Washington Insider-- Monday

By DTN's Washington Insider

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

Mexico Considers Duty-Free Corn Deals With Brazil, Argentina: Financial Times

Mexico, the world's biggest buyer of U.S. corn, is considering offering duty-free access to Brazilian and Argentine corn as an alternative to American imports in a move that could have big consequences for U.S. farmers worried about Donald Trump's trade and tax agenda, the Financial Times reported.

Mexico at present imports 98% of its corn from the U.S., and total U.S. farm sales to Mexico were $17.7 billion last year — five times greater than when the North American Free Trade Agreement (NAFTA) came into force in 1994. Mexican corn imports from the U.S. were worth $2.3 billion in 2015, according to USDA.

But President Donald Trump has said NAFTA is unfair to the U.S. and has vowed to renegotiate the deal or walk away, impelling Mexico to speed up a search for alternative suppliers in South America. "I am pretty optimistic about the possibility of having a deal with these countries soon," Juan Carlos Baker, Mexico's deputy economy minister, told the Financial Times in an interview. "We're pretty far advanced with Brazil... Argentina is a few steps behind," he said, adding that he expected to visit Argentina in April or May and soon after to meet Brazilian officials in his sixth such bilateral meeting since 2015.

Baker said Mexico could give South American producers the same terms U.S. farmers now enjoyed. "It's going to be the result of negotiations but... if we want to give zero [tariffs], we have the possibility, if it suits us," he said.

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Livestock and Poultry Groups Appeal To USDA To Kill GIPSA Rule

The meatpacking industry has joined livestock and poultry groups in asking the Trump administration to withdraw a rule that would set standards of proof for challenging marketing practices in the livestock and poultry industry.

The rule, which the outgoing Obama administration issued in December, is set to take effect April 22. The interim final rule is intended to aid producers in challenging processor contracting and buying practices.

In comments to USDA, the North American Meat Institute, which represents packing companies, said the rule would "set in motion a cascade of litigation" that would "roll back the significant process" that the industry has made in meeting consumer demands. But some farmers who support the rule say they have been unfairly required to prove that they harmed the entire market.

The new rule would tell courts that a practice can violate the Packers and Stockyards Act without a legal finding of harm to competition.

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Washington Insider: Perdue Confirmation Hearing

Governor Perdue sailed through a "no drama" confirmation hearing on Thursday and appears to have succeeded in attracting widespread support. Informa Economics reported that the hearing was short, and that "Perdue nailed it."

The committee will meet at a later date to vote on Perdue's confirmation during a business meeting.

Panel Chairman Pat Roberts, R-Kan., said he hopes to move Perdue's nomination as soon as possible. Ranking member Debbie Stabenow, D-Mich., also indicated support for the nominee.

In the meantime, however, Perdue will first have to answer questions submitted by Committee members in writing. As a result, the full Senate is not expected to vote on Perdue until after its two-week Easter recess, which ends April 21, Informa said.

Roberts opened the hearing by observing that the importance of trade cannot be overstated and that USDA, which would be cut by 21% under President Donald Trump's proposed budget, "needs a voice, an advocate at the highest level of government."

The former Republican governor of Georgia directly addressed the challenges he sees. In his opening statement he said he understands that running a department with nearly 100,000 workers and multiple missions would be challenging. He promised "open, honest and efficient communication" with the committee on policy issues and as the panel works on a 2018 Farm Bill.

Perdue also noted that he had no input into the administration's recent budget proposal and that he viewed the budget proposal much like he considered a revenue estimate he did not like during his time as the GOP governor of Georgia: "I didn't like it, but we manage to it... These are important programs," he added. "I recognize that."

As for Trump and rural voters, Perdue said, "I think the president understands that many of his votes came from many of the rural areas" that lawmakers have mentioned.

Perdue also said he will begin working on immigration issues "post haste" if confirmed. He said that he would advocate for changes to the H-2A visa program for temporary agricultural workers, especially for farm-state dairy operations. Dairy farmers currently cannot use this program because their labor needs are year-round.

On trade policy matters, Roberts said there appear to be "too many cooks in the kitchen" on trade under the Trump administration. The Commerce Department, the White House's newly created economic trade council and the U.S. Trade Representative (USTR) are expected to play a role in trade policy.

Perdue said he would stress agriculture's reliance on export sales to the administration and would work with the USTR office and the Commerce Department on trade generally. He also committed himself to work "tirelessly" to promote U.S. agriculture products in foreign markets and that he has already been in touch with Robert Lighthizer, Trump's pick for USTR, on the subject. He told the Committee that during that meeting, Lighthizer told him 80% of what he has heard so far about trade has involved agriculture.

Regarding trade with Cuba, Perdue urged lawmakers to ease restrictions on financing sales there to open up trade. Current U.S. law exempts agriculture from the embargo but requires sales be made with cash in advance, a policy several lawmakers want to change. "I think they would love to have our products... if you all could see fit to look into the financial situation," Perdue said.

Regarding farm policy, Perdue said he is committed to consider more risk-management tools for dairy producers ahead of the 2018 Farm Bill and that he was "intrigued" by comments from Sen. Debbie Stabenow and several farm groups on dairy issues. He said that he is "absolutely committed to look for a way to give immediate and temporary relief ahead of the 2018 Farm Bill," — although he added that any response would have to be "mindful" of budgetary constraints.

Perdue said he would address concerns of cotton producers, but offered no details. He also strongly supported the federal crop insurance program and revealed he had discussed the rural opioid crisis in detail with former USDA Secretary Tom Vilsack and would support using USDA resources to combat the problem. He also noted that USDA's rural development programs, facing proposed administration cuts, are vital to rural communities.

So, Governor Perdue appears likely to be a fairly conventional Secretary during a time of strong opposition to government spending for a number of USDA programs. In spite of administration recognition of the sector's support, Secretary Perdue can expect to face strong internal pressure to conform to high priority political goals affecting traditional programs that make up his enormous portfolio. And, the sector may well be fortunate to be served by a seasoned pro to fight these coming battles, Washington Insider believes.

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