Washington Insider - Friday

By DTN's Washington Insider

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

Crop Insurance Indemnities Clear $1 Billion for 2015 Crops

Indemnities for 2015 crops now total $1.083 billion under the federal crop insurance program, behind the pace seen at this point a year ago for 2014 crops of $1.625 billion, according to Risk Management Agency (RMA) data.

The most marked difference in the data thus far and that from this point in 2014 are payouts that were most likely linked to the drought situation in the Central and Southern Plains. For example, net acres of pasture and rangeland insured are at 54.74 million, up from 52.5 million at this point in 2014. But indemnities are at just $67 million compared to $147 million at this stage in 2014. Payouts for the pasture and rangeland covered acres for 2014 stand at $179 million.

Corn indemnities are running about even with year ago at $132 million. Payout for corn in 2014 ended up at $3.84 billion with a loss ratio of 1.05.

Soybean indemnities are one of the few cases where indemnities are running ahead of the 2014 crop levels at this point. As of Aug. 18, payouts for 2015 are at $85 million compared to $77 million compared to this point last year, likely reflecting a rise in prevented planting claims as signaled by USDA’s certified acreage data released earlier this week. Soybean indemnities for 2014 crop totaled $1.22 billion.

Rice and sorghum indemnities also are ahead of their year-ago pace, standing at $10 million for sorghum and $53 million for rice on 2015 crops. At this stage a year ago, sorghum payouts were $5 million and those for rice were at $35 million.

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FSA Announces Enrollment for BCAP; Enrollment Underway For New Project Areas Through Nov. 6.

Enrollment began Aug. 19 for farmers and forest landowners seeking financial assistance for growing new sources of biomass for energy or biobased products within designated projects areas under the Biomass Crop Assistance Program (BCAP), which was reauthorized by the 2014 Farm Bill.

Biomass energy facilities or groups of producers may submit proposals for new BCAP project areas. Proposals will be accepted on www.grants.gov through Nov. 6, USDA’s FSA announced.

USDA also will allocate $7.7 million towards four existing BCAP project areas in New York, North Carolina, Ohio/Pennsylvania and Kansas/Oklahoma, targeting the establishment of an additional 10,500 acres of shrub willow, giant miscanthus, and switchgrass for energy. Project area sponsors include Chemtex International, Aloterra Energy LLC, Abengoa Biomass LLC and ReEnergy Holdings LLC.

Farmers and forest landowners may enroll for biomass establishment and maintenance payments for these four sites through Sept. 25. In June, USDA began accepting applications from foresters and farmers seeking financial assistance for removing biomass residues from fields or national forests for delivery to energy generation facilities; the deadline for those applications is Sept. 4.

The retrieval payments are provided at a costshare match of $1 for every $1 up to $20 per dry ton with eligible crops including corn residue, diseased or insect infested wood materials, or orchard waste.

The energy facility must first be approved by USDA to accept the biomass crop, and deliveries to the facilities can continue until Dec. 11. The 2014 Farm Bill authorizes funding each year for the program to assist with the establishment and delivery of biomass for energy or biobased products.

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Washington Insider: What Happened to TPP in Hawaii?

In a blow to the US trade policy team, the recent meeting of the 12 TransPacific Partnership (TPP) negotiators in Hawaii ended earlier this month without the expected agreement. The failure of the ministers to break the deadlock on key issues is widely seen as further complicating the already complicated politics involved as global trade experts continue to assess the remaining prospects of success for the proposed deal.

Of course, US Trade Representative Mike Froman and Japan’s Economic Minister Akira Amari are bravely affirming that “significant progress has been made” and that they are closer than ever “to closing on the TPP,” a goal once projected by year’s end.

In retrospect, some issues were much tougher than expected and disagreements persisted including those over intellectual property rules for new generations of drugs, auto parts trade rules and the degree of market access for “sensitive” products like dairy and sugar. Australia, Japan and Canada are vitally involved along with the United States in these disputes and US leadership is taking heat for what critics see as attempts to push others to do what it was less than willing to do itself.

So, now the general view of trading partners seems to be that while the TPP negotiations have made progress and have narrowed differences on more than 2000 contentious issues, those remaining are by far the toughest, including agricultural disputes with Japan, and dairy and poultry disagreements with Canada, among others. For example, Australia is now seen to be deeply dug in on protections for drugs and medicines.

One observer noted that the proposed deal is important for the US and still should be within reach, in part because the Republicans like trade even more than they dislike President Obama. And, according to the Peterson Institute for International Economics, the market-opening features of the TPP are large and important, and could will boost US exports by about $123 billion annually by 2025 and add 600,000 jobs.

Others, such as He Weiwen, a member of China Society for WTO Studies, said the TPP is “more of a geopolitical tool than a trade pact.” And, he rather eagerly blamed US “selfishness” for the failure in Hawaii, especially the “failure to make necessary concessions.”

Chinese commenters focused especially on the US intellectual property proposals, arguing that they would have imposed a heavy burden on Canberra’s healthcare system—so it is not surprising that Australia rejected them. They cited Australian Trade Minister Andrew Robb’s statement that the last negotiating stages of the TPP were “very difficult” and that the deal is increasingly likely to fail when the US presidential election cycle kicks in.

So, it is clear that the administration has considerable work to do if it is to get the TPP talks back on track. Observers suggest internal US politics as well as international resistance mean that the intellectual property protections will be especially difficult to work through. And, as has long been the case, a number of ag issues, including Canadian dairy policies, will be difficult and possibly impossible to solve.

Perhaps even more troublesome is the criticism that the US leadership is reluctant to offer meaningful concessions on all these issues.

So, in spite of some residual optimism about ambitious outcomes, the new post-Hawaii TPP reality seems to raise serious questions of how it will be possible to regain momentum in these talks. The next steps in the negotiations will be very important to US producers and should be watched carefully as they emerge, Washington Insider believes.

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(GH/CZ)

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