Rollins to Speak This Morning at NASDA; HPAI/Egg Price Plan Expected Soon

Modified report today as I am en route to North Dakota for two speeches for Ihry Insurance Agency.

— The House passed the Republican budget resolution by a razor-thin vote of 217-215. GOP rebel Rep. Thomas Massie (R-Ky.) was the only Republican to vote no. Initially unable to secure enough votes, Speaker Mike Johnson (R-La.) and his leadership team executed a last-minute procedural switch, allowing the roll call to proceed as departing Democrats scrambled to return. The fiscal year (FY) 2025 budget blueprint (HConRes 14) paves the way for up to $4.5 trillion in tax cuts and new breaks, offset by $2 trillion in spending reductions over the next decade. It also includes provisions for a $4 trillion debt limit increase and funding boosts for border security and defense.

Conservative hardliners, initially resistant to the plan, were swayed after intense lobbying from former President Donald Trump, who personally urged members to back the measure. Key holdouts, including Reps. Warren Davidson of Ohio and Tim Burchett of Tennessee, cited assurances on future spending cuts as their reason for flipping. Meanwhile, Rep. Victoria Spartz of Indiana credited Trump’s personal commitment to healthcare reform for her support.

The dramatic passage was facilitated by GOP leaders’ strategic delays and Democratic absences, though three absent Democrats returned unexpectedly, tightening the margin. In response, House Minority Whip Katherine M. Clark (D-Mass.) rushed to alert Democrats, who deliberately slowed the voting process to buy time.

This budget resolution is just the first step toward enacting Trump’s broader fiscal agenda. The Senate has its own competing budget plan, emphasizing border security and defense while deferring tax legislation. Both chambers must align their proposals before moving forward with reconciliation, a process that could bypass a Democratic filibuster.

Bottom line: Despite internal GOP disagreements — conservatives demanding deeper cuts and moderates concerned about Medicaid and food stamp reductions — the leadership emphasized that failing to pass their framework would risk allowing tax hikes when 2017 tax cuts expire. Trump, for his part, signaled openness to either the House or Senate approach, leaving the final outcome uncertain. A compromise budget resolution won’t come to the House floor until early April. That’s when two new House Republicans from Florida will be sworn in. (New York GOP Rep. Elise Stefanik can now exit for her new UN post.) Johnson wants to send a reconciliation package to Trump by early May.

Of note: The House side may agree with the scoring method that Senate Republicans want to employ to make permanent extensions feasible without having to dip into huge offsets because of reconciliation rules.

Regarding tax cuts, a meeting will be held at the White House today. The meeting is expected to include Treasury Secretary Scott Bessent and White House National Economic Council Director Kevin Hassett on the administration side. The contingency from Congress includes Johnson and Senate Majority Leader John Thune (R-S.D.) along with the tax committee chairs, Rep. Jason Smith (R-Mo.) and Sen. Mike Crapo (R-Idaho).

— Alert: Some GOP lawmakers in the budget reconciliation talks want to repeal the Inflation Reduction Act’s clean energy credits. Republicans are looking for savings from the credits that Democrats passed in 2022. This could range from clawing back tax incentive credits to income caps for some incentives to transferability of the benefits. Whether or not this includes the 45Z (Sustainable Aviation Fuel) tax incentives is unknown, as this program is supported not only by Democrats but by farm-state lawmakers.

— USDA Secretary Brooke Rollins speaks this morning before the National Association of State Departments of Agriculture (NASDA) Winter Policy Conference. Brooke signaled earlier that there would be “big news” this week and most think it will be a new Trump administration approach to combating HPAI/bird flu and surging egg prices. Rollins has been working with the White House and National Economic Council Director Kevin Hassett on the coming announcement.

— USDA upped its 2025 egg price forecast to a 41.1% increase (range of up 15.0% to 74.9%), more than double the 20.3% rise they forecast in January. USDA started their 2025 egg price forecast in July 2024 looking for them to decline 7.6% versus 2024

“Retail egg prices increased by 13.8% in January 2025 after rising by 8.4% in December 2024,” USDA detailed. “Retail egg prices continue to experience volatile month-to-month changes due to an outbreak of HPAI that began in 2022. HPAI contributes to elevated egg prices by reducing egg-layer flocks and egg production. About 18.8 million commercial egg layers were affected by HPAI in January 2025, the highest monthly total since the outbreak began in 2022.”

Egg prices in January were 53% higher than January 2024 and “surpassed the previous peak prices in January 2023,” USDA detailed.

— USDA raises 2025 food price forecasts amid rising grocery costs. U.S. consumers will face steeper food prices in 2025, as USDA now predicts a 3.4% increase in overall food costs, up from January’s 2.2% forecast. Grocery prices are expected to rise 3.3%, a sharp revision from the previous 1.3% estimate, while restaurant prices will increase 3.4%, slightly lower than the earlier 3.6% projection.

The forecasted hikes surpass the 20-year average of 2.9% for overall food and 2.6% for grocery prices.

A key driver is egg prices (as previously noted), though other food categories have also seen upward revisions. Notably, meat prices are now set to rise 1.4%, beef and veal 3.2%, and pork 1.2%, while poultry prices are expected to remain flat. Meanwhile, cereals and baked goods are the only category expected to decline, albeit slightly at -0.1%.

With food costs climbing at the highest rate since 2023, when prices surged 5.8%, consumers are likely to feel the strain of inflation at grocery stores and restaurants alike.

— Update on the $10 billion coming in farmer economic relief payments Congress approved Dec. 21:
· They are coming, despite errant conjecture from some outside Washington.
· Based on history, the initial payment will likely be around 85% of the projected total, with a supplemental payment likely coming in the summer. Most expect the per acre payment rates to be in line with what staffers on the House Ag Committee released last year (link).
· The payments would be impacted if there is a gov’t shutdown beginning March 15.

— Zelenskyy to meet Trump as resource deal finalized. Ukrainian President Volodymyr Zelenskyy is set to meet with Donald Trump in Washington on Friday to finalize an agreement granting the U.S. control over half of Ukraine’s natural resources. The deal, expected to be approved by Ukraine’s cabinet today, is part of Trump’s push for a resolution to Russia’s invasion. While Kyiv initially rejected the terms due to a lack of security guarantees, the revised agreement emphasizes economic partnership. Trump, who has recently criticized Zelenskyy and moved closer to Moscow, sees the deal as a key step toward ending the conflict.

— BP shifts focus back to oil and gas. BP announced a major strategic shift, moving away from its aggressive renewable energy targets to refocus on oil and gas production. The decision follows shareholder pressure and financial underperformance compared to competitors. Key changes:
· Renewable energy cutbacks: BP is abandoning its goal to expand renewable capacity 20-fold by 2030 and cutting renewable investments by over 50%.
· Increased fossil fuel investment: Oil and gas spending will rise to $10 billion per year, and previous targets to reduce production by 25% by 2030 have been scrapped.
· Financial adjustments: Capital expenditures will be trimmed to $13-15 billion annually, with cost-cutting targets increased.

Activist investor Elliott Management is pressuring BP to enhance shareholder value. BP’s financial performance lags behind Shell and Exxon. Lower-than-expected returns from renewables was another reason, along with a broader industry trend, with companies like Shell and Equinor also scaling back renewables.

— Mexico moves to ban GMO corn planting. Mexico’s lower house of Congress has approved a constitutional reform to ban the planting of genetically modified (GMO) corn, passing the measure with a 409-69 vote. The reform designates native corn as an “element of national security.” However, concerns have emerged over a provision stating that any other use of GMO corn must be evaluated for potential risks to biosecurity, health, and cultural heritage. The measure now heads to the Senate for final approval. This move follows Mexico’s prior attempt to ban GMO corn imports, which was overturned under the U.S.-Mexico-Canada Agreement (USMCA), raising the possibility of renewed U.S. objections.

Of note: Mexico buys about $5 billion of U.S. GM corn each year, mostly for livestock feed.

— Senate vote on Greer for USTR expected today. The Senate is set to vote today on the nomination of Jamieson Greer as U.S. Trade Representative (USTR). Earlier this week, the Senate advanced the nomination with a 55-42 procedural vote. Greer is expected to be confirmed and will face several trade challenges immediately upon taking office.

— Some Democratic senators wrote USDA Secretary Brooke Rollins expressing concerns about recent layoffs at USDA and their potential impact on services for farmers and rural communities. “These widespread layoffs jeopardize USDA’s ability to respond to the ongoing avian flu outbreak, process farm loans, disaster relief and other assistance for farmers, and distribute grants and loans for infrastructure and services that rural Americans rely on,” they wrote. Link to letter. Key points include:

· The layoffs, announced on Feb. 14, have affected thousands of USDA employees across various agencies and offices, including APHIS, FS, NRCS, FSA, and RD.
· The Senators are worried that these layoffs will hinder USDA’s ability to manage the avian flu outbreak, process farm loans, provide disaster relief, and distribute grants and loans for rural infrastructure and services.
· They request detailed information on the number of employees terminated or placed on administrative leave, broken down by state, agency, job position, and veteran status.
· They seek clarification on the criteria and process used for these terminations, examples of termination notices, and details on any exemptions.
· They ask if any assessments have been conducted on the impact of these terminations and if any termination letters have been rescinded or employees rehired.
· They inquire about USDA’s plans to hire new employees to replace those terminated and any future plans for additional terminations.
· The Senators request responses to specific questions by Feb. 28 and March 7, emphasizing the urgency of the matter.

— NWS outlook: Clipper system to bring scattered rain and snow showers from the Midwest to the Northeast through the next couple of days... ...Another clipper system to reach the upper Great Lakes late Thursday bringing additional snowfall... ...Above to well above average temperatures expected to persist for most of the country.

(NWS)