Washington Insider-- Friday

Administration Proposal for Rural Program Cuts

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

US National Biodiesel Board Seeks Antidumping, CVD Investigation on Argentine, Indonesia Imports

An antidumping and countervailing duty (CVD) petition on imports of biodiesel from Argentina and Indonesia has been filed with the U.S. Department of Commerce and U.S. International Trade Commission (ITC) by the National Biodiesel Board (NBB). The U.S. industry is seeking tariffs of 23.3% on Argentina and 34% on Indonesia to counter dumping from those nations.

"The National Biodiesel Board and US biodiesel industry is committed to fair trade, and we support the right of producers and workers to compete on a level playing field," said Donnell Rehagen, CEO of the NBB. "This is a simple case where companies in Argentina and Indonesia are getting advantages that cheat US trade laws and are counter to fair competition."

Biodiesel imports from Argentina and Indonesia rose 464% from 2014 to 2016, taking about 18% of market share, the biodiesel board said. "The resulting imbalance caused by unfair trade practices is suffocating U.S. biodiesel producers," Rehagen explained.

Based on NBB’s review, Argentine and Indonesian producers are dumping their biodiesel in the U.S. by selling at prices that are substantially below their costs of production. This is reflected in the petition’s alleged dumping margins of 23.3% for Argentina and 34% for Indonesia, according to an NBB statement. The petition also alleges illegal subsidies based on numerous government programs in those countries.

The petition was filed on behalf of the NBB Fair Trade Coalition, which is made up of the NBB and U.S. biodiesel producers.

The Advanced Biofuels Association said in a statement that its members "vehemently oppose this action and expect these petitions’ rejections, similar to the EU’s recent rejections of NBB’s efforts conducted in Europe."

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Proposed Dairy Policy Changes Get a Big CBO Price Tag

Congressional Budget Office (CBO) analysts estimate that a major change sought by dairy producers to the Margin Protection Program (MPP) could cost more than $2 billion, a price estimate questioned by House Agriculture Committee leaders.

“I don’t want expectations to outrun what we can actually get done,” Chairman Mike Conaway, R-Texas, said at a hearing Wednesday on dairy policy. He said it is “not rational to be able to add that kind of resources” to MPP. “I don’t know where we’re going to find that” amount of money, said the committee’s ranking member Collin Peterson, D., Minn.

The National Milk Producers Federation (NMPF) is asking Congress to reverse a 10% cut that was made during drafting of the 2014 Farm Bill in the feed cost formula that is used to calculate the margin between milk prices and feed costs. MPP makes payments to producers when the margin falls below minimum levels. The current program only uses the average price of soybean meal at Decatur, Illinois. NMPF wants to include all soybean-meal price data collected by USDA’s Agricultural Marketing Service. "Let’s get the policy right and then address the cost of it. We’re not looking to have an expensive program," said Jim Mulhern, NMPF's president and CEO.

The American Farm Bureau Federation estimated that producers’ margins would have been $1 per hundredweight lower in 2015 and 2016 had the farm bill increased the feed formula by 10%. That would have resulted in payments of $36 million in 2016, based on the limited purchase of buy-up coverage that year. Payments could have been significantly higher if more farms had purchased higher levels of coverage.


Washington Insider: Administration Proposal for Rural Program Cuts

Politico is emphasizing this week the fairly hard hit USDA takes in the recent administration “skinny budget,” a topic ag secretary nominee Sonny Perdue heard a lot about on Thursday. The fact is, Politico says, the “rural voters who turned out in droves to elect President Donald Trump would be some of the biggest losers under the new White House budget.”

The spending blueprint calls for a 21% cut to the Agriculture Department. Rural voters supported candidate Trump’s promises to roll back environmental regulations, overhaul Obamacare and put blue-collar Americans back to work, as well as his nods to farmers on the campaign trail. Now, while many of those promises are in the budget, the cuts that would affect farmers and rural communities are seen by some as a sign from the White House that middle America isn’t a priority, Politico says.

USDA would take a $4.7 billion hit to its discretionary budget, trimming it to $17.9 billion. It’s unclear exactly where those cuts would fall, though the White House has named some specific targets, Politico says.

The plan would eliminate the Rural Business and Cooperative Service — a loan program criticized by the conservative Heritage Foundation — that costs $95 million a year but is credited with spurring millions more in economic activity, and a water and wastewater loan and grant program, which costs nearly $500 million and largely helps rural communities.

The budget blueprint doesn’t touch food stamps, the country’s largest nutrition program because that falls under mandatory funding. It would decrease the funding available for other USDA feeding programs, which are considered important for rural communities because they give assistance to millions of Americans who struggle to buy groceries and they also help ensure steady demand for the food that farmers sell.

For example, the administration calls for $6.2 billion for the Women, Infants, and Children program, a federal nutrition program aimed at pregnant women and young children that now assists half of all infants born in the United States. That program received $6.6 billion in Fiscal 2016, the last budget year available. The White House noted that the funding level is expected to cover all eligible beneficiaries, but anti-hunger advocates worry the reduction would limit access to those in need down the road.

The proposal comes as rural America is struggling with higher unemployment rates and a devastating opioid epidemic, Politico says. One in four children in rural America are living in poverty. One in five live in a household that sometimes struggles to put food on the table. And the proposed cuts are large enough to have attracted the ire of key farm-state Republicans, some of whom have strongly supported the president, Politico says.

“The president’s proposed budget reduction for agriculture does not work,” Sen. John Hoeven, R-N.D., a member of the Ag Committee and chairman of the Appropriations agriculture subcommittee, said. Given the farm challenges, including low commodity prices and natural disasters, “we need to prioritize and maintain our agriculture budget. While we support more funding for our military and defense, we must maintain support for our farmers and ranchers.”

House Ag Committee Chair Mike Conaway, R-Texas, also raised concerns about the cuts. “U.S. farmers and ranchers are struggling, he said, and Congress has to be careful not to exacerbate the problem.”

As a result of such concerns, farm-state Republicans are quick to point out that the budget is merely a wish list from the president and that Congress will have final say in what 2018 funding looks like. “This is the White House’s vision document, and what we are going to do is propose ours, too,” Rep. Rodney Davis, R-Ill., said Thursday. “Budgets are documents that are not appropriations, they are not authorizations. ... I’m no more scared than I was when President Obama offered spending priorities that were not conducive to farmers.”

“The budget makes it clear that the Trump administration doesn’t understand how the government works in rural America,” said House Agriculture ranking member Collin Peterson, D-Minn. He cited cuts to the USDA’s water and wastewater loans as an example. “While the administration called them duplicative, the financing is the only way small towns can update their water systems.”

Funds for agricultural data collection at the National Agricultural Statistics Service and Economic Research Service also are on the chopping block, along with the number of staff in offices across the country who deploy loans and grants to farmers and local projects.

"The president's first budget request misses the mark entirely when it comes to the needs of rural America," said Greg Fogel, policy director at the National Sustainable Agriculture Coalition, a group that represents small- and mid-size farm groups. "He is targeting these detrimental cuts right at the people who helped bring him to the White House — America's farmers, ranchers and rural communities.”

Of course, the real budget battles are yet to come, and will concern the huge Food Stamp program and the mandatory commodity and conservation programs that make up most of USDA’s expenditures. However, the budget hawks are clearly in the driver’s seat now, and their focus on agriculture is already being felt — and could intensify as the new farm bill debate gets underway, Washington Insider believes.


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