UPDATED — China Condemns U.S. Request to Close Houston Consulate in Escalating Tensions

Posted on 07/22/2020 5:37 AM

USDA cattle pricing investigation report coming 'very soon': USDA official

 


In Today’s Updates


 

* U.S. orders China to close its Houston Consulate; China to respond if not reversed
* USTR nominee sees China imports of U.S. ag products rising ‘rapidly’ later this year
* USDA official: Cattle pricing investigation report coming 'very soon'
* USDA's Ibach: Things in report Congress and industry will want to discuss
* GOP senators warn Grassley against extending wind subsidies
* CFTC to issue report this fall on negative crude oil futures

* Sen. Grassley raises Brazil ethanol in question to USTR nominee
* Worst flooding in decades raises concerns over China’s Three Gorges Dam
* Negotiations begin on next Covid-19 aid/stimulus package
* Perdue gives hints on next ag aid program
* USDA to announce another round of Food Boxes Program of $500-$700 million
* House panel members give USDA boxed-food program mixed reviews
* Coronavirus update
* Trump warns pandemic may ‘get worse before it gets better’

* Politics & Elections:
* Ballotpedia looks at pivot counties
* Other Items of Note:
* Senate committee approves Shelton, Waller for Fed positions
* USDA FY 2021 appropriations in focus today
* House today expected to clear the Great American Outdoors Act
* Trump halts counting of undocumented immigrants when allocating House districts

 


MARKET FOCUS


 

Equities today: U.S. equity futures dropped with European stocks after a diplomatic flare-up between the U.S. and China in a dramatic escalation and an entirely new front in the battle between the world’s two biggest economies. The yuan weakened, Hong Kong shares deepened their decline and both gold and silver slipped from their session highs — gold held near $1,850 an ounce and silver retreated from its highest level in about seven years. Treasuries edged higher and the dollar erased a loss.

 

     China impact

 

     U.S. equities yesterday: The Dow gained 159.53 points, 0.60%, at 26,840.40. The Nasdaq fell 86.73 points, 0.81%, at 10,680.36. The S&P 500 was up 5.46 points, 0.17%, at 3,257.30.

 

Early results from second-quarter earnings season have been coming in better than feared. Analysts’ consensus going in was for S&P 500 earnings per share to tumble by 44% from a year ago, on a 12% drop in revenues. The actual results so far, according to data from FactSet, show just over 80% of S&P 500 companies that have already reported second-quarter results have surpassed Wall Street’s estimates.

 

On tap today:

 

     • National Association of Realtors reports existing home sales for June. Expectations are for a 25% month-over-month jump in sales to a seasonally adjusted annual rate of 4.9 million. Existing-home sales have fallen for three straight months through May.
     • Federal Housing Finance Agency releases its House Price Index for May. In April, home prices rose 5.5% year over year. All nine regions tracked by the FHFA showed annual increases, ranging from 5% in the Mid-Atlantic to 6.8% in Mountain.

 

Another coronavirus casualty: remittances. The great recession of 2008 caused a 10% dip in the amount of cash migrants sent home in the form of remittances. As mass unemployment looms, the World Bank is predicting an even bigger crash following the coronavirus pandemic: a full 20% plunge. In Foreign Policy on July 20 (link), Zuhumnan Dapel outlined the damage such a shortfall will have on developing economies.

 

     Remittances

 

Market perspectives:

 

     • Gold continues to rally, and silver is soaring; latest U.S./China tension may impact both markets.


     • China's iron ore and steel prices keep moving higher.
 

     • U.S. milk futures are at multi-year highs. Expectations of lower demand for many commodities during the coronavirus pandemic helped push dairy prices to an 18-month low in May. Since then, the Global Dairy Trade price index has risen 11% and is now back to near levels seen in January, before the contagious respiratory virus began spreading globally. USDA said the outlook for the sector has improved considerably with dairy exports from January through May 2020 up 12% to $2.7 billion. In the first five months of 2020, China increased dairy imports by 6% to $5.3 billion, according to data provided by CEIC Data. Elsewhere in Asia, the easing of lockdowns has also helped normalize demand for milk products.

     • Crude oil prices remain under pressure ahead of U.S. government inventory data due later this morning. U.S. crude is down 1%, trading around $41.45 per barrel while Brent crude is down 0.8% to trade around $43.95 per barrel.

 


POLICY FOCUS


 

Ibach: Report on USDA investigation of cattle pricing coming 'very soon'. USDA Undersecretary for Marketing and Regulatory Programs Greg Ibach told lawmakers that they may want to considering acting on some of the report's findings. He made the comments Tuesday during a House Ag subcommittee hearing.

 

     Ibach said USDA is nearing conclusion of its investigation into the cattle market after the August 2019 Holcomb, Kan., Tyson beef processing plant caught fire in August 2019 and the volatility in the market in the early stages of the Covid-19 outbreak. Asked by Rep. Dusty Johnson (R-S.D.) for an update on the investigation, Ibach said the report will be released “very soon.”

 

     On whether the Packers and Stockyards division of USDA has the resources it needs, Ibach said there will be several things that come out of that report that both Congress and the industry will want to discuss.

 

GOP senators warn Grassley against extending wind subsidies. Sen. Kevin Cramer (R-N.D.) led a group of nine Republican senators warning fellow Republican Chuck Grassley of Iowa, the chairman of the Finance Committee, not to allow for the extension of wind tax credits set to expire at the end of the year, according to a letter. The wind production tax credit "was supposed to be temporary in order to level the playing field with other power generators," the senators write in the letter to Grassley, a major supporter of the dominant wind energy industry in his home state of Iowa. "However, over time, the reverse has occurred. This tax provision has become a competitive advantage to wind generators." Congress should avoid continuing the wind tax credit when it considers extensions of expiring tax provisions or via the appropriations process later this year, the senators will tell Grassley.

 

     Other senators signing the letter: John Barrasso (R-Wyo.), chairman of the Environment and Public Works Committee, Lamar Alexander (R-Tenn.), Shelley Moore Capito (R-W. Va.), Mike Enzi (R-Wyo.), John Hoeven (R-N.D.), James Lankford (R-Okla.), Pat Toomey (R-Pa.), and Jim Inhofe (R-Okla.).

 

     Perspective: While the letter does not mention the latest pandemic relief legislation being negotiated, it is unclear whether the development will present hurdles of including ethanol aid language as part of those discussions.

 

CFTC to issue report this fall on negative crude oil futures. The increased volatility in West Texas Intermediate (WTI) crude oil futures that saw the May contract drop into negative territory prompted a review by the Commodity Futures Trading Commission (CFTC). A report on that investigation will be made public this fall, CFTC Chairman Heath Tarbert told a meeting of the regulator’s Market Risk Advisory Committee. “We witnessed significant volatility in the derivative markets in the wake of the coronavirus pandemic, particularly during the early months,” Tarbert said in prepared remarks for the meeting. “For example, we saw a historic drop in the May futures contract for West Texas Intermediate Crude, which briefly traded at negative prices for the first time ever.”

 

     Tarbert cited several “unique macroeconomic factors” that contributed to the situation, including an “historically high supply of oil, a fight between Saudi Arabia and Russia for market share, and a simultaneous drop in demand that was unprecedented in both speed and severity due to the coronavirus.” He stated markets were at that point “digesting of information and it happened to coincide with the expiration of a futures contract.”

 

     However, Tarbert said the CFTC was “not surprised” as they viewed negative futures prices as a “possibility.” To back up that assertion, Tarbert said the agency had been in “regular contact” with exchanges “in anticipation of just such an event,” including a Staff Advisory to market participants that they had to be prepared for the “prospect that certain contracts may continue to experience extreme market volatility, low liquidity, and possibly negative pricing.”

 

     As for the report, Tarbert said, “The analysis points to a confluence of fundamental and technical reasons including a few market structure considerations that have not been previously highlighted that we will address to ensure that the price formation, price discovery, reliability and soundness of this important derivative market that serves our US energy industry is further strengthened.”
 

Update on China:

  • U.S. State Department orders China to close consulate in Houston as Beijing vows retaliation if U.S. action not reversed. U.S. State Department spokesperson Morgan Ortagus said the directive to close China’s Consulate General Houston had been made to protect American intellectual property and the private information of its citizens.

    The statement came hours after Houston police and firefighters descended on the consulate following witness reports that papers were being burned outside in open containers, the Houston Chronicle and two local TV stations reported, citing local police. In videos posted online by local media outlets in Houston, fires could be seen in multiple containers, with smoke rising into the sky.

    China responds. The latest U.S. move marked “a political provocation unilaterally launched by the U.S.,” Chinese Foreign Ministry spokesman Wang Wenbin said today at a routine briefing in Beijing. “China urges the U.S. to immediately rescind its erroneous decision, otherwise China will undertake legitimate and necessary responses.” Wang didn’t specify the deadline given for the Chinese consulate to cease operations. Hu Xijin, the editor in chief of Communist Party tabloid Global Times, tweeted today that the consulate was ordered to shut down within 72 hours. The Chinese Foreign Ministry spokesman also accused the U.S. of violating international law and reneging on a bilateral consular agreement. He said Washington has for some time been harassing Chinese diplomatic personnel in the U.S. and intimidating Chinese students.

    Background. The Vienna Convention states diplomats must “respect the laws and regulations of the receiving State” and “have a duty not to interfere in the internal affairs of that State,” Ortagus continued. She added that Washington “would not tolerate the People’s Republic of China’s violations of U.S. sovereignty and intimidation of our people, just as we have not tolerated the PRC’s unfair trade practices, theft of American jobs, and other egregious behavior.”

     
  • USTR nominee sees China imports of U.S. ag products rising ‘rapidly’ later this year. Purchases of U.S. ag goods by China are expected to increase “rapidly” this fall as seasonal purchase patterns by the country unfold, according to Michael Nemelka, nominated to be a deputy U.S. Trade Representative (USTR).

    We have the Phase I Agreement, which also just entered into force a few months ago,” Nemelka told the Senate Finance Committee in his nomination hearing. “In that remarkable agreement, USTR achieved many long-held goals, including a commitment from China to fully respect intellectual property rights, end forced technology transfer, and increase purchases of US goods and products, among many other things.”

    A key is making sure that China meets its commitments, he noted in prepared remarks, “and we have an agreement that is in writing, and is fully enforceable, to make sure they do.”

    On making sure that China will live up to its purchase commitments, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) asked Nemelka to address how USTR is working to make sure that China meets those commitments. Officials at USTR are working “every day to make sure that China lives up to its commitments,” Nemelka responded. “We have our ambassador Gregg Doud on the phone nearly every day” with his counterparts in China.

    Timeline for purchases. In the fall, he added, the expectation is that “with these seasonal products and soybeans in particular that are currently in the ground, we expect to see those purchases rapidly increase.”

    If China does not meet commitments of the deal, Nemelka pointed out the accord has a dispute settlement process that “escalates” if things cannot be worked out. “We will use the enforcement mechanism as written in the Phase 1 deal,” he noted.

    Brazil ethanol was another area raised by Grassley who asked Nemelka for a commitment that he would work to get Brazil to open its market to the product that is produced primarily from corn. USTR is “currently discussing ethanol with Brazil,” Nemelka said, in particular their tariff rate quota (TRQ) on the product. “Brazil should either raise the TRQ or they should lower their tariff,” he said. “They have tilted the table for their products and adversely against ours.”

    Regarding the U.S./Kenya trade negotiations, Nemelka said of their 10% tariff on imports of U.S. wheat should be addressed. The wheat tariffs are a “priority” in those negotiations, he added, stating that will be a “key part of our ask with Kenya.”

    The U.S.-Mexico-Canada Agreement (USMCA) was another focal point for lawmakers at the hearing, in particular on enforcement and labor provisions. “I think the priority is labor, is to ensure that the workers in Mexico know about the labor rights, know about the reforms and ensure that protectionist unions that are currently there, [that] there is a fair process to challenge those,” he said. Asked when the Trump administration would expect to bring enforcement actions under USMCA, Nemelka said there was “not target date.” But he said the U.S. is “fully prepared” to take enforcement actions “in the next several months” and that could happen “sometime this fall if our consultation process fails.”

     
  • China’s rapeseed oil rally drives widening spread with other edible oils. A rally in China’s rapeseed oil futures is pushing its price spread with other edible oils to the widest in years, with lower imports of the oilseed from Canada and tightening supplies spurring trading interest and volumes. Link to Reuters article.
     
  • China’s weekly farm produce prices continue to edge up. Prices of farm produce in China continued the upward trend last week, data from the Ministry of Commerce showed Tuesday, according to Xinhua. From July 13 to 19, the overall price of farm produce rose 0.4% on a weekly basis, narrowing by 0.4 percentage points from the growth logged a week earlier. The wholesale price of eggs edged up 3.2%, while that of beef increased by 0.3%. The average wholesale price of 30 types of vegetables stayed flat from a week earlier, while that of six kinds of fruits fell 0.9%, the data showed. Food accounts for about one-third of China's consumer price index, a main gauge of inflation.
     
  • U.S., China may ‘stumble’ into conflict in South China Sea, war-gamers suggest. Link to South China Morning Post article.
     
  • Worst flooding in decades raises concerns over China’s Three Gorges Dam; 40 million people impacted. Two months of unusually powerful rains in central and southern China have swelled the Yangtze River, triggering the worst flooding in decades and raising concerns about the Three Gorges Dam, the world’s largest hydroelectric facility. Link to WSJ article.
     
  • The U.S. Justice Department indicted two Chinese men on Tuesday who it says hacked dissidents, human rights activists, corporations, governments and tried to gain access to databases containing information about potential Covid-19 vaccines. The two men, Li Xiaoyu and Dong Jiazhi, worked for Guangdong State Security Department of the Ministry of State Security, the DOJ said. The MSS is the Chinese government’s intelligence and security agency and is roughly analogous to a combination of the U.S. Central Intelligence Agency and Federal Bureau of Investigation. “The cybercrime hacking occurring here was first discovered on computers of the Energy Department’s Hanford Site in Eastern Washington,” U.S. Attorney William D. Hyslop for the District Eastern District of Washington said in a statement. “The hackers operated from China both for their own gain and with the assistance and for the benefit of the Chinese government’s Ministry of State Security.”
     
  • U.S. imposes sanctions on 11 Chinese companies over human rights. The move, which affects suppliers to major international brands such as Apple, Ralph Lauren and Tommy Hilfiger, could force companies to sever some ties to China. Link to NYT item.
     
  • China bought more U.S. debt in May despite talk of financial war amid rising trans-Pacific tensions. China modestly increased its holdings of U.S. Treasury securities in May, the first in three months, despite rising trans-Pacific tensions and growing talk of a financial war between the world’s two largest economies. Link to SCMP article.

    Yuan and dollar

     
  • Pentagon chief looking to visit China this year amid tensions. U.S. Defense Secretary Mark Esper said on Tuesday he hoped to visit China by the end of the year to discuss areas of mutual interest, even as he condemned Chinese maritime activity in the South China Sea. Link to Reuters item for more.
     
  • U.S./China Phase 1 tracker: China’s purchases of U.S. goods. Link.

Update on next aid package:

  • Negotiations begin on next Covid-19 aid/stimulus package. Senate Majority Leader Mitch McConnell (R-Ky.) on Tuesday said, “The package is widely seen as lawmakers’ last opportunity to address the pandemic with major legislation before the November elections. The package is widely seen as lawmakers’ last opportunity to address the pandemic with major legislation before the November elections. Republicans’ opening proposal includes $105 billion for schools, additional funding for the Paycheck Protection Program (PPP) for small businesses and another round of direct payments to American families, McConnell said.

          — Timeline: House Speaker Nancy Pelosi (D-Calif.) wants a plan done by the end of next week. Republicans may want that, but they are split regarding whether or not that is possible. “We’re shooting to get something done by the end of next week,” Treasury Secretary Steven Mnuchin said. “I’ll be here for the next two weeks until we get this done.” Senate Majority Leader Mitch McConnell (R-Ky.) told reporters it was very unlikely a deal would be reached by the end of next week, saying no when asked whether that was possible. House Minority Leader Kevin McCarthy (R-Calif.) said Tuesday on CNBC that he didn’t expect a coronavirus relief package to pass until the first week of August.

        
Outlook: Both chambers are bumping up against a monthlong break, with the House scheduled to leave town on July 31 and the Senate on Aug. 7. If the process spills into August, the House will need to postpone their August recess and lawmakers would likely try to clear a short-term extension for expiring jobless benefits contained in prior legislation.
 

          — Cost of proposal: The House plan that cleared the chamber in May totals around $3.5 trillion. The White House and some GOP senators want the proposals to total no more than $1 trillion, with Pelosi calling the $1 trillion mark a “beginning point.” Some Republican lawmakers appear concerned about the growing size of the spending bill. “What in the hell are we doing,” Sen. Ted Cruz (R-Tex.) asked his colleagues, upset at the push among some of them to boost spending levels even more. Cruz said the GOP should be focused on a safe restart of the economy and warned that if the economy remains shuttered in November, that Democrats will win both the White House and the Senate, while keeping control of the House. Several GOP senators are outraged at the potential outlays, vowing to stall the relief bill’s passage. “They should be ashamed of themselves,” said Sen. Rand Paul (R-Ky.). Paul compared fellow Republicans to the “Bernie bros” — referring to the young supporters of Sen. Bernie Sanders (I-Vt.). “This is insane. ... There’s no difference now between the two parties.”
 

          Outlook: Above $1 trillion, but if it is a lot below what House Democrats want, a stalemate could occur with a blame game commencing. “I think we’re going to spend what we need to spend, and we’re going to make sure we don’t spend more than that,” Treasury Secretary Steven Mnuchin said.
 

          — Payroll tax cut: There has been little GOP enthusiasm for the payroll tax cut plan, even though Trump has said he might not sign a bill that doesn’t include it. President Trump keeps supporting it, along with a few senators, but the majority of GOP senators do not support it. Senate Finance Committee Chairman Chuck Grassley (R-Iowa) argued against the payroll tax cut, saying no voters would notice the tax relief and that he was skeptical that the policy changes could even be implemented before October. Trump wants a full repeal of the 15.3% payroll tax, which is split among employers and employees, and funds Social Security and Medicare. Experts say that alone would cost $600 billion. At a White House meeting on Monday, GOP leaders told Trump they preferred to include only a partial payroll tax cut.

          Outlook: This will not be in the coming aid package.

 

          — Liability protection: McConnell insists the package include liability protections for businesses, medical workers, schools and businesses navigating the pandemic — a proposal that Democrats fiercely oppose.

 

          McConnell is expected to include a five-year liability shield for businesses in his bill. The measure would protect businesses, hospitals, and schools from lawsuits related to the coronavirus. It is expected to be narrowly focused to weed out establishments that act negligently from being protected. The coverage would begin in December of 2019 and last through 2024. President Trump supports McConnell’s proposal; Democrats do not.

 

          Outlook: This topic will be decided late in negotiations and will be used by Democrats as leverage to get more of what they want.
 

          — Jobless benefits: Democrats insist on an extension for jobless benefits contained in prior plans. Mnuchin said it was important for lawmakers to reach an agreement before the supplemental increase in unemployment benefits runs out by the end of this month — 25 million to 30 million Americans would lose emergency unemployment benefits when they expire by the end of this month — that is when a $600 weekly unemployment benefits boost and other aid, including a federal rental moratorium on millions of apartment units, expires. Republican lawmakers, including Trump, have consistently said that the current jobless benefits make it more lucrative for workers to stay home than re-enter the labor market, but Mnuchin stressed the importance of providing some financial cushion for the jobless. Republicans want to replace the $600 weekly federal jobless benefit with a lower amount.

          Background: On average, unemployment benefits across the country were $385 per week in February 2020, according to the House Ways and Means Committee. When combined with the added benefit, jobless workers receive nearly $1,000 a week. The median salary for a grocery store cashier, an essential worker, is roughly $600 a week, according to Salary.com.

 

         The White House would like to see the payment reduced to between $200 and $400, but it is not clear whether McConnell would support the provision at a lower payout.

 

         Pelosi last week signaled a willingness to be flexible on the payment amount. Its size could be reduced if the finalized bill includes direct stimulus payments to individuals and families, according to the speaker.

 

         Outlook: : Some form of jobless benefits will be included in the next package. Some Republicans reportedly are pushing a one-time bonus rather than the extension of the $600-per-week federal unemployment payment that Democrats included in the HEROES Act, National Journal reported.
 

          — Funding for testing and CDC: Democrats and a growing number of Republicans want more money for testing and the Centers for Disease Control and Prevention. Some Republicans are seeking $25 billion for states for testing and tracing that the administration had initially opposed. White House spokeswoman Kayleigh McEnany said Tuesday that the White House is seeking “targeted” money for testing, saying that “we’re willing to put in money for targeted testing that makes sense, not just dumping money into a pot that contains $10 billion.” Trump, during a Tuesday briefing, was asked about Senators wanting more money for testing and if he supported such funding. The president said there have been a massive number of tests; he will have a presentation soon on the subject; and, if doctors and professionals feel more testing is needed, he is ok with it.

 

          McConnell said his legislation would provide funds for additional testing, but he did not disclose the amount. The Senate proposal is very different from what the administration wants, which is to cut or totally eliminate the funds for testing. Trump doesn't want to provide more funding because states have yet to spend all the money allocated for testing in the CARES Act, which was enacted in March. Also, Trump, in an interview with Fox News on Sunday, said additional testing would be “creating trouble” because the number of cases would likely increase.

 

          The House in May approved $75 billion for testing, contact tracing, and isolation measures for people infected by the disease and forced into quarantine.

 

          Outlook: White House officials have backed away from demands for cuts to testing and health funds. President Trump at a late-Tuesday briefing was not negative about more funding.
 

          — Stimulus checks: The House plans includes another round of stimulus checks and the Republicans support the concept. McConnell on Tuesday promised a new round of direct payments to earners below a certain income level, similar to the $1,200 checks sent in the spring. McConnell’s package wold send a fresh round of direct cash payments to Americans below a certain income level, likely $75,000 for singles.

 

          McConnell said his bill would include stimulus checks, but he did not say who would be eligible for them. In the past, McConnell has said his bill would provide a stimulus payment to people earning under $40,000. This figure is less than what was approved as part of the CARES Act in March. That package provided a one-time $1,200 payment for people who earned up to $75,000. Those earning more than this amount received a partial payment, which phased out at $99,000.

 

          Trump has recently remarked that he is open to another round of stimulus payments. Democrats also support such payments and included in their bill that passed their chamber in May a $1,200 stimulus payment to individuals that topped at $6,000 for households.

 

          Outlook: Another stimulus check is coming, but who gets them is under discussion.
 

          — Money to states: The Democrats want a lot of funding for states. The GOP’s proposal includes no new funding for state and local governments or specific funds for communities that have been affected by the virus. Sen. Rick Scott (R-Fla.) said it’s wrong to “bail out” cash-strapped states. “Florida taxpayers are not going to pay for New York’s expenses,” he said.

 

          The Republican-controlled Senate is not expected to include additional aid to state and local governments in its next relief bill. Senate Republicans are concerned that state and local governments might use the money for non-virus issues, such as shoring up pension funds. Vice President Mike Pence in June said that the White House is open to providing aid to state and local governments in the next relief package as long as the funding goes to coronavirus-related expenses. Without additional aid, 4 million jobs could be lost, according to a June report by Moody’s Analytics.

 

          House Democrats approved nearly $1 trillion in state and local aid in the bill they passed in May. Moody’s states that this dollar figure is too high and projects that $500 billion in aid would be required. It also warns that doing nothing could shave 3% off of real GDP on an annual basis.

 

          Outlook: Besides the issue of jobless benefits, funding for states is the other major hurdle in recent negotiations on a new package.
 

         — Money for schools: Trump has insisted aid to schools be contingent on reopening plans, but pushback is ample on that position. McConnell said the Senate package would include $105 billion to help schools reopen. Senate Democrats have put forward a $430 billion plan for child care and schooling. House Democrats have approved $100 billion as an education stabilization fund and as noted, Senate Democrats are seeking even more, $430 billion for schools and universities to re-open — with money for spacing students apart, buying masks for daily use and alternating bus schedules.
 

          Outlook: Funding for schools will be in a compromise package, but the amount is murky at this time.
 

          — Paycheck Protection Program (PPP): Mnuchin on Tuesday discussed the importance of providing more money for the PPP.
 

          Outlook: McConnell sad another round of funding for the Paycheck Protection Program for small businesses will be part of the final Senate proposals.
 

          Other items: McConnell said the Senate plan would include incentives for hiring and retaining workers, and reimbursement for businesses to establish safety measures. “The American job market needs another shot of adrenaline,” McConnell said. “Senate Republicans are laser-focused on getting American workers their jobs back.”

  • Ag aid proposals in next package. Senate Majority Whip John Thune (R-S.D.) said Senate Majority Leader Mitch McConnell's approach will be very targeted and will address the needs and the concerns of America's farmers and ranchers. He said the Senate plan would include liability protections, not just for businesses but for healthcare workers, for colleges and universities, and schools across this country and “those who could be hit with frivolous lawsuits if we don't take action.”

    USDA Secretary Sonny Perdue said USDA is looking at options for future coronavirus relief for producers. ”I know you're all curious about what the future of CFAP will look like. Congress replenished $14 billion in the CARES Act for CCC. We're in the process of evaluating the Covid-19 impacts on the agricultural economy and looking back at the lessons learned thus far, as we consider our second round of CFAP.” Perdue was speaking in a video to the National Association of Farm Broadcasting.

    Perdue said USDA is considering additional commodities to be eligible in the CFAP and did not think a third round of the Market Facilitation Program (MFP) is needed at this point now that China is increasing its purchases of U.S. farm products.


    Perspective: Perdue thinks cotton and others want an MFP-3 program to respond to trade losses. That is not what cotton and other farmers are seeking. What they are seeking is an MFP-3 style program that covers Covid-19 impacts instead of trade. It is a compliment to Perdue and USDA that producers liked the way MFP-2 worked. USDA knows how to implement the program and it is fast, efficient, and farmers understand it. Their request is not for an MFP-3 based on trade losses.


    A murky issue: How much additional funding for USDA's Commodity Credit Corporation (CCC) and whether there will be stipulations on such funding. Sen. Joni Ernst (R-Iowa) says there will be $20 billion in additional CCC funding; Sen. John Hoeven (R-N.D.) says $30 billion to $35 billion. The House-passed bill pegged the amount at $33 billion, with stipulations on how USDA could use it. House Ag Chairman Collin Peterson (D-Minn.) on Tuesday said, “This idea that we’re going to give more money to the CCC, where we are really having no kind of oversight or kind of involvement in it whatsoever, is not a good idea long term, because you’re basically taking the Ag Committee out of this whole situation."

    Another major ag aid issue: Will it include aid for 2020 crops. The House-passed measure does not include assistance for 2020 crops.

Update on implementation of CARES 1, including CFAP:

  • Fudge critical of Food Box Program following hearing. Rep. Marcia Fudge (D-Ohio), chair of the House Agriculture Subcommittee on Nutrition, Oversight, and Department Operations, blasted USDA's operation of the Farmers to Families Food Box program. “Because USDA has rushed this program out the door, there is very little quality control with regard to who gets these contracts and who is qualified to actually meet the need,” Fudge said. “Tens of millions of dollars have gone to inexperienced contractors that still haven’t delivered anywhere near what they’ve promised. As one food bank executive explained, if USDA had gone through established and capable channels, this problem could have been avoided. This is a humanitarian effort, not a gravy train.”

    Because of that “same hasty approach from USDA, there is still the ‘last-mile’ issue of actually getting food into the hands of those who need it,” Fudge added, noting food pantries and charities are having to foot the bill to make sure people get the food that the program promised to provide. “This program must relieve hardships on overburdened charities like food pantries, not create them,” she said.

    Fudge said her panel heard from food bank experts on the ground that “USDA’s lack of planning and strategy on the program has led to inexplicable decisions and policies with regard to how funds are distributed, the regions into which the country is divided in terms of food distribution, and other problems. Despite these issues, USDA has refused, to date, to provide any insight or background on how these decisions are being made, and what quality control, if any, exists to correct them if they’re wrong.”

    We saw that an additional 6 million people applied for SNAP (food stamps),” Fudge detailed. “As our food bank experts told us, hunger isn’t going away; it’s getting worse. This program was meant to help people, but not only am I afraid that isn’t happening fast enough, I worry USDA isn’t taking the operation of this program seriously enough to ensure it can happen at all.”

    Peterson comments. “What I’m concerned about is: Are we getting the best bang for the buck in this program?” House Agriculture Committee Chairman Collin Peterson (D-Minn.) said during the hearing. “We need to do oversight over what’s happening. My sense is we are getting a better deal through SNAP than these food boxes.” Peterson added, “The bottom line is we need to make sure people who are unemployed” and their children have enough food.

    USDA Undersecretary for Marketing and Regulatory Programs Greg Ibach noted that in April “in just a few short weeks, USDA stood up [the program] as a new and innovative multi-billion-dollar Covid response program to address three critical needs simultaneously: to provide markets for farmers faced with declining demand and the crisis of food rotting in fields and animals being euthanized; the food needs of newly unemployed Americans; and helping put suppliers and distributors back to work.”

    Ibach said he wanted to stress two important points: “All commodities purchased, packaged, and delivered are of 100% domestic origin, and no vendor is paid until proof of delivery and compliance with the contract is confirmed.”

    Ibach acknowledged the program does not have the same standards as regular USDA food distribution programs, but said that was because it was supposed to be put in operation so quickly. He also said there have been some glitches and some complaints about geographic inequities, although he revealed USDA had not received many offers from food distributors in the Northeast to participate in the program.

    Regarding concerns that some food banks do not have storage capacity or the ability to deliver the boxes to other locations, Ibach said, “We need to tell the food banks that they can put what they want in the box. They do not have to take food they need to store.”

    Ibach said USDA will announce this week an opportunity for new and current vendors to submit proposals for approximately $500 million to $700 million that will be remaining when current contracts expire on August 31. USDA will attempt to address "challenges and lessons learned" in that round of contracts, he said.

Coronavirus update:

  • Summary: The global case count for Covid-19 is nearing 15 million, standing at 14,968,982 with 616,985 deaths, according to data from the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU). The U.S. case count stands at 3,902,135 with 142,068 deaths.

    On Tuesday, the daily coronavirus death toll in the U.S. exceeded 1,000 for the first time since May, as the effects of a recent explosion in the number of cases is becoming clear. Deaths were highest in Arizona, Florida, Texas, and California, the four states who have recorded the majority of new cases.

    Link to Covid Case Tracker

    Link to Our World in Data

     
  • President Donald Trump said Tuesday the coronavirus pandemic would probably worsen before improving but said getting a vaccine is a “top priority” and “we’re going to get it taken care of.” Appearing at White House coronavirus briefing for the first time since April, Trump said “it will probably, unfortunately, get worse before it gets better, something I don’t like saying about things but that’s the way it is.” Trump at the briefing also urged Americans to wear masks and practice social distancing. Get a mask,” said Trump. “Whether you like the mask or not, they have an impact. They will have an effect and we need everything we can get.”

    The median age of those who succumb to the virus is 78, Trump said, with half of all deaths individuals in nursing homes. He said that 90% of those hospitalized had underlying medical conditions and that young adults have milder or no symptoms.

    The president said 96% of all fatalities have been adults and that far less than 1% are children.

    Several treatments are available that reduce the severity and duration of the disease, Trump said, adding “we have learned the best practices for dealing with the disease and have shared them with providers,” e.g. the use of ventilators and Remdesivir. Fatalities have fallen 75% since mid-April, he detailed. Hospital stays are now half of what they were in April.

    Trump was asked about the rapid testing platforms at the White House, and if it would be better to have such quick platforms for the general public. He said they are working on it and it would be better to get results on sight.

    The president was asked if China is the first to develop a vaccine if he is willing to work with them. He said that he is willing to work with anyone.

    In other remarks, the president said cases are occurring in the south and southwest, primarily among those 18 – 35 years of age. New testing has been identifying more asymptomatic and mild cases and there are no unfulfilled requests from governors for equipment or other items.

     
  • Executives from four companies told lawmakers that they were optimistic their coronavirus vaccines could be ready by the end of the year or the beginning of 2021. Three competing laboratories have released promising results from early trials in humans.

 


POLITICS & ELECTIONS


 

  • Links
    2020 Presidential Election Interactive Map
    The Green Papers

     
  • Ballotpedia: 95 Pivot Counties voted Democratic in all four presidential elections from 1992 through 2004. Pivot Counties are the 206 counties that Ballotpedia identified as having voted for President Donald Trump (R) in 2016 after voting for President Barack Obama (D) in both 2008 and 2012. Collectively, Trump won these counties by more than 580,000 votes and had an average margin of victory of 11.5 percentage points. Ballotpedia looked at the historical voting patterns of these counties in presidential elections dating back to 1992. In 98 of the 206 Pivot Counties, one party’s presidential nominee won each election from 1992 through 2004. Ninety-five of those 206 Pivot Counties — 46% — voted for the Democratic nominee in that period. Three counties — one each in Illinois, Michigan, and South Carolina — voted for the Republican nominee over the same time period. In other words, 95 counties voted for the Democratic Party nominee from 1992-2012, before Trump carried them in 2016.

    In looking at those 95 historically Democratic Pivot Counties, Ballotpedia said the largest number of them — 20 — are in Iowa. This trend mirrors Iowa’s statewide voting pattern in presidential races. Iowa voted for the Democratic candidate in every election between 1988 and 2012, except in 2004, when Bush defeated John Kerry (D), 49.9% to 49.2%. Iowa voted for Trump in 2016, 51% to 41%.

    The other 108 Pivot counties had the following voting patterns in the four presidential elections from 1992 to 2004:

             • 18 counties voted for the Democratic candidate once and the Republican candidate three times.
             • 40 counties voted for both the Democratic and Republican candidates twice.50 counties voted for the Democratic candidate three times and the Republican candidate once.
             • 50 counties voted for the Democratic candidate three times and the Republican candidate once.

 

         The winning presidential nominee in each election from 1992 to 2004 carried 35 Pivot Counties (17%). Wisconsin had the largest number of these Pivot Counties, with seven backing the winning presidential candidate in each election during that time period.

         Pivot counties

 


OTHER ITEMS OF NOTE


 

  • Senate committee approves Shelton, Waller for Fed positions. The Senate Banking Committee on Tuesday voted to report Judy Shelton’s nomination to the floor in a 13-12 party-line vote. The panel also advanced Christopher Waller’s nomination to the board by a 18-7 vote. Waller, a research director at the Federal Reserve Bank of St. Louis, faced opposition from the committee’s more liberal Democrats, who had concerns over his support for relaxing some bank regulations.
     
  • USDA FY 2021 appropriations. The House Rules Committee will meet at 2 p.m. ET today to consider the fiscal year 2021 Agriculture appropriations bill. Some 40 amendments to the Ag bill have been posted on the Rules website; three amendments would restrict the sugar program were submitted by Rep. Scott Perry (R-Pa.). Link for more details.
     
  • House today expected to clear the Great American Outdoors Act, which would permanently authorize the Land and Water Conservation Fund at $900 million a year. President Trump is expected to sign the bill. Trump was swayed to support the legislation, which he plans to sign into law, after Sens. Steve Daines (R-Mont.) and Cory Gardner (R-Colo.) showed him pictures of national parks in their home states. The bill (HR 1957) would permanently fund the Land and Water Conservation Fund, a federal pool of money that gets its revenue largely from offshore oil and gas drilling fees income. It would also authorize $9.5 billion for the Interior Department to clear some of its backlog of maintenance, including at National Park Service sites, a bipartisan cause.
     
  • President Trump directed the federal government not to count undocumented immigrants in the census when allocating the nation’s House districts. The move reverses the longstanding policy of counting everyone regardless of citizenship or legal status. Multiple legal challenges are expected. Several groups, including the National Democratic Redistricting Commission, previously said they plan to challenge the memo after media reports about it surfaced last week. Trump previously sought to add a citizenship question to the 2020 census, but the Supreme Court last year ruled the effort violated administrative law. Trump’s memo said that including undocumented immigrants in apportionment would “create perverse incentives encouraging violations of Federal law” for states like California, which may have more than 2 million undocumented residents. "My Administration will not support giving congressional representation to aliens who enter or remain in the country unlawfully, because doing so would create perverse incentives and undermine our system of government," Trump said in a statement. "Just as we do not give political power to people who are here temporarily, we should not give political power to people who should not be here at all."

    About 10 million undocumented immigrants live in the U.S., according to a 2016 estimate by Pew Research Center. Most of them are concentrated in large states like California, Texas, Florida and New York. The Pew estimates also noted Nevada as having the highest percentage of undocumented immigrants at 7 percent. Vermont had the lowest undocumented population, at about 0.1 percent of the state.

 

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