Washington Insider -Wednesday

GOP Lawmakers, Industry Back Perdue's USDA Shakeup

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

US Commerce's Ross, Mexico's Guajardo Agree to Continue Sugar Talks

The U.S. and Mexico will keep discussions going on the issue of sugar trade in the wake of a meeting between Mexico Economy Minister Ildefonso Guajardo and U.S. Secretary of Commerce Wilbur Ross in Washington, with Guajardo saying it is important to find a solution that maintains balance in the sweetener market.

The two officials agreed to “maintain continuous and open dialogue in the coming days,” according to a statement from the Mexico’s ministry. The US and Mexico should be able to reach a deal in the next few weeks to resolve a sugar dispute, Guajardo said.

The U.S. has threatened to impose antidumping and countervailing duties on Mexico's sugar exports to the U.S. if no deal is reached by June 5. That should be plenty of time to solve the problem, Guajardo argued, if the two sides are up to the political challenge of reaching a deal. "I think if you [can't] do anything in two weeks, you will not be able to do it in a year," Guajardo said.

Guajardo and Ross also discussed the timing of NAFTA talks after the confirmation of Robert Lighthizer as U.S. Trade Representative.

A key portion of the agreements required Mexico to guarantee that no more than 53% of its sugar exports to the US be refined sugar, and the remaining 47% be raw sugar for processing in the U.S. Refiners in the U.S., who complain that they are being driven out of business by a dearth of sugar to refine, want the ratio flipped to 85% raw and 15% refined. Mexico is believed to be offering 70% raw versus 30% refined, in the hope of settling on an 80/20 split, an industry official said.

Guajardo suggested in remarks to Politico the differences between the sides were not that big. "Just to give you an idea, in terms of the definition between refined and raw sugar, we're talking about 150,000 tonnes, which is not more than 1% of the total US market. So, we're not talking about something humongously disruptive," Guajardo said. "We're not talking about an elephant here. We're talking about a minor adjustment that will not have any impact on the market and the industry."

The senior Mexican official downplayed the possibility of Mexico filing a World Trade Organization case against the U.S. sugar program if no deal is reached, as some Mexican industry officials advocated back in 2014 when they were facing U.S. antidumping and countervailing duties. However, he noted that there is the possibility of Mexican industry filing an antidumping and countervailing duty complaint against U.S. exports of high-fructose corn syrup to Mexico.

USDA Sets Public Meetings for Input on Revisions to Biotech Regs

Dates and locations have been set for three public comment meetings on proposed revisions to biotechnology regulations by USDA's Animal and Plant Health Inspection Service (APHIS).

The sessions will be held:

June 6, 2017, at the APHIS Center for Animal Welfare, Kansas City, Missouri;

June 13, 2017, at the University of California, Davis Conference Center, Davis, California; and

June 16, 2017, at the USDA Center at Riverside, Riverdale, Maryland.

Those wanting to attend in person or via the Internet need to register in advance, with additional details on how to participate to be in a Federal Register notice to be published May 18, 2017, and on the APHIS website ahead of the session.

The public comment period on the proposal closes June 19.

Washington Insider: GOP Lawmakers, Industry Back Perdue's USDA Shakeup

Traditionally, USDA has managed a large overseas trade support operation with representation in the top staffs of U.S. embassies in many areas of the world. In the 2014 Farm Bill, Congress directed USDA to strengthen its trade support role and put trade concerns almost on a par with overall farm support operations. Republican lawmakers and agribusiness groups generally think this is a good idea and are reacting positively to USDA Secretary Sonny Perdue's reorganization announcement boosting the role of trade.

Perdue told a group in Cincinnati last week that he was moving to create an Undersecretary for Trade and Foreign Agricultural Affairs and an Undersecretary for Farm Production and Conservation. The new trade undersecretary will serve as the lead trade policy coordinator at the department. This move essentially carries out a 2014 Farm Bill provision that called for splitting the undersecretary for farm and foreign agricultural services into two positions, though Perdue's changes go further, Bloomberg says.

The new Secretary told the press he liked the idea, and said it seeks to place USDA agencies in a more logical order,” Perdue said.

“To have USDA recognize the importance of farm trade by creating this position is very encouraging, and we appreciate the administration's foresight in doing so,” American Soybean Association President Ron Moore said in a statement.

Craig Uden, president of the National Cattlemen's Beef Association, noted that “This position will play a vital role in leading USDA's efforts to capitalize on foreign demand for US agriculture products and we look forward to working with the undersecretary to break down trade barriers and expand our ability to meet the growing demand for US beef in key markets like Asia.”

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., Sens. John Thune, R-S.D., Joni Ernst, R-Iowa, and John Hoeven, R-N.D., issued statements praising the changes. House Agriculture Committee Chairman Mike Conaway, R-Texas, also backed the decision.

Agricultural trade is one of the bright spots of U.S. exports, and reported a $17 billion positive trade balance in 2016, the American Soybean Association said.

The new trade undersecretary will oversee the department's Foreign Agricultural Service and its variety of activities including promoting U.S. agricultural goods abroad while the new undersecretary for farm production and conservation will oversee the Farm Service Agency, Risk Management Agency and Natural Resources Conservation Service, organizations which manage conservation programs and crop insurance. Perdue has not yet named anyone to fill either position. “We're already looking at candidates,” Perdue said during his Ohio speech.

The recent proposal also included a downside in the form of elimination of the Undersecretary for Rural Development, moving oversight of programs for rural housing and rural broadband internet to the secretary's immediate office. That change almost certainly was forced by the Office of Management and Budget, and likely will cause heartburn among USDA staffers who have been managing development programs. USDA has struggled for decades to figure out just how it should define and integrate its economic development activities — and, how to work with their advocates nationwide.

Perdue talked up the change and characterized it as a “promotion,” for development efforts saying it would allow him better oversee development efforts related to President Trump's proposed trillion-dollar infrastructure spending plan. Others were more skeptical. The National Sustainable Agriculture Coalition said in a statement that it was “confused and concerned” about the decision to move oversight of the Natural Resources Conservation Service away from the Undersecretary for Natural Resources and Environment and to an undersecretary group focused on production.

The NSAC also said it opposed moving rural development “in office” and eliminating its undersecretary position, characterizing it as a demotion and saying that the group would lose key decision-making powers that comes with being a USDA mission area. “Moreover, the rural development mission area is huge and to assume that the limited number of overworked staff in the Secretary's office will be better positioned to make and act on these decisions is questionable at best,” the statement said.

Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., and Sen. Sherrod Brown, D-Ohio, both supported creating a trade undersecretary, but said they were concerned about moving rural development programs to the secretary's office.

“This proposal would eliminate an important voice for rural America and bypass Congress's role to confirm a qualified nominee,” Stabenow said in a statement.

Perdue will testify this morning before the House Agriculture Committee.

So, USDA is big and complex with thousands of operations at many levels of government. While the move to recognize the importance of ag trade and its support structure is welcome, these intra-administration battles can lead to important changes and should be watched closely by producers as they emerge Washington Insider believes.

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