Washington Insider-- Friday

It Looks Like Sonny Perdue

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

Vilsack Presents Priorities for USDA in Exit Memo

A series of priorities USDA should focus on after outgoing USDA Secretary Tom Vilsack leaves office are detailed in an exit memo, released January 5.

Vilsack, whose last day is reportedly January 13, said the next administration should modify safety net programs, such as the Dairy Margin Protection Program, to ensure that they have their intended effect.

Vilsack also called on Congress to lift restrictions on the USDA's use of its Commodity Credit Corporation (CCC) to offer emergency financial assistance to farmers.

Vilsack also called on Congress to pass a five-year bill to reauthorize funding and set policy for the USDA's child nutrition programs. The 114th Congress failed to pass a bill renewing funding for the programs before adjourning. "It would be unwise to roll back standards, saddle parents and school administrators with more paperwork or weaken assistance for our most vulnerable children," Vilsack said in the memo.

Regarding completing implementation of the GMO labeling law, Vilsack noted that on July 29, 2016, President Obama signed a bill into law requiring the labeling of food containing genetically modified ingredients. "This is a landmark law for disclosure," he wrote. Currently, USDA has established a working group and GMO Disclosure Team to manage implementation of the law. A study will seek to identify potential technological challenges that may impact whether consumers would have access to the bioengineering disclosure through electronic or digital disclosure methods. Vilsack said, "USDA must ensure that the rulemaking process closely adheres to the authority provided in statute."

Jon Corzine Ordered to Pay $5 Million for Role in Collapse of MF Global

Jon Corzine, the former New Jersey governor, was ordered to pay a $5 million penalty from the US Commodity Futures Trading Commission (CFTC) for his role relating to the collapse of brokerage MF Global.

The order ends CFTC's lawsuit in the aftermath of the 2011 collapse of the commodities brokerage. Corzine, who was chief executive of MF Global and had previously held the same role with Goldman Sachs Group Inc., is largely barred from trading client money in commodities and others assets regulated by the commission as he cannot register with the body.

He could still trade some futures if the amount falls under certain thresholds. He is also prohibited from using insurance proceeds to pay the penalty. However, the order bars Corzine from acting as a principal, agent, officer, director or employee of a Futures Commission Merchant (FCM) and he is barred from registering with the CFTC in any capacity, the regulator said.

Corzine in a statement said he accepted responsibility for the company's failure and is pleased to have reached a settlement.

MF Global collapsed in 2011 after big positions on European bonds during a volatile stretch for the markets alarmed investors and raised questions from regulators. The investment strategy was championed by Corzine.

When a $1.6 billion shortfall in customer funds emerged, two years elapsed before the trustee overseeing the liquidation of MF Global's brokerage unit collected and returned the money to customers. The CFTC alleged that the company unlawfully used nearly $1 billion of customer funds to support its own operations.

Corzine has previously denied wrongdoing and said he never directed anyone to dip into customer funds. As part of the settlement, Corzine neither admitted nor denied the allegations.

Further, CFTC said former MF Global Assistant Treasurer Edith O'Brien will be ordered to pay a $500,000 civil monetary penalty for aiding and abetting MF Global's violations.

Washington Insider: It Looks Like Sonny Perdue

There has been a lot of talk about the political importance of rural voters this year, along with questions about why the job of Ag Secretary has remained unfilled. By Thursday, Sonny Perdue III, the former governor of Georgia, was widely seen as the leading candidate for the job, even though "sources" cautioned that the decision is not yet final.

Still, Bloomberg notes that Trump rode to his election victory partly on strong support from voters in rural areas clamoring for an economic turnaround. As a result, Trump and his aides have interviewed many candidates including former Texas A&M University President Elsa Murano, former Texas U.S. Representative Henry Bonilla, Texas Agriculture Commissioner Sid Miller, former Texas Agriculture Commissioner Susan Combs, former California Lieutenant Governor Abel Maldonado, Idaho Governor Butch Otter, and North Dakota US Senator Heidi Heitkamp, a Democrat.

It is not surprising that the president-elect sees the need for a steady hand in the Ag Secretary post. His statements during his campaign covered several areas that could have major implications for agricultural businesses, especially the potential that ag exports might be disrupted if the administration follows through with a pledge to reshape trading relationships with China and other countries.

Additionally, if U.S. immigration laws are enforced more strictly, business owners could face labor shortages. Undocumented workers comprise a major slice of the U.S. farm and agricultural labor force. At the same time, farmers may stand to gain from a promised relaxation of environmental regulations.

Perdue was born in Perry, Georgia, graduated from the University of Georgia and served as a state senator. In 2003, he became the first Republican governor of the state in 130 years. He stepped down in 2011, and the same year he founded Perdue Partners LLC, which according to its LinkedIn profile, is an Atlanta-based trading company.

In Washington, political heat was clearly building on the president-elect to fill the Ag Secretary position. Bloomberg this week noted that in the two months since the election, he had selected 13 of 15 cabinet posts, from the departments of State to Justice to Health and Human Services -- but not Secretary of Agriculture.

"It certainly has folks concerned or worried that maybe it just doesn't seem to be getting the attention that we would like it to," Roger Johnson, president of the National Farmers Union, the second-biggest U.S. farmer group told Bloomberg earlier in the week. "Folks in agriculture and rural America feel like they delivered for this president and they just want there to be more attention."

While Agriculture Secretary tends to be among the later cabinet picks made by new presidents, Trump's is much later than usual. President Barack Obama named Tom Vilsack, who still holds the job, on Dec. 17, 2008. President George W. Bush, whose transition was delayed by a contested vote recount in Florida, made his pick on Dec. 20, 2000. Bill Clinton chose his agriculture chief on Dec. 24, 1992.

Concern over the pace of appointments isn't universal, Bloomberg says. House Agriculture Committee Chairman Michael Conaway, R-Texas, "is focused on the make-up of the committee more than anything right now," spokeswoman Haley Graves told Bloomberg.

The job of Agriculture Secretary has a broad mandate, which means any appointee will need time to get up to speed, according to Dave Johnson, who led the Bush transition team in 2000. "It is not just farm programs," Johnson, a longtime Senate Agriculture Committee chief counsel, told Bloomberg. "USDA oversees school lunches, meat inspection, food stamps, the Forest Service, rural electrification and much more. If the secretary-designate is unfamiliar with USDA, the need for intensive briefings and thorough background memos increases."

In addition to hot issues concerning trade and immigration, the ag secretary nominee also will need to deal with a new farm bill once the current law expires on Sept. 30, 2018. Much of the spending authorized by the legislation goes to nutrition programs including food stamps, along with farm subsidies.

Few people understand the range of social, economic and food safety concerns managed by USDA -- along with the major battles that almost always occur within administrations over priorities, as well as broader national concerns.

So, it is not just political payback that defines the job of secretary, it is the need to manage the broad and intense controversies that can be expected. Thus, it will be important for producers to watch closely as the Secretary and top USDA staff are announced and introduced and vetted again by the Congress, Washington Insider believes.

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