No Consensus on Cattle Market Reforms; USDA Mulls Action on Line Speed Issue in Hog Plants

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Manchin criticizes Schumer victory speech as details, timelines bog down key issues ahead
 


In Today’s Digital Newspaper


Market Focus:
• Another disappointing jobs report
• IMF board will decide fate of its leader
• Ireland joins international tax deal
• Natural-gas shortage setting off a scramble ahead of winter
• Shipping costs have declined
• Ag demand update

• Grain and soy futures strengthen overnight
• Onslaught of late-season rains for northern China raises quality concerns
• Planting of France’s winter cereal crops is underway
• Ukraine’s grain harvest is now 70% complete
• Brazil working on project to boost domestic fertilizer production
• Texas dryland, ranchland continue to mark double-digit gains
• USDA working on a waiver system for pork processing line speeds
• Select beef trying to stabilize
• Cash hog bids finally edge higher

Policy Focus:
• Senate passes a short-term increase in the debt ceiling; House to vote Tuesday
• Cheat sheet for all these major spending/debt issues
• Benefits for rich split Democrats in BBB/reconciliation debate
• Is new WHIP+ a minus for some producers? Could be 

Afghanistan:
• U.N. Council appoints watchdog to investigate abuses by the Taliban  

Biden Administration Personnel:
• Who might replace Francis Collins as NIH director?
• Senate confirms Torres Small as USDA undersecretary for rural development  
• EPA names Snyder ag adviser 

China Update:
• China bank to restrict some forex, commodities trading
• China building several huge gas-fired power plants
• Coal miners in Inner Mongolia ordered to increase production
• CIA plans to create a new China Mission Center
• WSJ: U.S. troops secretly training military forces in Taiwan; China responds 

Trade Policy:
• USTR Tai to deliver remarks on WTO reform next week 

Energy & Climate Change:
• IMF: $75 is price a tonne of carbon must reach to meet Paris agreement
• Fed official comments on climate change
• Top Federal Reserve official comments on climate change
• Climate change proponents: don’t cut climate change funding from BBB/reconciliation
• How to cut methane emissions by 75%


Livestock, Food & Beverage Industry Update:
• Restaurants are preparing for another Covid winter  
• FDA sodium guidelines getting close
• Lots of topics, little consensus in House livestock sector hearing

Coronavirus Update:
• Vilsack: Vaccine requirement won’t close FSA offices
• Pfizer and BioNTech seek approval of Covid-19 vaccine for children ages 5 to 11
• France will begin charging unvaccinated people for Covid screening tests 

Politics & Elections:
• Amy Walter: Return to normal or a “new” normal?
• Republicans' biggest redistricting weapon: Florida
• Biden moves to restore three national monuments in western U.S., Atlantic 

Other Items of Note:
• Poland delivers blow to EU
• Cotton AWP rises
• NEPA redo
• Tesla moving headquarters to Austin, Texas


MARKET FOCUS


Equities today: Global stock markets were mixed in overnight trading. The U.S. Dow opened around 50 points higher, then went slightly lower... a go-nowhere Friday. Asian equities finished higher amid a rise in U.S. markets, with the Shanghai Composite reopening after a holiday. The Nikkei rose 370.73 points, 1.34%, at 28,048.94. Hong Kong’s Hang Seng was up 136.12 points, 0.55%, at 24,837.85. The Shanghai Composite was up 24.00 points, 0.67%, at 3,592.17. European equities were mixed ahead of US jobs data. The Stoxx 600 is 0.1% lower with regional markets seeing gains of 0.3% to losses of 0.3%.

     U.S. equities yesterday: The Dow finished up 337.95 points, 0.98%, at 34,754.94. The Nasdaq gained 152.10 points, 1.05%, at 14,654.02. The S&P 500 rose 36.21 points, 0.83%, at 4,399.76.

     Stocks

On tap today (see detailed list of events and reports below):

     • Employment report. U.S. employers are expected to add 500,000 jobs in September and the unemployment rate is forecast to tick down to 5.1% from 5.2% one month earlier. (8:30 a.m. ET) UPDATE: The U.S. added only 194,000 non-farm payrolls in September, far less than economists expected. The unemployment rate dropped 0.4 points to 4.8% amid a drop in the participation rate. Economists worry the disappointing jobs performance is unlikely to change Fed’s anticipated taper timing, raising worries about stagflation (rising inflation combined with a weak jobs market and slowing economic growth). Recall that Fed Chairman Jerome Powell noted after the conclusion of the September Federal Open Market Committee that he did not necessarily have to see a robust jobs number for September for him to think the Fed had met the "substantial further progress" relative to the jobs market after having already met that relative to price stability.
     • U.S. wholesale inventories for August are expected to increase 1.2% from a month earlier. (10 a.m. ET)
     • Baker Hughes rig count is out at 1 p.m. ET.
     • CFTC Commitments of Traders report, 3:30 p.m. ET.

IMF board will decide the fate of its leader. The tenure of Kristalina Georgieva, the fund’s managing director, is in limbo over claims that she pressured staff members to manipulate a report to placate China when she was at the World Bank. (She has denied the allegations.) At a meeting today, the IMF board will decide whether it still has confidence in her.

Ireland joins an international tax deal. The low-tax country that’s a popular base for multinationals had been a holdout in a sweeping tax overhaul focused on imposing a global minimum corporate income tax of 15%. A deal could be announced today — the group seems likely to give its backing to a final agreement that would aim for implementation in 2023.

      What change Ireland’s mind? Dealmakers crossed out two words that changed the country's mind. The initial text mentioned a minimum corporate tax rate of "at least" 15%, but that was updated to just 15%, meaning the rate wouldn't be pushed up at a later date. Ireland was also given assurances that it could keep its lower rate for smaller companies operating in the country, ahead of an OECD meeting in Paris this weekend.

Market perspectives:

     • Outside markets: The U.S. dollar index was weaker ahead of the Employment report (see item above for an update). The yield on the 10-year U.S. Treasury note eased to trading around 1.56% despite a firmer tone to global government bond yields. Gold and silver were mixed, with gold around $1,762 per troy ounce and silver weaker around $22.55 per troy ounce.

     • Crude oil remained higher ahead of U.S. trading, but off highs seen earlier in electronic trading. U.S. crude was around $78.90 per barrel and Brent around $82.50 per barrel. Futures moved higher in Asian action, with U.S. crude up $1.11 at $79.41 per barrel and Brent up $1.06 at $83.01 per barrel.

     • Natural-gas shortage is setting off a scramble ahead of winter. Buyers in Europe, Asia and Latin America are competing for limited supplies, racing to fill tanks and caverns with the fuel before cold weather hits the Northern Hemisphere, the WSJ reports (link). Natural gas stocks are very low around the world, and prices in most places have never been higher after surging to new records in Europe and Asia this week. Demand has jumped as economies have bounced back from pandemic shutdowns, and the squeeze has caught traders, shipowners and energy executives off guard. Tight supplies from Russia and strong demand in China and Latin America have made European economies including Spain, the Netherlands and the U.K. particularly vulnerable.

        NG prices       

        Natural-gas producers have pledged to keep oil-field spending and output roughly flat in an effort to send more cash to shareholders, meaning big increases in supply are unlikely in the near term. Even if they did boost output, plants and tankers exporting liquefied-natural gas from the U.S. are already close to capacity.

        LNG exports

     • Shipping costs have declined. The cost of shipping goods from China to the U.S shows the spot rate for taking a 40-foot container from China to the U.S. West Coast halved between September and October. This is still considerably more than pre-pandemic rates.

     • Ag demand: Turkey has bought an initial 150,000 MT of animal feed barley from optional origins in a tender seeking 310,000 MT of the grain. An importer group in the Philippines is thought to have purchased around 56,000 MT of feed wheat from Australia. Japan’s ag ministry bought 60,525 MT of food-quality wheat from the U.S., as well as 24,410 MT of the grain from Canada and 46,028 MT from Australia. Jordan made no purchase in its tender for 120,000 MT of feed barley. Tunisia bought an undisclosed amount of durum wheat in an international tender in which it was seeking 100,000 MT of the grain.

     • NWS weather: Heavy rain and the potential for flash flooding continues into this morning across portions of the Southeast... ...Anomalous heat across the central/southern Plains will be contrasted with mountain snows across the northern/central Rockies into this weekend.

        NWS
        Wx Today

Items in Pro Farmer's First Thing Today include:

     • Grain and soy futures strengthen overnight
     • Onslaught of late-season rains for northern China raises quality concerns
     • Planting of France’s winter cereal crops is underway
     • Ukraine’s grain harvest is now 70% complete
     • Brazil working on project to boost domestic fertilizer production
     • Texas dryland, ranchland continue to mark double-digit gains
     • USDA working on a waiver system for pork processing line speeds
     • Select beef trying to stabilize
     • Cash hog bids finally edge higher


POLICY FOCUS


— Senate passed a short-term extension of the debt limit on Thursday by a 50-48 party line vote on a bill that raises the borrowing limit by $480 billion, the amount the Treasury Department says is needed to meet the country’s cash needs until Dec. 3. Eleven Senate Republicans, including Minority Leader Mitch McConnell (R-Ky.), joined all Senate Democrats to break a GOP filibuster of the measure by a vote of 61-38. 

     House vote Tuesday evening. House Majority Leader Steny Hoyer (D-Md.) announced the House would return to Washington on Tuesday to take up the measure.

     The list of “aye” Senate GOP votes: Sens. John Barrasso (Wyo.), Roy Blunt (Mo.), Shelley Moore Capito (W.Va.) Susan Collins (Maine), John Cornyn (Texas), Lisa Murkowski (Alaska), Rob Portman (Ohio), Mike Rounds (S.D.), Richard Shelby (Ala.), John Thune (S.D.) and McConnell.

     Senate Majority Leader Chuck Schumer (D-N.Y.) went to the floor and harshly criticized Republicans for provoking the crisis. But Centrist Sen. Joe Manchin (D-W.Va.) harshly criticized the tone of Schumer’s remarks, shaking his head repeatedly during the Schumer tirade. This came after Sen. Bernie Sanders (I-Vt.) held a press conference on Wednesday to bash centrist Sens. Manchin and Kyrsten Sinema (D-Ariz.). Meanwhile, progressives (liberals) are threatening to primary Sinema in 2024 and encouraging Rep. Ruben Gallego (D-Ariz.) to run.

     Manchin down

— Confused about all the policy items ahead, and the dates? You are not alone. Here is a cheat sheet to help:

     • BIF is the bipartisan infrastructure bill… “traditional” infrastructure. That around $1 trillion measure has passed the Senate but not the House. Progressives (liberals) say they will not vote for BIF until reconciliation passes.
     • BBB is the “Build Back Better “measure via the reconciliation process… the social infrastructure and climate change bill that currently totals $3.5 trillion in the Senate but has to be reduced to some level due to objections of the price tag from centrist Democrats.
     • CR is the continuing resolution or stopgap spending measure that provides spending through Dec. 3.

     • Oct. 31 is the latest date House Speaker Nancy Pelosi (D-Calif.) has given for the House passing the BIF bill.
     • Dec. 3 is the date the CR runs out and is also the date other action is needed on the debt limit.

— Benefits for rich split Democrats in BBB/reconciliation debate. Under Democrats’ “Build Back Better” plan, a married couple earning a combined $500,000 a year could get $10,000 a month from the federal gov’t when taking paid family leave to care for a sick relative or a newborn baby. The same program would provide a middle-class family with one wage earner much less, about $3,100 a month. Centrist Democrats say programs should be strictly aimed at poor and middle-class Americans to improve efficiency and fiscal accountability. Almost all the Democrats’ proposals will have some form of means-testing, under which the size of a benefit declines or disappears as income rises. But the issue is where and how to draw the lines on class distinctions, and how to divvy up cash and other benefits.

     Regarding family leave, many top earners already get it from their employers. So, including them as part of a federal benefit could result in simply reimbursing their company. “It’s basically paying people for something they’re already getting,” said Marc Goldwein, senior vice president of the Committee for a Responsible Federal Budget, a nonpartisan think tank that advocates deficit reduction.

— Is new WHIP+ a minus for some producers? Could be. It didn’t take long for some in the ag sector to spot a potential glitch in the WHIP+ program for 2020 and 2021 ag disasters. Some producers that took the initiative to protect themselves with RP insurance may see little or no WHIP+ payment, says one observer. “We started doing some calculations on WHIP+ indemnities using the WHIP+ formula used in 2018 and 2019.  We found out there could be some issues now with the harvest prices for commodities such as wheat and dry edible beans being much higher than in the spring, 40% to 60%.  In most cases producers who had an RP policy and had a loss for Wheat or Dry Beans will not qualify for a WHIP+ payment using the previous formula. Producers who selected a yield protection policy (no price coverage) may even come out ahead of producers who bought the better coverage." 

     Comments: The program for 2020 and 2021 is not bound to the ok’d WHIP program rules. Hence, USDA can address any glitch in its rule making.


AFGHANISTAN


— U.N. Human Rights Council voted to appoint a watchdog to investigate and report on abuses by the Taliban in Afghanistan.


BIDEN ADMINISTRATION PERSONNEL


— Who might replace Francis Collins as NIH director? Among the names instantly singled out as the potential next NIH director: Jennifer Doudna, the biochemist best known for her work on CRISPR.

— Senate confirms Torres Small as USDA undersecretary for rural development. The Senate late Thursday confirmed former Rep. Xochitl Torres Small (D-N.M.) as USDA undersecretary for rural development. The vote was by voice. 

     Meanwhile, two other undersecretary nominees have been approved by the Senate Agriculture Committee but not acted on by the full Senate: Robert Bonnie to be USDA undersecretary for farm production and conservation and Homer Wilkes to be undersecretary for natural resources and environment.

— EPA names Snyder ag adviser. The Environmental Protection Agency on Thursday named Rod Snyder the agriculture adviser to EPA Administrator Michael Regan. “Snyder will lead outreach and engagement efforts with the agricultural community for EPA, working to advance the Biden-Harris environmental agenda for farmers and rural communities,” EPA said.

     Background. Since March 2014, Snyder has served as president of Field to Market: The Alliance for Sustainable Agriculture, which EPA described as “the largest multi-stakeholder initiative working to advance the sustainability of commodity crop farming in the United States.” In an email to his Field to Market network, Snyder wrote that he will begin his duties next week and that he was leaving the alliance “with mixed emotions.” Snyder previously held positions as public policy director for the National Corn Growers Association and government affairs leader for CropLife America. He has previously served on the board of directors of the Conservation Technology Information Center, on the steering committee of the Agricultural Nutrient Policy Council, on the executive committee of Field to Market, and as chair of the Pesticide Policy Coalition. He grew up in West Virginia and resides on his family’s farm in Shenandoah Junction, W. Va. Snyder graduated from Eastern University, near Philadelphia, in 2002 with a bachelor's degree in political science.


CHINA UPDATE

 

— China bank to restrict some forex, commodities trading. The Industrial and Commercial Bank of China (ICBC) announced it will restrict some foreign exchange and commodities trading. ICBC said it would suspend new accounts in the “account forex business” where individuals can trade forex against the yuan for speculative and hedging purposes, with a halt for existing clients to establish new trading positions starting November 14. ICBC said as of Oct. 17, it will stop taking new clients in trading businesses in volving energy, base metal, agricultural products and precious metals. China has been tightening rules and activities in trading in several areas. “Risk is high these days in global forex and commodities markets,” ICBC said, “so please pay attention to controlling risks.”

— China is currently building several huge gas-fired power plants and still plans to build 247 gigawatts of new coal power — nearly six times Germany’s entire coal capacity — according to the U.S. climate envoy John Kerry. Meanwhile, to encourage the use of renewable energy, the Chinese government has ordered electric utilities to charge customers up to five times as much when power is scarce and generated mainly by coal.

     A coal production demand. In response to a demand from China’s State Council, coal miners in Inner Mongolia were ordered to increase production by a rate of nearly 100 million tonnes a year. Coal prices are rocketing across China and much of Asia, forcing energy to be rationed and constricting industrial output. China announced that the key coal-producing hub of Ordos in Inner Mongolia has boosted its coal output to over 2.1 million tonnes per day, with 107 newly approved open-pit coal mines with temporary land-use approval with a capacity of 169 million tonnes since the year began. As of October, Ordos had 225 coal mines in operation with annual capacity of 640 million tonnes.

— CIA plans to create a new China Mission Center meant to better position U.S. intelligence to study China and analyze its activities. Announcing the expansion on Thursday, CIA director Bill Burns said the spy agency would be at “the forefront” of “facing our toughest geopolitical test in a new era of great power rivalry.”

— U.S. troops have been secretly training military forces in Taiwan, the Wall Street Journal reported (link). The deployment is a sign of concern within the Pentagon about Taiwan’s tactical capabilities considering Beijing’s yearslong military buildup and recent threatening moves against the island. China told America to cut military ties with Taiwan after the WSJ report. Taiwan’s president, Tsai Ing-wen, said her country seeks to avoid war, “but,” she added, “will do whatever it takes to defend its freedom.”


TRADE POLICY


— USTR Tai to deliver remarks on WTO reform next week. U.S. Trade Representative (USTR) Katherine Tai will attend the G20 Trade and Investment Ministers meeting Oct. 11-12 in Italy and have bilateral meetings during that time, according to USTR. Tai is expected to emphasize boosting cooperation at the WTO.

     Oct. 13 will see Tai in Geneva to meet with WTO members and representatives from the International Labor Organization.

     Oct. 14 Tai is to deliver remarks on the WTO’s “important role, why it must adapt to the rapidly changing global economy and how it can help workers and unlock broad-based economic prosperity,” USTR said. Expectations are that Tai will lay out US objectives for WTO reforms. Most will be watching to see if Tai offers any views on the Appellate Body at the WTO which has been non-functional since December 2019 as the U.S. has blocked naming new members to hear appeals to trade decisions. The Biden administration has maintained the blockade on new members to the Appellate Body to the surprise of some in the world trade community.


ENERGY & CLIMATE CHANGE


— IMF: $75 is the price a tonne of carbon would have to reach to meet the ambitions of the Paris agreement. Others believe it should be almost double that. The current global average is $3. For some heavy emitters covered by the European Union’s emissions-trading system, it is already above €60 ($69). In China’s new program, by contrast, it is a pittance. America has no federal program at this time. The U.N.’s COP26 climate summit runs from Oct. 31 to Nov. 12 in Glasgow. Of more than 4,200 firms in the G20 club of big economies that have disclosed their climate ambitions, only a fifth have committed to so-called science-based targets that would keep the world on track to meet the Paris agreement’s goal. And, only about one-fifth of global emissions is covered by a price on carbon.

— Fed official comments on climate change. A top Federal Reserve official said financial regulators should direct the nation’s biggest banks to take new steps to manage climate-related risks as part of a broader effort to monitor potential hazards posed to the financial system. Fed governor Lael Brainard detailed how the central bank is preparing to beef up its assessment of growing threats from climate-related events, including natural disasters and wildfires, which could deliver unexpected shocks to the economy and markets.

— Climate change proponents: don’t cut climate change funding from BBB. Climate hawk senators are ramping up calls on Democratic leaders to ensure no climate provisions are stripped from a slimmed down version of the reconciliation spending package (BBB) being negotiated within the party right now. “Climate cannot and will not be cut,” said Sen. Ed Markey (D-Mass.), speaking at a press conference with climate activist groups led by Evergreen Action. “No climate, no deal. We cannot compromise on science. There is no middle ground.” Markey and other senators demanded the entirety of core climate provisions be preserved in order to meet President Joe Biden’s pledge to slice U.S. emissions in half by 2030. That means keeping intact the Clean Electricity Performance Program and green energy tax credits, along with a fee on methane, funding for electric vehicles, and creating a Civilian Climate Corps.

     Ag groups say, Me too! It did not take long for a slew of ag sector groups to implore lawmakers to not cut a penny out of the $28 billion included in the current reconciliation language, but that move was widely expected.

— How to cut methane emissions by 75%. The International Energy Agency (IEA) released a roadmap for governments and companies to cut methane emissions from oil and gas operations 75% by 2030 using readily available technologies. Much of these emissions are a result of leaks along the production and supply chain that oil and gas operators fail to capture or avert, and there are cost-effective ways to limit these emissions, IEA said in a report. Many experts consider combating methane leaks to be the “low hanging fruit” of easy, quick emission reduction efforts, since methane has a more potent immediate warming effect than carbon, although it does not linger as long in the atmosphere. "Methane missions are avoidable; the solutions are proven and even profitable in many cases. And the benefits in terms of avoided near-term warming are huge,” said Fatih Birol, IEA’s executive director. The report comes out as the EPA is drafting new methane regulations for new and existing oil and gas operations, and just weeks after the U.S. and European Union announced a Global Methane Pledge to cut emissions by at least 30% from 2020 levels by 2030.


LIVESTOCK, FOOD & BEVERAGE INDUSTRY


— Restaurants are preparing for another Covid winter. As temperatures drop, owners are upgrading structures from last year by opting for elaborate decor and speeding up service. But their plans might be complicated by supply-chain shortages and whether they can find workers. Link to more details via the WSJ.

— FDA sodium guidelines getting closer. The Office of Management and Budget (OMB) has completed its review of a notice by the Food and Drug Administration (FDA) on to provide guidance to the industry on voluntary sodium reduction goals in commercially processed, packaged, and prepared foods. Agency officials recently flagged reducing sodium as a key focus for the agency. The targets for reducing sodium in foods are also expected to provide consumers with time to adapt to the changing tastes.

— Lawmakers focus on livestock market reforms, diseases, pending USDA rulemakings in House Ag session with Vilsack. USDA Secretary Tom Vilsack was pressed on several livestock-related issues during a House Ag Committee hearing Thursday (Oct. 7), ranging reforms in the cattle market, the department’s plans to boost meat processing capacity, to new Packers and Stockyards Act (P&SA) rulemaking aimed at increasing fairness in livestock and poultry markets. The session, titled, “A Hearing to Review the State of the Livestock Industry,” was comprised of multiple panels including a lengthy session with USDA Secretary Tom Vilsack. But it also revealed there is no agreement on specifically which market reform options would produce the intended or best results.

  • ASF actions by USDA. House Ag Committee Chair David Scott (D-Ga.) asked Vilsack about the new African Swine Fever (ASF) candidate vaccine from USDA’s Agricultural Research Service (ARS). “There are actually seven vaccines that are currently under investigation and examination at various ARS facilities,” Vilsack responded. He said the vaccine candidate has gone through the “first steps” of testing but said “there is still quite a bit of work yet to be done” to confirm the safety and efficacy of its vaccine before it is ready for commercialization.

Rep. Cindy Axne (D-Iowa) asked for more clarification on USDA’s move to tap up to $500 million from the Commodity Credit Corporation (CCC) to help respond to the outbreaks of ASF in the Dominican Republic and Haiti. She noted the funds look to be spent for “containing ASF in the Caribbean, and then heightening the surveillance there,” and asked what resources are being set aside to respond to any outbreak within the US. Vilsack stressed the importance of trying to “minimize” and then “eliminate” the risk at its source which is a focus of the aid to the Dominican Republic and Haiti, but said USDA is also “beefing up” its prevention, surveillance and response measures domestically.

  • Line speed at hog plants key issue. Ranking Member GT Thompson (R-Pa.) said he supported moves to increase meat processing capacity but questioned whether a Biden administration decision not to contest a ruling eliminating higher pork line speeds are consistent with that goal. He asked Vilsack what is being done to “remedy the situation” for pork producers and processors impacted by the reduction in processing capacity due to lower line speeds.

“The Department of Justice (DOJ) makes these decisions,” Vilsack responded, saying the Trump administration made what courts deemed “a fatal error” in not putting forward data on impacts to worker safety. “We’re now working with both the industry and those who represent workers to try to figure out ways in which we can balance — appropriately — the need for worker safety, food safety and farmer profits.”

Rep. Jim Hagedorn (R-Minn.) again raised the issue, calling it “strange” that worker safety is being cited as one of the reasons for the rollback, noting that in plants operating at higher line speeds under the New Swine Inspection System (NSIS)—many for more than 20 years— “worker injuries were reduced 86%.” He castigated Vilsack for ignoring a letter by more than 70 lawmakers urging him to intervene to prevent lower line speeds and asked him what the status is of an effort to provide line speed waivers.

“I apologize for not responding to your letter,” Vilsack said of the letter, reiterating that USDA is “under an injunction, so it’s not a situation where we have the ability to tell a federal judge that we’re not going to comply.” He added that USDA is in discussions with affected facilities and workers to establish a waiver for NSIS facilities that agree to certain conditions.

  • Updated P&SA rules, organic livestock. Rep. David Rouzer (R-N.C.) expressed concerns about the move to revisit Packers and Stockyards Act (P&SA) rules and asked whether USDA would have the Office of the Chief Economist conduct “a full economic analysis” of the costs and benefits of the new rules. Vilsack would only commit to “follow the requirements under the administrative laws and rules,” but said the department would not hold back information on the rulemaking.

Relative to the Organic Livestock and Poultry Practices Rule withdrawn by the Trump administration but revived by Vilsack, Rep. Chellie Pingree (D-Maine) asked for an update on the rulemaking process and pending litigation. “We anticipate an opportunity to get what we are working on to our general counsel for review in the very near future, and to [the White House Office of Management and Budget (OMB)} by the end of this year,” Vilsack responded. In terms of publishing the rule, he said that would likely come in 2022.

  • Help for small, medium meat processors. Rep. Vicki Hartzler (R-Mo.) asked Vilsack to ensure $500 million in grant funding to be distributed to smaller meat processors is also made available to new plants, brought online after the Covid-19 pandemic hit. Vilsack reiterated that a lot of feedback — over 500 comments — has been received on the effort and said he would take concerns on the eligibility of new processors under consideration. He added that he expects demand may outpace what resources are available but said one goal of the effort is to learn from the effort and apply lessons to additional, permanent programs that might be established in the future.

Vilsack also responded to a question by Rep. Dusty Johnson (R-S.D.) on how USDA will ensure the funds flow to smaller processors that can survive long-term, and not likely to be acquired by larger companies. “I've asked for assistance from folks who work in the private sector, to assist us as we formulate this…  to make sure that we are making wise decisions and not putting people in a situation where they are bound to fail,” he said. He added there may also be a component “that looks not just at entities that need capital to build, but those who might need assistance in the first early stages of operation to get their feet on the ground,” but said he did not want to “prejudge” an outcome on the final details.

  • Labeling and interstate shipment of meat. Labeling of cell-cultured meat products derived from swine and poultry cells also surfaced during questioning, with Rep. Jim Baird (R-Ind.) asking what Vilsack’s thoughts were — noting the 2019 Memorandum of Understanding (MOU) with FDA on the topic. “I think the key here is to make sure that consumers are not confused,” Vilsack said, with keys being that information “is accurate and doesn’t misrepresent whether it’s in this space or whether it’s in the ‘Product of the USA’ labeling space.”

On the Cooperative Interstate Shipping (CIS) program — which allows state-inspected meat processing facilities to ship products across state lines once the state’s inspection programs meet certain requirements — Rep. Sanford Bishop (D-Ga.) asked why just nine or 27 states had taken advantage of the program, and how participation might be increased. “The simple answer,” said Vilsack, is that the program requires states not just to achieve equivalency with federal inspection standards but that their systems must be “exactly the same,” which he said for many states is “a significant change.” He added that USDA’s program to help offset costs needed to bring state-inspected plants up to federal standards “may create incentives for states to take a slightly different position” and may eventually see more of the 27 states with inspection programs qualify for CIS.

  • Change to livestock markets reveal no unified view by lawmakers. Vilsack was asked by Rep. Rick Allen (R-Ga.) whether he saw value in the creation of a contract library for cattle markets — especially formula transactions — like those that exist for the pork markets. Vilsack said President Joe Biden’s Executive Order on competitiveness in the US economy “asked us to put together a report due in December on this very issue,” but said he did not want to speculate on what the report might conclude. Still, Vilsack said he does think moves to provide more transparency on contracts will yield a “stronger” market,” and he hopes USDA might be able to provide such a resource “across both beef, poultry and pork.”

Rep. Randy Feenstra (R-Iowa) raised the issue of cattle market reform, specifically a bill by Sen. Chuck Grassley (R-Iowa) and Jon Tester (D-Mont.) which would put in place what’s called 50/14 —  requiring meatpackers to purchase a minimum of 50% of their weekly volume of beef slaughter on the spot market with those cattle having to be processed in 14 days.

Grassley testified at the opening of the hearing, urging lawmakers to act on the measure. “My bill, commonly referred to as 50/14, would create the price transparency that's needed in the marketplace. My colleague, Senator Fischer, of Nebraska, has a bill that would help as well. Ultimately, Senator Fischer and I are working on a compromise that can unite the industry because kicking the can down the road is not an option,” he told the panel; Fischer is also a Republican.

Responding to Feenstra, Vilsack said, “there's no question” on the need for transparency and price discovery in cattle markets as the share of cash trades decline. However, he stressed the need for “caution, that we look for the proper balance that as we try to provide for greater transparency, we don’t necessarily sacrifice the benefits of the existing system in terms of efficiency.” Those comments echo the findings of a recent report from Texas A&M, which warned the 50/14 proposal and similar though less stringent 30/14 proposal would both impose billions of dollars in new costs on the industry—much of those costs borne by cattle producers.

But even among Republicans, views on 50/14 appeared split. Rep. Kat Cammack (R-Fla.) later noted cow/calf producers in her district are wary of new mandates on cattle market transactions. “The market works,” she said, urging against new mandates which might curb producers’ ability to make their own transaction decisions—which appeared to be a reference to 50/14 like proposals. She also raised concerns about recent proposals from USDA on P&SA to no longer require showing a “harm to competition” relative to unfair practices, which she said could hurt producers of branded products with special characteristics and invite a “flood” of litigation. Vilsack responded that proposed P&SA changes are aimed at seeing producers “get a fair price” for their cattle and any value added. The key aspect of rulemaking “is getting the fair return,” he stressed.

  • Drought and CRP emergency haying and grazing. Rep. Michelle Fischbach (R-Minn.) asked Vilsack why he declined a bipartisan-led request to permit emergency haying and grazing on Conservation Reserve Program (CRP) lands prior to the conclusion of primary nesting season, despite severe drought impacts affecting the availability of adequate feed for their livestock. “The law didn’t allow me to take the action you all requested,” Vilsack said, “it would require a law change.” However, he said he would be more than happy to work with Fischbach and other lawmakers “to do the technical work to get to deal with this.”

Grazing concerns were also raised by Rep. Doug LaMalfa (R-Calif.), who said USDA’s Forest Service grazing allotments in California were vacant despite recent fires and the need to thin vegetation. Vilsack said the key is whether the vacant areas are that way for a reason. “Sometimes there are vacant lots because they’ve been overutilized and it’s rotational grazing,” he noted, or due to a “scientific reason.” For vacant lots suited to grazing, Vilsack promised the Forest Service “will be moving as quickly as possible for those.”

Bottom line: The wide-ranging hearing reflected the plethora of issues lawmakers hoped to raise publicly with the secretary, including many not directly related to livestock markets. For the most part the session was cordial, with occasional sparring on issues like the pork line speed issue. Also clear from the session: lawmakers agree on the need for reform to livestock markets, especially cattle, but still differ on solutions even within the same party.


CORONAVIRUS UPDATE


Summary: Global cases of Covid-19 are at 236,854,356 with 4,836,281 deaths, according to data compiled by the Center for Systems Science and Engineering at Johns Hopkins University. The U.S. case count is at 44,159,120 with 710,180 deaths. The Johns Hopkins University Coronavirus Resource Center said that there have been 399,552,444 doses administered, 186,618,184 have been fully vaccinated, or 56.9% of the U.S. population.

— Vilsack: Vaccine requirement won’t close FSA offices. The Biden administration's requirement that all federal employees including the employees of the Farm Service Agency be vaccinated against Covid-19 will not cause FSA offices to close or mean farmers will find a reduced level of service, USA Secretary Tom Vilsack said Thursday at a House Agriculture Committee hearing.

     Rep. Vicki Hartzler (R-Mo.) told Vilsack of her fears that the reluctance of some employees to be vaccinated may cause FSA offices to close or to provide reduced service to farmers. Asked if he has considered exemptions to the vaccine requirement. Vilsack responded that there are exemptions for religious and health reasons. “We will do what we need to do to keep offices open. I don’t anticipate we will see a significant number of closed offices… I think that the significant percentage of workers at USDA understand and appreciate that our concern is for worker safety. … I don't anticipate at this point that we're going to see a major disruption in our capacity to do our job at USDA,” he said.

— Pfizer and BioNTech asked U.S. health regulators to authorize its Covid-19 vaccine for children ages 5 to 11. An independent advisory committee is expected to discuss the request Oct. 26.

— France will begin charging unvaccinated people for Covid screening tests to encourage inoculations.


POLITICS & ELECTIONS



— Return to normal or a “new” normal? Amy Walter of The Cook Political Report with Amy Walter writes: “The prevailing mood among voters in the focus groups I’ve been watching since this summer is frustration. They thought, or had hoped, that things would be better by now. Instead, it feels to many as if we are running in place.”

— Republicans' biggest redistricting weapon: Florida. David Wasserman, House editor for The Cook Political Report with Amy Walter, notes: “Florida, set to gain a 28th seat next year, could be Republicans' biggest redistricting weapon of the 2022 cycle. In fact, the GOP could erase most of Democrats' thin House majority in Florida alone.”

— Biden moves to restore three national monuments in western U.S., Atlantic. President Joe Biden today will sign proclamations reversing actions by the Trump administration to shrink the Bears Ears and Grand Staircase-Escalante monuments in Utah. The order will expand the Bears Ear National Monument to 1.36 million acres, expanding it back to the size via action by President Barack Obama and keeping an additional 11,200 acres that were added by President Donald Trump. The move is also seen preventing oil, natural gas and uranium deposits from potentially being extracted. The action will restore the Grand Staircase-Escalante National Monument to 1.87 million acres using the boundaries that were established under the Obama administration. In the Atlantic, protections for the Northeast Canyons and Seamounts Marine National Monument will be restored to levels set in September 2016. The move will prevent commercial fishing in the 4,913 square miles of the monument, with American lobster and red crab fisheries to be phased out by September 2023.


OTHER ITEMS OF NOTE     


— Poland delivers blow to the EU. Poland’s prime minister, Mateusz Morawiecki, welcomed the country’s constitutional court’s rejection of the supremacy of European Union law over member-states’ national legislation. The European Commission quickly disagreed with the court, saying the ruling raised “serious concerns”. Morawiecki’s right-wing populist Law and Justice party has been accused by the EU of politicizing the judicial branch and undermining the rule of law.

— Cotton AWP rises again. The surge in cotton prices has once again moved the Adjusted World Price (AWP) for cotton higher, moving to 91.81 cents per pound effective today (Oct. 8). That marks the highest AWP since it was at 96.71 cents per pound the week of Sept. 23, 2011. Meanwhile, USDA said that Special Import Quota #25 for Upland cotton would be established Oct. 14 for 49,482 bales of Upland Cotton purchased not later than Jan. 11, 2022 and entered into the U.S. not later than April 11.

— NEPA redo. The Biden administration plans to reinstate three major provisions of the National Environmental Policy Act (NEPA), which requires federal agencies to assess the environmental impact of projects including mines, highways, and pipelines.

— Tesla is moving its headquarters to Austin, Texas. The electric vehicle maker is the latest big company to move there in recent months. Tesla’s shift makes good on a threat that Elon Musk issued last year, when he was frustrated by lockdown orders at Tesla’s factory in Fremont, California. Meanwhile, Musk said Tesla is likely to begin producing its Cybertruck late next year as it works through supply chain challenges. He also hopes the company will manufacture its long-delayed semitrailer truck and a revamped version of its Roadster sports car in 2023.


EVENTS AND REPORTS


Friday, Oct. 8

· PFAS issues. EPA teleconference of the Board of Scientific Counselors (BOSC) Executive Committee to discuss Per- and Polyfluoroalkyl Substances (PFAS).
· Climate and sustainable development. Environmental and Energy Study Institute virtual briefing on "Creating Policies, Coalitions, and Actions for Global Sustainable Development," as part of the "What Congress Needs to Know in the Lead Up to COP26" series.
· Climate mitigation. American University Center for Environmental Policy, the AU College of Arts and Sciences Department of Environmental Science and the Oxford University Press virtual discussion on "Climate Mitigation Ambition in the Wake of COVID-19 and the 2021 United Nations Report."

· Economic reports. Employment | Wholesale Trade 

· Energy reports. Baker-Hughes Rig Count

· USDA report.  NASS: Peanut Prices


 

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