Agri-Pulse Open Mic: Todd Van Hoose, President & CEO Farm Credit Council

This week’s guest on Open Mic is Todd Van Hoose, President and CEO of the Farm Credit Council. Farmers and ranchers across the country continue to struggle in a down farm economy.

In this week’s interview, Van Hoose emphasizes the need for a new farm bill with risk protection including Title One and crop insurance to see producers through this downturn. Van Hoose explains the need for change in the FSA loan program, expanded funding for rural development and an expansion of market access for U.S. commodities around the world.

Link: https://www.agri-pulse.com/media/podcasts/85-open-mic-interview/play/8505-todd-van-hoose-president-ceo-farm-credit-council

Sugar Symposium opens with call for unity in farm bill talks (via Agri-Pulse)

The leaders of the two biggest U.S. farm groups opened the sugar industry’s annual Sweetener Symposium Monday with a plea for unity among ag organizations as Congress gets down to negotiating a new farm bill.

Zippy Duvall, president of the American Farm Bureau Federation (pictured above), told the American Sugar Alliance gathering in San Diego that the tough economic conditions farmers are facing make it obvious that a strong safety net is needed to ensure agriculture producers can plant and harvest a crop from one year to the next.

“If we’re gonna write a farm bill, we couldn’t find a better atmosphere to write it in,” said Duvall, who said a more precise term for the legislation Congress puts together every five years or so should be a “food security bill for the people of America.”

“It’s not a safety net for farmers,” Duvall said. “It’s not a pay check we’re gonna receive… It’s to make sure farmers get through this crop and can get to the next one…”

Duvall also said that this is the right time to negotiate the farm bill because President Trump “talks our language” and has put in place a team that understands farmers and can speak for the sector to congressional negotiators. He specifically praised Agriculture Secretary Sonny Perdue, Interior Secretary Ryan Zinke and EPA chief Scott Pruitt.

Pruitt, he said, had spoken twice before AFBF leaders and each time had received a standing ovation. “Who would ever think an EPA administrator would ever get a standing ovation from a group of Farm Bureau leaders… I never thought that would happen…. He (Pruitt) wants to go back and enforce laws as they were intended, not make up rules.”

Duvall had followed Roger Johnson, the president of the National Farmers Union, who said farmers, ranchers, conservation groups and nutrition organizations “will all have to be pulling together to get the farm bill done.”

He noted that the ag sector is being challenged by groups including the Heritage Foundation and tea party activists who will be looking for cuts in farm spending, and specifically from nutrition programs, which account for most of USDA outlays.

“When you have a knife out to cut, you go where the money is,” Johnson said.

Still, Johnson said he’s optimistic that the farm bill will be finished on time and that the end result will be “evolutionary, not revolutionary.” He said with Congress as divided as it is now, a farm bill may be an “easier lift” than other legislation being debated, and that lawmakers may see the measure as a way to demonstrate they can get things done.

Later, in a separate panel discussion, Jack Roney, an ASA economist, called for a continuation of a strong U.S. sugar policy in the 2018 farm bill, arguing that with U.S. sugar prices still slumping, the country would otherwise be vulnerable to losing much of its domestic sugar industry.

“Sugar is a unique commodity and our policy is unique in that it is designed to operate without taxpayer cost,” he said. Roney pointed out that U.S. sugar growers don’t have access to farm programs such as Agriculture Risk Coverage and Price Loss Coverage, which are designed to provide financial relief to other commodity groups when prices fall below certain levels. Sugar producers, on the other hand, put their crops up as collateral for loans designed to help them maintain their businesses throughout the year.  Because loans are repaid with interest and no subsidy checks are involved, sugar policy has generally been without cost to taxpayers.

“After a sugar crop is completed, producers must hold the inventory until food makers buy it and ultimately need the sugar in their factories,” Roney said. “This keeps our customers from having to store massive quantities of sugar. That kind of just-in-time delivery would be nearly impossible without the cash-flow that government loans provide.”

Roney says there would be other consequences, too, if opponents of sugar policy are successful in gutting the loan system in the next farm bill.

“In today’s low-price environment, you’d see many domestic producers go out of business without a strong safety net – much like the century-old Hawaiian industry that recently went under after years of market uncertainty,” he explained.  “Risk would increase, contraction would occur, and geographic diversity of the industry would shrink.”

That would also mean a greater dependence on subsidized imports, according to Roney.

“As we’ve seen in other countries that’ve outsourced sugar production, grocery shoppers would be vulnerable to market fluctuations and supply issues,” he concluded.  “A reliable, affordable, homegrown sugar supply is in the public interest, and no-cost sugar policy makes it all possible.”

Speaking on the same panel was Randy Green, representing the Sweetener Users Association, who argued that U.S. sugar policy keeps prices artificially high for the companies that use large amounts of sugar, and ultimately for U.S. consumers.

The 34th Annual Sweetener Symposium continues through Wednesday. House Agriculture Committee Chairman Mike Conaway, R-Texas, addresses the group on Tuesday, and the panel’s ranking Democrat, Collin Peterson of Minnesota, is scheduled to speak Wednesday.

Issue Update: Trade Agreements and Cuba

Dave Ladd, President of RDL & Associates, was recently a guest on the Linder Farm Network to provide an overview of issues related to trade agreements and opportunities for the agricultural sector in Cuba.

Part 1: Trade (:45 in length)

Part 2: Trade Opportunities for Agriculture in Cuba (:34 in length)

Dave Ladd, President of RDL & Associates writes about public policy and the political environment. He also serves as Co-Director of Heartland Advocates.  Contact him at daveladd66@gmail.com.

Trump sparks rush of NAFTA lobbying (via The Hill)

Lobbyists are gearing up for the looming renegotiation of the North American Free Trade Agreement (NAFTA), a sweeping trade pact of critical importance to the United States, Canada and Mexico.

Trade officials from the three nations will take the lead at the negotiating table, but business leaders are already working to build consensus around possible changes to the agreement.

About 175 companies and groups in the U.S. listed lobbying federal officials on NAFTA from June 2016 through the beginning of this year. Roughly a dozen other entities have recently hired Washington lobbyists, including states, provinces and business groups in Mexico and Canada.

President Trump has called NAFTA “the worst trade deal ever,” and he threatened to ditch the deal before finally agreeing to renegotiate after talking to Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto.

“I don’t think a [Hillary] Clinton administration would have prompted Canadian provinces to hire a lobbyist,” said one lobbyist working on NAFTA negotiations who asked for anonymity to speak freely.

Lobbyists and government negotiators for Canada and Mexico have bristled at Trump’s criticism of NAFTA but say working with Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer has given them hope about moving forward.

“Trump’s personal style is an important challenge to any negotiation,” said Luis de la Calle, a consultant who was part of Mexico’s original NAFTA negotiating team. “There’s a difference between today and 25 years ago. That negotiation was complicated, but all three governments had the same objective.”

Canada’s federal government has not hired any U.S. firms so far. Mexico employs a few D.C. firms working on trade, including Public Strategies Washington, though diplomats are leading the charge on the talks.

Some of the lobbying on NAFTA is coming from individual regions that would be affected by changes to the deal.

The state of Sinaloa, which is the largest agricultural producer in Mexico, has hired Mercury, which has former Mexican government official Luis Rosendo Gutiérrez Romano as its managing director, to lobby on its behalf.

Similarly, New Brunswick, a Canadian province, hired the law firm that boasts the former U.S. ambassador to Canada. That firm, Nelson Mullins Riley & Scarborough, already represents the Canadian province of Saskatchewan. Additionally, Ontario — which trades with more than two dozen U.S. states and is home to Canada’s capital of Ottawa — recently hired the lobbying firm West Front Strategies.

U.S. business leaders and officials in Mexico and Canada insist that negotiations, which aren’t expected to start until at least August, must not result in going back to the high tariffs and other trade barriers that were in place before NAFTA.

Experts in Mexico are drawing a hard line: “Neither tariffs nor quotas of any kind will be negotiated,” de la Calle said.

The White House notified Congress on May 18 that it plans to renegotiate the 23-year-old trade deal, kicking off a 90-day countdown clock before official talks can begin.

Most groups are keeping their powder dry on specific issues, and lobbyists say that discussions remain broad in scope and focused on modernizing the agreement.

Businesses and governments — down to the state and local level in all three countries — agree they want to work quickly on NAFTA before elections in Mexico and in the U.S. next year so that all three nations can stay in the deal, allowing the current trading system to continue uninterrupted.

Mexico will elect a new president and Congress next July, while the U.S. congressional elections will follow in November.

Jodi Hanson Bond, senior vice president for the U.S. Chamber of Commerce’s Americas Division, said updating the trade agreement means starting from scratch to convince policymakers of NAFTA’s value.

“I think for a couple of decades we’ve taken for granted that things were going so well that we didn’t take the time to communicate or educate on why it mattered to our economic platform together,” Bond said.

“This has given us a chance to get back together, and it’s really unified the private sector and collaboration with the government at a real local level,” she said.

Earlier this month, the U.S. Chamber of Commerce announced the creation of the U.S.-Mexico Economic Council, led by top companies in both countries, and the North American Economic Alliance with the heads of Canada’s and Mexico’s chambers.

And in April, the Mexican Chamber of Commerce, the Consejo Coordinador Empresarial, hired its first lobbying firm — top K Street shop Akin Gump — to work on NAFTA-related issues.

“On the record, they’re going to be optimistic,” said another trade lobbyist about those involved in the talks. “There’s nobody in industry who’s asking to renegotiate NAFTA. Nobody wanted to renegotiate NAFTA.”

“They’re trying to keep a stiff upper lip. They’re not really thinking about if and when they conclude this thing,” the lobbyist said, expressing concern that a renegotiated NAFTA may face hurdles on Capitol Hill.

Most industries are urging officials to tread lightly on overhauling the agreement, which they say has been successful but needs updates to account for the technological advances of the past 25 years.

The agriculture sector is “not the industry pushing for large wholesale changes to NAFTA,” said Veronica Nigh, an economist at the American Farm Bureau. “Now that we’re here, there could be some changes around the edges.”

The farm group is mostly hoping not to lose “the really significant gains” it has made since NAFTA was adopted. U.S. agriculture exports to Canada and Mexico have increased 300 percent since NAFTA was enacted, Nigh said.

David MacNaughton, Canada’s ambassador to the United States, said he is tapping into support in Congress and the U.S. business community to smooth negotiations with the Trump administration.

“The key message I hear across every sector of the U.S. economy is that a modernized NAFTA must reduce trade barriers between our three countries and enhance the ability of North America to compete in the rest of the world,” McNaughton told Canadian lawmakers last week.

“Put simply, American business is telling their government that the cardinal rule for NAFTA renegotiation is do no harm,” he said.

Al-Corn Clean Fuel “Ethanol Update”

Randy Doyal, CEO of Al-Corn Clean Fuel in Claremont, MN provides an update regarding Al-Corn’s expansion and modernization project. Mr. Doyal also touches upon the benefits of the project to the local community and regional economy, as well to current and future members.

For additional information regarding Al-Corn Clean Fuel, please visit al-corn.com

Mexico shopping for new pork suppliers (via National Hog Farmer)

Mexico’s concern over North American Free Trade Agreement renegotiations sparks the country to begin seeking other viable options for pork supplies, reports pork leaders during a press conference held at the World Pork Expo in Des Moines, Iowa, last week.

While Mexico appreciates and values the pork trade relationship with the United States, they too have reservations over the Trump administration’s intentions to revamp NAFTA. “They want to continue the positive relationship that we have with them, but they are very concerned,” says Maria Zieba, National Pork Producers Council deputy director of international affairs.

Last year, 26% of U.S. pork and pork variety meat was exported with the largest volume shipped (730,000 metric tons) to Mexico, accounting for 90% of the pork imported into the country. U.S. exports to Mexico are coming off a fifth consecutive volume record in 2016

During March, the National Pork Board trade team traveled to Mexico City, building trade relations and pursuing new trade opportunities. The delegation invested its time immersing itself in Mexico, which is one of America’s most important export markets. Zieba and other NPPC staff accompanied the NPB members and staff on the trip.

“Our visit to Mexico was eye-opening. As board members, we were able to witness why Mexico is such an important trading partner,” says Jan Archer, NPB immediate past president and a North Carolina pig farmer. “The average Mexican family spends 30% to 40% of its income on food, so they appreciate the ability to access safe, nutritious and affordable U.S. pork.”

If the United States withdraws from NAFTA, Mexico is likely to place a 20% duty on pork. The fear of imposing a 20% duty on various products sent Mexico researching other potential suppliers of pork. “The biggest worry for us and what we heard is they are looking at other markets. They are looking at diversifying where they purchase their pork from,” stresses Zieba.

Global pork trade is extremely competitive. Other leading pork-producing countries are eager to step up and supply Mexico with pork. As U.S. exports to Mexico comes off a fifth consecutive volume record in 2016, the U.S. pork producers understand the economic impact of trade with its No. 1 volume customer.

America’s pig farmers export pork to more than 100 countries worldwide. However, the United States ships more pork to the 20 countries with free trade agreements than all other countries combined. Market access through free trade agreements is essential to selling additional pork.

John Weber, NPPC immediate past president and Iowa pork producer, says while gaining new market opportunities is a leading offense priority, its top defensive priority is NAFTA. “We want to protect pork exports to two of our biggest markets – Canada and Mexico,” explains Weber.

The United States withdrawing from NAFTA would be devastating to U.S. pork producers. Iowa State University economist Dermot Hayes calculates that if Mexico places a 20% duty on U.S. pork, the industry eventually will lose the entire Mexican market. Consequently, this would result in a 5% loss in pork production, 10% reduction in the live hog market which will ultimately cost America’s pig farmer $14 per pig or an aggregated loss of nearly $1.7 billion to the U.S. pork industry alone.

“We are asking the Trump administration to ‘do no harm’ to agriculture when renegotiating NAFTA,” stresses Weber. “For our industry, that means maintaining zero tariff rates on North American trade.”

Pork leaders recognize that NAFTA is not a perfect agreement for all sectors of the U.S. economy. NPPC supports the modernization of NAFTA. However, the organization firmly asks for no tweaks to NAFTA when it comes to pork trade.

KDUZ Radio “Farm Forum”

Dave Ladd, President of RDL & Associates, recently participated in KDUZ Radio’s “Farm Forum hosted by Lester Schuft.  Topics include buffer strips/water quality, land values, international trade, biotechnology and much more.

He was joined by Mark Dorenkamp (Brownfield Ag News),  Kent Thiesse (MinnStar Bank) and Dave Nicolai (University of Minnesota Extension).

Commentary: Deja vu all over again. Crop insurance garners White House attention

It has become an article of faith amongst policy wonks that an administration’s budget proposal is considered “dead on arrival” before it hits the Halls of Congress.  Every year the White House delivers a proposed budget to Capitol Hill and, every year, there is a hue and cry from affected stakeholders.  The release of the Trump Administration’s fiscal year (FY) 2018 budget is no exception.

While it is true that an administration’s budget is the first step in an intricate dance with 535 members of Congress, it does provide insight as to the priorities of the Executive Branch.

The budget recently released by the White House would cut the federal crop insurance program by $28.5 billion—or roughly 36 percent—by capping the premium subsidy and eliminating the harvest price option.

As producers continue to face low commodity prices and weather-related challenges, risk management tools such as crop insurance continue to be a critical component of their marketing plan. Crop insurance protects a producer’s yield and price, as well as providing collateral and a repayment source for operating loans, term loans for machinery, livestock, facilities and real estate loans.

The enhanced coverage provided by higher levels of revenue policy coverage means significantly greater protection for the producer’s revenue stream, as producers have shifted to protecting income rather than yield.

A review of recent history related to the crop insurance program are illustrative.  During deliberations related to the 2008 Farm Bill included reductions to the crop insurance program of approximately $6 billion over a 10-year period.

The 2011 Standard Reinsurance Agreement (SRA) that went into effect July 1, 2010 included an additional $6 billion in estimated funding reductions the crop insurance program over 10 years.

Another part of the equation is the delivery mechanism for crop insurance – crop insurance companies.  The two primary revenue sources for a crop insurance company are Administrative and Operating (A&O) reimbursement and underwriting of gains and/or losses.

During consideration of the 2014 Farm Bill, amendments in the U.S. House related to crop insurance would have reduced the cap of government funding for crop insurance companies from $1.3 billion to $900 million per year and another that would reduce the guaranteed rate of return for crop insurers from 14 percent to 12 percent.

A wide range of strong risk-management tools for producers, including a viable crop insurance program, is more important than at any time in recent memory.  As such, proposed reductions in the crop insurance program would adversely impact producers and hinder their ability to manage risk.

The proposed reductions hold the potential to reduce the number of companies offering risk-management tools such as crop insurance.  Without a viable program, it is likely that lending standards would need to be much more stringent in order to maintain sound credit quality.

It is unclear as to what the aggregate national impact of reductions to producer premium subsidies and A & O reimbursements would be on producers and those entities that currently serve the crop insurance marketplace.  It is likely, however, that lower producer premium subsidies would stifle producer utilization of crop insurance as a risk-management tool.  Likewise, lower reimbursement rates would most likely be passed along to producers in the form of higher premiums or diminished service.

It is important to remember that most producers cannot afford not to have some type of protection.  Therefore, their profit margins would be further reduced if premiums are raised.  In addition, many young and beginning producers (who traditionally have less collateral and equity) would face additional challenges in obtaining financing.

Crop insurance is not immune to the vagaries of the budget process and the issues deserve renewed scrutiny.  Over the course of the past few years the program has emerged as a continuing policy issue for policy and philosophical reasons.  In the end, Congress passes the budget and agriculture has generally been successful in making the case for crop insurance and mitigating proposed reductions.  Each battle, however, expends political capital and emboldens critics – including members of Congress.

Dave Ladd, President of RDL & Associates, is a frequent guest commentator regarding the public policy and the political environment.  He assists clients in achieving their legislative and policy objectives via government relations, strategic communications, and message development.

Trump to target agriculture spending in FY18 budget (via Agri-Pulse Communications)

President Trump releases his full fiscal 2018 budget this week and it’s expected to propose big cuts in crop insurance, conservation assistance and a number of agricultural and rural development programs.

The budget, which expands on the “skinny” budget plan issued in March, will be released on Tuesday. Agriculture Secretary Sonny Perdue will be in the hot seat the very next day when he faces the House Agriculture Appropriations Subcommittee, which writes the annual spending bill for USDA, the Food and Drug Administration and Commodity Futures Trading Commission.

Multiple sources told Agri-Pulse last week that the budget will propose cuts in crop insurance. And the National Sustainable Agriculture Coalition said the budget also would whack rural development programs, including Value-Added Grants, rural housing assistance, and cut $100 million from the National Institute for Food and Agriculture, which funds university research projects.

“The one bright spot in the President’s budget proposal is that it is just that – a proposal,” said Greg Fogel, NSAC’s policy director.

Many, if not most of the cuts, especially to farm bill programs, have little chance of passing Congress, especially with the House and Senate Agriculture committees wanting to maintain funding levels as they prepare to write the next bill. Lawmakers were already downplaying the importance of the proposals even before they were released.

“When the administration sends over their budget they’re looking for programs to cut to try to get their numbers to all add up. We’re not looking to take exactly what they recommend and running with it,” the chairman of the House Agriculture Appropriations Subcommittee, Robert Aderholt, R-Ala., told Agri-Pulse.

Congress has typically trimmed from select farm bill programs – the Environmental Quality Incentives Program being a typical target – to shore up other priorities, but Aderholt said he didn’t expect lawmakers to go beyond that this year.

House Agriculture Chairman Mike Conaway, R-Texas, pledged to continue defending crop insurance and other farm programs. He said it’s no time to cut agriculture spending, given the downturn in the farm economy. “The president wanted a robust farm bill and we intend to get that done. Obviously, resources will be the next big issue to come to grips with,” he said.

The FDA’s new commissioner, Scott Gottlieb, will appear before Aderholt’s subcommittee on Thursday.

The March budget proposal dealt only with “discretionary” spending programs, those whose spending levels are determined by annual appropriations bill. The expanded version will include programs in which the spending levels are mandated by the farm bill and other laws.

Also this week, the House will take up legislation aimed at easing permit requirements for pesticide usage. The Reducing Regulatory Burdens Act would reverse a 2009 appellate court ruling in a case involving the National Cotton Council that forced the Environmental Protection Agency to require pesticide applicators to get permits to spray in or near “navigable waters” as defined in the Clean Water Act.

“My district is home to many hard-working farmers, so I know this issue quite well,” House Majority Leader Kevin McCarthy, who represents a portion of California’s Central Valley, said on the House floor Friday. “This bill will reduce red tape that makes it more costly for farmers to protect their crops and our nation’s food supply.”

Similar efforts to reverse the 2009 court decision have died in the Senate.

Health care reform is likely to join Trump’s budget in dominating the attention of Congress this week as lawmakers prepare to leave for their week-long Memorial Day recess.

On Wednesday, the Congressional Budget Office releases its analysis of the House-passed health care reform bill. GOP leaders have yet to actually forward the legislation to the Senate for consideration while they waited for the CBO report, which will include estimates of how many people would lose insurance coverage under the measure.

EPA Launches “Water of the U.S.” Webpage (via Brownfield AgNews)

The EPA has launched a web page to keep stakeholders up to date on potential changes to the Waters of the U.S. rule.  The EPA says the web page will keep the public informed about EPA’s review of the definition of WOTUS.  President Trump’s February executive order directs the EPA to review the rule and to publish revisions, including changes to what’s considered “navigable water” under the rule.