Biden Signs Stopgap Spending Bill but Contentious Issues Remain Unresolved

Vilsack says to tap CCC for more farm bill funding, talks about trade policy at NAFB event

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November 17, 2023 06:12 AM

Vilsack says to tap CCC for more farm bill funding, talks about trade policy at NAFB event

Abbreviated report today. I am presenting at the Missouri Governor’s Ag Conference.

— Equities: Asian and European markets were mixed in overnight trading. U.S. stock indexes are pointed to narrowly mixed openings.

— President Biden signed a temporary spending bill just one day before a potential government shutdown, postponing a budget dispute with congressional Republicans into the new year. The bill received strong bipartisan support in both the House and Senate, ensuring that the government will remain funded until after the holiday season. Biden signed the bill in San Francisco, where he is hosting the summit of Asia-Pacific Economic Cooperation (APEC) economies.

The temporary spending package maintains government funding at current levels for approximately two more months while negotiations continue on a long-term spending package for the current fiscal year that began Oct. 1. It establishes two separate deadlines for passing full-year appropriations bills: Jan. 19 for some federal agencies including Agricutlure and Feb. 2 for others. This creates two potential dates for a partial government shutdown.

House Speaker Mike Johnson (R-La.) has indicated that he will not back any further stopgap funding measures, such as continuing resolutions, and sees the temporary funding bill as a precursor to a budget battle with the Senate next year.

The spending bill does not include the White House’s nearly $106 billion request for wartime aid to Israel and Ukraine, nor does it provide humanitarian funding for Palestinians and other supplemental requests, including funding for border security. Lawmakers are expected to focus on these requests after the Thanksgiving holiday to reach a negotiated agreement.

— Oil prices have entered a bear market due to a combination of factors. Despite efforts by OPEC+ leaders Saudi Arabia and Russia to stabilize prices, healthy supplies and increasing stockpiles have outweighed their attempts. Crude oil has experienced four consecutive weeks of declines, marking its longest losing streak since May. West Texas Intermediate (WTI) crude oil is currently trading near $73 per barrel, having fallen more than 20% from its peak in September. The global benchmark, Brent crude, saw a significant drop of nearly 5% in a single day. These declines were driven by the accumulation of crude oil inventories in the United States and were potentially exacerbated by automated selling programs.

— Chinese President Xi Jinping has had a successful week during his first visit to the United States in six years. His trip to San Francisco resulted in positive outcomes, including an agreement with U.S. President Joe Biden to improve the management of tensions between the two countries and to convey China’s desire for friendship rather than conflict with the United States.

In China, recent economic data indicates that the nation might be overcoming some of its recent challenges, suggesting a positive trajectory for the economy.

Additionally, a new political alignment in Taiwan has increased the likelihood of a leader with a pro-China stance coming to power in the upcoming January election.

Bottom line: The typical negative tone of U.S. journalism was prevalent in post-summit reports and so-called analysis. But the actual outcome saw admittedly low expectations realized, and then some. Follow through on China’s part is the key, as usual.

— Today, Mexico takes center stage as President Biden prepares to meet with President Andrés Manuel López Obrador. López Obrador is prioritizing key issues for his country, such as enhancing regional cooperation to combat corruption and promoting trade. However, both leaders must also tackle significant challenges in their countries’ relationship, including surges in migration at the border and the flow of drugs like fentanyl.

López Obrador has voiced his belief that the world has taken the wrong approach by primarily focusing on deterring migration and militarizing borders instead of addressing the underlying causes that compel people to leave their homes. In October, he emphasized that people do not leave their towns willingly but out of necessity.

— PARP: A USDA official denied reports that because USDA still does not have enough money for PARP, it may be the first quarter before there is a payment. “We are scrubbing for money from other areas, but there is no known intent to hold this payment off until 1st quarter of the calendar year. That has not been discussed.”

— USDA Secretary Vilsack has a simple answer to finding more farm bill funding: Use the CCC Charter Act’s $30 billion borrowing authority that is always replenished when it gets to a certain level. That may be the case inside Congress, but lawmakers and staff are not confirming anything for fear something or someone could zap the possibility.

— Vilsack announces USDA’s plans to strengthen agricultural trade. These plans include the announcement of the 2024 USDA trade mission schedule, aimed at promoting U.S. agricultural products for export in countries like Korea, India, Canada, Colombia, Vietnam, and Morocco. Vilsack discussed these trade missions and USDA’s trade strategies during a media event at the National Association of Farm Broadcasters convention in Kansas City.

The goal of these efforts is to diversify market opportunities for U.S. agricultural exports. Last year, U.S. agricultural exports reached a record high of $196 billion, but there was also a record ag trade deficit.

Vilsack emphasized that while trade agreements often grab the headlines, a significant amount of work happens behind the scenes to open up markets and reduce trade barriers. The nations included in these trade missions have been gradually opening up to more U.S. exports, creating new opportunities for American farmers and ranchers.

Some examples mentioned include the market opening up for U.S. grapefruit exporters in Vietnam, the reduction of retaliatory tariffs on various goods in India, Canada’s importance as an export market for U.S. ethanol and biodiesel, and Mexico granting market access to U.S. potatoes. In Japan, renegotiations of beef safeguard levels are reducing tariffs and generating growth opportunities for beef exports, and Brazil has agreed to maintain import certification requirements for U.S. milk, beef, and seafood.

Vilsack also highlighted the importance of supply chain resilience, particularly considering the disruptions caused by the pandemic. USDA is considering a shift in trade strategy from a sole focus on supply chains and cost efficiency to one that emphasizes resiliency, diversification, and sustainability.

Vilsack also introduced the new Regional Agricultural Promotion Program (RAPP), which aims to diversify trade opportunities, especially in non-traditional markets, and provide resources for specialty crop exports. The program will utilize $1.3 billion from the Commodity Credit Corporation funds to expand the nation’s agricultural export opportunities. USDA will open a 30-day comment period starting today, Nov. 17, to gather input on the RAPP regulations (link).

— WOTUS update. Legal challenges and disputes continue related to the Environmental Protection Agency (EPA) and Army Corps of Engineers’ regulation of wetlands and waters in the United States. Some developments, according to Bloomberg:

Industry groups and 26 states are pursuing legal action to clarify the terms of the EPA’s Waters of the United States (WOTUS) rule and the implications of the US Supreme Court’s May ruling in Sackett v. EPA.
The legal actions by the states claim that the EPA and the Army Corps of Engineers violated the Clean Water Act and Administrative Procedure Act when updating the WOTUS rule to align with the Sackett ruling.
The Sackett ruling determined that only relatively permanent waters directly connected to larger navigable water bodies qualify as “waters of the U.S.”
The states argue that the agencies did not provide sufficient analysis or explanation of the scope of federal jurisdiction in response to the Sackett decision, leading to concerns about their commitment to following it faithfully.
EPA revised its WOTUS rule in August to reflect the Sackett ruling, which reduced the extent of federal wetlands protections.
Brenda Mallory, Chair of the Council on Environmental Quality, expressed concerns that the Sackett decision weakens environmental protections and increases the costs of water treatment.
The amended complaints by West Virginia and 23 other states argue that the August rule undermines state control over land management and fails to define key terms like “relatively permanent” and “continuous surface connection.”
Texas and Idaho argue that the rule is illegal because it oversteps state sovereignty, asserts federal authority over non-navigable waters, and did not allow for a notice-and-comment period, violating the Administrative Procedure Act.
EPA claims it used the “good cause” exception under the APA to quickly finalize its updated rule after the Sackett ruling, as it deemed a final WOTUS definition urgent.
Legal experts suggest that if West Virginia’s litigation is successful, it could force the agencies to clarify terms and demonstrate adherence to the Sackett ruling.
Some argue that the ongoing legal disputes may further weaken federal wetlands protections and are part of a larger political agenda by Republican attorneys general to challenge the EPA’s authority.
Eighteen industry groups, including mining, fossil fuels, construction, and agriculture organizations, joined the Texas lawsuit, while many other states and organizations have also become involved in the legal proceedings.

Bottom line: The legal battles are centered around the definition and regulation of wetlands and waters in the United States, with multiple states and industry groups challenging the EPA’s actions in response to the Sackett ruling. These disputes have implications for the extent of environmental protections and state sovereignty over land and water management.

— Labor Dept. report raises concerns about fraud in foreign worker programs. The Labor Department’s Office of the Inspector General released an accountability report that highlights concerns about foreign worker programs, including the H-2A temporary agricultural visa program, being susceptible to significant fraud and abuse.

The report identifies ongoing integrity challenges in these foreign labor programs and notes that over the past decade, more than 160 criminal investigations related to fraud, including cases of human trafficking involving H-2A workers, have been conducted.

To address these issues, the report recommends that the Department of Labor (DOL) take several actions. These include promptly referring criminal investigations to the Office of the Inspector General, improving reporting and the application of suspensions and debarment when program abuse is detected, and enhancing their statutory and regulatory authorities to address program abuse effectively.

Additionally, the report suggests that the DOL should expedite the processing of applications to meet workforce demands. This recommendation stems from concerns raised by H-2A employers, with nearly 80% of them attributing delays in worker arrivals to administrative delays in the application process.

— Italy has banned the production of lab-grown meat to protect its agricultural industry and traditional culinary culture. This ban, put forward by the right-wing government of Prime Minister Giorgia Meloni, has received final parliamentary approval. Agriculture minister Francesco Lollobrigida praised the ban as a “brave measure” and stated that it puts Italy at the forefront of the world in taking this action. He also criticized multinational companies for seeking to profit from these products at the potential expense of citizens’ jobs and health. Coldiretti, one of Italy’s largest farming associations, campaigned for the ban on cultivated meat, arguing that it posed a threat to Italian farms and the country’s food chain. Their campaign garnered significant support, with over 2 million signatures and backing from thousands of Italian local and regional governments.

Under the new law, companies and restaurants will be prohibited from using terms like “steak” or “salami” to describe plant-based products. The law argues that using labels traditionally associated with meat to sell vegetable protein products is inappropriate and represents a dangerous shift away from natural food and cultural distinctions.

However, not all Italians are in favor of this decision. Members of the small Italian libertarian opposition party Più Europa protested in front of the parliament, accusing the Coldiretti president of promoting ignorance. Environmental groups are also dismayed, as they believe that cultivated meat could help reduce emissions and combat climate change. Francesca Gallelli from the Good Food Institute Europe said Italy is closing the door on opportunities in this sector that other European countries are actively investing in.

— Rep. George Santos (R-N.Y.) said he won’t seek re-election next year after a House committee found evidence that the New York Republican stole money from his campaign and committed other misdeeds.

— Cotton AWP continues to move lower. The Adjusted World Price (AWP) for cotton declined to 64.23 cents per pound, effective today (Nov. 17), down from 64.62 cents per pound the prior week and the sixth straight weekly decline. Meanwhile, USDA announced that Special Import Quota #5 will be established Nov. 23 for the import of 35,998 bales of upland cotton, applying to supplies purchased not later than Feb. 20 and entered into the U.S. not later than May 20.

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