Washington Insider -- Friday

Sonny Perdue to Lead USDA

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

Trump EPA Pick Vows To Honor Congress Intent of RFS Mandates

Scott Pruitt, President-elect Donald Trump's nominee to lead the Environmental Protection Agency (EPA), vowed to "honor the intent" of Congress in requiring refiners to blend biofuel into the nation's gasoline and diesel supply.

"It's not the job of the administrator of the EPA to do anything other than administer the program according to the intent of Congress, and I commit to you to do so," Pruitt said at his confirmation hearing.

Trump adviser and activist investor Carl Icahn has pressed EPA to change the way the program is structured, pushing the compliance burden away from refiners toward fuel blenders.

Waivers used to lower annual quotas below congressional targets should be used "judiciously," Pruitt said.

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Commerce Says Chinese Fertilizer was Dumped in US

Ammonium sulfate from China has been dumped on the U.S. market, according to a determination by the U.S. Commerce Department announced January 18.

The determination brings the fertilizer imports a step closer to facing substantial trade remedy duties. According to Commerce, the imports from China were worth an estimated $62 million in 2015.

Commerce found the imports were dumped in the U.S. at a margin of 493.46%. If the U.S. International Trade Commission (ITC) finds the imports materially injure or threaten the domestic industry, antidumping duties will be imposed in line with that margin.

Domestic US fertilizer producers PCI Nitrogen LLC and AdvanSix Inc., and the United Steelworkers union, requested both antidumping and countervailing duties on the Chinese fertilizer imports. They contend the Chinese government provided domestic producers with subsidies in the form of preferential loans, tax benefits, freight discounts and cheap inputs.

If imposed, duties would apply to Chinese producers, exporters, and U.S. importers. ITC is expected to make its final injury determination by March 3.


Washington Insider: Sonny Perdue to Lead USDA

After a long search, president-elect Trump announced this week that former Georgia Governor Sonny Perdue will be Secretary of Agriculture. As everybody knows by now, that search took far longer than expected and there is enormous national interest in how the president-elect plans to deliver on his promises to the rural voters who helped him win the election, the Associated Press said.

The position of Secretary always attracts attention, since it is seen as signaling improved access to producers of competing US regions and crops. For example, cotton producers have been under recent economic pressure and were especially happy with the Perdue choice.

The AP notes that Perdue was formerly a Democrat who later became a Republican. He grew up on a cotton farm and was trained as a veterinarian. In addition, AP says that the choice of Perdue's heads off "abundant speculation" that Trump was seeking a Latino for the job.

Eric Tanenblatt, Perdue's first chief of staff in the Georgia governor's office, says that Trump and Perdue have a great deal in common, citing Perdue's conversion to the Republican party and service as the first Republican governor of Georgia in generations.

AP also focuses on the issue of agricultural spending in the context of the looming 2018 farm bill. While the bill is Congress's responsibility, Perdue also could face conflicts over how to fund the department's exceedingly diverse programs, "especially the enormous food stamp program, which many conservatives have sought to cut."

"It's at great risk, and what has saved it from being chopped up into little pieces is that it's in the Farm Bill and therefore logrolled with agricultural supports," said Marion Nestle, a professor of nutrition at New York University.

It is true, AP says, that many of the core tensions of the presidential campaign run through the agricultural sector: It tends to depend on immigrant labor, and to benefit from and support free trade. For instance, the American Farm Bureau Federation is a big supporter of the Trans-Pacific Partnership (TPP), writing that "annual net farm income will increase by $4.4 billion, driven by an increase of direct U.S. agricultural exports of $5.3 billion per year upon full implementation of the TPP agreement." Trump has staunchly opposed the deal.

How Perdue will attempt to resolve these contradictions remains unclear. He once signed legislation in Georgia that sought to crack down on illegal immigration and drew widespread protests. As for trade, Perdue founded the Atlanta-based company Perdue Partners LLC after his governorship ended, promising to help companies find "new opportunities to sell American products and services abroad."

Although not one of the higher-profile Cabinet posts, Trump's pick of an agriculture secretary took on added significance because his victory was bolstered by several swing states with large agricultural industries including Iowa, North Carolina and Wisconsin.

Trump has said that environmental regulations are "undermining our incredible farmers," and some observers expect cuts to environmental and conservation programs at the Agriculture Department on his watch, as a Republican-controlled Congress moves to pass a new farm bill.

While many ag advocates supported the Perdue announcement, the Environmental Working Group did not. "It should be no surprise that the incoming Trump administration, which has proposed putting executives from Big Food and Big Oil in top cabinet positions, would pick someone like Governor Perdue -- who has received taxpayer-funded farm subsidies -- to lead the Department of Agriculture."

If confirmed, Perdue will head a sprawling agency with a $155 billion annual budget and close to 100,000 employees, one of the largest federal departments, and one that includes branches ranging from the US Forest Service to the Animal and Plant Health Inspection Service and duties ranging from co-publishing the U.S. Dietary Guidelines to running the school lunch program.

The agency also supports the U.S. ag industry and rural communities by fighting barriers to agricultural exports, making loans to farmers, supporting the ethanol industry, and operating an enormous crop insurance program that paid out $64 billion from 2009 through 2015, AP says.

So, Perdue almost certainly will have his work cut out for him. He clearly knows agriculture, but the job of Secretary clearly has pitfalls all its own—in spite of the image of agriculture as largely bi-partisan. Even trade and immigration were once much more bi-partisan than they are now, cynics say.

Governor Perdue likely has a tough hide, as do most successful governors, but that characteristic could be tested frequently in the coming months in both internal intra-administration fights and well-established, highly toxic national issues of ag and food program funding, Washington Insider believes.


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