s still no consensus here on immigration.”
— Relationship with House Ag Chairman Collin Peterson (D-Minn.). Conaway — a normally optimistic lawmaker — turned somewhat somber to a degree when asked about his relationship with House Ag Committee Chairman Collin Peterson (D-Minn.).
“Yeah… we had a bit of a rugged 2018 Farm Bill, and it took its toll,” Conaway stated. “We are cordial professionally, and we will continue to work on what the Committee needs to get done. But he’s probably not going to invite me on a hunting trip. And I'm probably not going to invite him golfing.”
— Topics ahead. Issues that have to be dealt with, Conaway said, are reauthorization of the Commodity Futures Trading Commission (CFTC), grain standards and mandatory price reporting. “The CFTC has been expired since 2013, so we need to get that done,” he remarked.
— Other areas commented on by Conaway:
- Dairy issues: Provisions in the new farm bill have helped the dairy industry quite a bit, he said, adding that another plus is getting whole milk back in schools. “That's good for the dairy industry, good for kids to drink, and certainly good for our dairy guys.” He pointed to an article in USA Today (link) that talked about how Canadian dairies are satisfied with their current state, while Mexican dairies are going out of business. But he made clear that he does not back supply management for the dairy sector. “I am not in favor of any kind of supply management” for dairy, Conaway said. He also expressed amazement at how powerful the Canadian dairy industry is. “They have one million people drinking milk and 20,000 producers,” he said.
- Meat alternatives/lab-grown meat: Asked if he has eaten any of those items, Conaway flatly said, “No.” He expressed amazement that there are “non-GMO fanatics out there that have just gone crazy about this stuff…. Something that was grown in a petri dish. But I have not had the Franken-meat. Not on purpose!”
- Future Republican leaders on the House Ag Committee: Conaway has announced he will not seek re-election in 2020, setting up a contest for the top Republican post on the House Ag Committee. He pointed to Reps. GT Thompson (R-Pa.), Austin Scott (R-Ga.) and Rick Crawford (R-Ark.) as three that “could be the next leader. These guys are seasoned and ready to go! We’ve got a deep bench so you know whoever takes over for me as the lead Republican will do a great job and we won’t miss a beat.”