Washington Insider -- Tuesday

Two-Tier Cruz Fight in Iowa

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

USDA Updates Swine Enteric Coronavirus Disease Federal Order

An updated Federal Order related to swine enteric coronavirus diseases (SECD) such as porcine epidemic diarrhea virus (PEDv) has been released by USDA’s Animal and Plant Health Inspection Service (APHIS). The new order is effective Jan. 4, 2016.

The updated Order will do several things, APHIS noted, including changing how emergency funding APHIS received in 2014 will be used. “APHIS has reprioritized its needs going forward and will focus all remaining SECD funds towards diagnostic testing,” the agency said. “With this modification, the funds should last long enough to cover diagnostic testing through this winter season.”

Eliminating the herd plan requirement, along with reimbursement to veterinarians for completing those plans and eliminating reimbursement for biosecurity actions, like truck washing, are all part of the updated Order.

In response to a large number of SECD cases that were causing significant hardship for the U.S. swine industry, APHIS issued a Federal Order in June 2014 making SECD a reportable disease. At the same time, USDA made funds available to cover specific costs associated with the disease. SECD remains a reportable disease, which means that producers, veterinarians, and diagnostic laboratories are required to report all cases of SECD to USDA or State animal health officials. The reporting criteria are unchanged in the updated Federal Order.

USDA is now receiving more accurate and timely information about SECD-affected herds and their locations, which allows animal health officials to better understand how the disease spreads and what measures are most effective in containing it. The outbreak peaked between January and March 2015. In the last five months, the weekly average of new confirmed positive premises has dropped 90% when compared to the average number of weekly cases during the peak of the outbreak.

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ERS: School Lunch and Breakfast Costs Drop with Higher Participation

Per-meal costs of school breakfasts and lunches are seen falling when the total number of meals served increases, with breakfast costs falling by a greater percentage than those of lunches, according to the Economic Research Service.

Over 30 million school children are served meals through USDA’s National School Lunch Program and another 13.5 million are served meals through the School Breakfast Program. Participation in the program varies by school district and more districts serve lunches than breakfasts, though many serve both.

School meal production costs vary based on total meal volumes. The smaller overall number of school breakfasts served means that an increase in the total number of breakfasts served yields a greater corresponding percentage decrease in per-meal costs than the same increase in the number of lunches served would.

If the number of school breakfasts served increases from average to above average, the cost per breakfasts would fall an average of 50%. The same change in lunch meals served would only yield a 20% decrease in per-meal costs.

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Washington Insider: Two-Tier Cruz Fight in Iowa

Presidential candidate Ted Cruz is on a state-wide bus tour this week in Iowa while at the same time facing strong headwinds from an influential state organization that is fighting his stand on mandates for fuel ethanol.

In its final candidate scorecard before Iowa kicks off the 2016 presidential race with its Feb. 1 caucuses, America’s Renewable Future, an ethanol-advocacy group, reserved its harshest words for Cruz, describing the Republican who is leading Iowa’s polls as a threat to the corn-based alternative fuel that has been a boon the state’s economy.

“Ted Cruz is dangerous to Iowa and thousands of Iowa jobs,” Eric Branstad, the group’s leader and the son of Iowa’s Republican governor, Terry Branstad, said in a statement. Referring to the Renewable Fuels Standard, a federal mandate on the amount of ethanol required in gasoline, the statement continued: “Our economy depends on a strong RFS, and Iowans count on $5 billion in wages thanks to it. Ted Cruz wants to kill their jobs, and we are going to make sure every Iowan knows that.”

Cruz was one of only two candidates rated “bad” by the group. The other was Senator Rand Paul of Kentucky, who has said he considers federal support for biofuels a form of corporate welfare. A bad rating was given to candidates who “stood against Iowa farmers and the RFS.”

All other Republican candidates, and all three Democratic contenders, got a good rating. That went to those who “demonstrated consistent support for the RFS and Iowa farmers,” according to the group, which boasts 17 field staffers working throughout the state.

At the same time, Cruz seems happy to have this fight headlined across the state, in addition to his stands on foreign policy, immigration, government spending and others because he and his backers think he can win. He has been the beneficiary of large campaign contributions from the oil and gas industry, which has opposed ethanol’s expansion, Bloomberg reported. And, he has co-sponsored legislation that would repeal the Renewable Fuels Standard, the bedrock of government support for the industry. Earlier this year, Cruz touted his stance on the issue as proof that he won’t pander to those in early-voting states.

Government support for biofuels has declined in recent years, with tax credits and pro-industry tariffs allowed to lapse as the industry has expanded.

Still, Iowa corn farmers rely on the fuel more than ever to help them cope: farm profits this year are expected to be the lowest since 2002. The state’s 43 ethanol plants produced just over 4 billion gallons this year, up slightly from 3.9 billion last year. That’s a new record for the biggest U.S. biofuel-producing state, the Iowa Renewable Fuels Association said this week.

Earlier this month, the latest Bloomberg Politics/Des Moines Register poll showed that the RFS is supported by 61% of those planning to participate as Republicans in the Iowa caucuses.

Other candidates in the past have shown up in Iowa primed to kill the ethanol subsidies, but frequently see the political light after being introduced to the local true believers who have long dominated most conversations here. Still, Senator Cruz may have a stronger appetite for controversy—and, stronger anti subsidy backers—than does the long list of those who found their resolve fading.

The result is what looks like a make or break fight for both sides. If Cruz wins in Iowa, it will be suddenly harder for Republicans to support the mandate for ethanol in other areas. If he loses, the prevailing wisdom will be supported once again, and it will be increasingly difficult to believe anybody will stand up to the unified ag establishment here. Still, the Iowa fight is suddenly more interesting with higher stakes and is increasingly one to watch, Washington Insider believes.


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(GH/CZ)