Washington Insider -- Friday

Farm Bill Completion Expected Soon

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

China Trade Dents US Ag Export Outlook

The U.S.-China trade tensions and tariffs deployed on U.S. products like soybeans are showing up in more USDA outlooks, with forecast U.S. ag exports for fiscal year (FY) 2019 now at $141.5 billion, down from an August outlook for $144.5 billion.

"Soybean export volumes are down because of declining Chinese purchases from the United States as a result of trade tensions, and as a record U.S. crop continues to pressure soybean prices lower," USDA said in its Outlook for U.S. Agricultural Trade.

The agency detailed that oilseed and product exports are forecast at $27.9 billion, down $2.3 billion from August on lower soybean export volume and value. "Declining China soybean purchases from the United States have pushed U.S. export volumes lower, and China is expected to source its soybean imports primarily from South America," USDA said.

But soybeans are not the only crop where China is tabbed, as USDA noted sorghum exports are lowered $300 million to $500 million "on a slower export pace with the loss of the Chinese market."

As for imports, USDA raised its outlook for FY 2019 to $127 billion, up from their August forecast of $126.5 billion. The new mark, however, would not be a record. That set in FY 2018.

The result is a forecast ag trade surplus of just $14.5 billion, down from $18.0 billion forecast in August and the FY 2018 result of $15.8 billion. The FY 2019 result would be the smallest trade surplus since FY 2007.

Reuters: EPA Expected to Slightly Boost RFS Total Volume

EPA is expected to release a final level of 19.92 billion gallons for biofuels in 2019 under the Renewable Fuel Standard (RFS), up slightly from their proposed level of 19.88 billion gallons, according to a report from Reuters.

The increase comes in the advanced biofuel category via an increase in expected cellulosic ethanol. The report said the 2019 cellulosic biofuel total would be 418 million gallons, up from 381 million proposed by the agency in June.

That also increased the expected advanced biofuel level to 4.92 billion gallons compared with a proposed level of 4.88 billion gallons.

No other changes to the proposed levels are expected, the report noted, with conventional ethanol held at 15 billion gallons and the 2020 biomass-based biodiesel mark maintained at 2.43 billion gallons.

EPA by law is set to release the final levels for the RFS by Nov. 30, so an announcement is likely Friday.

Washington Insider: Farm Bill Completion Expected Soon

House and Senate Agriculture Committee Chairmen Mike Conaway, R., Texas, and Pat Roberts, R., Kan., and Ranking Members Collin Peterson, D., Minn., and Debbie Stabenow, D., Mich., released a statement Thursday declaring they have "reached an agreement in principle on the 2018 Farm Bill."

However, the leaders also said they were working to finalize the legislative language and conference report language and get scores from the Congressional Budget Office (CBO). "We still have more work to do," the lawmakers said. "We are committed to delivering a new farm bill to America as quickly as possible."

This echoes what some of the panel leaders had been saying the past 24 hours on the matter.

Programs covered by the bill include crop subsidies and support to access export markets, areas essential for American farmers, a key constituency of President Donald Trump.

Such funding is crucial, various media accounts have said, as farmers suffer from trade wars with key commercial partners such as China.

The latest bill, passed in 2014, expired on Sept. 30 after talks over its replacement broke down. At the heart of the debate was whether or not to impose stricter work requirements for recipients of food stamps.

With Democrats in control of the House next year, lawmakers were hopeful the deadlock could be resolved, but recently, forestry provisions emerged as a new point of contention, following the deadly wildfires in California earlier this month.

Last week USDA Secretary Sonny Perdue said forest management practices need to be "sped up" and he hoped that U.S. agencies could get more authority to do so under a farm bill being debated. "There are things we can do; we need the authority to do that," he said.

Interior Department Secretary Ryan Zinke said on Tuesday that the deadliest wildfires in California's history were partly due to lawsuits from environmentalists who have sought to stop forest management practices, such as forest thinning.

Environmental groups and many Democrats have opposed some Republican proposals on forestry issues, and worrying that while "the government already has powers to prevent fires under current law, the proposals would increase logging."

Roberts said forestry provisions had been dealt with at the leadership level during a meeting late on Tuesday, but declined to elaborate on the details.

"The paramount issue ... is farmers need a bill, he said. They need certainty and predictability. So if you have a strong feeling about a particular issue that is in second place," he said.

So, we will see. It will be important to see the details of just how the administration chooses to deal with the fire protection issue. There are well-tested, fire-fighting authorities and practices in use for each of the main forestry management agencies, especially USDA and the Department of the Interior. Whether these are beefed up some and continue, as they have been in the past, or emphasized and "weaponized" in the ongoing climate change battle remains to be seen.

With the announcement by ag panel leaders, it appears enough of these conflicts have been settled, a situation which will be a significant achievement for the administration and for the sector, Washington Insider believes.

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