Washington Insider -- Wednesday

New USDA Headaches Over SNAP and MFP Disparities

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

Lighthizer Remains Mum On Specific Commodity Buys By China

Question of purchases of U.S. ag goods by China as the two sides negotiate remains an open issue, with U.S. Trade Representative Robert Lighthizer not signaling any specific commodities or tonnages involved in answers to questions from members of the Senate Finance Committee.

“As you know, the United States is demanding that China make substantial purchases of U.S. agricultural products, in addition to making structural changes across a wide range of unfair policies and practices,” he said. Meanwhile the U.S. is pushing to get China to change its ways.

Asked again about the purchase commitments, Lighthizer said the U.S. focus continues on getting China to change how it treats imported products.

“The United States has been negotiating with China to resolve a large number of unwarranted and longstanding trade barriers to U.S. agricultural exports,” he observed. “We are encouraging China to demonstrate real structural changes across a wide range of unfair policies and practices that will yield actual, verifiable, and enforceable results. The administration has been clear in demanding that China make substantial purchases of U.S. agricultural products and remove technical and regulatory barriers that impede U.S. agricultural exports to China.”

Reuters: EPA’s Wheeler Defended Small Refiner Waivers to Farm-State Senators

EPA Administrator Andrew Wheeler defended the use of small refiner exemptions (SREs) in a session last week with four biofuel-backing senators, according to a report from Reuters.

The expanded use of SREs relative to obligations under the Renewable Fuel Standard (RFS) has become a flashpoint between biofuel supporters and the U.S. refining industry. Wheeler told the farm-state lawmakers – including key Sen. Chuck Grassley, R-Iowa, – that the program has not had a negative impact on ethanol demand, the report said.

The refining industry says the SREs are critical for small refiners as complying with the RFS can put them in a financial bind, arguing that ethanol demand has not be curtailed due the expanded use of SREs. Wheeler, the report said, argued that the downturn in ethanol demand came from falling gasoline consumption, not SREs.

The meeting took place July 24, the report said.

Washington Insider: New USDA Headaches

The press is reporting this week on a couple of items that likely mean new headaches for USDA. The first is a report that the agency “omitted” from a regulatory impact analysis its own estimate that the new SNAP regulations would result in the loss of access by some 500,000 low-income children to free school meals – a figure Bloomberg said that House Education and Labor Committee aides were given on a call with USDA on July 22.

Although the recent rule change proposed for nutrition programs would affect the voluntary standard that states can use to automatically qualify recipients of non-cash welfare for food aid, neither the official posting nor the regulatory impact analysis included its impacts on the meal program or their participants.

As a result, the House Education and Labor Committee chair, Bobby Scott, D-Va., wrote to USDA Secretary Sonny Perdue recently asking that USDA “revise the analysis to include expected impacts and confirm that information provided to the committee is accurate.”

USDA responded negatively, arguing that it cannot provide additional information during the public comment period – but did acknowledge that the rule “could” affect the use of direct certification of SNAP participants for free school meals.

“The effect on school meal eligibility represents an important technical finding that must be made public so that stakeholders have the opportunity to comment on all aspects of the rule’s impact,” Scott said.

Observers say the USDA’s omission of a likely significant impact can be expected to be a factor in the debate over the Department’s proposal – and it almost certainly will make life more difficult for USDA officials in coming budget hearings.

That isn’t the only new hot potato USDA can look forward to dealing with during the late summer and fall – Bloomberg also is reporting that a new study by the Environmental Working Group (EWG) says that “most” of the trade aid benefits offered under USDA’s first Market Facilitation Program (MFP) aid programs go to a very small share of affected producers. The organization regularly analyzes and publishes detailed databases on federal farm subsidy payments, often highlighting disparities in aid.

The administration is beginning its second MFP program, an additional $16 billion round of aid as the trade dispute with China continues.

While the initial payments were based on crops produced, this time they are to be tied to the acreage planted.

USDA said that the program “is designed to provide a level of support that’s proportionate to a farm’s size and success … to our knowledge, USDA’s payments have all been made in accordance with our published regulations and existing procedures,” the department said.

Eighty-two farming operations received more than $500,000 each in payments through April under the MFP, the EWG said. It noted that it analyzed payment records obtained through the Freedom of Information Act covering $8.4 billion in payments.

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, a Republican who has long favored payment limits on farm subsidies, said the findings show the need for “hard payment caps” on the assistance.

Trade aid and other farm subsidies are “meant to help people over humps beyond their own control,” Grassley told reporters. “Some large farmers do have the benefit of having resources to get over those humps without government help.”

The EWG, which published a searchable database of trade aid recipients on its website and said the top 1% of farmers were paid an average $188,000 while the bottom 80% averaged less than $5,000.

Trade aid payments are capped at $125,000 per person in each of three categories of commodities: one for soybeans and other row crops; one for pork and dairy; and one for cherries and almonds.

Still, some farms set up as corporations or partnerships can exceed those limits. Relatives and partners who don’t live or work on a farm can collect payments as long as they help make management decisions such as what to plant, said Scott Faber, senior vice president for government affairs for the group said. EWG also found that thousands of trade aid recipients live in the nation’s largest cities.

The analysis and searchable database covers payments to more than 563,000 participants in 2018 through April 2019, EWG says.

The database only covers payments made directly to farmers. Last year’s $12 billion farm trade assistance package also included other programs, including commodity purchases and export promotion assistance, Bloomberg noted.

Although the EWG’s reports tend to be controversial, they have been a well-known feature of ag policy debates for many years. They are widely reported and frequently discussed as indicators of the amount and distribution of USDA program benefits which many producers believe are inadequate compensation for ag’s frontline position in the global tariff wars, Washington Insider believes.

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