READ the NAFB’s National Ag News for Wednesday, February 19th

Sponsored by the American Farm Bureau Federation

India Offers Concession on U.S. Farm Goods to Help Reach a Deal

India is attempting to reach a trade deal with the U.S. before President Donald Trump makes his first official visit to the country on February 24-25. People close to the negotiations say the Indian government is open to greater market access for American farm and dairy products. India is willing to allow market access for U.S. products like cranberries, blueberries, pecan nuts, and avocados at lower duty rates. They’re also open to allowing imports of DDGs, the by-product of ethanol production used in animal feed and alfalfa hay. Even as the two nations attempt to have a deal in place before Trump’s visit, there aren’t a lot of details available as to when a new agreement might be ready. Negotiators are still working on the final details in an attempt to resolve some long-standing issues between the two countries. Bloomberg says even a partial trade deal with India that allows greater market access for U.S. farm goods is likely to help the president as he runs for reelection this year. He’s fresh off success with the “Phase One” deal with China, as well as the USMCA agreement, and the trade deal with Japan.

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GAO will Investigate Trade Aid Funds Distribution

The Government Accountability Office is looking into President Trump’s $28 billion aid program for farmers that were hurt by trade disputes with other countries. The office is investigating allegations that the money was mismanaged and distributed unfairly. The New York Times says the investigation came about because of a request by Michigan Democrat Debbie Stabenow, who says she thinks the aid program was biased. She argues that the program provided more funds to southern states that voted for the president and that it favored large and foreign agriculture companies over small farmers. The administration says the aid program that began in 2018 will end this year. The program started as a $12 billion effort to help mitigate losses for farmers who faced lost sales because of retaliatory tariffs from China, the European Union, Canada, and Mexico, as a result of the trade war. The program grew to $28 billion last year as the trade war disruptions with China lingered. Critics have said the formula that was used to determine payments for certain crops were faulty, which meant funds went to multiple big corporations or large farms, instead of the smaller family operations.

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Hemp Farmers on Edge Because of Law Enforcement Requirements

Hemp producers around the country feel they’re being treated like criminals. That’s because laboratories that test the crop must be certified by the Drug Enforcement Administration, something that has the country’s producers uneasy. USDA’s new hemp regulations say farmers have to ship some of their crops off to labs so that they can verify the crop doesn’t contain illegal amounts of THC, the mind-altering chemical in marijuana. If a hemp crop is found non-compliant, which would mean the THC levels are above .3 percent, it has to be completely destroyed under the supervision of a law enforcement officer. Eric Steenstra, President of Vote Hemp, tells Politico that law enforcement shouldn’t be involved unless there’s evidence of illegal activity, such as a farmer with a hemp license growing marijuana. Other critics worry that DEA lab certification will create a major bottleneck to testing, which must take place during a 15-day window before harvest. 44 labs in America can process hemp samples, but some states such as Alabama don’t have a single lab to take care of that kind of testing.

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Justice Department Looking Into Dairy Merger

Dairy Farmers of America has reached an agreement with Dean Foods to purchase the bulk of Dean’s operations for $425 million. An Agri-Pulse report says that agreement will be contingent on approval from the Justice Department and a federal bankruptcy court. Dean filed for bankruptcy back in November. The company currently operates 57 facilities in 29 states, and under the agreement, Dairy Farmers of America would acquire 44 of those facilities. However, not everyone is happy with the agreement. “It would be awful,” says Peter Carstensen, a Law Professor at the University of Wisconsin. “This has the potential to hurt consumers because it would eliminate a lot of competition within the industry. At the same time, it will hurt dairy farmers.” Carstensen specializes in antitrust in agriculture, and he says Dean and DFA are some of the only milk processors in the Upper Midwest and New England. Bobbi Wilson, a government relations associate for the Wisconsin Farmers Union, says, “We don’t want to see a situation where DFA is the only buyer around.” The Justice Department will need to review the merger and has been in contact with Dean Foods about potential transactions, including a tie-up with DFA. Dean Foods says it believes the transaction would be “competitive and beneficial” for both farmers and consumers.

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Grain Glitch Could Cost Farmers, Cooperatives Money

It’s been two years since the discovery of the “grain glitch” in the Tax Cuts and Jobs Act of 2017. A DTN report says farmer cooperatives are still asking Treasury Department officials to change provisions of Section 199A back to the way the tax deduction worked before the 2017 tax law was passed. The tax quirk that looked like a windfall for farmers who did business with cooperatives might now increase the taxes for at least some of those farmers who are patrons of more diverse cooperatives. Accountants and grain industry leaders discovered in early 2018 that the new tax law inadvertently gave farmers a potentially large tax break for selling their crops to farmer cooperatives instead of private elevators. Major private grain companies were faced with a possible large purchasing disadvantage. The grain glitch generated enough attention that Congress passed legislation to rework the tax deduction in a federal spending bill within a few months. Last summer, the Treasury Department began proposing that Section 199 deductions only apply to “patronage income.” That would eliminate cooperatives’ ability to combine “non-patronage income” as part of the deduction calculation. That exclusion of non-patronage income was never part of the original Section 199 regulations.

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Coronavirus a “Wildcard” in the Cotton Market too?

The coronavirus in China represents a significant wildcard in the world’s cotton market. That comes from the 2020 economic outlook released at the National Cotton Council’s annual meeting in New Orleans. The coronavirus outbreak in China may mean delays in the Asian country’s ability to increase purchases in the near-term. The NCC says that it makes it hard to predict what 2020 buying may look like in the cotton market during the year ahead. The NCC is projecting planted acreage to be 13 million acres, 5.5 percent less than in 2019. The Hagstrom Report says the expected drop in cotton acres is a result of slightly weaker cotton prices relative to corn and soybeans. Export markets for cotton, like many other commodities, continues to be the primary outlet for the raw fiber shipments from the U.S. World trade is estimated to be higher in the 2019 marketing year. However, retaliatory tariffs and increased competition from other major exporting countries have led to a sharp drop in the U.S. share of the cotton market in China. However, despite the continued U.S. and China trade disruptions, the NCC says U.S. export sales to other markets have been very strong for the current crop year.

SOURCE: NAFB News Service

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By Brian Allmer - The BARN

Brian Allmer & the BARN are members of the National Association of Farm Broadcasting (NAFB), the Colorado FFA Foundation, the Colorado 4H Foundation, the Colorado Farm Show Marketing Committee, 1867 Club Board Member, Denver Ag & Livestock Club Member, the Weld County Fair Board, the Briggsdale FFA Advisory Council, Briggsdale 4H Club Beef Leader & Founder / Coordinator of the Briggsdale Classic Open Jackpot Show.