READ the NAFB’s National Ag News for Monday, November 18th
Sponsored by the American Farm Bureau Federation
USDA Announces Second Round of MFP Payments
Ag Secretary Sonny Perdue announced the second round of Market Facilitation Program payments will be heading out to farmers suffering from trade retaliation by foreign nations. The payments will begin the week before Thanksgiving. Producers of eligible commodities will now be eligible to get 25 percent of the total payment expected, in addition to the 50 percent they already received. “The second round of payments, along with the already provided disaster assistance, will give farmers, who’ve had a tough year due to unfair trade retaliation and natural disasters, much-needed funds in time for Thanksgiving,” Perdue says. “While we continue to have confidence in the President’s negotiations with China, this money will show that President Trump is following through on his promise to help and support farmers as he continues to fight for fair market access. Earlier this year, President Trump authorized USDA to provide up to $16 billion in aid through various programs, which is in line with the estimated impact of the retaliatory tariffs on U.S. agricultural goods and other trade disruptions.
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Monopoly Concerns Surround DFA Acquisition of Dean Foods
Dean Foods, one of America’s largest dairy companies, filed for Chapter 11 bankruptcy last week. A New Food Economy report says that leaves a lot of dairy producers up in the air about where they’ll be selling their milk in the future. The timing of the bankruptcy couldn’t be worse as milk prices are still low, even though they’ve bounced back somewhat in recent months. In the announcement last week, Dean Foods said it was “engaged in advance talks with Dairy Farmers of America about a possible acquisition.” DFA is the country’s biggest dairy cooperative. However, one antitrust expert says the potential deal causes serious concerns about anti-competitive activity. Cooperatives negotiate with processors like Dean Foods on behalf of producers to get the best price they can for their farmers. “The problem with DFA is the conflict of interest that will result from trying to lower prices to farmers to increase their revenue as a milk producer,” says Peter Carstensen, a University of Wisconsin Law School Professor. Some farmers have accused the co-op in the past of trying to suppress milk prices to maximize its profits. Dairy Farmers of America represents over 13,000 dairy producers and controls 30 percent of the milk production in the U.S.
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Moderate Democrats Now Pushing for USMCA
More than a dozen House Democrats from key battleground states are now trying to rally support for the U.S.-Mexico-Canada Agreement. Politico says they held a special caucus meeting to talk through the issue. The push marks the newest sign that moderate House Democrats are getting impatient over a lack of movement toward getting the deal finally done. Some of the moderate Democrats worried about potential pushback from progressives, which they did get from Representatives Jan Schakowsky (Sha-KOW-skee) and Bill Pascrell. Schakowsky did say after the meeting that she’s confident they can reach an agreement before the end of this year. However, she cautioned those who are “anxious just to move the deal,” saying they need to make sure it gets done the right way. Late last week, House Speaker Nancy Pelosi gave a positive indication of USCMA’s fate in Congress. The California Democrat said a deal between House Democrats and the Trump Administration was “imminent.” Politico says that means an announcement could be coming within days. “I do believe if we can get this to a place it needs to be, which is imminent, this can be a template for future trade agreements,” she said. “A good template.”
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Biodiesel Coalition Sends Joint Letter to Congress on Tax Incentives
The National Biodiesel Board teamed up with 140 member companies, allied trade associations, and industry partners to send a letter to House and Senate leadership on expired tax incentives. They’re asking Congress to extend those incentives before the end of 2019. The Hagstrom Report says the letter attempts to convince Congressional leadership that an “immediate extension of the biodiesel tax incentive is vital to prevent a severe economic disruption of the U.S. biodiesel industry.” The groups say 10 biodiesel plants have closed or cut back on production since the start of 2019. Several hundred workers have been furloughed and as the economic impact spreads across the U.S. economy, it will impact more than 7,500 jobs. Connecticut, Georgia, Indiana, Iowa, Michigan, Mississippi, Missouri, Pennsylvania, and Texas have all seen work slowdowns or stoppages at their biodiesel plants. NBB Vice President of Federal Affairs Kurt Kovarik says an immediate extension of the tax credit is vital to prevent more plants from closing, more production cutbacks, as well as potentially many more jobs being lost. “Continued uncertainty about the tax incentive impacts businesses, workers, and industry partners across the economy and in every state,” Kovarik adds. “The number of companies and trade groups that joined us on the letter demonstrates the broad impact of the expired incentives.”
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Farm Finances Weaken Further Amid Uncertainty
Farm credit conditions within the Federal Reserve’s Tenth District steadily deteriorated in the third quarter of 2019. The Kansas City Fed Report says in spite of a slight increase in the price of some agricultural goods, as well as additional support from government payments, farm income declined at a modest pace. Loan repayment rates also declined at a modest pace in the third quarter. District bankers say agricultural economic conditions were influenced by uncertainty about crop production, agricultural trade uncertainty, as well as a variety of other factors, all contributed to commodity price fluctuations. Continuing weakness in the ag sector put even more pressure on farm finances. Signs of modest increases in credit stress continued in the third quarter of 2019. Farm borrowers made additional cuts in spending in response to the continued lower-revenue environment. 75 percent of bankers reported farmer working capital deteriorated at least modestly in 2019, compared with 90 percent as recently as 2016. However, farmland values continue to be a positive note in the sector. Those values remained stable and continue to provide ongoing support to an otherwise struggling economic sector.
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House Ag Chair Leads Letter on Midwest Propane Shortages
House Ag Committee Chair Collin Peterson of Minnesota and a group of bipartisan lawmakers sent a letter to the Chair of the Federal Energy Regulatory Commission. The letter sent on behalf of farmers and rural residents in the Midwest is intended to bring awareness of the need for a continued supply of propane to the Midwest states. The letter details how farmers and grain elevator operators are dealing with propane shortages while trying to finish harvest and prepare their grain for storage. The propane shortage is hitting because of early cold temperatures in the region, which has picked up residential use of propane to heat homes. Back in 2014, the commission took extraordinary measures to address catastrophic conditions and shortages of propane. The letter is intended to remind commissioners that they do have the tools needed to help address the conditions facing rural communities. The letter says, “We hope to avoid a disastrous situation with cold temperatures and snow in the forecast spiking demand for residential deliveries just as farms are needing to heat poultry and livestock barns. Crop farmers also need to dry down their commodities after one of the most frustrating harvest seasons in years.”
