Washington Insider-- Thursday

Challenges for USDA

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

USDA 's FAS In China Still Notes Uncertainty On Over-Quota Tariffs On Corn Imports

The USDA Foreign Agricultural Service (FAS) in China has kept its import forecast for corn at 22 million metric tons for 2020-21, indicating that the country will likely use imports of sorghum, barley and other grains in feed rations.

But the report also addressed the issue of China's corn imports, which FAS pegs at 4.5 mmt more than the official USDA level. The calendar year 2020 corn imports by China surpassed the 7.2 mmt tariff-rate quota (TRQ), the report noted, “with no slowdown in sight.”

But the issue of the 65% tariff that is applied to imports above the TRQ remains a question, as the report said, “It remains unclear if the 65% out of quota duty was applied to imported corn or if additional TRQs were quietly issued as official government agencies remain silent on the matter. In addition, there is rampant industry speculation of a 'special TRQ' that will be used for China to import U.S. corn to meet its purchase commitments under the U.S.-China Phase One Economic and Trade Agreement.”

It is interesting that even USDA's on-the-ground offices in China are unable to unearth additional details on the 65% tariff that applies to imports above the TRQ levels, a key question given that China's appetite continues strong for U.S. corn, including 1.36 mmt of purchases announced Tuesday by USDA.

Sinclair Confirms Receipt of RFS Waivers In Court Filing

Sinclair Oil Corporation said in court filings this week it was the recipient of waivers of its Renewable Fuels Standard (RFS) obligations via small refinery exemptions (SRES) granted by the Trump administration earlier this month.

Reuters reported that Sinclair was the recipient of at least two of the three waivers granted.

Sinclair made the admission in court filings defending the waivers in response to the Renewable Fuels Association (RFS) filing to block the waivers; The U.S. Court of Appeals for the DC Circuit ruled the three waivers granted by EPA should be stayed. Sinclair filed the statement in court, saying it had the right to intervene in the matter as if the SREs are blocked, it would face financial harm. It is not clear if Sinclair was the recipient of all three waivers issued by the Trump administration last week — two for the 2019 compliance year and one for the 2018 compliance year.

The SRE issue is just one of the biofuel policy matters facing the new administration as EPA also now has to put forth proposed levels for the 2021 biofuels and 2022 biodiesel levels under the RFS.


Washington Insider: Challenges for USDA

The New York Times carried a detailed retrospective this week on the “State of the Union for food.” It began by noting that “transition memos from the left flank of American agriculture” have been piling up including pleas small and large.” It listed several: fix the rules for raising organic livestock and reverse the department's track record with Black farmers. Restore school food standards and strengthen GMO labels. Prioritize the climate crisis. There was even a suggestion to change the name to the Department of Food and Well-Being, among many others.

Still, the Times said that a key perspective about USDA for “food warriors,” who worry that their issues were shoved back several squares on the game board under former President Trump is that USDA is an understaffed agency facing staggering hunger and safety challenges.” It will likely be led by Tom Vilsack, who was Agriculture secretary in the Obama administration is expected to be confirmed by the Senate for another turn, NYT said and commented that “he has already sketched out his agenda.”

“There are probably five very, very large challenges ahead that have to be dealt with very quickly,” Vilsack said. Topping the list is protecting Agriculture Department employees and people who process the nation's food from the virus, and figuring out which land-grant universities, government laboratories and other department offices might be able to store and administer vaccines.

Hunger relief was listed as a pressing issue, as are two of his boss's other priorities: promoting social justice and fighting climate change. Next comes propping up regional food systems and helping farmers.

However, the Times also notes that Vilsack is returning to a vastly different department from the one he ran in the Obama era, when it landed on the Forbes list of America's best employers. Morale is low and many positions are unfilled – especially in agencies that provide the data and scientific research for policy decisions.

The Agriculture Department, with a budget of $153 billion and nearly 100,000 employees, runs 29 agencies and offices whose jobs range from feeding the poorest Americans and regulating what public schoolchildren eat to managing forests and helping farmers sell commodities like soybeans abroad.

Under President Obama, childhood nutrition and the quality of school food became a priority. Michelle Obama created a permanent White House garden and climate-friendly policies gained traction.

When President Trump arrived at the White House, his supporters joked about turning the garden into a putting green. His USDA secretary, Sonny Perdue, moved the department's largest science-based research agencies, the Economic Research Service and the National Institute of Food and Agriculture, from Washington to Kansas City, Mo. Many employees resigned rather than move – the staffs were gutted, limiting the agencies' effectiveness.

Also, President Trump became a champion in many rural communities, easing regulations and paying farmers when his “get tough” trade policies and the pandemic hurt sales.

But the mood was bleak on the other side, according to Laura Batcha, the chief executive officer of the Organic Trade Association which represents a $50 billion segment of the food industry. “The root of it was a hyper-anti-regulatory agenda with no respect for organics or other forms of sustainable agriculture.”

The Times says that some advocates, like Batcha, have strong hopes for Vilsack – but others consider him a retread and not even all agribusiness and commodity farmers are happy with his nomination. Still, the new president went with experience, seeking someone who could immediately get to work on pandemic-related safety and nutrition issues. The number of Americans who face hunger rose by some estimates to more than 50 million in 2020, from about 34 million in 2019, the Times said.

Last week, President Biden signed an executive order that would increase both the amount of federal food assistance for about 12 million people who use the supplemental nutrition programs and the grocery money given to families with school-age children. He has also included more money for other federal feeding programs in his proposed $1.9 trillion stimulus package.

The pandemic has shown how fragile the food-supply chain is, Vilsack said, and has underscored the need to open more regional and local markets and increase the number of meat processors so the country isn't so reliant on a handful of plants.

Changes that many people thought were decades away, like universal school meals, stronger urban-rural supply chains and e-commerce for agriculture, have accelerated during both the pandemic and the Trump administration, said Krystal Oriadha, the senior director of policy and programs at the National Farm to School Network.

Farmers, environmentalists and anti-hunger advocates were forced to strengthen relationships based on a new understanding of how interconnected and vulnerable the food system is. “This is a new moment, with a new generation of voters is putting pressure on ideas around environmental and racial-justice issues like we haven't had before,” she said.

“If we have one-idea-fits-all at the national level, it just gets watered down,” she said. “I can't think nationally anymore. I need to act locally. I need to go where the doors are open.”

So, we will see. Clearly, the ag industry is far more complicated now than it used to be and many of its key issues are extremely controversial—especially those linked to the environment and other social issues. These are concerns that producers should watch especially closely as they emerge, Washington Insider believes.

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