House Leaders Want to Put Pressure on Stabenow to Get Off Dead Center Re: Farm Bill

Mr. Trump goes to Washington | Brazil, China, Saudi Arabia pose big challenges to U.S. ag sector

MARKET FOCUS

• Bank of Japan unanimously maintained key short-term interest rate
• Japan might consider reducing bond purchases at its July meeting
• Shareholders in Tesla approved two major proposals
• Tyson CFO and chicken family scion John Tyson arrested for DWI
• New fertilizer facility in Boone, Iowa, aims to lower costs, reduce emissions
• Whack-a-mole logistics
• Diesel price set to rise in three Midwestern states
• Missiles fired by Yemeni rebel group, the Houthis, struck cargo ship in Gulf of Aden
• Ag markets today
• Ag trade update
• Heavy rainfall causing severe flooding in South Florida will continue
• NWS weather outlook
• Pro Farmer First Thing Today items

CONGRESS

• Medicaid fraud targeted as costs near $1 trillion

ISRAEL/HAMAS CONFLICT

• Senior Hamas official tells CNN ‘No one has an idea’ how many hostages are alive
  

RUSSIA & UKRAINE

• Biden pledges U.S. support for Ukraine “until they prevail” in war against Russia
• Putin details plan how Russia would immediately cease fire and begin negotiations
• Ukraine raises grain production forecast.
  

POLICY

• House GOP leaders want to trip up Stabenow’s plan to slow walk farm bill

PERSONNEL

• Biden to nominate Christy Goldsmith Romero as chair of FDIC
  

CHINA

• New Chinese megaport in Chancay, Peru, raises significant concerns in U.S.
• G7 vows action against ‘unfair’ Chinese business practices
• Chinese firms seek anti-dumping probe of EU pork imports
  

TRADE POLICY

• ASEAN: U.S. reclaims top export destination from China
• Saudi Arabia and Brazil strengthen trade ties, target $10 billion by 2030
• U.S. and Mexico in USMCA dispute over Mexico’s ban GMO corn for food use
  

ENERGY & CLIMATE CHANGE

• U.S. biofuels boom spurs 377% surge in Brazilian tallow imports, threatening U.S.
  

LIVESTOCK, NUTRITION & FOOD INDUSTRY

• NCBA responds to FDA study investigating 2018 E. coli outbreak in Yuma, Arizona ,
• H5N1 avian flu spread nationwide via cows, machinery, and people
  

HEALTH UPDATE

• OIG report criticizes FDA for delayed response to contaminated infant formula
  

POLITICS & ELECTIONS

• Trump proposes tariff policy in GOP meeting
  

OTHER ITEMS OF NOTE

• FMCSA revises under-21 pilot program requirements
• ASA raises concerns over California locomotive regulation
• Supreme Court sides with Starbucks in case involving fired employees
• Vilsack to unveil steps to ease farm labor shortages

— Equities today: Asian and European stock indexes were mixed overnight. U.S. Dow opened around 200 points lower. In Asia, Japan +0.2%. Hong Kong -0.9%. China +0.1%. India +0.2%. In Europe, at midday, London -0.5%. Paris -2.5%. Frankfurt -1.4%.

U.S. equities yesterday: The Dow was down 65.11 points, -0.17%, at 38,647.10. The Nasdaq rose 59.12 points, 0.34%, at 17,667.56. The S&P 500 added 12.71 points, 0.23%, at 5,433.74.

Treasury yields declined for a third consecutive day. The yield on the benchmark 10-year note slipped to 4.239%, down from 4.294% on Wednesday. Yields fall as prices rise.

— Shareholders in Tesla approved two major proposals: reaffirming a multibillion-dollar compensation package for CEO Elon Musk and approving the company’s reincorporation in Texas. Despite ongoing legal battles in Delaware over the compensation plan, investors demonstrated strong support for Musk, with 72% of non-Musk votes backing the pay plan and 84% supporting the reincorporation. “We’re not just opening a new chapter for Tesla, we’re starting a new book,” a jubilant Musk told shareholders at the annual meeting. Texas will oversee future compensation for Musk.

— Tyson CFO and chicken family scion John Tyson arrested for DWI. Tyson Foods suspended its 34-year-old CFO after he was arrested Thursday on charges of DWI and careless driving. Tyson named Curt Calaway as interim CFO. Earlier, in November 2022, Tyson was arrested for criminal trespassing and public intoxication after a Fayetteville, Arkansas resident found the executive asleep in their bed. The company said it would review that incident and Tyson pleaded guilty to the charges and offered his own apology during an earnings call after the incident. Some observers say the latest charges call into question Tyson’s future position in the company, who is the great-grandson of its founder, John W. Tyson.

— Ag markets today: Corn, soybeans and SRW wheat pulled back from yesterday’s gains during overnight trade, while HRW and HRS wheat extended their losses. As of 7:30 a.m. ET, corn futures were trading mostly 2 cents lower, soybeans were 7 cents lower, winter wheat markets were 5 to 6 cents lower and spring wheat was 3 cents lower. The U.S. dollar index was around 350 points higher, and front-month crude oil futures were trading just above unchanged.

Cash cattle trade higher. Cash cattle trade developed Thursday in the Southern Plains at $1.00 to $2.00 higher prices than last week. Some feedlots in the Southern Plains and most in the northern market continued to pass on those bids in hopes of even stronger prices.

Pork cutout falls again. The pork cutout dropped another $1.99 on Thursday to $97.02 amid heavy pressure on all cuts but hams and picnics. More concerning is a slowdown in pork movement the past two days despite heavy price pressure.

— Agriculture markets yesterday:

• Corn: July corn rose 4 1/4 cents to $4.58 1/2, closing near the session high and above the 40-day moving average.
• Soy complex: July soybean futures surged 12 1/4 cents to $11.89 1/2 and settled near session highs. July meal futures settled $8.1 higher to $368.3, on session highs. July bean oil firmed 7 points to 43.86 cents.
• Wheat: July SRW wheat rose 3 cents at $6.20 and near mid-range. July HRW wheat fell 1/2 cent at $6.67 3/4, near mid-range and hit a five-week low early on. July spring wheat futures fell 1 1/4 cent. to $6.67.
• Cotton: July cotton futures fell 39 points to 71.35 and settled on session lows.
• Cattle: August live cattle rose $1.175 to $179.50. August feeder cattle fell 10 cents to $257.475. Prices closed near their session highs.
• Hogs: The expiring June contract slipped 27.5 cents to $91.75, while most-active August futures fell $1.35 to $88.60.
  

— Quotes of note:

• Fedspeak. Chicago Fed president Austan Goolsbee will participate in a fireside chat at the Iowa Farm Bureau Economic Summit. Fed governor Lisa Cook will deliver a speech at the 50-year celebration of the American Economic Association Summer Program in Washington.
  
• “We’re looking for something that gives us confidence that inflation is moving sustainably down.” — U.S. Federal Reserve Chair Jerome Powell at a press conference Thursday, suggesting the Fed was in no rush to lower interest rates.
  
• Whack-a-mole logistics. “Our supply chains are crunched, and our logistics tails are long. We are playing whack-a-mole, and they are playing a long game.” — Emily Harding of the Center for Strategic and International Studies, on allied efforts to halt Houthi rebels’ attacks on commercial shipping in the Red Sea.
  

— At its June meeting, the Bank of Japan unanimously maintained its key short-term interest rate at around 0% to 0.1%, following its first rate hike since 2007 and the end of eight years of negative rates in March. The board signaled that it might consider reducing bond purchases at its July meeting. The decision was passed by an 8-1 vote, with board member Nakamura Toyoaki dissenting, to allow more flexibility in long-term rates. The BoJ currently buys about JPY 6 trillion in bonds monthly. The statement noted moderate economic recovery in Japan, with resilient private consumption, improving corporate profits, and steady business spending, though exports and public investment remained flat. Inflation figures year-over-year have ranged from 2% to 2.5%, with rising inflation expectations and a gradual increase expected in the underlying CPI.

— New 75,000-square-foot fertilizer facility in Boone, Iowa, aims to lower costs, reduce emissions, and support local businesses. More than 100 employees, farmers, and community members attended the grand opening of a 75,000-square-foot fertilizer production and distribution facility in Boone, Iowa, on Thursday. The $15 million facility, owned by Landus Cooperative, aims to lower costs for local farmers, reduce greenhouse gas emissions, and support local businesses. Landus President and CEO Matt Carstens emphasized the company’s commitment to farmers and rural communities.

The facility’s construction was partially funded by a $5 million grant from USDA, as part of a federal initiative to expand domestic fertilizer production. USDA Rural Development Administrator Betsy Dirksen Londrigan highlighted this as part of President Biden’s agenda to strengthen the economy from the middle out and bottom up.

Besides producing fertilizer, the facility will create adjuvants and soil products and store millions of bushels of corn, grain, and soybeans. It also features a green ammonia production section in partnership with TalusAg, which helps reduce the facility’s carbon footprint without requiring operational changes from farmers.

The new plant is expected to make the fertilizer production process more affordable by eliminating international shipping costs and using raw ingredients. It will also create jobs, support nearby farms, and boost local businesses. Farmers can pick up fertilizer on-site or have it shipped to them. The facility is nearly complete, with only the green ammonia production and additional storage areas still under construction.

Market perspectives:

— Outside markets: The U.S. dollar index was higher, with the euro and British pound sharply lower against the greenback. The yield on the 10-year U.S. Treasury note fell, trading around 4.20%, with a negative tone in global government bond yields. Crude oil futures were higher, with U.S. crude around $78.90 per barrel and Brent around $83.20 per barrel. Gold and silver were up, with gold trading around $2,345 per troy ounce and silver around $29.29 per troy ounce.

— Diesel price set to rise in three Midwestern states. In Indiana, Illinois, and Missouri, fuel tax increases take effect July 1.

• The Illinois Department of Revenue gradually raises its fuel tax every year. On July 1, diesel taxes in Illinois will increase by 1.6 cents to 54.5 cents per gallon.

• Missouri will increase taxes on diesel by 3 cents to 27 cents per gallon.
• Indiana will raise the tax on diesel and biodiesel by 2 cents to 59 cents per gallon.

— Missiles fired by the Yemeni rebel group, the Houthis, struck a cargo ship in the Gulf of Aden, injuring a sailor. The vessel was Palauan-flagged, Ukrainian-owned, and Polish-operated. In response, America’s Central Command destroyed two Houthi patrol boats. The Houthis have frequently targeted commercial shipping in the Red Sea and Gulf of Aden, claiming their attacks are in solidarity with Gaza.

— Ag trade update: Egypt purchased 22,500 MT of vegoils from an unspecified origin.

— Heavy rainfall causing severe flooding in South Florida will continue for a fourth consecutive day. The flooding, which began on Tuesday, has reached waist-deep levels in some areas, stranding drivers, making roads impassable, closing schools in hard-hit counties, and causing hundreds of flight cancellations or delays. Flood watches remain in effect for over 7 million people, including residents of Miami and Fort Lauderdale.

Meanwhile, high temperatures are spreading from the Plains to the East Coast, with Washington, DC expected to experience its hottest day of the year, reaching the mid-90s, about 10 degrees above normal.

— NWS weather outlook: A moderate risk of excessive rainfall remains in place across southern Florida today before the heavy rain threat slowly diminishes this weekend... ...A cold front will bring showers and thunderstorms across the Northeast and into the northern Mid-Atlantic states today with a slight chance of severe weather... ...A round of heavy rain with possible severe weather is forecast for the central High Plains tonight, spreading northeast to reach the upper Midwest by Saturday night and Sunday morning... ...An intensifying low pressure system will bring a slight chance of severe weather across North Dakota early Sunday... ...Excessive heat remains a concern from portions of the Desert Southwest to the southern High Plains.

Items in Pro Farmer’s First Thing Today include:

• Grains weaker overnight
• French wheat ratings hold
• China’s new bank loans rise less than expected in May

— Medicaid fraud targeted as costs near $1 trillion. Washington policymakers are taking action to curb fraudulent and improper payments in Medicaid, the nation’s largest health insurer, as its costs approach $1 trillion by 2032. Improper payments accounted for $50.3 billion, or 8.6% of all Medicaid payments last year, representing nearly 21% of government-wide improper payments.

Medicaid covers approximately 76 million low-income individuals. Improper payments include overpayments, underpayments, errors, and fraud.

Lawmakers from both parties are pushing for increased oversight and accountability. House Energy and Commerce Committee leaders questioned significant payments made to deceased beneficiaries. The Department of Health and Human Services identified over $249 million in payments to Medicaid managed care plans for deceased enrollees.

New bills require quarterly verification of beneficiaries’ eligibility and ensure they are alive. Additional measures include screening out deceased or terminated medical providers and preventing beneficiaries from being enrolled in multiple states.

The House Energy and Commerce Committee unanimously advanced these bills. Lawmakers involved include Reps. Gus Bilirakis (R-Fla.), Angie Craig (D-Minn.), Mike Garcia (R-Calif.), and Mariannette Miller-Meeks (R-Iowa).

— Senior Hamas official told CNN that “No one has an idea” how many hostages are alive, and that any deal to release them must include guarantees of a permanent ceasefire and the complete withdrawal of Israeli forces from Gaza. Israel believes more than 70 of the 120 hostages are still alive. Earlier this week, Secretary of State Antony Blinken called some of Hamas’ proposed changes to the cease-fire plan “unacceptable.”

— Russian President Vladimir Putin said Russia would immediately cease fire and begin negotiations to end the war in Ukraine if Kyiv withdraws troops from four contested regions. These regions include areas that Moscow has never controlled during its two-year invasion or from which it has subsequently withdrawn. Putin’s demands, outlined in a speech on Friday, represent the most specific conditions he has set for ending the conflict, but they indicate a maximalist position in any peace talks. Ukraine is highly unlikely to accept these conditions, as they would effectively cede control of Donetsk, Kherson, Luhansk, and Zaporizhzhia to Russia.

— Ukraine raises grain production forecast. Ukraine’s ag ministry raised the country’s grain production forecast to 56 MMT, including 28.5 MMT of corn, 21 MMT of wheat and 5 MMT of barley, up 3.6 MMT from its prior outlook. The ministry forecasts oilseed production at 22 MMT, including 13 MMT of sunflower seeds, 4 MMT of rapeseed and a record 5 MMT of soybeans. The ministry expects Ukraine to export 43 MMT of grain in 2024-25, including 25 MMT of corn and 15 MMT of wheat, and 17 MMT of oilseeds and oilseed products.

— House GOP leaders know the only way to get Stabenow off farm bill dead center is for the House to clear its own bill. For various reasons, Senate Ag Chair Debbie Stabenow (D-Mich.) and some of her staff have made clear they do not expect a new farm bill this year, largely because they do not believe the GOP-led House can approve its farmer-popular farm bill. But that may be errant thinking. Various House farm bill strategies are being discussed internally at the Ag and top leadership levels.

Of note: The irony is that Stabenow could likely have more trouble getting her eventual version of the farm bill through the Senate chamber. Sources say that is likely why she is content to just leave Congress with the status quo 2018 Farm Bill, having already secured billions more in funding for conservation and food and nutrition programs.

— President Biden will nominate Christy Goldsmith Romero as chair of the Federal Deposit Insurance Corp., the White House said, confirming recent conjecture. Goldsmith Romero is currently a Democratic commissioner at the Commodity Futures Trading Commission. Current FDIC Chair Martin Gruenberg has said he will step down once his replacement is confirmed by the Senate.

— Construction of a new Chinese megaport in Chancay, Peru, has raised significant concerns in the United States, reflecting broader geopolitical tensions between the two nations. This $3.5 billion deep-water port, primarily owned by China’s state-owned Cosco Shipping, is part of China’s Belt and Road Initiative and is expected to be completed by the end of 2024. The port will facilitate direct shipping routes between South America and Asia, significantly reducing transit times for commodities like soy, corn, and copper from South America to China.

The U.S. is worried that the port will enhance China’s influence in South America, a region traditionally within the U.S.’ sphere of influence. The port’s ability to handle megaships directly between Peru and China could shift trade dynamics, making it easier for China to extract and control South American resources.

There are fears that the port could be used for military purposes. General Laura Richardson of the U.S. Southern Command has highlighted concerns about the dual-use nature of such infrastructure, where commercial ports could potentially serve military functions. This includes worries about data security and the control over cargo scanning and logistics.

The U.S. is also concerned about China’s growing economic leverage in the region. China’s investments in infrastructure, such as the Chancay port, are seen as a way to secure long-term access to critical minerals and other resources, which could undermine U.S. economic interests.

The Chancay port is expected to transform Peru into a strategic commercial hub, facilitating the export of commodities not only from Peru but also from other South American countries like Brazil. This development is seen as a significant step in China’s strategy to deepen its economic ties with Latin America, which has become a new battleground for resources among global powers.

Peruvian officials have downplayed U.S. concerns, suggesting that if the U.S. is worried about China’s growing presence, it should increase its own investments in the region. This stance reflects a broader trend in Latin America, where countries are increasingly looking to China for financing and development projects due to a significant gap in infrastructure funding.

— G7 vows action against ‘unfair’ Chinese business practices. Leaders of the Group of Seven (G7) wealthy democracies vowed to “continue to take actions to protect our businesses from unfair practices, to level the playing field and remedy ongoing harm,” by China, according to a draft summit statement. They also called on China “to refrain from adopting export control measures, particularly on critical minerals.”

— Chinese firms seek anti-dumping probe of EU pork imports. Chinese firms have formally applied for an anti-dumping probe into pork imports from the European Union, the state-backed Global Times reported. It was unclear which pork products would be targeted and the report did not name any companies, citing a “business insider” as the source of its information. The probe follows Brussels slapping tariffs of up to 38.1% on Chinese electric vehicles (EVs). China imported $6 billion worth of pork in 2023, including offal, with the EU accounting for more than half.

— ASEAN: U.S. reclaims top export destination from China. In the first quarter of 2024, ASEAN countries exported more goods to the United States ($67.2 billion) than to China ($57 billion) for the first time in six quarters, according to Nikkei Asia. This shift is attributed to three main factors:

• Rerouted trade: U.S.-China trade has been redirected through ASEAN due to increased tariffs and trade restrictions between the two largest economies.
• Increased U.S. imports: The U.S. is importing more semiconductors and electrical parts from ASEAN countries, while China is producing more domestically.
• Low Chinese demand: Weak Chinese consumer demand contributes to the shift.

Though one quarter’s data isn’t enough to establish a trend, strong structural factors suggest this pattern could continue. Rising costs, political risks, and trade tensions between the U.S. and China are driving trade towards Southeast Asia. However, if U.S. trade imbalances with ASEAN partners persist, it could lead to tariffs, particularly on Vietnam, especially under a potential second Trump administration.

The U.S. previously outpaced China as ASEAN’s top export destination during the first three quarters of 2022 due to China’s zero-Covid policy. Prior to that, China had been ASEAN’s leading export destination since 2010.

— Saudi Arabia and Brazil strengthen trade ties, target $10 billion by 2030. Saudi Arabia is strengthening ties with Brazil, with both countries seeking to diversify trade and mitigate geopolitical risks, Bloomberg reports (link). Historically connected through chicken exports, their relationship now spans multiple sectors. Two-way trade reached $7 billion last year, with expectations to grow to $10 billion by 2030.

This week, a Saudi-backed institute is hosting its first Latin America-focused investment conference in Rio de Janeiro. Attendees include Brazilian President Lula, Finance Minister Fernando Haddad, and Saudi officials like PIF Governor Yasir Al-Rumayyan.

BRF SA, a leading poultry supplier, plans to open a plant in Saudi Arabia. Other collaborations include plane maker Embraer SA’s partnership with the kingdom. Saudi Arabia seeks $100 billion in annual foreign investment to drive its economic transformation. The focus on Brazil is part of Crown Prince Mohammed bin Salman’s strategy to enhance the Global South’s relevance.

Mining is a key interest, with Saudi-based Manara Minerals Investment Co. acquiring a 10% stake in Vale’s base metals unit. Food exports are vital, with Brazil’s exports to Saudi Arabia hitting a 10-year high in 2023. BRF’s local production in Saudi Arabia aims to leverage higher prices and favorable financing, despite higher operational costs.

— U.S. and Mexico are in a USMCA dispute over Mexico’s ban on biotech and genetically modified (GM) corn for food. Initially targeting tortillas and dough, Mexico plans to extend the ban to all products for human and animal consumption. The U.S. argues that the ban is not scientifically justified and violates USMCA market access provisions. In August 2023, the U.S. established a dispute panel under USMCA to ensure U.S. producers retain market access in Mexico. A hearing is scheduled for June 2024, with a decision expected in November 2024. The outcome will set a precedent for how future disputes are handled under the agreement. A ruling in favor of the U.S. could reinforce the importance of science-based regulations, while a ruling in favor of Mexico could embolden other countries to implement similar bans based on precautionary principles.

The USMCA dispute panel is chaired by Swiss trade expert Christian Häberli. The panel will consider arguments from both sides, including scientific evidence and trade implications. If the panel rules against Mexico, potential trade sanctions could be imposed, although Mexico has indicated it may maintain its policies regardless of the outcome.

The U.S. is the world’s largest exporter of corn, with over 90% of its corn being genetically modified. Mexico is a significant market for U.S. corn, particularly yellow corn used for animal feed. The U.S. argues that Mexico’s ban could have severe economic repercussions for American farmers and the biotechnology industry. The National Corn Growers Association has described the ban as potentially “catastrophic” for U.S. producers.

Meanwhile, Canada has a systemic interest in how key USMCA provisions, such as those related to sanitary and phytosanitary (SPS) measures and agricultural biotechnology, are interpreted and applied . The ruling could shape the regulatory landscape for agricultural biotechnology products, including GM crops that Canada exports to Mexico and the United States. While Canada is not a major corn exporter to Mexico, it does export other GM products like canola to Mexico. A ruling in favor of Mexico’s ban could embolden similar restrictions on other GM crops, potentially disrupting Canada’s exports of these products to Mexico and setting a precedent for other markets.

Bottom line: The U.S. exported approximately $5.4 billion worth of corn to Mexico in 2023, highlighting the economic stakes involved. If the dispute escalates, it could result in punitive tariffs or other trade barriers, further straining economic relations.

— U.S. biofuels boom spurs 377% surge in Brazilian tallow imports, threatening U.S. farmers. In the first four months of 2024, U.S. purchases of Brazilian tallow, a waste fat used for renewable fuels, surged 377% from the previous year. Brazil now accounts for 40% of overall tallow imports into the U.S., posing a threat to U.S. soybean oil suppliers, Bloomberg reports (link).

U.S. fuelmakers like Diamond Green Diesel LLC and Marathon Petroleum Corp. are opting for cheaper raw materials like tallow and used cooking oil, which have lower carbon scores and thus receive higher tax credits in states like California. A larger federal tax credit starting next year is expected to further favor these feedstocks over U.S. soy-based vegetable oil.

This influx of Brazilian tallow has disrupted the market for U.S. farmers and agricultural companies like Bunge Global SA and Archer-Daniels-Midland Co., who have been relying on increasing demand for crop-based green diesel feedstocks. The rise in imports is eating into their profits and hindering expansion plans.

Brazil, which slaughters more cows than any country except China, has abundant tallow. The country became a major exporter in 2022 when Darling Ingredients Inc. acquired FASA Group, Brazil’s largest independent rendering company. FASA now supplies tallow to Diamond Green Diesel, a biofuel venture between Darling and Valero Energy Corp.

According to U.S. government trade data, total U.S. tallow imports have quadrupled since 2019, reaching a record 779,300 metric tons in 2023. Brazil’s share of these imports jumped from 23% last year to 40% in the first four months of this year. Additionally, record shipments of waste cooking oil from China have further flooded the U.S. biofuel material market, prompting U.S. soybean crushers to advocate for higher import tariffs.

— NCBA responded to an FDA study investigating the 2018 E. coli outbreak in Yuma, Arizona, which contaminated leafy greens, resulting in five deaths and over 200 illnesses in 38 states. The FDA found that air and dust, like water, could transfer pathogens like E. coli to produce, and that the proximity of produce farms to animal operations was a risk factor. However, NCBA emphasized that the E. coli strain was not found at a nearby cattle feeding operation, and the FDA study did not identify a specific contamination source. NCBA CEO Colin Woodall expressed concern over misinterpretations blaming the cattle industry, reaffirming the industry’s commitment to food safety and compliance with regulations. He called for more scientific data and cautioned against premature conclusions.

— H5N1 avian flu spread nationwide via cows, machinery, and people; USDA urges enhanced biosecurity. After the H5N1 avian flu virus jumped from birds to dairy cattle in Texas last December, it spread nationwide via infected cows, contaminated machinery, and people carrying the virus on their clothes and footwear, according to USDA scientists (link). Despite the low risk to the public, three dairy farm workers contracted mild cases, and the virus has been confirmed in 96 herds across 12 states, with Michigan and Idaho having the most infections. Since February 2022, the bird flu has also killed nearly 97 million birds in domestic flocks.

USDA officials stress the importance of enhanced biosecurity practices to control the virus spread. Reports identified multiple transmission pathways, including movement of infected cows, shared equipment, and frequent visits by veterinarians and other personnel to multiple farms. Genetic analysis ruled out migratory waterfowl as a factor in spreading the virus among cattle.

USDA has made financial assistance available to affected farms, with up to $28,000 per farm over three months, and 20 states are considering a voluntary USDA program to test milk for H5N1. While mortality among infected cows is low, older cows are more susceptible, showing symptoms like fever and reduced milk production.

— OIG report criticizes FDA for delayed response to contaminated infant formula from Abbott’s Sturgis facility. The Department of Health and Human Services’ Office of the Inspector General (OIG) released a report criticizing the FDA for numerous lapses that delayed the detection and response to contaminated infant formula from Abbott Laboratories’ Sturgis, Michigan facility in 2022. The report highlighted that the FDA had inadequate or non-existent policies to identify risks and respond effectively to complaints, inspections, and recalls.

Key findings included the FDA taking over 15 months to act on a February 2021 whistleblower complaint and nearly four months to inform senior leadership of an October 2021 complaint. Additionally, a mission-critical inspection was delayed by 102 days after a whistleblower complaint due to a lack of defined timeframes.

The report recommended nine improvements, including cross-training staff on whistleblower policies, briefing senior leadership on open complaints, establishing policies for mission-critical inspections during public health emergencies, and enhancing procedures for initiating infant formula recalls. The FDA agreed with these recommendations.

— Trump proposes tariff policy in GOP meeting. Former President Donald Trump suggested replacing income taxes with tariffs in a meeting with House Republicans on Thursday. He targeted historically blue states for his presidential campaign and reiterated his plans for more tariffs if re-elected.

During the meeting at the Capitol Hill Club, Trump made several key points about tariffs:

• Advocacy for higher tariffs on China: Trump argued for increasing tariffs on Chinese goods to protect U.S. industries. He emphasized that tariffs are a powerful tool for the executive branch to use in negotiations with China to secure concessions.
• Historical context of tariffs: Trump mentioned that the United States historically relied on tariffs to fund government services until the early 20th century. He noted that before World War I, tariffs were a primary source of government revenue. “He does want to look at lowering the income tax, and that could be offset and paid for by some type of tariffs, particularly on adversarial nations,” Rep. Nicole Malliotakis, a New York Republican, said following the meeting. Using tariff increases to offset income taxes is a hurdle, because the U.S. brings in much more money from levies on individuals than on imported products. Customs duties brought in $80 billion to the federal government in 2023, according to the Office of Management and Budget. That’s just a small fraction of the $2.6 trillion from individual and corporate income taxes. “Tariffs go into the federal budget as receipts every bit as much as taxes do,” former Commerce Secretary Wilbur Ross told Bloomberg. “So in an arithmetic sense, it’s clearly correct that one could very well offset the other.”
• Tariff dilemma: The U.S. imports less than $4 trillion of goods annually and it collects $2.5 trillion in individual income taxes, which means it would take tariff rates of 70% or higher to fill the void left by repealing income taxes. It also depends on how much demand for imported goods changes as tariffs rise. But a 10% tariff could yield roughly $300 billion a year—about the same as the cost of extending the expiring 2017 tax cuts. That is one possibility, said Stephen Moore, an occasional adviser who attended Trump’s meeting Thursday with chief executives at the Business Roundtable. “Another possibility would be to dedicate tariff revenue to lower the payroll tax — which deters work and hiring,” he said.
• General use of tariffs: Trump proposed imposing across-the-board tariffs on all imports and increasing duties on Chinese goods even higher than they currently are. This proposal is part of his broader trade policy, which includes ending China’s normalized trade relations with the United States.
• Protection of American workers: Trump highlighted the use of tariffs to prevent other countries from taking advantage of American workers and industries. He suggested that tariffs could be used strategically to stop unfair trade practices that harm U.S. interests.

Rep. Jodey Arrington (R-Tex.), a member on the committee that deals with tariff and trade issues, said he supports free trade, but also says he sees the need for some tariffs. “Republicans who are free trade realize there has to be a balance,” Arrington said. “Trump’s message on tariffs has been embraced “

Trump believes he can win Democratic-leaning states like New Jersey, New Mexico, Minnesota, and Virginia.

He also discussed border security, the economy, inflation, and emphasized the need for exceptions in abortion discussions.

Trump promised to lower the corporate tax rate to 20%, from 21%. President Biden wants to increase it to 28%.

Of note: If Congress doesn’t act, taxes will go up on more than 60% of households in 2026. But fully extending the cuts could reduce projected revenue by $4 trillion over a decade, and Republicans haven’t finalized whether they want to offset that cost and, if so, whether to do it with taxes or spending cuts elsewhere… or offset some via Trump’s tariff ideas.

Trump railed against President Joe Biden’s electric vehicle policies and said he would undo them if he took the White House in November, according to lawmakers who attended the private meeting. Trump told assembled lawmakers at the Capitol Hill Club that “the whole mandate toward battery and electric is crazy.”

The meeting, described as a “pep talk,” was Trump’s first visit to Capitol Hill since the Jan. 6 riots and his first formal meeting with GOP lawmakers since his recent felony conviction.

The meeting aimed to rally GOP lawmakers and address any lingering skepticism about Trump’s campaign. It follows Trump’s recent legal troubles and comes as the campaign season intensifies.

Not all Senate Republicans were in attendance. Alaska’s Lisa Murkowski and Maine’s Susan Collins did not attend due to scheduling conflicts. Sen. Ron Johnson of Wisconsin said that despite those absences, Republicans are still unified in their support of Trump. “We realize that his success is our success,” Sen. Lindsey Graham (R-S.C.) said of Trump. “The road to the Senate majority is also the road to the White House.”

Bottom line: Regarding tariff comments from Trump, Douglas Holtz-Eakin, the former Congressional Budget Office director who ran policy for John McCain’s 2008 presidential campaign, said: “It’s not a real policy. It’s him trying to figure out if he can find a way to make his tariff proposal more attractive.”

— FMCSA revises under-21 pilot program requirements. The Federal Motor Carrier Safety Administration (FMCSA) recently revised the requirements for its under-21 pilot program, making it easier for motor carriers and drivers under 21 to join. Key changes include:

• Simplified sign-up process for motor carriers and young drivers.
• Removal of the requirement to install or use inward-facing cameras.
• Elimination of the need for a registered apprenticeship number from the Department of Labor.

— ASA raises concerns over California locomotive regulation. The American Soybean Association (ASA) has expressed concerns about the California In-Use Locomotive Regulation ahead of a Thursday House Committee on Science, Space, and Technology subcommittee hearing (link) on its nationwide implications. The regulation, issued by the California Air Resources Board (CARB), mandates a shift to zero-carbon rail propulsion technologies by 2035, phasing out non-electric locomotives.

ASA’s letter to Chairmen Frank Lucas (R-Okla.) and Subcommittee Chairman Jay Obernolte (R-Calif.) emphasizes the need to address the regulation’s potential adverse effects on the agricultural industry through sustainable transportation practices and biofuel innovation. ASA noted the financial and operational impacts on freight rail carriers and their customers, including soybean farmers, due to potential increased transportation costs and operational inefficiencies. The association underscores the importance of biomass-based diesel in reducing carbon emissions and notes the ongoing transition of Class I railroads to biodiesel and renewable diesel blends.

American Short Line and Regional Railroad Association (ASLRRA) President Chuck Baker testified before the hearing titled “Environmentalism Off the Rails: How CARB Will Cripple the National Rail Network.” Opponents are asking the U.S. Environmental Protection Agency to deny CARB’s request for a waiver from the federal Clean Air Act so that it can implement the rule. “The title of the hearing says it all — the CARB in-use locomotive rule will have dire consequences for short lines, and will cripple the U.S. rail network,” Baker told the subcommittee, according to his written testimony. “What [CARB has] failed to recognize is the broad-reaching, national negative impact of that reality to shippers, the economy — particularly in small town and rural America — and to the American public due to tens if not hundreds of thousands of additional heavy trucks on the nation’s highways as the freight we carry is displaced,” said Baker.

Because close to 70% of the Class I locomotive fleet moves in and out of California in any given year, “the rule dramatically increases the cost of providing rail transportation, and most likely shifts a lot of freight onto the highway,” said Ian Jefferies, president and CEO of the Association of American Railroads, testifying before the oversight subcommittee. “That makes our customers pay more, consumers pay more, and it adds stress to the public infrastructure by pushing more trucks onto the highways, increasing congestion.”

Their arguments were countered by Alan Abbs, legislative officer for the Bay Area Air Quality Management District, based in San Francisco. The regulation, Abbs said, “calls for a steady reduction of emissions over the next 30 years, allowing for existing technologies to be used, while new and more advanced zero-emission technologies are developed.” He also said such locomotives are available for purchase today. “Zero-emission rail transportation is nothing new. Electrified rail is more than 100 years old and is widely used around the world, nearly every locomotive operating today runs on fully electric motors which can be powered other than using diesel generators.” Abbs also pointed out that despite industry warnings about costs, unachievable timelines, and lost business, those fears have not materialized as California has tightened its environmental laws.

The regulation, approved by the California Air Resources Board (CARB) in 2023, aims to significantly reduce emissions from locomotives operating within the state.

Key aspects of the regulation:

• Age limit for locomotives: Starting in 2030, locomotives must be less than 23 years old to operate in California. Switch, industrial, and passenger locomotives built after 2030, and line-haul locomotives built after 2035, must operate with zero emissions in the state.
• Spending accounts: Rail companies are required to set up spending accounts based on the pollution their locomotives emit. These funds will be used to upgrade their fleets to zero-emission technologies.
• Idling limits: Locomotives will have a 30-minute idling limit to reduce emissions further.

Expected Impacts

• Emission reductions: The regulation is expected to reduce 7,400 tons of particulate matter, 386,300 tons of nitrogen oxides, and 21.6 million tons of greenhouse gas emissions cumulatively between 2023 and 2050.
• Health benefits: Supporters say the regulation is projected to yield over $32 billion in health benefits by preventing 3,200 premature deaths and 1,500 emergency room visits and hospitalizations.
• Environmental justice: The regulation aims to reduce the disproportionate burden of air pollution on low-income communities and communities of color, particularly those located near rail operations.

Challenges

• Technological viability: Critics argue that the required zero-emission technologies are not yet commercially viable, and the regulation imposes significant financial and operational burdens on railroads.
• Legal concerns: There are claims that the regulation violates the Clean Air Act (CAA) and the Interstate Commerce Commission Termination Act (ICCTA) by overstepping state authority and attempting to regulate interstate commerce.

Implementation

• The regulation went into effect on Jan. 1, 2024, but CARB must obtain approval from the U.S. Environmental Protection Agency (EPA) before enforcing key provisions. The EPA is currently reviewing public comments on whether to approve or deny CARB’s request.

— Supreme Court sided with Starbucks in a case involving fired employees, marking a significant loss for the National Labor Relations Board (NLRB). This decision could make it more difficult for the NLRB to intervene when companies are accused of illegally suppressing labor organizing.

Starbucks fired seven employees in 2022, claiming they allowed a TV crew into a closed store, while the workers argued they were fired for union organizing. The NLRB filed a complaint and sought an injunction to reinstate the workers, which a judge granted. However, the Supreme Court overturned this ruling, agreeing with Starbucks that federal courts should use a strict standard when granting such injunctions.

This decision limits the NLRB’s use of injunctions, a key tool in discouraging companies from firing pro-union workers. The case is part of a broader effort by the political right to limit the power of regulatory agencies like the NLRB, EPA, and CDC.

Looking ahead, the Supreme Court is set to decide on two more cases that could further limit the power of executive agencies and impact regulations in areas such as the environment, health care, and consumer safety.

— Vilsack to unveil steps to ease farm labor shortages. USDA Secretary Tom Vilsack is set to announce steps to address agriculture labor shortages, farmworker protections, and legal pathways for labor migration on Friday during a trip to Colorado

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