Washington Insider-- Thursday

DTN's Washington Insider

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

Three Biofuel-Related Bills Coming

Biofuel-backing senators will introduce three pieces of legislation aimed at bolstering the sector, including efforts to expand higher biofuel blends, provide tax incentives for flex fuel vehicles and establish a tax credit higher blends of ethanol.

The first effort would appropriate $100 million annually in Fiscal Years (FYs) 2021 through 2030 for efforts to update fueling dispensers and storage tanks for higher biofuel blends, with 75% cost share for new pumps to dispense higher ethanol blends, 50% for higher biodiesel blends, and 40% of the cost to update tanks.

Another measure would establish a $200-per-vehicle tax credit for flex-fuel vehicles.

The low-carbon fuel tax credit would provide 5 cents per gallon for E15 and 10 cents per gallon for blends over 15% ethanol.

There already has been a push by some lawmakers to include biofuel efforts in any infrastructure package, and it would seem these pieces of legislation are being offered potentially with that goal in mind. Sens. Amy Klobuchar, D-Minn., and Joni Ernst, R-Iowa, are co-authors of the first two pieces of legislation with Klobuchar and John Thune, R-S.D., teaming up on the low-carbon fuel tax credit bill.

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USDA Sends Final Rule to OMB On Non-Cattle Imports And BSE

USDA has sent forward a final rule to the Office of Management and Budget (OMB) for review that would revise rules for imports of sheep, goats, and other non-cattle ruminants and their products with regard to bovine spongiform encephalopathy (BSE).

The rule would remove BSE-related import restrictions on sheep, goats and most of their products and add import restrictions relative to transmissible spongiform encephalopathies (TSEs) for certain wild, zoological or other non-cattle species.

The rule would align U.S. import conditions with internationally accepted rules from the World Organization for Animal Health's Terrestrial Animal Health Code. USDA aims to publish the final rule in August.

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Washington Insider: Still Waiting on More Dairy Aid

The dairy sector and lawmakers representing key dairy states have been pushing for more financial help for dairy producers in the wake of the COVID pandemic.

Dairy producers and others have complained that they did not see as much benefit from the pandemic aid efforts like the Coronavirus Food Assistance Program 2 (CFAP 2) which paid out more than $1.2 billion to dairy producers and the CFAP 1 effort saw payments of $1.8 billion.

Plus, the dairy sector saw a big rise in prices via the Farmers to Families Food Box Program. That effort surprised markets and sent Class I milk prices shooting higher as the industry grappled with the sudden rise in demand from the government effort that resulted in fresh dairy products being sent out to recipients.

But the Food Box Program has since ended, with USDA pledging to put the “best of” from the Food Box effort into other established food and nutrition efforts. And they have announced help will be available to set up storage for fresh products that could be included in those food and nutrition efforts.

USDA on June 15 acknowledged that not all sectors or producers had shared in pandemic aid equally, as a portion of the aid announced was aimed at “filling gaps in previous rounds of assistance and helping beginning, socially disadvantaged and small and medium sized producers that need support most.” USDA said the efforts it announced that day would be coming over the next 60 days.

And dairy figured into that mix. USDA in April announced it would be moving ahead with a new Dairy Donation Program (DDP), an effort to “address food insecurity and mitigate food waste and loss.” The June 15 announcement from USDA said that $400 million would be earmarked for that effort. But the program is not yet ready to roll. USDA only on June 9 sent the DDP proposed rule to the Office of Management and Budget (OMB) for their review. That review could take up to 90 day, but odds are USDA is expecting that will not be the case. So that effort will likely be fully launched days after OMB finishes their review of the program.

USDA also said that there would be $580 million in Supplemental Dairy Margin Coverage (DMC) payments made to small and medium farms. But there too, additional regulations are expected to be needed in order to make those dollars available. And as of June 30, USDA had not sent those regulations over to OMB for their review.

As the announcement was made that President Joe Biden and USDA Secretary Tom Vilsack would go to Wisconsin this week, expectations rose for there to be some kind of dairy announcement. With the DDP regs still at OMB and the apparently needed regs to make additional DMC payments yet to go to OMB, odds rose that some other aid effort was going to be announced.

That set off a flurry of activity in Washington, with indications that a program of direct payments to dairy producers in the range of $750 million to $1 billion was on tap. As last week wore on, the dollar amount appeared to be the major uncertainty, with all eyes focused on June 29, the day of the Biden/Vilsack Wisconsin visit.

The extra payments appeared to be under the scope of what USDA announced June 15 -- “Additional pandemic payments targeted to dairy farmers that have demonstrated losses that have not been covered by previous pandemic assistance.” That was a rather general description which appeared to a description of the direct aid that was being worked on to be announced in Wisconsin.

But all that changed late in the week. The White House was sending signals that the Wisconsin trip focused mostly or entirely on infrastructure. Seems the White House was eyeing that as part of their damage control after the dust up that arose after the announcement last week that saw Biden imply that if Congress only sent him the bipartisan infrastructure package, he would veto it.

That set the White House scurrying to walk back those remarks and make clear at least from their perspective, or officially, there was no linkage.

So when Tuesday rolled around, there was no clear signal of a dairy program that would be announced. And to boot, Vilsack did not even make the trip.

So we will see. Clearly there will be more aid flowing to dairy producers, but it may take time for a chunk of those dollars to move and the process for getting the payment effort readied needs to be closely monitored, Washington Insider believes.

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