Washington Insider -- Monday

Additional Farmer Aid Announced

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

Some Tweaks To Bird Flu Responses By Some Countries

USDA’s Food Safety and Inspection Service (FSIS) has indicated some US trading partners have adjusted their response to USDA reporting a positive find of highly pathogenic avian influenza (HPAI) in a commercial turkey flock in South Carolina.

Ukraine shifted from their blanket ban on imports of all US poultry to now restrict poultry and poultry meat products originating from the rest of the U.S. (other than South Carolina) if they were slaughtered on or after April 14, 2020, unless they are heat-treated. South Korea said its trade ban applies to product shipped from South Carolina on or after April 10, 2020, regardless of the production data.

As for the European Union, indications are the situation there is the subject to a final agreement on the exact regionalization of shipments from the U.S., according to contacts. US Chief Ag Negotiator Gregg Doud told Pro Farmer the situation remains under discussion.

USDA Continues To Insist US Food Supply Is Plentiful

USDA officials from Secretary Sonny Perdue on down have continued to insist there is no shortage of food in the country despite shoppers seeing empty store shelves in grocery stores.

“We have sufficient quantities to not only feed our country but maintain robust exports even in the face of the COVID-19 pandemic,” said USDA Chief Economist Rob Johansson in a blog post. Pointing to forecasts from USDA’s WASDE and data on supplies in cold storage, Johansson said the figures show an “adequate domestic supply of meat, eggs and dairy products to meet immediate demand.” Noting that meat packing plans are considered essential industry infrastructure, Johansson said, “according to the Food Safety and Inspection Service (FSIS), the USDA agency responsible for regulating meat processors, closures of facilities regulated by the agency due to the disease outbreak have been limited, and temporary. Similarly, wheat and rice mills, which generally are not labor-intensive operations, have not had any significant disruptions.”

He acknowledged there is less certainty on the import side which the U.S. relies on for about 15% of total food consumption. While shortages in supplies from countries hit by COVID-19 could cause shortages and higher prices here, Johansson said, “industry and news reports on trade flows suggest that even countries heavily affected by COVID-19 spread, continue to ship food products and that there are no immediate risks of massive disruptions in the global supply chain.”

The rise in demand at the retail (grocery) level has led to some shortages, but he noted that “over the next few weeks, as retailers restock their shelves and demand from overstocked consumers decline, we will see fewer empty shelves and prices should stabilize or even decline.” But he concluded the situation is one for steady to lower prices ahead. “So overall, the supply and demand factors at play point to stable if not lower market prices in the next few weeks,” Johansson said.

As for uncertainties, he noted that consumer demand trends and the response by farmers and companies to the changing market conditions remain a source of uncertainty.

Washington Insider: Additional Farmer Aid Announced

Press reports this week indicate that the administration will provide a $19 billion economic rescue package for farmers and ranchers. The program will include cash payments as well as purchases of products to be redistributed to food banks.

The report noted that the president counts farmers and rural voters among his most reliable supporters and it indicated that he directed ag secretary Sonny Perdue to “speed assistance to the agriculture sector as producers increasingly bleed profits and start dumping goods like milk and fresh produce.”

Support from the industry could be crucial to the president’s reelection hopes this November in key Midwestern swing states like Wisconsin and Michigan, the report said. However, it also noted that “influential” sectors, including producers of biofuels like ethanol, are frustrated that they were excluded from the program.

The current plan is the latest in a long string of recent ad hoc relief efforts for the agricultural economy. POLITICO says that the administration is “pulling out the stops to bail out farmers and ranchers stung by his own trade war and biofuel policies, in addition to long-term economic headwinds.”

“The program will include direct payments to farmers as well as mass purchases of dairy, meat and agricultural produce in an effort to get that food to the people in need, the President said during a White House press briefing.

Secretary Perdue said at the briefing that the direct aid to farmers will total $16 billion while the department will buy $3 billion in surplus food to give to food banks and other organizations.

Sen. John Hoeven, R-N.D., chairman of the Senate Appropriations panel that oversees USDA spending, released details about how the direct aid would be divided among commodity sectors, with the majority share going to cattle, hog and dairy producers.

USDA is financing the payments through a combination of the new spending authority from Congress included in the stimulus package and existing funds. The President said an additional $14 billion in aid would be available in July.

Some commodity groups have felt burned in the past by the department’s aid efforts, POLITICO said. It cited corn grower complaints in 2018 about a trade bailout that paid them only one penny per bushel, while other sectors were left out of the program entirely.

On Friday, the National Pork Producers Council said hog producers’ slice of the package will “fall short of what is truly needed—and that while the direct payments to hog farmers will offset some losses for some farmers, they are not sufficient to sustain the various market participants, including those who own hogs as well as thousands of contract growers who care for pigs,” NPPC President Howard A.V. Roth said.

The Renewable Fuels Association said USDA “missed a crucial opportunity” to help biofuel producers in crisis as drivers stay off the roads and gasoline consumption plummets. The group said it’s “unfortunate and disappointing that the 350,000 workers supported by America’s ethanol industry were left behind.”

Perdue said USDA wasn’t given enough money by Congress to fully address all the farmers in need. “The demand from all the sectors was even more than we could accommodate at this time,” he said.

As for the commodity purchases, the department said it will start by procuring about $100 million per month each of meat, dairy and fresh produce. Participating distributors and wholesalers will then send pre-approved boxes of the goods to food banks, faith-based organizations, community groups and other nonprofits, USDA said.

Farmers also say they have struggled to access separate pieces of the $2 trillion stimulus package, including forgivable small business loans aimed at helping employers keep their workers on the payroll.

Congress last month authorized USDA to spend more than $23 billion to boost hard-hit sectors including livestock and dairy producers, specialty crop growers and producers who sell to local food systems like farmers markets. Some of those sectors have been struggling for years from trade headwinds, labor shortages, low commodity prices and the rapid consolidation in agriculture.

So, we will see. Managing broad subsidy programs across sectors as diverse as agriculture can be thankless, but USDA has considerable experience and a number of well-honed tools to use. Such efforts tend to be hard to balance, and to create issues that should be watched closely as they emerge, Washington Insider believes.

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