Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.USDA’s Perdue Says Cattle Market Investigation Will Include COVID-19 Market Moves
USDA Secretary Sonny Perdue said via Twitter that the agency would be expanding its investigation into cattle market activity to include the move-recent price movements that took place in the wake of the COVID-19 situation.
“@USDA’s Packers and Stockyards Division will be extending our oversight to determine the causes of divergence between box and live beef prices, beginning with the Holcomb Fire in KS last summer and now with COVID-19,” Perdue said on social media.
Scores of lawmakers have been pressing USDA to take the action after record moves in beef prices as consumer panic buying pushed up beef demand. But despite the increased dressed beef prices, live cattle prices actually declined.
Sen. Chuck Grassley, R-Iowa, welcomed the action with his own tweet, saying, “After asking USDA to investigate price fixing by beef packers they announced today they will Farmers need to see USDA report as soon as possible Beef producers need help! Thx Scty Perdue & Pres Trump for hearing their concerns.”
China Phase One Agreement Implementation Focus Continues
Even as market attention is mostly on the COVID-19 situation, some are noting that trade data for the first two months of 2020 indicate China is behind on the pace needed to meet their commitments under the phase-one trade deal to boost their imports of U.S. agricultural goods.
The Trump administration over the next few weeks will give an assessment of the current phase-one developments. But public information is forthcoming on the deal, as the agreement calls for the U.S. and China to make "public disclosures" on "quarterly exports and imports of goods and services, no longer than 90 days after the end of each quarter."
Indications are a call between U.S. and Chinese officials was postponed two weeks ago after U.S. President Donald Trump and Chinese President Xi Jinping were scheduled to talk via telephone March 27. U.S. officials are said to be remaining cautiously content with China’s progress towards buying American products and opening the domestic market to U.S. firms.
However, there are still actions on the intellectual property front that China has not yet put in place that were agreed to in the -phase-one deal, according to a report in the South China Morning Post.
Meanwhile, the China Agricultural Supply & Demand Estimates (CASDE) report released by their Ministry of Agriculture and Rural Affairs increased their forecast for 2019/20 corn imports to 4 million metric tons, up 1 mmt from their prior mark, citing the U.S.-China phase-one agreement.
Washington Insider: Farmers Vie for Coronavirus Aid
POLITICO is reporting that while Congress authorized several billion dollars to help struggling producers weather the coronavirus market decline, it provided little direction about how or where the funds should be spent. This is putting significant pressure on USDA as it works to figure out how to disperse aid across the vast farm economy as quickly and evenly as possible.
Lobbying for access to these funds has become intense, the report says. Numerous industry groups also are enlisting their allies on Capitol Hill to help make their case.
“Threading that particular needle is a tall order,” POLITICO says, and the program, whatever it turns out to be, is “sure to face heavy scrutiny, especially since the payments for market losses over the last two years were criticized heavily as unfair and tilted toward Southern states and wealthy farmers. Many commodity groups complained that their sector was shortchanged by the direct payment rates or excluded altogether.
Even before any relief checks have gone out, the American Farm Bureau Federation claimed that more money will soon be needed from Congress. “We’re going to find out very quickly that amount of money is not going to help sustain a lot of our farmers through this difficult time,” said the group’s president, Zippy Duvall. “The secretary was asking for a lot more.”
In the meantime, lawmakers have flooded Agriculture Secretary Sonny Perdue’s mailbox every day with letters reminding him to make sure farmers in their states aren’t forgotten.
Perdue’s challenge is to get money into the hands of farmers without skewing their business decisions like which crops to plant or drawing charges of political favoritism.
The $2 trillion economic rescue package signed into law last month includes $9.5 billion for cattle ranchers, fresh produce growers and other agricultural sectors affected by the economic freeze, as well as another $14 billion injection for the Commodity Credit Corporation that can be used in a variety of ways.
The $9.5 billion in direct agricultural aid allocated to Perdue’s office names specific sectors that should receive assistance, including dairy and livestock industries; growers of specialty crops like fruits, nuts and vegetables; and producers that “supply local food systems” including schools and farmers markets.
The aid isn’t earmarked exclusively for those groups, and Congress didn’t provide any other directions in the legislation itself.
Dale Moore, AFBF’s executive vice president, told reporters last week that Perdue interpreted the funding provision to apply to “a broader range of folks who are not covered by other aspects” of farm assistance, rather than just the groups that are listed.
Even as the relief bill was being crafted, Western senators went to bat for livestock producers during the negotiations. Now, they’re heaping pressure on USDA to keep cattle ranchers’ concerns in mind.
More than 100 lawmakers sent Perdue a letter last week arguing that “there is an immediate need for assistance for our cattle producers” while the impact on other farm commodities was still being measured.
The dairy industry, which has struggled through years of low milk prices, rapid consolidation and rising bankruptcies has called for USDA to buy up their milk products and distribute them to those in need.
Similar proposals have been floated for specialty crops, like fresh fruits and vegetables, which are now being left to rot in some regions.
The potential price tag for supporting those specifically named groups is quickly adding up. Even local and regional agricultural markets like farmers’ markets and farm-to-school programs are facing more than $1 billion in losses, according to industry estimates.
Midwestern senators this week asked Perdue to use some of the additional $14 billion in CCC spending power to offset biofuel market carnage which has, in turn, brought down corn futures prices by about 15% since January.
Some analysts expect USDA will design a program similar to its trade relief payments since 2018. The department attempted to calculate the impact of retaliatory tariffs on specific commodity prices, and then reimbursed farmers based on the volume and variety of their production, or that of their county.
As with the trade bailout funds, the stimulus money could be distributed in multiple batches. That would allow Perdue to bolster reeling sectors that need money now while leaving room to adjust course as needed.
USDA could even use its additional spending power through the CCC to fund another round of trade aid itself, now that China has struggled to fulfill its promise to import eye-popping sums of U.S. farm goods as part of the “Phase One” trade deal signed in January. For example, soybean futures prices haven’t fallen as steeply since January as other major crops like corn or cotton. But growers of the oilseed arguably were hit hardest by President Donald Trump’s trade war with Beijing, and they made out well under USDA’s trade relief program, POLITICO said.
So, we will see. USDA has not laid out a timeline for when it will announce details of the stimulus payments, but these decisions certainly should be watched closely by producers as they emerge, Washington Insider believes.
Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.
If you have questions for DTN Washington Insider, please email firstname.lastname@example.org
Copyright 2020 DTN/The Progressive Farmer. All rights reserved.