Washington Insider-- Wednesday

DTN's Washington Insider

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

Democratic COVID Aid Plan Again Contains Farm Policy Shifts

There are several provisions in the $2.2 trillion Democratic COVID aid plan that focus on nutrition and agriculture policy. It would provide additional Supplemental Nutrition Assistance Program (SNAP) aid, including increases in the SNAP benefit levels and funds to cover expected participation increases in the program.

For agriculture policy, the plan would amend the Commodity Credit Corporation (CCC) Charter Act to allow for the use of CCC funds to deal with the removal and disposal of livestock and poultry due to supply chain disruptions during a public health emergency and would require congressional notification by USDA before any disbursement of CCC funds.

Payments would be provided for livestock and poultry depopulated due to processing plant shutdowns from the health emergency with additional funds for animal health surveillance efforts.

While it is not clear if the ag-policy-related provisions will become law, the details are a clear signal of what will likely be components in the next debate on an omnibus farm bill that will start to unfold in 2021.

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CFAP 1 Payments Top $10 Billion

Payments under the Coronavirus Food Assistance Program 1 (CFAP 1) program are at $10.2 billion as of September 27, including $5 billion for livestock, $2.6 billion for non-specialty crops, $1.8 billion for dairy and $102 million for specialty crops.

Funds paid for cattle total $4.3 billion, followed by $1.8 billion each for corn and milk, with $600 million for hogs and $509 million for soybeans.

Payouts by state still show Iowa topping the list at $968 million followed by Nebraska ($711 million), California ($653 million), Texas ($625 million), Minnesota ($608 million) and Wisconsin ($523 million).

Payment data for CFAP 2, where signup launched September 21, “will be available in the coming weeks,” according to USDA's Farm Service Agency.

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Washington Insider: New Stimulus Proposal Emerges

Democratic leadership released a $2.2 trillion coronavirus response bill on Monday — but their offer would require Republicans to make concessions before a bipartisan deal is possible.

The measure is $1 trillion below the Democrats' $3.4 trillion proposal from May. It would provide $436 billion for state and local governments rather than the original $915 billion and would provide another round of $1,200 payments and $600 per week extra unemployment insurance payments through January 2021, similar to the May proposal.

The bill also would include new aid for airlines, restaurants and small businesses that were not included in the original legislation, as well as $225 billion for education and $75 billion for coronavirus testing, tracing and isolation measures.

Bloomberg reports that Speaker Nancy Pelosi, D-Calif., spoke to Treasury Secretary Steven Mnuchin on Monday about a possible bipartisan deal — and that the two plan to speak again on Tuesday, Drew Hammill, Pelosi's deputy chief of staff, said.

Republicans still need to support more spending than their previous $1 trillion proposal to reach an agreement, Pelosi said late on Monday. “When he's ready to come back to the table, we're ready to have that conversation, but he has to come back with much more money to get the job done,” Pelosi said. “So, I'm hopeful. I'm optimistic.”

The Trump administration has yet to weigh in on the proposal.

Pelosi previously said Republicans need to agree to a top-line figure of $2.2 trillion for negotiations to result in an agreement. Republicans originally proposed a $1 trillion measure, but didn't vote on it. Senate Republicans then proposed a smaller measure, which Senate Democrats blocked.

Bloomberg focused on several details in the proposal. For example, it said the bill would provide $500 stimulus payments for dependents, which is equal to what families received starting this spring, but lower than the $1,200 Democrats proposed in May. And, it would provide $20 billion for the Department of Health and Human Services Biomedical Advanced Research and Development Authority for the development and procurement of vaccines and therapeutics.

That matches what Robert Kadlec, assistant secretary for preparedness and response, told Senate appropriators HHS needs earlier this month. It also would provide the Centers for Disease Control and Prevention $7 billion for a vaccination campaign and $1 billion for “an evidence-based public awareness campaign on the importance of vaccinations,” according to a summary by the House Appropriations Committee.

The measure also includes $15 billion to make up for U.S. Postal Service lost revenue. It also would require states to accept mail-in ballots if they were mailed before Election Day and received within 10 days of the election — and, it would increase the maximum benefits allowed under USDA's Supplemental Nutrition Assistance Program by 15%.

Bloomberg said that the draft bill would prevent U.S. Citizenship and Immigration Services from furloughing employees “if the agency has sufficient funds to pay them—and would ensure funding by restricting the Department of Homeland Security's ability to transfer funds collected from fees for immigration benefits to other federal agencies for other purposes. The agency had expected to furlough workers at the end of August, citing a decrease in immigration fees because of the coronavirus. The furlough was averted temporarily.

In spite of possible progress toward a further stimulus that was seen as positive news this week, Bloomberg also noted that China was making only slow progress on the purchases of U.S. products as required by phase one of the U.S.-China trade deal. Purchases have been sliding, the report said and noted that China reduced the pace of its purchases in August, making slow progress toward trade deal goals.

The value of U.S. goods bought by China declined from the previous month, led by a slowdown in energy products, according to Bloomberg calculations based on Custom's data. By the end of August, China had purchased about 32.8% of the full-year target of more than $170 billion — meaning it must buy about $115 billion of goods in the remaining four months of the year to comply with last January's deal.

Purchases of energy products fell by 24% in August from the previous month, hitting about 14% of the full-year target. While China's crude oil imports from the U.S. dropped substantially from a record high in July, they are likely to rise in coming months as purchases of American crude rose before the August review of the trade deal.

In addition, the U.S. and China reaffirmed their commitment to the “Phase-One deal” in August, demonstrating a willingness to cooperate even as tensions rise over a range of issues.

China also cut its pork imports from the U.S. by nearly 40% in August from a month earlier, while increasing its purchases of cereals, Bloomberg said. Imports of soybeans, one of the key products in the trade deal, rose almost 300% from a month earlier and are likely to trend higher as the U.S. harvest picks up.

The August data include the latest revisions, Bloomberg said.

So, we will see. The proposed stimulus bill still seems quite fragile, especially as the many headline fights spread to include an increasing number of issues. Thus, this “most toxic” political year appears to continue to become even more difficult as the elections near, situations producers should watch closely as they emerge, Washington Insider believes.

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