Washington Insider -- Wednesday

The Farm Bill and Sugar

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

Sen. Grassley Calls Out EPA's Pruitt on Biofuel Policy

Unless EPA Administrator Scott Pruitt addresses the issue of small-refiner waivers under the Renewable Fuel Standard (RFS), he should resign, according to Sen. Chuck Grassley, R-Iowa, telling reporters the matter needs to be dealt with fairly.

"They better or I'm going to be calling for Pruitt to resign because I'm done playing around with this," Grassley said.

Plus, Grassley said he thinks Pruitt is not delivering on President Donald Trump's policy agenda. "Trump was elected with an agenda, Pruitt was not elected, it's Pruitt's job to enact the president's agenda," he said.

Regarding E15 sales being allowed during the summer months, Grassley said EPA is working on that issue – another commitment by President Trump. "They're going to try to make it applicable for this summer, but they couldn't promise they could do it, and I could understand that," he said.

Trump Urges Quick Conclusion to NAFTA 2.0 Talks

President Donald Trump pushed for a quick conclusion to the NAFTA 2.0 renegotiation during a call Monday with Canadian Prime Minister Justin Trudeau, according to a White House readout of the conversation. “President Trump underscored the importance of quickly concluding an agreement,” the statement said.

Trudeau’s office said the leaders discussed “the possibility of bringing the negotiations to a prompt conclusion.”

From the Mexican side, Economy Minister Ildefonso Guajardo said, “Ministers will convene as required once the teams are ready to provide us with some elements of solutions that we have indicated."

U.S. Commerce Secretary Wilbur Ross confirmed that all of the most difficult issues to resolve remain. The “big hot topics … are still a work in progress,” he said, listing rules of origin, the five-year sunset provision, dispute resolution mechanisms and labor under that category. “And those are very complex issues, particularly rules of origin, so it eventually will come down to every comma, every semi-colon, everything before we can figure out if it’s something that’s workable,” he said.

Washington Insider: The Farm Bill and Sugar

Bloomberg is reporting that a major change to the U.S. sugar program may end up in the House version of the farm bill as backers of a controversial amendment are claiming to have enough votes to get the plan included in the bill.

Rep. Virginia Foxx, R-N.C., filed an amendment that would eliminate production limits that keep sugar prices higher for growers. "I am a believer in free markets. Republicans should all believe in free markets. Some do more than others," Foxx said. "I do not believe in allotments. All the other programs like this have gone away. Sugar is the last one."

Foxx's amendment also would repeal a sugar-to-ethanol program that let the government sell surplus sugar to biofuels producers and it would give the administration greater flexibility to lower tariffs on imported sugar. Sugar processors would also no longer be required to reimburse the government for costs incurred under a federal loan program. That, Bloomberg notes, is a key difference between the amendment and an earlier stand-alone bill sponsored by Foxx.

Foxx says she has enough support to get her measure included in the farm bill, set for a vote later this week – likely Friday. Her amendment appeals to many conservative members of the House that do not like heavy government involvement or government subsidies.

But the Foxx amendment still faces stiff opposition. Rep. Ted Yoho, R-Fla., is a member of the House Freedom Caucus, but said he'd only back getting rid of farm subsidies if other countries do the same.

“There’s a lot of misinformation out there" spread by environmentalists and confectioners that claim the program costs consumers and taxpayers money, Yoho said. "This has not cost the taxpayer except in 2013, when Mexico took Brazilian sugar and dumped it on our market,” he said. “I’ve never had anyone come up to me and say, can you do something about the price of sugar?”

True, the no-net-cost aspect of the U.S. sugar program is one of the arguments supporters of the current program have used over the years to push back against attempts at changing the policy.

The mention of 2013 is a situation where the cost to the U.S. government for the program was $259 million to buy surplus sugar and then in turn, it sold the sugar at a loss. The other "cost" to the sugar program is put at a much-larger price tag in the form of higher costs to consumers. The American Enterprise Institute, Bloomberg noted, estimated that consumers and users may spend up to $4 billion annually in extra costs because of higher commodity expenses.

Rep. Yoho is not alone in his opposition. It includes House Agriculture Committee Chairman Mike Conaway, R-Texas, labeled the Foxx amendment "the most troubling one” out of more than 100 proposed changes to the farm bill. He called the measure an "attack" and said that allowing it on one commodity could impact all farm support programs.

“We are going to fight on behalf of sugar,” he said.

The Foxx amendment could be a key test as it will not only test those who back the sugar program, but it will also test Democrats. Their marching orders from House Minority Leader Nancy Pelosi, D-Calif., are to not support the bill. Question is, whether that applies to amendments as well. But, at least one backer of the sugar program, House Ag Committee Ranking Member Collin Peterson, D-Minn., will vote no. But will that bring other Democrats along and result in the Foxx amendment failing? Appears to be an open question at this point.

While the amendment could well pass the House, the battle in the Senate is a much bigger one. And one that even backers of the same version of the Foxx plan admit is an uphill climb in that chamber.

So as the farm bill votes are poised in the House, the sugar program situation emerges as a key test for farm bill backers and a key test for the US sugar industry that has been successful over the decades in protecting their program. This could set the stage for a shift in farm policy that needs to be monitored by more than just sugar producers, Washington Insider believes.

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