Washington Insider -- Tuesday

Secretary Perdue and Ag Controversies

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

Commerce Postpones Preliminary CVD Determinations on Argentine, Indonesia Biodiesel

Preliminary determinations in the countervailing duty (CVD) investigation on imports of biodiesel from Argentina and Indonesia has been delayed until August 21 by the U.S. Commerce Department.

The preliminary determination had been due no later than June 16, but Commerce said the decision has been postponed at the request of a petitioner in the investigation as allowed for under U.S. law. Commerce said the postponement was coming "because there are no compelling reasons to deny the request," the decision would postponed to no later than 130 days after the investigation was initiated which was on April 12.

"Accordingly, the Department will issue the preliminary determinations no later than August 20, 2017," the agency said in a notice effective June 5. "However, because August 20, 2017 falls on a Sunday, the preliminary determinations are now due no later than August 21, 2017."

The deadline for the final determination of the investigations will still be 75 days after the date of the preliminary determination, Commerce said, "unless postponed at a later date."

China Trade Deals Should Reduce Trade Deficit: Ross

Recent commitments by China to further open its markets to U.S. exports should begin to show up in balance-of-trade data later this summer, Commerce Secretary Wilbur Ross said in a June 2 statement.

“While the overall trade deficit continues to grow, it is too soon for the numbers to reflect the recent deal with China and other actions this administration is taking to level the balance of trade,” Ross wrote, referring to the initial results announced in May of a bilateral 100-day action plan for trade.

The trade deficit in goods with China was up 13.8% in April from the same month the previous year to a level of $27.6 billion. Year-to-date, the trade deficit reached $106.5 billion, according to the April 2017 International Trade in Goods and Services monthly data released June 2 by the Department of Commerce.

“We look forward to the July 16 deadline which will open up the Chinese market to American beef, liquefied natural gas and other products,” Ross said, citing the end date of the action plan. However, analysts with the U.S.-China Economic Security Review Commission (USCC), said June 2 that even if Beijing and Washington reach agreement in July 2017 on outstanding technical issues, U.S. beef exports may not resume for another year.

USCC based its estimate on resuming U.S. beef exports on Brazil's experience with a similar Chinese ban that took over a year to implement. They also cited the lack of a mandatory identification system in the U.S. for tracing the beef from the cattle to the store and the use of growth-enhancing drugs by U.S. ranchers on their cattle, as potential sticking points.

Washington Insider: Secretary Perdue and Ag Controversies

Secretary Perdue arrived in Washington with strong support from the ag community, which had been feeling neglected but now seems to like the new Secretary’s style. Last week, he was in Montana at the local ag summit in Great Falls to talk about the breadth of USDA’s responsibilities, Politico says. He emphasized that USDA not only oversees programs geared toward farmers and ranchers, but is also in the nutrition business.

Perdue said his goal is to ensure that ag safety nets catch all Americans — both producers and those who can’t afford to buy the food producers grow. “It’s not in the heart of America to see others go hungry, he said, and then promised that USDA will be compassionate,” but that he doesn’t think “it should be a permanent lifestyle, either. It ought to be a hand-up.”

The audience applauded those thoughts, but had more reservations about the recent White House budget proposal to cut federal funding for a wide range of Ag and food programs. After his speech, the Secretary stuck to his oft-repeated lines: any changes to nutrition programs would have to be made by Congress in the 2018 farm bill; and that he hadn't been confirmed when most of the budget prep was done.

Perdue went on to compare SNAP to crop insurance: Just like SNAP recipients shouldn’t make relying on government assistance a lifestyle, neither should farmers. He called that “tough love.” “Let’s face it: You don’t buy insurance on your house hoping it will burn down.”

“Just like we don’t want everyone on permanent status on food stamps, we don’t want [farmers] to become dependent,” Perdue added. He added that he doesn’t know a single farmer that would rather have a government program than a good crop at a fair price.

Senate Agriculture Chairman Pat Roberts, R-Kan., told farmers and ranchers at the Montana meeting that the Trump administration is on their side and will be much better for business than its predecessor, mainly because of its deregulatory push. At the same time, the Kansas Republican acknowledged that the White House’s budget shows where President Donald Trump’s priorities are, but that farm-state lawmakers will largely dismiss the proposal, Roberts said.

During his comments after his speech, Roberts was asked about the fact the administration’s pro-farmer message sometimes conflicts with its policy proposals (for instance, not only did the budget call for $228 billion in cuts to farm bill programs over a decade, but Trump withdrew from the Trans-Pacific Partnership and has flirted with pulling out of NAFTA).

However, Roberts argued the administration is friendly to producers because it gave farmers Secretary Perdue, who is a “champion for production agriculture” — and the chairman literally gave Perdue a pat on the back for getting “the entire Cabinet behind him so NAFTA wasn’t terminated.”

At the same time, there is a modest undercurrent of concern among some ag interests about climate change, for example. However, Politico reported that Secretary Perdue issued a statement last week, saying that President Trump had “rightly determined that the Paris accord was not in the best interests of the United States.” He argued the pact's effects on global temperatures would be negligible but that U.S. involvement “represented a willful and voluntary ceding of our national sovereignty.”

Perdue also focused on the need for ag research, and asserted. “At USDA, we rely on sound science and remain firmly committed to digging ever deeper to develop better methods of agricultural production in that changing climate,” he said. “Floods, droughts and natural disasters are a fact of life for farmers, ranchers and foresters who he says have persevered in the past, and will adapt in the future — with the assistance of the scientists and experts at USDA.”

Still, the exit from the climate agreement is controversial among many ag groups, Politico says. It reported that “a number of moderate Republican lawmakers said Trump’s decision was regrettable and diminishes America’s leadership role on the world stage,” according to Rep. Patrick Meehan R-Pa., who used lines similar to those from Sen. Susan Collins, R-Maine, Rep. Carlos Curbelo, R-Fla.

So, the Secretary is deeply involved in intense controversies even before the farm bill debate has properly begun, and it faces possibilities of threats from a number of directions—from budget hawks who promise to push in the direction indicated in the recent administration budget proposal, from anti-trade advocates who want to curtail trade links, among many others. Certainly Secretary Perdue will have his work cut out for him over the next several months, a process producers should watch carefully as it proceeds, Washington Insider believes.

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