Infant Formula Instant Political Issue as Short Supply Gets Washington Focus

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House pushes gas price controls | Vilsack, Yellen on international trips | Regan to testify

 


Washington Focus


 

The House and Senate are in session this week.

The House is set to vote on a Democratic bill that would bar "excessive" or "exploitative" fuel prices as gasoline over the last several days has reached new record highs. The Consumer Fuel Price Gouging Prevention Act will likely die in the Senate, as Republicans are not expected to support the legislation, which would ban price increases during national energy emergencies declared by the president.

     Former Treasury Secretary Lawrence Summers dismissed the moves as “dangerous nonsense.” “There is no material prospect that, in any enduring way, gouging legislation can have any substantial effect on inflationary pressure,” Summers said.

In the Senate, lawmakers will move the around $40 billion aid package for Ukraine (HR 7691), with a cloture vote on the motion to proceed to that bill planned for Monday night. The rescheduled vote comes after Sen. Rand Paul (R-Ky.) delayed a vote seeking changes to the package.

Lawmakers, the Biden administration and industry are scrambling to show they’re responding to a nationwide infant formula shortage that has surfaced as a political liability for Democrats already facing a tough midterm election. Speaker Nancy Pelosi (D-Calif.) said Friday that the chamber will vote this week on two measures aimed at getting more baby formula on shelves.

     One would grant emergency authority for the Special Supplemental Nutrition Program for Women, Infants, and Children, otherwise known as the WIC program that would allow relaxing certain non-safety regulations around baby formula.

     Another measure is a supplemental appropriation that Pelosi said House Appropriations Chairwoman Rosa DeLauro (D-Conn.) plans to bring to the floor to address the shortage. DeLauro began an inquiry last month into a recall of formula produced at an Abbott facility and how the FDA handled it.

     Biden administration on Friday urged Abbott Laboratories to do more to ensure low-income families on federal assistance have access to baby formula amid the shortage. USDA Secretary Tom Vilsack said the company should extend flexibility through the end of August to allow states and territories to obtain rebates to purchase alternative formulas to ensure supply for people on WIC. Nearly half the infants in the program are covered by an Abbott contract. Vilsack’s letter to Abbott suggested administration frustration with a shortage that became acute after Abbott recalled several brands of its formulas earlier this year. The shortage has led to frantic parents hoarding formula and scouring store shelves to feed their children, posing yet another political headache for the White House. Link to White House fact sheet. Link to USDA announcement.

     Vilsack also sent a letter to all 50 states “urging them to adopt all possible flexibilities” to obtain needed formula supplies, White House Press Secretary Jen Psaki said Friday. Psaki also said the use of the Defense Production Act is on the table but no decision has been made.

     The FDA this week will detail plans for increasing formula imports and other “flexibilities” for domestic producers to boost supplies, Commissioner Robert Califf tweeted. Califf will appear Thursday before the House Ag Appropriations Subcommittee hearing on "FDA’s FY 2023 budget request, including oversight of infant formula.

     Out of stocks

House Ag Committee on Tuesday, May 17, will consider:

  • Budget Views and Estimates Letter of the Committee on Agriculture for the agencies and programs under the jurisdiction of the Committee for Fiscal Year 2023;
  • HR 7764, A bill to direct the Secretary of Agriculture to provide additional payments under the environmental quality incentives program for implementation of a nutrient management practice, and for other purposes;
  • HR 2518, “Producing Responsible Energy and Conservation Incentives and Solutions for the Environment Act or the PRECISE Act”;
  • HR 2606, “Sponsoring USDA Sustainability Targets in Agriculture to Incentivize Natural Solutions Act of 2021, or the ‘SUSTAINS’ Act”;
  • HR 4140, “Butcher Block Act”;
  • HR 7675, To amend the Department of Agriculture Reorganization Act of 1994 to establish an Agricultural and Food System Supply Chain Resilience and Crisis Response Task Force, and for other purposes;
  • HR 7606, “Meat and Poultry Special Investigator Act of 2022”;
  • HR 7763, To direct the Secretary of Agriculture to support and incentivize domestic activities to address fertilizer shortages and deficiencies, diversity fertilizer sources, and reduce depending on foreign sources for fertilizer, and other purposes;
  • HR 7765, “American Food Supply Chain Resiliency Act of 2022.”
     

More fiscal 2023 budget hearings this week, including in the Senate Armed Services Committee Thursday where Energy Secretary Jennifer Granholm will testify on nuclear energy defense; the House Appropriations Labor-HHS-Education Subcommittee with testimony from Labor Secretary Marty Walsh on Tuesday; and the House Appropriations Financial Services Subcommittee on Tuesday, when Office of Management and Budget Director Shalanda Young will testify.

EPA’s budget will be under a Senate subcommittee focus on Wednesday. EPA Administrator Michael Regan will testify and will likely be asked for updates on biofuel policy. Regan will also appear Tuesday before the House Energy and Commerce — Subcommittee on Environment and Climate Change.

Michael Barr, President Joe Biden’s nominee for Federal Reserve vice chair for supervision, will go before the Senate Banking Committee for a nomination hearing on Thursday.

     The hearing will also consider Jaime Lizarraga and Mark Toshiro Uyeda’s nominations to the SEC.

SEC/Federal Trade Commission budget comes up for review Wednesday via a House Appropriations subcommittee. Witnesses: SEC Chairman Gary Gensler and FTC Chairwoman Lina Khan testify.

Treasury Secretary Janet Yellen aims to increase economic pressure on Russia to end “its brutal and illegal war” during a trip to Europe this week, the Treasury Department said in a statement Friday. Also during the trip to Germany May 19-20, Yellen will participate in a meeting of Group of Seven finance ministers and central bank governors in talks that will also feature work to implement last year’s global corporate tax deal.

USDA Sec. Tom Vilsack on Monday will hold a media teleconference from Warsaw, Poland. Secretary Vilsack will underscore the importance of the continued collaborative relationship between the United States and its European allies as the world confronts the food security challenges caused by Russia’s unprovoked war on Ukraine, USDA said in a notice.

Russia’s invasion of Ukraine has “generated one of the most severe food and energy crises in recent history which now threatens those most vulnerable across the globe,” the Group of Seven club of rich nations said Saturday in a statement after a meeting in northern Germany.

     The head of the United Nations World Food Program said the globe faces outright food shortages as early as next year if Ukrainian seaports remain blocked by Russia. The executive director of the World Food Program, David Beasley, told a conference in New York that Ukrainian ports must reopen before the harvesting season, which begins in earnest in mid-June, to prevent shortages next year. Some 300 million people could face “crisis levels of acute food insecurity in the coming months,” he said earlier in written U.S. Senate testimony.

     India on Saturday invoked a rare ban on wheat exports, with few exceptions, to help tame domestic prices. Late last month, Indonesia halted the export of certain types of palm oil to lower soaring prices of cooking oil at home. “The food security of India, neighboring and other vulnerable countries is at risk,” said India’s Directorate General of Foreign Trade in a notice explaining the ban. See our special report (Link) on the trade policy moves.

Ukrainian President Volodymyr Zelenskyy welcomed to Kyiv a congressional delegation led by Senate Minority Leader Mitch McConnell (R-Ky.). Zelenskyy said on his Instagram account that the visit "is a strong signal of bipartisan support for Ukraine from the United States Congress and the American people."

     Ukraine has begun a counteroffensive toward the eastern city of Izyum, aiming to disrupt Russian supply lines into the Donbas region, officials said Saturday, as Ukrainian forces continued clearing villages north of the country’s second-largest city of Kharkiv.

     Ukraine’s refugee crisis will be discussed Wednesday at a House Foreign Affairs Committee hearing.

Affordable/resilient food supply chain hearing comes Wednesday at the House Select Climate Crisis Committee. Witnesses: Dana Gunders, executive director of ReFED; Kent Swisher, president & CEO of the North American Renderers Association; Melinda Cep, vice president for natural solutions and working lands at the National Audubon Society; and Elly Brown, co-executive director of the San Diego Food System Alliance.

European Union and the U.S. are planning to launch a new platform to address the security of food supplies and agricultural commodities as the war in Ukraine curbs global access to staple crops and fertilizers from the region. As many countries are facing food security issues, “there is clearly a need for how to best align approaches to support these countries as the EU and U.S. are major players and international donors,” Valdis Dombrovskis, the EU’s trade chief, said in a Friday interview with Bloomberg. The two countries will also look at supply chain diversification, particularly for fertilizers. Since both Russia and Belarus are major exporters, “there are clearly disruptions and we need to see how we are diversifying the supply,” Dombrovskis said.

     The new cooperation will be part of the Trade and Technology Council set up by both allies to strengthen their economic ties. Senior officials met Sunday and will meet again Monday in Paris to deepen their cooperation on fields including export controls, semiconductors and procurement. U.S. Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and Trade Representative Katherine Tai plan to attend from the U.S. side. Dombrovskis, Margrethe Vestager, the EU’s digital affairs chief, as well as the head of internal markets, Thierry Breton, will represent the EU.

USAID foreign policy/international development priorities are the topics Tuesday before the House Foreign Affairs Committee. U.S. Agency for International Development (USAID) Administrator Samantha Power testifies.

On the personnel front, President Biden announced the nomination of Alexis Taylor to serve as the USDA Undersecretary for Trade and Foreign Agriculture Affairs. The Trade and Foreign Agriculture Affairs mission area plays a key role in developing and implementing USDA’s trade policy, overseeing and facilitating foreign market access, and promoting opportunities for U.S. agriculture. The appointment requires Senate confirmation. Taylor is widely respected on both sides of the aisle.

     Taylor currently serves as the Oregon Department of Agriculture’s Director, where she oversees the state’s efforts on food safety and consumer protection, natural resource protection and the promotion of Oregon products. Prior to this, Taylor managed the USDA’s Farm and Foreign Agricultural Services, where she worked to improve market access and improve the competitiveness of U.S. agricultural products around the world. Before joining USDA, Alexis worked on Capitol Hill in both the Senate and House of Representatives. 

     Fellow Iowan, Sen. Chuck Grassley (R-Iowa), said: “Congratulations to Alexis Taylor on her nomination to serve as the USDA Under Secretary for Trade and Foreign Agricultural Affairs. While I’m very pleased an Iowan whom I know to be talented and hardworking has been nominated for this role, the announcement is long overdue. I once again urge the Biden administration to also nominate a qualified individual for Chief Agricultural Negotiator at USTR without delay.

On the political front, key focus is on Senate contests Tuesday, one of five states holding elections that day along with Idaho, Kentucky, North Carolina, and Oregon.

     Among the House races to watch are those of Reps. Madison Cawthorn (R-N.C.), Kurt Schrader (D-Ore.), and Mike Simpson (R-Idaho), who face serious challenges. They’re attempting to avoid becoming the next incumbent to lose a primary, following Rep. David McKinley (R-W.Va.) last Tuesday.

 


Economic Reports for the Week


With rising inflation, focus this week will be on retail sales and existing home sales.

Monday, May 16

  • Federal Reserve Bank of New York releases the Empire State Manufacturing Survey for May. Consensus estimate is for an 18.2 reading. After three readings close to or less than zero to begin the year, April saw a surge to 24.6, indicating growth in the region’s manufacturing activity.
     

Tuesday, May 17

  • Census Bureau reports retail sales data for April. Expectations are for it to be up 0.8%, month over month, while retail sales, excluding autos, are likely to have risen 0.4%. This compares with gains of 0.75% and 1.4%, respectively, in March.
  • Industrial production index
  • Capacity utilization
  • National Association of Home Builders releases its Housing Market Index for May. Economists forecast a 75 reading, two points fewer than in April. The 77 figure in April was a seven-month low for the index, as 30-year fixed-mortgage rates have risen above 5% for the first time since 2011.
  • Business inventories (revision)
     

Wednesday, May 18

  • MBA Mortgage Applications
  • Building permits
  • Census Bureau reports new residential construction data for April. Consensus estimate is for a seasonally adjusted annual rate of 1.76 million privately owned housing starts, slightly lower than the March figure.
  • Philadelphia Fed manufacturing index
     

Thursday, May 19

  • Jobless Claims
  • National Association of Realtors reports existing home sales for April. Economists believe that they fell to a seasonally adjusted annual rate of 5.6 million from 5.77 million in March. It would be the third consecutive monthly decline if estimates prove correct.
  • Conference Board reports its Leading Economic Index for April. Expectations are for a flat month-over-month reading of 119.6. The board currently projects 3% gross domestic product growth for 2022, despite fears of a hard landing precipitated by the expected interest-rate hikes from the Federal Reserve.
  • Fed Balance Sheet
  • Money Supply  
     

Friday, May 20

  • Advance services report  
     

Key USDA & international Ag & Energy Reports and Events 


China’s second batch of trade data for April, including imports of corn, wheat, sugar and pork, will be published on Wednesday, while the monthly report from the International Grains Council comes Thursday. A grains conference is set to be held in Geneva May 17-19.

Monday, May 16

     Ag reports and events:

  • Export Inspections
  • Crop Progress
  • Cotton and Wool Outlook
  • Oil Crops Outlook
  • Feed Outlook
  • Rice Outlook
  • Wheat Outlook
  • North American Flour Milling Products Summary
  • Holiday: India, Indonesia, Malaysia, Singapore, Thailand
     

Energy reports and events:

  • China April output data, including crude oil and refining
     

Tuesday, May 17

     Ag reports and events:

  • Feed Grains: Yearbook Tables
  • EU weekly grain, oilseed import and export data
  • GrainCom conference in Geneva, May 17-19
     

     Energy reports and events:

  • API weekly U.S. oil inventory report
     

Wednesday, May 18

     Ag reports and events:

  • Broiler Hatchery
  • Fruit and Tree Nuts Data
  • Vegetables and Pulses Data
  • Livestock, Dairy, and Poultry Outlook
  • Sugar and Sweeteners Outlook
  • Milk Production
  • China’s second batch of April trade data, incl. corn, wheat, sugar and pork imports
  • Holiday: Argentina
     

     Energy reports and events:

  • EIA weekly U.S. oil inventory report
  • U.S. weekly ethanol inventories
  • Genscape weekly crude inventory report for Europe’s ARA region
  • China’s 2nd batch of April trade data, including oil products trade breakdown
     

Thursday, May 19

     Ag reports and events:

  • Weekly Export Sales
  • Livestock Slaughter
  • International Grains Council’s monthly report
     

     Energy reports and events:

  • EIA natural gas storage change
  • Russian weekly refinery outage data from ministry
  • Insights Global weekly oil product inventories in Europe’s ARA region
     

Friday, May 20

     Ag reports and events:

  • CFTC Commitments of Traders report
  • Peanut Prices
  • Cattle on Feed
  • Chickens and Eggs
  • China’s third batch of April trade data, including soy, corn and pork imports by country
  • FranceAgriMer weekly update on crop conditions
  • Malaysia’s May 1-20 palm oil export data
  • Earnings: Deere reports results for its 2022 fiscal second quarter
     

     Energy reports and events:

  • Baker Hughes weekly U.S. oil/gas rig counts
  • China’s 3rd batch of April trade data, including country breakdowns for energy and commodities

 

 

 

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