Washington Insider -- Friday

Trade Top Concern for Producers in 2019

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

Farm Bureau Concerned on Farmer Impacts From Government Shutdown

As the partial shutdown drags on, impacts at USDA and elsewhere in the government are building, affecting everything from trade aid payments to implementation of the 2018 Farm Bill.

More activities at USDA were suspended this week as the partial US government shutdown continues. Beyond delays seen for the USDA report schedule, the shutdown is having plenty of other impacts across the department as well.

USDA's Farm Service Agency (FSA) county offices stayed open during the first week of the government shutdown, but closed December 28 after residual funding was exhausted.

FSA office closures are high on the list of shutdown concerns among farmers and ranchers, American Farm Bureau Federation Chief Economist John Newton told IEG Policy. "That impacts the FSA lending programs, that impacts the ability for farmers and ranchers impacted by retaliatory tariffs to do their application for Market Facilitation Program (MFP) payments," he observed.

While MFP payments under USDA's trade aid package for farmers that have already certified production with FSA continue, payments to farmers who have not certified are on hold.

The current deadline for farmers to sign up for payments under MFP is January 15, but USDA Secretary Sonny Perdue could decide to extend that deadline after government funding resumes. As the deadline approaches Newton said "the best we can hope for is that the government reopens and folks have an opportunity to get in to their FSA office." Meanwhile, the deadline for farmers to certify production for MFP is May 1.

USDA is currently considering the issue of the looming MFP sign up deadline. Perdue "will review that deadline and be able to look at whether it makes sense to do an extension or not," USDA Undersecretary for Farm Production and Conservation Bill Northey said on a farm-radio show. As for FSA lending activities, he reiterated USDA "will take into account the fact that there is real disruption," adding, "we will not put a producer at a disadvantage because of the shutdown."

Farmers are also unable at this point to obtain or to pay off any marketing assistance loans on eligible commodities.

Still Waiting on Export Data

The lack of funding for USDA has resulted in the Weekly Export Sales and any daily export sales notices from being released. That has left markets uncertain in terms of official confirmation of export business that typically would be released by USDA.

USDA released the export sales data for the week ended December 13 on December 20. However, the agency has not released the weekly update since that time, meaning any export sales made since December 14 have not been publicly confirmed by USDA.

USDA has also not made any daily export sales announcements since the government shutdown began. U.S. exporters are required to report large sales of some U.S. commodities under the daily sales reporting system if they exceed certain thresholds – U.S. exporters are also required to report all large sales activity made in a single day to a single country for certain commodities by 3:00 p.m. (ET) on the business day after a sale is made. Large export sales of certain commodities are defined as 100,000 metric tons (20,000 mt for soybean oil) or more of one commodity in one day to a single destination, or cumulative sales of 200,000 metric tons (40,000 mt for soybean oil) or more of one commodity during the weekly reporting period to a single destination.

Washington Insider: Trade Top Concern for Producers in 2019

To nobody’s surprise, farmers are seen as caught in “the crossfire of a trade war with China and are expected to feel the effects well into 2019,” Bloomberg says. “They will be counting on Congress to devise a solution,” the report says.

While the administration announced in December that it will proceed with plans to distribute a second round of payments to farmers, Rob Larew, senior vice president of public policy at National Farmers Union, said it’s unclear whether there will be additional aid in the new year — still leaving uncertainty in farm country.

“We’re told trade battles are entrenched, so we’re calling on the administration to work with Congress to come up with a long-term solution,” Larew told Bloomberg, in a recent interview.

The article described huge storage filled with soybeans that it says are “caught in the middle of the U.S.-China trade war.” It concluded that America’s soybean farmers are taking a huge gamble — rather than selling the crop right away as they pull it out of the ground — as they do almost every harvest season to pay the bills — they are instead stashing it, Bloomberg says.

In fact, producers commonly use a variety of marketing plans boost returns for their crop — including holding out for better seasonal markets — but it is the case that prices of soybeans, especially, are under pressure this winter.

Looking forward, now that the five-year, $867 billion farm bill has been enacted into law, the House and Senate Agriculture Committees say they will spend much of their time on other reauthorization bills, including ones dealing with the US Commodity Futures Trading Commission (CFTC) and the Child Nutrition Act. Rep. Collin Peterson, D-Minn., the incoming House Agriculture Committee chairman for the 116th Congress, told reporters in December that CFTC reauthorization will be a top priority in the new year.

“We’ll work on it,” said Peterson, who added he will fight Republican attempts to impose new cost-benefit requirements for CFTC rulemaking. Peterson has said the new cost-benefit mandates could roll back consumer protections under the Dodd-Frank law and make it harder for the CFTC to do its job.

Outgoing Chairman Mike Conaway, R-Texas, who becomes the panel’s ranking member in the new Congress, agrees that reauthorizing the derivatives market regulator will be a priority now that the farm bill has been passed.

“Hopefully I can work with the incoming chairman to see if we can’t move that,” Conaway told reporters.

On the Senate side, Agriculture, Nutrition, and Forestry Committee Chairman Pat Roberts, R-Kan., said CFTC reauthorization will also be a goal, but he expects to hold “quite a few” hearings over 2019 on trade.

In addition, “We need to monitor [the] farm bill and make sure it does what we think it’s going to do,” Roberts said.

On the House side, Peterson said his panel also will focus on farm bill implementation and oppose lobbying efforts to roll back the legislation. Agriculture negotiators worked for months to get the current deal but couldn’t make it happen until the lame-duck session.

“We fight this thing through with the lobbyists and come out with a product, then all these groups hire lobbyists and shift it down to the USDA to unchange what we did,” Peterson said.

The new farm law, which includes an extension of federal crop insurance, leaves out an earlier, highly contentious, House provision that would have added more work requirements for able-bodied adult food assistance recipients and those with older children. The provision had been included in the House version of the measure and was removed during negotiations with the Senate, where it faced opposition.

Then, last December, USDA proposed a rule to limit state Supplemental Nutrition Assistance Program waivers, a plan that Republicans unhappy with the limited changes in the law touted as a way to achieve their objective through regulations.

USDA Secretary Sonny Perdue told reporters that he recommended President Donald Trump sign the farm bill “because I knew and I believe we can make improvements to SNAP through the regulatory process.”

The proposed rule would eliminate statewide waivers from work requirements for SNAP recipients unless a state qualifies for extended unemployment benefits.

Perdue is also scheduled to announce the location to which about 700 employees from two USDA agencies will be relocated from the District of Columbia — including the Economic Research Service and the National Institute of Food and Agriculture, which provides funding for programs that research agriculture-related sciences

However, such a move is quite controversial in some quarters, and some members of Congress are trying to halt the move.

Democrats on the House Appropriations Committee introduced legislation in December to block the relocation. The bill laid down a marker for legislation they will push for in the new Congress.

So, we will see. It likely is true that trade policies will be a continuing, highly contentious issue that will face the Congress for much of the year — fights that producers should watch closely as they emerge, Washington Insider believes.

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