Washington Insider -- Friday

Farm Bill Draft Delayed

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

US Reaches Regionalization Agreement with South Korea on Bird Flu

The U.S. and South Korea have worked out an agreement that is aimed at tempering trade impacts if the U.S. finds another case of highly pathogenic avian influenza (HPAI).

The agreement reached between the two countries would set in place a regionalization system that would allow trade restrictions at the state level should the U.S. detect HPAI in the future. That would temper the trade impacts in the event of another U.S. HPAI find.

When the U.S. found HPAI in 2015, South Korea cut off imports of all U.S. poultry, poultry products and eggs, with the agreement aimed at preventing that type of response in the future.

US-China Trade Tensions Keep Ratcheting Up with Tire, Aluminum Foil Decisions

A pair of trade rulings by U.S. government agencies on tires and aluminum foil imported from China are poised to further increase the already rising trade tensions between the U.S. and China.

Countervailing duties (CVD) ranging from 19.13% to 119.46% on passenger vehicle and light truck tires produced in China and exported to the U.S. were announced by the Commerce Department's International Trade Administration (ITA) in a set of notices set for publication in the Federal Register March 16.

Meanwhile, the United States International Trade Commission (USITC) today determined that the U.S. aluminum foil industry is materially injured by imports of the product from China that Commerce determined are subsidized and sold in the United States at less than fair value. Commerce made their determination February 27.

This determination marks the final phase of the antidumping and CVD process and will put in place for five years antidumping duties ranging from 48.64% to 106.09% and CVDs between 17.14% to 80.97%. The specific duties vary by company.

Washington Insider: Farm Bill Draft Delayed

Following recent happy talk about timing of the release of the new House Agriculture Committee draft farm bill, Bloomberg is now reporting that Committee Chairman Mike Conaway, R-Texas, says that he is delaying the release of the draft in an effort “to try and produce a bill with bipartisan support.” He pointed to “intense Democratic opposition to proposed cuts to the food-stamp program that increased the possibility the bill could be imperiled.”

"What I don’t want to be is in those negotiations, put something out there and have to change it," the Texas Republican told reporters Tuesday. "We’re in negotiations."

Rep. Collin Peterson of Minnesota, the ranking Democrat on the farm panel, said the additional work requirements for recipients and other changes proposed by Republicans would drop 8 million people from the Supplemental Nutrition Assistance Program (SNAP), dooming support from Democrats.

Conaway denies that the Republican proposals would cut that many people from the program. At the same time, Bloomberg suggests that budget-hawk Republicans may balk at any plan that doesn’t do enough to cut food stamps and farm subsidies—whatever that may be.

Conaway said he won’t rule out releasing a farm bill designed to appeal only to Republicans. However, observers argue that would put it at risk in the Senate, where Democratic votes are needed. Chairman Conaway said he is still trying to gain Democratic support. The chairman had previously said his committee would send a farm bill to the House floor with the goal of a full-chamber vote by the end of March. That becomes more difficult without any bill this week.

Senate Agriculture Chairman Pat Roberts, R-Kansas, said it’s crucial to get the farm bill done this year because of the possibility that tariffs imposed by President Donald Trump might trigger retaliation that would hit farmers.

“At a time when farm income is down and exports are threatened from a protectionist trade policy it is the duty of the agriculture committees to provide farmers with some certainty,” Roberts said. The Senate may release its version of the legislation in April, he said.

The impasse echoes divisions that delayed the current farm bill by nearly a year-and-a-half when it was last renewed in 2014. It also casts doubt on how much money will go to conventional retailers through the food-stamp program as well as the shape of subsidies paid to farmers who are struggling with low prices, Bloomberg said.

The bill, which has cost more than $100 billion in previous years, authorizes programs overseen by USDA, ranging from payments to corn and soybean producers, funds to fight fires in national forests as well as support for nutrition supplements for poor people. The current farm law ends Sept. 30, after which subsidies begin to phase out.

Lawmakers from both parties as well as Agriculture Secretary Sonny Perdue predict that this year’s law will be more evolutionary than revolutionary, after farm programs were revamped in 2014.

Still, farmers are becoming more dependent on government payments, Bloomberg says, as an agriculture boom that ended around the time the last law was passed has left farmers expecting their lowest returns since 2006. Dairy and cotton producers are seeking more money, and conservatives continue to target food stamps as wasteful government spending, along with farm subsidies they call too generous.

Last January, Secretary Perdue said work-eligibility rules are necessary to discourage a “lifestyle” of welfare dependence and in February proposed a “Harvest Box” program of food kits distributed to the poor as a cost-saving replacement for some SNAP aid.

Roberts last year signaled a tough stance on food-stamp fraud, even as he also acknowledged that major changes were less likely in the more evenly-divided Senate. Senator Debbie Stabenow of Michigan, the top Democrat on Senate Agriculture, said that House-crafted food-stamp cuts as proposed are "not going to fly" in her chamber.

"There’s no question. We are not doing that in the Senate," she said on Monday.

The farm bill’s complexity and cost make it difficult to assemble a bipartisan coalition to pass the House – and cuts that make a Republican-only bill possible then often founder in the Senate, said Josh Sewell, senior policy analyst for Taxpayers for Common Sense in Washington and a subsidies critic.

“It’s a mishmash of a lot of policies to begin with, and that creates a lot of headwinds,” he said. While some Republicans, often the ones most interested in maintaining farm subsidies, want to keep food-stamp cuts minimal so as to ease passage in the Senate, others push for bigger change to both nutrition and farm-aid spending, he said.

In 2017, spending on food stamps fell 15%, to $68 billion, from its peak four years earlier. As of November, 2017, about 41.7 million people were using the program. But with that program still responsible for up four-fifths of the bill’s spending, disputes over its mechanisms may derail it, said Jim Weill, head of the Food Research and Action Center in Washington, which seeks to end poverty-related hunger.

“I’d rather see no farm bill than anything that looks like what Conaway has put on the table,” he said.

So, this looks like yet another farm bill fight, complicated by the potential threats to U.S. export markets. It likely will become increasingly complex—and, increasingly contentious, and should be watched closely by producers as the fights proceed, Washington Insider believes.

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