Kremlin Tightening Military Vise on Ukraine

What farmers are saying and asking

A very early plane trip from Palm Springs to Denver and then to Fargo makes this an abbreviated update.

• Russia/Ukraine update. The Kremlin is tightening its military vise on Ukraine, as thousands of Russian troops yesterday began 10 days of exercises in Belarus. Ukraine also warned of upcoming Russian naval drills so extensive that they would block shipping lanes. Aside from Belarus, satellite images revealed deployments of Russian military equipment and troops in Crimea and western Russia, according to the New York Times. In Moscow, Sergey Lavrov, the Russian foreign minister, dismissed his talks with his British counterpart as a conversation of a “mute person with a deaf person,” asserting again that the West was not seriously addressing Russia’s most pressing concerns. Vladimir Putin, the Russian president, said negotiations were continuing, and added that he planned to speak by phone in the coming days with Emmanuel Macron, the French president. Meanwhile, Kyiv is encouraging the arming of nationalist paramilitary groups to thwart a Russian invasion. But they could also destabilize the government if it agrees to a peace deal they reject, some observers note.
• European Central Bank President Christine Lagarde warned that the Governing Council would harm the economy’s rebound from the pandemic if it were to rush to tighten monetary policy. Lagarde also stressed that the euro zone can’t be compared to other major jurisdictions. “The U.S. economy is overheated, whereas our economy is far from being that,” she told Redaktionsnetzwerk Deutschland in an interview. “That’s why we can — and must — proceed more cautiously. We don’t want to choke off the recovery.”
• Federal Reserve Bank of St. Louis President James Bullard said he supports raising interest rates by a full percentage point by the start of July — including the first half-point hike since 2000 — in response to the hottest inflation in four decades. Bullard’s plan involves spreading the increases over three meetings, shrinking the Fed’s balance sheet starting in the second quarter, and then deciding on the path of rates in the second half based on updated data. However, some other top Fed officials appear skeptical of a half-point hike, suggesting little need to start a hiking cycle with an aggressive move.
• Goldman Sachs economists now expect the Federal Reserve to raise interest rates seven times this year to contain surging U.S. inflation, up from the five hikes they had seen earlier. The change of view comes after the U.S. consumer price index report for January showed a 7.5% annual increase, the biggest since 1982.
• The politics of unmasking. Both political parties have politicized the ways of dealing or trying to deal with the pandemic. But it has now taken a decided turn to more practical policy as a growing number of “Blue states” have announced action regarding no mandating masks. My 13 speeches in one month to several states/locations made crystal clear why some states are changing regarding masks: People of all political persuasions are exhausted, fed up and disgusted with the conflicting information coming out of Washington for too long. They want no more of it. Democratic lawmakers have finally heard this anger and are now worried this will be another negative that voters will confront them with come Nov. 8 election day.
• One Missouri farmer asks: “If Trump does not get the GOP nomination for president in 2024, would he run as an independent?” Mmm. I answered: Trump 101 says yes, even though it would very likely cost Republicans the presidency for sure as the around 20% or so of rock-solid Trump voters would go along with him. That is assuming the Democrats do not have a splinter in their presidential process as well. Those doubting Trump would do that only have to look at how he helped (likely caused) both special election Senate seats in Georgia to go to the Democrats because Trump basically was telling GOP voters their votes did not count. The January 2021 special elections showed that a statistically significant number of usually Republican members did not show up to vote, thereby giving both Senate seats to the Democrats and control of the chamber and the spend-happy ways of the Progressive Democrats.
• Another question I get: “Would Manchin run for president?” The centrist Democrat from West Virginia is a pleaser in GOP country after giving his Democrats fits regarding the bloated and now dead Build Back Better (BBB) measure. If he were to run, I quickly ask, “On what ticket?” A little back story on Manchin: Former President Trump called him up one day and said, “You know I won your state by almost 40 points.” Manchin’s response: “Yeah, I know… but I won my state by even more.” Trump was unusually quiet.
• A major issue among Missouri (and all) hog producers: What will happen to California’s Proposition 12? The Supreme Court has not yet indicated whether they will take up the requested petition for review of California’s controversial sow management provision made by Farm Bureau and the NPPC. Apparently, that must be made by Feb. 18. If the Supreme Court does not accept the petition for review, there would be major and negative impacts for the U.S. ag sector ahead. Reason: More anti-ag groups (environmental activists, etc.) would take a similar approach on other issues to accomplish what they have been mostly unable to do so far.
• With billions of dollars being sent to rural states to improve their broadband access and delivery, some farmers note a concern: While fast internet will indeed help in several ways to keep existing people in the rural sector by aiding telehealth, education, and working at home, farmers and ranchers worry that it may bring in people from more urban areas/states that will bring their more liberal ways with them, including challenges to the livestock sector in several areas (odors, etc.). But others say the rural living standards are what will bring non-ag people to the countryside.
• Farmers are asking what their commodity and farm groups are saying about this: If a new economic Cold War is unfolding between China & Russia vs the U.S. and other western nations, what would be or should be the trade policy strategy ahead? The Biden administration still has not detailed its trade policy vision, let alone doing what both political parties have been unable to do for several administrations: strategize and think beyond the next election.
• U.S. farmers have clearly heard USDA Sec. Vilsack’s comments regarding the “new revenue stream” for the ag sector ahead relative to carbon mitigation. They now want more solid details on how carbon will be measured and how carbon mitigation efforts will be priced. This is why some farmers say the ag sector should not be too negative regarding Democrats’ efforts for a revised and still unnamed new BBB package that will focus on climate change and carbon mitigation language in a package totaling around $400 billion.
• Senate to vote next week on stopgap spending plan. The House-passed continuing resolution (CR) that would keep the gov’t operating through March 11 will be voted on in the Senate next week, Senate Majority Leader Chuck Schumer (D-N.Y.) said Thursday (Feb. 10). This comes as Senate Appropriations Committee leaders said earlier this week they reached an agreement on a framework for an omnibus spending package to cover gov’t operations for the remainder of fiscal year (FY) 2022. “I am very confident we’re on a path to finish with something that can be strongly supported,” Senate Appropriations Committee Chairman Pat Leahy (D-Vt.) said. It is not clear what the specific spending levels will be under the framework deal and details of the effort are being worked out with House Appropriations Committee Chair Rosa DeLauro (D-Ct.) and Ranking Member Kay Granger (R-Texas). The lack of detail indicates there is still a lot of work left to do on the package but getting an agreement on a framework sets lawmakers on a path to getting the FY 2022 spending situation finally put to rest (FY 2022 ends Sept. 30).
   
• U.S. registers rare monthly budget surplus as aid spending dwindles. The U.S. registered a budget surplus of $119 billion in January, the first since the pandemic began, as tax receipts rose to $465 billion (up 21% from year ago) against spending that fell 37% from January 2021 to $346 billion. In January 2021, the budget red ink totaled $163 billion. Covid-related spending has continued to fall and rising wages have resulted in more payroll taxes flowing into federal coffers — payroll taxes were up 21% in January compared with a year ago. This puts the deficit for fiscal year (FY) 2022 at around $259 billion, considerably different from the $736 billion that was registered at this point in FY 2021.
• Alberta files complaint on cancellation of Keystone XL pipeline. The Canadian province of Alberta has filed a trade challenge, seeking to recoup its investment in the Keystone XL pipeline project that was canceled by the Biden administration when President Joe Biden took office. This is the second claim that is filed under legacy provisions of the North American Free Trade Agreement — now the U.S.-Mexico-Canada Agreement (USMCA). TC Energy filed a similar claim last year, seeking more than $15 billion in damages. “After examining all available options, we have determined a legacy claim is the beet avenue to recover the government’s investment in the Keystone XL project,” Alberta Energy Minister Sonya Savage said. Alberta said it invested C$1.3 billion ($1.03 billion) in the project.
• Senate panel to hold RFS hearing next week. Reuters reports the Senate Environment and Public Works Committee will hold a hearing on the Renewable Fuel Standard (RFS), with both biofuel and oil industry representatives to testify at the session. This indicates the panel will likely hear perspectives from both supporters and opponents of U.S. biofuel policy with much of the attention likely to focus on the 2020, 2021 and 2022 RFS levels that EPA is in the process of finalizing. Plus, the EPA proposal to deny all pending 65 small refinery exemptions (SREs) is expected to be a discussion point.
• Ag groups suing EPA over agency’s ignoring science & safety findings. U.S. farm groups representing thousands of farmers and farmer-owned cooperatives that will be harmed by EPA’s decision to revoke all tolerances of chlorpyrifos are taking legal action against the agency. In a news release (link), the groups reiterated that the chlorpyrifos revocation rule does no good for human health, is harmful to farmers and farm co-ops, and EPA must be held accountable. Brad Doyle, soy farmer from Arkansas and president of ASA commented, “EPA’s proposed interim decision back in December 2020 for the re-registration of chlorpyrifos found 11 high-benefit, low-risk crop uses that the agency was confident ‘will not pose potential risks of concern.’ How can they now deny all uses, even when the court gave them options for keeping those found safe?”
  
       The agricultural stakeholders taking legal action are first seeking an injunction of the rule to prevent the first wave of significant, irreparable damage the chlorpyrifos revocation would cause if it were to take effect on the Feb. 28 implementation date. The groups are ultimately seeking vacatur of the rule where it conflicts with well-established, properly developed science — specifically, the 11 uses found safe.
• Cotton AWP rises again. The Adjusted World Price (AWP) for cotton increased to 117.60 cents per pound, effective today (Feb. 11), up from 116.10 cents per pound the prior week. Meanwhile, USDA said Special Import Quota #17 for Upland Cotton will be established 46,837 running bales of Upland Cotton, applying to supplies purchased not later than May 17 and entered into the U.S. not later than Aug. 15.
• USDA formally announces Pandemic Cover Crop Program (PCCP) for 2022. USDA’s Risk Management Agency (RMA) formally announced that producers will be eligible for a premium benefit under the crop insurance program if they planted cover crops during the 2022 crop year under the Pandemic Cover Crop Program (PCCP). To be eligible, producers have to report cover crop acreage by March 15, RMA said. The effort provided $59.5 million in premium subsidies for the 2021 crop year on 12.2 million acres of cover crops. Premium support for the 2022 crop year is $5 per acre, but no more than the full premium owed. Growers in Illinois, Indiana and Iowa have existing cover crop programs for producers to receive a premium benefit for planting cover crops, and the PCCP for 2022 will provide an additional benefit. All cover crops are eligible, RMA said, but PCCP is not available for Enhanced Coverage Option, Hurricane Insurance Protection – Wind Index, Post-Application Coverage Endorsement and Supplemental Coverage Option. Stacked Income Protection (STAX) and Margin Protection (MP) policies are only eligible for PCCP when insured as a standalone policy. STAX and MP endorsements to underlying policies are not eligible for PCCP.  The Office of Management and Budget (OMB) finished its review of USDA’s final rule for PCCP Feb. 4, having only studied it for less than two weeks. Link to read the final rule for PCCP published in the Federal Register.
• China urges U.S. to scrap additional tariffs, sanctions: Xinhua. China has worked hard to promote the joint implementation of its Phase 1 economic and trade agreement with the U.S. since the deal came into force. It overcame multiple negative impacts of the Covid-19 pandemic, a global economic recession, and disrupted supply chains, Gao Feng, spokesperson of the Ministry of Commerce, told a press conference. Gao called for action from the U.S. to create a conducive atmosphere and sound conditions for the two sides to expand trade cooperation. He added that the economic and trade teams of the two sides are in regular communication.
• Trade restrictions continue re: U.S. HPAI case in Indiana commercial turkey flock. More countries have put trade restrictions on US poultry after the confirmation of the H5N1 strain of highly pathogenic avian influenza (HPAI) on a commercial turkey farm in Dubois County, Indiana. The following trade actions have been taken by US trading partners, according to USDA’s Food Safety and Inspection Service (FSIS), with halts on imports of poultry/products:

     — From Indiana from birds slaughtered on/after Feb. 8: China, Korea, Tunisia, Belarus, Cuba, Kazakhstan, Ukraine.
     — From Indiana from birds slaughtered on/after Jan. 18: Benin, Namibia, South Africa, and Japan (date listed as Jan. 17).
     — From Indiana loaded on/after Feb. 9: Taiwan.
     — From DuBois or an area within Indiana processed on or after Feb. 8: Singapore, Barbados, India, Jamaica (DuBois and two other counties), Jordan, Qatar, United Arab Emirates, and Western Samoa (50 kilometer radius).
     — From all of U.S. as of Feb. 8: U.K.

     Note: The list continues to expand, and reports indicate that Mexico is now on that list banning imports from Indiana, but USDA’s FSIS had not yet listed that restriction as of 5 pm ET Feb. 10.