Perdue Comments on RFS, U.S./China Trade, ERS & NIFA Relocation, Food Stamp Issues

Posted on 04/10/2019 4:37 AM

U.S./EU trade tiff growing | House Dems punt on FY 2020 budget | Bernie the millionaire

USDA Secretary Sonny Perdue in remarks Tuesday at a House Appropriations hearing, and in remarks to reporters, commented on U.S./China trade, ethanol/RFS waivers, E15, USDA's proposed new food stamp rule and the need for ag disaster aid.
     U.S./EU trade war preliminary moves being made. The European Union is preparing retaliatory tariffs against the U.S. over subsidies to Boeing, hours after the Trump administration said it would impose tariffs on the EU because of European aid to Airbus. But the Trump administration sought to play down its new plan to impose tariffs on $11.2 billion in imports from the EU, saying the move is part of a dispute over aviation subsidies, not an effort to apply pressure toward a possible EU trade deal.
     House Democrats punted on their fiscal year 2020 budget plans, leaving the key issues to sometime after the coming two-week Easter recess.
The National Weather Service is warning of a “potentially historic storm.”  Link.
A glut of gluten in gluten-free pizza? More than half of gluten-free pizza and pasta dishes in restaurants tested positive for the presence of gluten, according to a study published in the American Journal of Gastroenterology. Link.
     Socialists can be millionaires, too... just ask Bernie Sanders. “I wrote a best-selling book,” Sanders said in an interview. “If you write a best-selling book, you can be a millionaire, too.” The presidential candidate pledged to release his tax returns by Monday.
     Black or white? This morning, astronomers from the Event Horizon Telescope, a collaborative network of telescopes and astronomy research facilities around the world, are expected to release the first ever pictures of the supermassive black hole at the center of our galaxy. Astronomers are excited to really see a black hole for the first time, and have visual evidence that confirms years of scientific speculation. Link for a look when the photos are released. Link to how the New York Times is tracking the topic.

     Free beer? Nearly 700 beer distributors are in D.C. this week for the National Beer Wholesalers Association fly-in. The group will meet with congressional leaders.
     Say this isn’t so… 99% of the wasabi the world consumes is fake. Made of Western horseradish and green food coloring, the spicy paste that adorns most sushi (and some peas) is an imitation of the real deal — the stem of the Japanese horseradish, one of the most valuable vegetables on earth. As Trump would say, FAKE WASABI! Link for details.
     Austin, Texas ranks as the country’s best place to live for the third year in a row in the latest U.S. News & World Report rankings, released this week. Denver, Colorado Springs, Colo.; Fayetteville, Ark. and Des Moines, Iowa round out the top five.
     Spiral ham it up for Easter. A New York Times account (link) calls it “the ham world’s equivalent of pop music: a honeyed, easy-to-eat mainstay of the buffet table. Even boutique producers are starting to make it, as cooks have come to care more about the provenance of their pork.”
Spiral ham


Perdue comments on U.S./China trade, ethanol waivers, ag disaster aid. USDA Sec. Sonny Perdue noted the following Tuesday in Washington:

  • U.S. and Chinese negotiators have discussed reducing tariffs on ethanol, as well as countervailing duties and anti-dumping measures on dried distillers grain. “We’re hopeful that China, while having been a good customer, will again become a good customer, even better than before, in a variety of different commodities.” He hopes “we’ll be able to double and triple those numbers,” referring to U.S. agriculture exports prior to a trade war. “These are all in discussion areas,” he added, noting, “While things look positive it’s never over until it’s over with the Chinese.” Structural issues between the two countries are yet to be settled. Perdue said topics around non-tariff barriers were still a point of contention. "I think ... China will have to reform some of its protocols over approving biotech products there. We need dependability and consistency as well as enforceability of agreements," he said. Beijing has taken years to approve new strains of genetically modified crops, which U.S. companies and farmers have complained stalls trade by restricting the sales of new products from companies.
  • Metal tariffs on Canada & Mexico. Perdue said he continues to be an “advocate” of resolving the steel and aluminum tariffs with Canada and Mexico. The U.S. wants Canada and Mexico to accept quotas, although talks on that issue are at a virtual standstill. Perdue said he “would hope to persuade President Trump that quotas may work in lieu of tariffs.”
  • RFS waivers. He has pressed EPA Chief Andrew Wheeler to more tightly control the agency’s decision to waive small refineries from U.S. biofuel mandates. EPA should “make sure they really are qualified under the letter of the law"; waivers shouldn’t be “abused as we felt like they have been in the past.”
  • Year-round E15. Perdue said the benefit of an EPA change allowing year-round E15 sales outweighs potential damage of EPA granting small refineries waivers from biofuel quotas — particularly as E15 grows. Ethanol proponents note that EPA's proposed RIN changes would actually undermine the sale of more E15 blends, and are primarily beneficial to refiners.
  • Perdue said he has urged lawmakers to pass a disaster bill, one that will help farmers who have lost stored crops to flooding. Sen. Chuck Grassley (R-Iowa) earlier this week said he expects the Senate bill to be revised to compensate producers in Iowa and Nebraska whose grain was destroyed by flooding in March.
  • Roundup. Perdue said he’s worried that a series of lawsuits against the Monsanto Co. could eventually end the use of glyphosate herbicide, mostly known as Roundup. That would be “devastating” to agriculture, Perdue said when asked about the lawsuits during his appearance before a House Ag Appropriations Subcommittee. “I’m hoping the appeals court will see through this,” Perdue said. As noted in a separate item below, House Democrats released an expanded disaster aid bill that also includes a provision to cover losses of “on-farm stored commodities.”
  • Dairy Margin Coverage program. Perdue said it would be impossible to move up the signup date for the Dairy Margin Coverage program, now set for June 17. But he said the program should be a “no-brainer” for farms with fewer than 250 to 300 cows. He said implementation of the dairy program has been slowed by a requirement that USDA reimburse farmers for fees they paid under the old Margin Protection Program, but that many of the records needed to make the reimbursements were kept on paper.
  • Open to redefining who is able-bodied for food stamp rule. Perdue said his department’s use of the term “able-bodied” may need fine-tuning in a proposed rule that would limit states from offering waivers from food stamp work requirements and time limits. Public comment on the proposal ends today. USDA in December released a proposed rule (link) dealing with participants in the the Supplemental Nutrition Assistance Program (SNAP/food stamps) who are younger than 50, without dependents, and able-bodied. These recipients are expected to work at least 20 hours a week or be in training programs to obtain benefits. “There’s probably a legal definition of 'able-bodied.' That’s a fine point that probably needs to be discussed further. Whether it is the Social Security definition or not, I don’t know. That’s a valid point about how we’re defining 'able-bodied,'” he said. Perdue noted the proposed regulation is designed to make it more difficult for states to receive USDA waivers that allow them to exempt able-bodied adults without dependents from SNAP work requirements and time limits on food aid. These adults, ages 18-49, are required to work, participate in job training or volunteer 20 hours a week to receive aid for three months out of every three years. States can use waivers to exempt able-bodied adults without dependents in areas of high unemployment or few jobs from the time limits and the work mandate. Perdue also noted that the 2018 Farm Bill still allows states to exempt up to 12% of their populations of able-bodied adults without dependents without USDA review. At the House appropriations hearing, Perdue also asked for congressional approval for a pilot program to deliver food packages called “harvest boxes” to recipients of food assistance. His proposed plan would leave it to states to implement the proposed America’s Harvest Box program. “If you all don’t want to authorize it at all, give us an opportunity to have a pilot program to prove the concept,” said Perdue.
  • Relocating ERS and NIFA from Washington. Perdue said USDA will share with lawmakers cost analyses of potential locations for the agencies after whittling down the remaining 68 proposals. USDA requested $25 million in its fiscal year 2020 budget proposal to cover the costs of the move. Perdue told reporters after Tuesday’s appropriations hearing he wasn’t sure if the agency needed an appropriation to move ahead with the USDA relocation but that he expected House Democrats would go along with the plans after they received a final cost-benefit analysis for the move. “Room is not the justification that we used for ERS and NIFA,” Perdue told reporters after the hearing. “Space was not the reason, nor the justification.” Not all of the nearly 600 ERS and NIFA employees will move to the new location. USDA has said 76 ERS employees and 20 NIFA employees will remain in D.C., slightly more than what the agency predicted when it discussed the moves with employees back in August. That leaves 253 ERS and 315 NIFA employees who would be asked to move to a new location.

U.S./China trade policy update:

  • China has committed “significant” orders for U.S. soybeans and “they are in markets executing those orders,” Treasury Secretary Steven Mnuchin said Tuesday during a House Financial Services panel hearing.
  • USDA Sec. Sonny Perdue said he hopes to be able to double and triple the numbers in terms of U.S. farm exports to China relative to what they were prior to the trade war, but added “it’s never over till it’s over.” U.S. and Chinese negotiators have discussed reducing tariffs on ethanol, as well as countervailing duties and anti-dumping measures on dried distillers grain, Perdue detailed. “We’re hopeful that China, while having been a good customer, will again become a good customer, even better than before.” Perdue said there “have been conversations with China on reducing that tariff on ethanol, which would obviously be good for our domestic corn industry.”

House won't vote on spending caps bill; adopts 'deeming' rule. The House on Tuesday set an overall spending cap of nearly $1.3 trillion for appropriators in that chamber to write their fiscal 2020 bills, adopting a "deeming resolution" on Tuesday as part of the rule governing floor debate on separate spending caps legislation — deeming automatically sets a topline discretionary spending figure for House appropriators that aligns with the $1.295 trillion in the underlying legislation.

The vote was 219-201, with no Republicans voting for the rule and seven Democrats voting 'no.'

Punting to after Easter recess. House Majority Leader Steny Hoyer (D-Md.) said the spending caps legislation (HR 2021) wouldn't come to the floor before the chamber's two-week recess.

House appropriators can still write their bills at the underlying measure's levels in the meantime, though it doesn't resolve the problem of avoiding another government shutdown and potential across-the-board cuts if President Donald Trump doesn't sign legislation to raise the caps. Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday he has discussed spending levels with President Trump and House Speaker Nancy Pelosi (D-Calif.) in hopes of devising a path forward. Ultimately both chambers and the White House will need to agree on defense and nondefense spending caps, or else steep cuts from the current fiscal year will take effect.

Without an eventual agreement, the current-law caps would be enforced through across-the-board cuts, known as a sequester, slicing next year's budget by $125 billion below the current year, or 10%. Defense would be cut by $71 billion, and nondefense by $54 billion.

Disaster aid legislation in Senate remains at impasse over Puerto Rico funding. Senate Republicans made a new offer over the weekend that Democrats dismissed, dimming prospects for a deal before lawmakers leave town later this week for a two-week Easter recess. President Donald Trump has told Republicans he won’t support additional aid to Puerto Rico beyond an extra $600 million in food assistance that is already included in a GOP-written bill. Democrats want an additional $462 million for long-term rebuilding of the U.S. island territory, along with a commitment to speed up the delivery of billions of dollars in aid that has yet to be disbursed by the Department of Housing and Urban Development.

Things look bleak,” said Senate Appropriations Chairman Richard Shelby (R-Ala.), who held talks in recent days with Democrats and the White House. “But you never know. Sometimes there’s a storm before the sun comes up.”

House Democrats offered another aid package similar to the $14.2 billion package the House passed in January, with an additional $3 billion tacked on to respond to flooding in the Midwest and tornadoes that ripped through Southeastern states this year. Of the new funds, $1.5 billion would be distributed through the Army Corps of Engineers, and $1 billion would run through HUD's Community Development Block Grant program. House Democrats also included $500 million for farmers and ranchers to rehabilitate farmland damaged by recent disasters.

House Ag Chairman Collin Peterson (D-Minn.) noted concern about delaying passage of the disaster aid bill over the stored-grain issue. “I don’t want to hold up” the bill “for three months because we’re fighting over this Midwest thing,” he told members of the North American Agricultural Journalists. He stressed that some producers in the Southeast are on the verge of going out of business because of losses from last fall’s hurricanes. The majority of crops or livestock damaged by flooding in Nebraska and Iowa were covered by crop insurance or are eligible for farm bill disaster programs, which isn’t the case for many Southern crops like pecan trees and peaches hit by last year’s hurricanes, Peterson said. “People are saying we have to get billions of dollars to the Midwest. Well, that’s a bunch of baloney,” he said. “The only thing that is not covered [in the Midwest] is this stored grain that was damaged. I think this is something we should look at and do a one-time thing to help.”

Other items of note:

  • Trump's tax returns. IRS Commissioner Charles Rettig said he and Treasury Secretary Steven Mnuchin met about House Ways and Means Chairman Richard Neal’s (D-Mass.) request for Trump’s tax returns. They discussed “who was going to handle the response,” Rettig said. “There was no conclusion on it.” Mnuchin said he did not know whether Treasury's legal department was reviewing whether he or IRS Commissioner Rettig should be the one to make the decision regarding compliance with Neal's request for Trump's tax returns.

  • After tight race, Netanyahu appears poised to form Israel’s next government. Prime Minister Benjamin Netanyahu looked much likelier than his chief rival, Benny Gantz, to be able to form a governing coalition. Final results were expected by Thursday afternoon, with ballots for soldiers and other special categories of voters yet to be counted.

  • House Democrats' concerns about labor, environmental and pharmaceutical provisions in the USMCA/NAFTA 2.0 were contained in a letter (link) by Ways and Means Chairman Richard Neal (D-Mass.) to Trade Representative Bob Lighthizer. Neal said, “The promises and assurances made to secure support for this trade agreement must be more than just words on a page.”

  • USDA lowers domestic sugar stocks outlook. USDA on Tuesday reduced its outlook for domestic sugar stocks as it slightly lowered its production outlook for the 2018-19 crop year. USDA put the stocks-to-use ratio at 13.2 for the crop year through end-September, lower than last month's forecast of 13.6 and down from 16.1 in 2017-18.

  • House bill would provide two-year extension for the lapsed biodiesel and renewable diesel blenders tax credit. The bipartisan Biodiesel Tax Credit Extension Act of 2019 was recently proposed in the House. The language is identical to the biodiesel tax incentive provision in Senate legislation introduced by Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Oregon). The Senate legislation (S 617) would provide a two-year extension of expired tax incentives, including the blenders credit. Congress retroactively extended the incentive for 2017, in February 2018, leaving the credit expire beginning in 2018.

  • More than 100,000 people were apprehended at the southwest border in March, a monthly sum not seen since the early 2000s, U.S. Customs and Border Protection reported. The total includes 53,077 individuals in family units, 8,975 unaccompanied minors, 30,555 single adults and more than 10,000 others declared "inadmissible."

  • Four major food companies release climate principles. Mars, Danone, Nestlé and Unilever — part of the Sustainable Food Policy Alliance — unveiled climate policy principles to help inform Capitol Hill (link). The two-page document endorsed a carbon pricing system that would set prices transparently. There also should be incentives for the agriculture and forestry sectors to reduce and sequester greenhouse gas emissions that are combined with technical assistance for adopting certain practices, the alliance said. Other principles comment on accelerating innovation in renewable energy, investing in infrastructure that is more resilient to the impacts of global warming, and ensuring vulnerable communities have the resources to take on the costs of any regulatory changes.

  • Executive order coming to boost energy infrastructure. President Trump will issue an executive order today that aims to prevent states from blocking pipelines and other energy infrastructure by using authority granted to them under the Clean Water Act. It is expected to be challenged in court.

Markets. The Dow on Tuesday fell 190.44 points, 0.7%, to 26,150.58, while the Nasdaq Composite slid 44.61 points, 0.6%, to 7,909.28. The S&P 500 fell 17.57 points, 0.6%, to 2,878.20. The move handed the index its first daily decline in nine trading sessions.

EU expected to grant Brexit delay but may demand a longer extension and conditions. European leaders will decide today whether to grant the U.K. another extension to its departure from the bloc, due to take place on Friday April 12. The EU’s 28 leaders, including British Prime Minister Theresa May, are in Brussels for an emergency summit dedicated to Brexit. May has asked the bloc for a second delay to the U.K.’s departure. It’s widely expected that the U.K. will be granted a longer, flexible extension with conditions attached, however, according to an invitation letter sent to EU leaders by European Council President Donald Tusk on Tuesday. “I believe we should also discuss an alternative, longer extension. One possibility would be a flexible extension, which would last only as long as necessary and no longer than one year,” Tusk said in his letter. He called for a longer delay to avoid “the risk of a rolling series of short extensions and emergency summits, creating new cliff-edge dates.”

The International Monetary Fund (IMF) cut the outlook for global growth to its lowest point since the financial crisis. The world economy will grow 3.3% this year, down from the 3.5% the IMF had forecast for 2019 in January, the fund said Tuesday in its latest World Economic Outlook. The 2019 growth rate would be the weakest since 2009, when the world economy shrank. It’s the third time the IMF has downgraded its outlook in six months. As for the lowered expectations, the IMF pointed to an environment of increased “trade tensions and tariff hikes between the U.S. and China, a decline in business confidence, a tightening of financial conditions, and higher policy uncertainty across many economies.” World trade, which had been growing at about 5%, expanded by 3.8% last year and is forecast to rise 3.4% in 2019, an additional downgrade of 0.6 percentage points. The IMF’s chief economist, Gita Gopinath, said the data shows “a slowdown in growth for 70% of the global economy” and described the world economy as being in “a delicate moment.” The IMF forecasts U.S. growth will slow to 2.3% this year. The IMF now forecasts China’s economy will grow by 6.3% in 2019, up 0.1% on its last prediction. China has ramped up its fiscal and monetary stimulus in response to the trade tariffs,” Gopinath said at a press briefing in Washington. “Furthermore, the outlook for U.S./China trade tensions has improved as the prospect of a trade agreement take shape. These responses have helped reverse the tightening of financial conditions to varying degrees across countries.” However, the IMF downgraded its 2020 growth forecast for China by 0.1%, to 6.1%, saying “the underlying momentum in activity is more subdued.” Euro zone growth was revised down by 0.3%, to 1.3% due to issues including the impact of new diesel emissions standards on Germany’s car industry, the impact of trade tensions on exporting nations and uncertainty created by Brexit. “If the ongoing trade truce between the US and China is resolved with a rollback of tariff increases enacted in 2018, rising business confidence and financial sentiment could lift growth above this baseline forecast,” the IMF report said.


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