Snags Hit 2018 Farm Bill Extension; Farmer Aid May Be Linked with Disaster Aid

Note: Modified report today as I am Champaign, Illinois, to speak at a meeting given by Strategic Farm Marketing.

— 2018 Farm Bill extension and aid package face new challenges. Efforts to extend the 2018 Farm Bill and provide financial aid to farmers have hit a political snag. Outgoing Senate Ag Committee Chair Debbie Stabenow (D-Mich.) supports reallocating $14.5 billion in unspent Inflation Reduction Act (IRA) funds to the farm bill baseline, potentially unlocking $10 billion in budget authority, according to some reports citing the Congressional Budget Office. However, Politico reports House Speaker Mike Johnson (R-La.) has indicated that most House Republicans oppose this move.

Of note: Democrats have reportedly proposed $9.8 billion in economic assistance for farmers, including nearly $9 billion in direct payments for 2024 crops and additional funds for crop insurance and specialty crop disaster relief. Republicans have countered with a proposal for just over $20 billion in emergency relief but have not provided details on how this would be funded.

Now what: Lawmakers are now exploring passing a clean, one-year 2018 Farm Bill extension and incorporating emergency economic aid for farmers in a separate disaster aid package. Says one farm policy veteran: “There are always bumps along the way in this kind of process but I think they will land in a good place.”

— IEA raises 2025 oil demand forecast amid supply surplus outlook. The International Energy Agency (IEA) revised its 2025 oil demand growth forecast upward to 1.1 million barrels per day (bpd), up from its previous estimate of 990,000 bpd. The increase is attributed largely to the impact of China’s recent stimulus measures and broader growth in Asian economies.

Non-OPEC+ nations are expected to increase oil supply by 1.5 million bpd in 2025, driven by production gains in the U.S., Canada, Guyana, Brazil, and Argentina. This supply growth outpaces demand increases, leading the IEA to predict a modest acceleration in demand alongside a well-supplied market.

OPEC+ countries have delayed their planned output hikes by three months, and their lower demand growth outlook contrasts with the IEA’s findings. The IEA estimates a supply surplus of 950,000 bpd in 2025, potentially rising to 1.4 million bpd if OPEC+ output cuts are reduced. Meanwhile, the IEA lowered its 2024 demand growth forecast to 840,000 bpd, down by 80,000 bpd from its previous projection.

— Xi Jinping unlikely to attend Trump inauguration despite invitation. Chinese President Xi Jinping is unlikely to accept president-elect Donald Trump’s invitation to attend his inauguration on Jan. 20, given diplomatic norms and historical precedent. Foreign heads of state have never participated in U.S. presidential inaugurations, with China typically sending special representatives or envoys. Trump extended the invitation shortly after winning the election, according to CBS News, but diplomatic protocols and time constraints make Xi’s attendance improbable. Experts note that such visits require extensive preparation, which may be unrealistic during the U.S. government’s transition period.

— China plans more stimulus to boost growth amid uncertainty. China announced plans for expanded fiscal stimulus and monetary easing in 2025, aiming to sustain economic growth and stabilize employment and prices. At the Central Economic Work Conference, top officials, including President Xi Jinping, committed to raising the budget deficit ratio, cutting interest rates, and reducing the reserve requirement ratio (RRR) for banks. Additional measures include issuing ultra-long special treasury bonds and local government special notes to fund infrastructure and public spending.

The plans align with China’s pivot to a “moderately loose” monetary policy, a shift confirmed earlier this week. However, the scale and timing of these initiatives remain uncertain. Economists expect the first steps, such as an RRR cut, by year-end, with interest rate reductions anticipated in early 2025.

Despite recent rebounds in consumer spending and factory activity, risks persist. These include weak business confidence, deflation, a prolonged housing downturn, and potential export challenges from renewed U.S. trade tensions under Donald Trump’s administration. Full policy details, including growth targets, will be unveiled in March.

— Albertsons/Kroger merger ends amid legal dispute. Albertsons and Kroger have officially terminated their $25 billion merger following court decisions blocking the deal. Albertsons announced the termination on Wednesday and filed a lawsuit against Kroger, accusing it of failing to ensure regulatory approval. Kroger countered, claiming Albertsons breached the agreement and was not entitled to a break fee. Both companies stated the decision to end the merger was in their best interests after legal challenges proved insurmountable.

— Coming 45Z updated regs may be guidelines that incoming Trump administration will finalize. So say inside sources. A U.S. Treasury spokesperson recently confirmed that they anticipate issuing guidance before the end of the Biden administration, enabling eligible producers to claim the 45Z credit for 2025. The credit is set to kick off on Jan. 1, 2025, regardless of when the guidance is released.
Treasury advised taxpayers to apply for registration as soon as possible, with a recommendation to submit completed applications by July 15, 2024, to receive registration letters by Jan. 1, 2025.

Of note: Treasury did not commit to a definitive timeline or clarify how thorough the eventual rule would be. The guidance is expected to provide basic information for renewable fuel producers to demonstrate eligibility and claim the tax credit. Continued delays in the 45Z guidance could affect farmers who supply low-carbon feedstocks to biofuel producers, as it may be too late for them to adjust their 2025 growing season plans without clear rules on qualifying climate-smart agriculture practices.

— EPA’s investigation into used cooking oil (UCO) imports is directly related to biofuel tax incentives and compliance with the Renewable Fuel Standard (RFS) program. EPA has launched audits and inspections of renewable fuel producers’ supply chains to verify the authenticity and legitimacy of UCO feedstocks used in biofuel production. There is no specific completion date for EPA’s investigation into UCO imports. The investigation is ongoing, and EPA has not provided a definitive timeline for its conclusion. The investigations are still ongoing, and EPA is unable to discuss details of ongoing enforcement investigations.

Concerns have been raised about the legitimacy of imported UCO, particularly from China. There are suspicions that some imported UCO may contain palm oil or other mislabeled substances, which could violate U.S. renewable fuel standards.

The RFS program requires renewable fuel producers to submit UCO collection points used for biofuels production. Biofuels produced from UCO can earn producers various state and federal environmental and climate subsidies, including tradable credits under the RFS.

Investigation details: EPA began conducting audits after updating domestic supply-chain accounting requirements in July 2023. The agency is evaluating UCO collection locations and conducting inspections of renewable fuel producers. While not directly implemented by EPA, the agency may consider third-party certifications as part of its verification process. Some importers use testing and third-party certifications, such as the International Sustainability and Carbon Certification, to ensure the legitimacy of UCO.

Of note: EPA did not make a specific public announcement about investigating used cooking oils (UCOs). However, based on information provided, EPA began conducting audits of renewable fuel producers in July 2023. This is when the agency updated its domestic supply-chain accounting requirements for renewable fuel producers seeking to earn credits under the Renewable Fuel Standard (RFS) program. The investigations became public knowledge in August 2024, when EPA confirmed to various news outlets that they had been conducting these audits. On Aug. 7, Reuters reported that EPA had launched investigations into the supply chains of at least two renewable fuel producers. EPA spokesperson, Jeffrey Landis, stated that these audits had been ongoing since July 2023, but declined to provide specific details about the companies being investigated due to the ongoing nature of the enforcement actions.

Despite these measures, ensuring the authenticity of UCO imports remains challenging:• It’s difficult to differentiate between authentic UCO and mixtures containing fresh vegetable oils, such as palm oil.• The high volume of UCO imports, particularly from China, complicates verification efforts • There are concerns about potential fraud in the supply chain, including the mixing of fresh oils with UCO

If fraudulent practices are discovered, it could impact the eligibility of certain biofuels for tax incentives and RFS credit.

The investigation reflects concerns about potential displacement of U.S. feedstocks and unfair advantages for imported UCO. U.S. farm groups have called on the Biden administration to restrict biofuels produced with foreign feedstocks from qualifying for new tax credits. However, trade sources say UCO products have a substantial price discount and even without garnering U.S. biofuel tax incentives would still likely be imported.

There are calls for more visibility into the UCO supply chain and clarity on how the EPA ensures imported UCO is not blended with palm oil, especially relative to several deforestation programs in Europe.

— Key takeaways from the 2024 national vote tracker. David Wasserman, election analyst for the Cook Political Report, writes: “With the 2024 vote count certified in nearly every state, I thought I’d pass along my analysis of how vote margins and turnout shifted versus four years ago, using the Cook Political Report’s national popular vote tracker. The margins determining control in DC remain extremely narrow: despite a GOP sweep, the White House came down to a difference of 229,766 votes across three states and the House came down to 7,309 votes across three districts, out of over 155.2 million votes cast.”

— Biden administration pushes to stabilize U.S./China relations ahead of Trump’s presidency. The New York Times reports (link) that the Biden administration is engaging in a final round of high-level talks with China, aiming to fortify communication channels amid mounting economic tensions and before President-elect Donald Trump assumes office. Senior Treasury officials will meet with their Chinese counterparts in Nanjing and at a G20 summit in South Africa to discuss persistent issues like China’s green energy surplus, export restrictions, and support for Russia.

“The American people expect that we should be able to communicate directly with Chinese officials on both areas where we agree and especially on areas where we don’t,” said Jay Shambaugh, Treasury’s undersecretary for international affairs.

Despite increased dialogue, long-standing disputes persist. The Biden administration has maintained tariffs from Trump’s first term and imposed new restrictions on Chinese technologies. China has retaliated by banning exports of critical minerals.

Mark Sobel, a former Treasury official, emphasized the need for continued dialogue, stating: “Whether they like each other or not, they absolutely should be speaking with one another, if for no other reason than to avoid potentially harmful misunderstandings.”

Bottom line: As Trump prepares to resume a harder stance on trade with China, including the possibility of heightened tariffs, the Biden administration hopes its groundwork for economic communication will mitigate future disruptions in the world’s most pivotal economic relationship.

— FBI Director Christopher Wray announces resignation. FBI Director Christopher Wray announced Wednesday that he will resign from his position, effective January 20, amid expectations that the incoming GOP administration will appoint a new director. Wray shared the decision during an internal agency town hall, according to ABC News.

“This is the best way to avoid dragging the Bureau deeper into the fray,” Wray said.

President-elect Donald Trump has made clear he would get rid of Wray despite the director having more than two years left in his 10-year term. Trump has nominated Kash Patel, an official in his first administration and loyalist, to be the next FBI chief.

— Senate blocks McFerran nomination, clearing path for GOP control of NLRB. On Dec. 11, the Senate narrowly voted 50-49 to block the re-nomination of Lauren McFerran to the National Labor Relations Board (NLRB). This decision ensures a Republican majority under President-elect Donald Trump’s incoming administration, marking a major shift in the board’s ideological balance.

Two independents, Joe Manchin (W.Va.) and Kyrsten Sinema (Ariz.), joined Republicans in opposing McFerran’s nomination. The result dealt a blow to Senate Majority Leader Chuck Schumer’s (D-N.Y.) efforts to maintain Democratic influence on the NLRB.

The NLRB will shift to a GOP majority, with vacancies expected to be filled by the incoming administration. Impact: Likely rollbacks of Biden-era pro-union policies, affecting union organizing, joint employer standards, and independent contractor regulations. Marvin Kaplan, currently the sole Republican member, is anticipated to become NLRB Chairman.

The incoming Trump administration is expected to pursue employer-friendly labor policies, potentially easing regulatory enforcement and scaling back pro-union initiatives. The shift heralds significant changes for U.S. labor relations in the years ahead.

— Trump administration likely to revise Inflation Reduction Act provisions. The incoming administration of President-elect Donald Trump may scale back certain elements of President Joe Biden’s Inflation Reduction Act (IRA/Climate Act), according to Seiho Kim, head of research at LG Business Research. Speaking at an SNE Research conference in Seoul, Kim suggested Trump might eliminate the $7,500 tax credit for some electric vehicle (EV) models but could retain or adjust the Advanced Manufacturing Production Credit (AMPC), which supports U.S.-based battery manufacturing.

Of note: Congress would need to approve Trump’s plan. This tax credit is embedded in the IRA Act (IRA), which was enacted under President Biden. To repeal or amend the tax credit, legislative action by Congress would be required, either through a standalone bill or as part of broader tax reform legislation. Such changes would involve passing a new law, which requires approval by both the House of Representatives and the Senate, and then being signed into law by the president. While Trump cannot unilaterally revoke these credits, his administration could take regulatory actions to limit their scope. For example, it could issue new rules to restrict eligibility criteria or remove credits for leased vehicles. However, a complete repeal of the tax credit would necessitate congressional action.

— RFK Jr.’s CIA push stirs transition drama. Robert F. Kennedy Jr., tapped to lead Health and Human Services by Donald Trump, is advocating for his daughter-in-law, Amaryllis Fox Kennedy, to become the CIA’s second-in-command, Axios reports. The proposal has ignited “real drama” within the Trump transition team. Kennedy, a vocal critic of the CIA, suspects agency involvement in the assassinations of both his uncle, John F. Kennedy, and his father, Robert F. Kennedy. Amaryllis Fox, a former CIA analyst and RFK Jr.'s campaign manager, could, in his view, investigate these claims from within. Trump has also pledged to release the remaining JFK assassination files.

— Trump transition updates:
• Trump named Kari Lake to be the director of government-funded media outlet Voice of America.
• Trump named Leandro Rizzuto Jr. as ambassador to the Organization of American States, Peter Lamelas as ambassador to Argentina, and Dan Newlin as ambassador to Colombia.
• Meta Platforms donated $1 million to Trump’s inaugural fund, according to the Wall Street Journal.

— President Biden is commuting the sentences of roughly 1,500 people who were released from prison and placed on home confinement during the coronavirus pandemic and is pardoning 39 Americans convicted of nonviolent crimes. It’s the largest single-day act of clemency in modern history. More acts of clemency could be coming before Biden leaves office on Jan. 20.

— NWS outlook: Great Lakes heavy lake-effect snow expected to continue into Friday especially along the Snow Belt of the lower Great Lakes... ...A couple rounds of heavy coastal rain and heavy mountain snow expected to impact northern California into Sierra Nevada heading into the weekend... ...Sub-zero temperatures expected over parts of the northern Plains and upper Mississippi Valley for the next couple of mornings.

(NWS)