Sponsored by the American Farm Bureau Federation
READ the NAFB’s National Ag News for Tuesday, May 28th
Trade Aid Details Still Unsure
Thursday’s disaster aid package rollout was good news for agriculture but many of the details are still uncertain. The total aid amount could come in at $16 billion and will cover a wider range of crops than last year’s aid to farmers. However, the administration didn’t disclose some key details like just how much money individual farmers and ranchers will get in cash. Politico says $14.5 billion is being earmarked for direct payments to producers. USDA developed a new and more complex formula for calculating producers’ compensation to remove incentives for planting certain crops. Instead of being tied to what farmers actually grew in 2019, they’ll be computed on a county-by-county basis. Officials say they’ve estimated the amount of damage inflicted on producers by trade disputes and will then multiply that by the acreage planted in the area. Farmers who don’t plant a crop this year won’t be eligible for cash assistance. This will likely complicate things for Midwest producers who’ve been battling rain this spring while trying to plant. The USDA’s trade aid package could encourage them to try to plant anyway. The president says the aid would be paid for by the tariffs that China is paying into the U.S. Treasury. That’s not the case. Ag Secretary Sonny Perdue says the USDA will tap into the Commodity Credit Corporation, which has broad authority to stabilize the farm economy.
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Disaster Aid Finally Passes Through the Senate
Senate Republicans and Democrats finally came together on an agreement regarding a $19.1 billion disaster aid package. An Agri-Pulse report says the aid was expanded to include payments to producers who can’t plant a crop this year. It also will include farmers whose stored commodities were damaged by flooding. Producers who lost crops to hurricanes and wildfires last year will also qualify for payments. The combination of disaster payments and crop insurance benefits or Noninsured Crop Disaster Assistance Program would be limited to 90 percent of a farmer’s loss. Disaster payments to farmers who don’t buy crop insurance will be limited to 70 percent of their loss. The disaster aid package also includes a provision making industrial hemp eligible for whole-farm insurance policies starting next year. The Senate approved the bill 85-8 on Thursday, just before the Memorial Day recess. Passing the bill had been delayed months because of a battle between President Trump and Democrats over disaster funding for Puerto Rico. The battle also involved funding the president wanted for the southern border. Those funds were left out of the final bill. Most of the House had already left for the holiday weekend before the Senate passed the bill.
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Trump Says Year-Round E-15 is “Coming.”
President Donald Trump says the summertime ban on higher ethanol blends is a “ridiculous rule.” However, SP Global Dot Com says during a press conference last Thursday, he didn’t give any new timeline for giving consumers year-round access to E-15. The Environmental Protection Agency says it will issue a final rule allowing summertime E-15 sales by June 1, the official start of the U.S. summer driving season. Trump says ethanol remains a vital part of America’s energy future. Last October, the president promised his administration would approve year-round E-15 access, but the policy got bogged down, thanks to the government shutdown and the debate between biofuel producers and oil refiners. The EPA did propose a year-round E-15 rule in March, a process that typically takes several months to finish. Market experts say that gas station owners are likely waiting until the final rule is official before they add any new pumping equipment. The Renewable Fuels Association says hundreds of fuel stations would add equipment to pump E-15 in the months after the EPA adopts the final rule. They also say that number will grow to thousands in the years after the decision is reached.
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Chinese Pork Imports Climbing
Chinese pork imports jumped 24 percent in April when compared to a year ago. The country appears to be stocking up to prevent potential pork shortages as African Swine Fever continues to decimate hog herds. Reuters examined Chinese customs data to reach the conclusion. An estimated 20 percent of China’s hogs have been lost to the disease as outbreaks cover all of the mainland provinces, as well as Hong Kong. China imported more than 136,000 tons of pork muscle cuts in April, the biggest number since September of 2016. Imports in the first four months of this year climbed eight-percent higher than in 2018, coming in at more than 470,000 tons. China’s ASF-caused hog problems are starting to have an effect on the global hog and pork markets. Hormel Foods says it will reduce its full-year sales and earnings outlook. Hormel says ASF is causing a rapid increase in input costs in the second quarter. Officials at the National Pork Producers Council and the North American Meat Institute are asking the administration for a quick resolution to the U.S.-China trade war in order to allow U.S. producers to preserve market share and take advantage of that increasing Chinese demand for pork.
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Bipartisan RFS Integrity Act Aimed at Small Refinery Exemptions
The National Biodiesel Board thank multiple legislators from both political parties for introducing the Renewable Fuels Standard Integrity Act of 2019 into the House. The legislation would require small refineries to petition for Renewable Fuels Standard hardship exemptions by June 1 of each year. That change would ensure the Environmental Protection Agency properly accounts for exempted gallons in the annual Renewable Volume Obligations it sets each November. Kurt Kovarik, the NBB Vice President of Federal Affairs says they appreciate the legislative solution to EPA’s recent flood of small refinery exemptions. “This is just one of the many things that the EPA could do on its own to ensure that the RFS volumes it sets each year are met and the market for biodiesel and renewable diesel remains open,” he said. “EPA’s retroactive small refinery exemptions destroyed demand for more than 360 million gallons of biodiesel and renewable diesel of the past 16 months.” Kovarik says the EPA is considering granting another flood of retroactive exemptions, which will further undercut the use of advanced biofuels for the rest of 2019 and into the future. “This legislation will prevent further harm to biodiesel producers and soybean growers,” Kovarik adds.
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NPPC: Company Ownership Shouldn’t Matter
Pork producers have been hit hard by the trade war with China, to the tune of about $2.5 billion. A part of the administration’s trade aid announced last year, the USDA announced a food purchase and distribution program. The agency would buy pork and other farm products for various food-assistance programs. North Carolina pork producer and NPPC President David Herring had a lot to say on the topic during an op-ed piece in The Hill. Herring says the program’s overarching goals are to provide demand stimulus for the entire pork industry. “Unfortunately, some people are focused on whether the meat companies have some degree of foreign ownership,” he says. “That is irrelevant. Since when is foreign ownership of U.S. companies that employ thousands of Americans, purchase millions of hogs, and produce U.S. pork a problem?” He says that if foreign-owned companies are not permitted to participate in government purchase programs, those programs likely will not work. Going into 2018, the financial analysts had forecast profits for U.S. hog producers. However, those forecasts were turned upside down by trade retaliation penalties. “Only now are we starting to pull out of the red,” Herring adds, “but because of trade retaliation, our small profits are significantly suppressed.”
