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Farm News Headlines- 12/5/19

USDA Announces Final SNAP Rule

A final rule making changes to the Supplemental Nutrition Assistance Program restores intent of the program, according to the Department of Agriculture. However, critics say the rule could cut benefits to hundreds of thousands of recipients, and charge that the rule ignores a bipartisan agreement in the 2018 farm bill. The change tightens work requirements for able-bodied SNAP participants without dependents. Agriculture Secretary Sonny Perdue says amid the strongest economy in a generation, the rule “lays the groundwork for the expectation that able-bodied Americans re-enter the workforce where there are currently more job openings than people to fill them.” Senate Agriculture Committee Ranking Democrat Debbie Stabenow of Michigan, counters, “this rule could cause one million people to lose their food assistance, while doing nothing to help them find jobs.” The National Farmers Union says the rule “will erode food security in rural and urban communities alike.” In the announcement, Secretary Perdue says, “Government can be a powerful force for good, but government dependency has never been the American dream.”

Japan Approves Partial Trade Agreement with U.S.

Japan’s Upper House of Parliament Wednesday ratified a partial trade agreement with the United States, which will go into effect on January 1, 2020. Ryan LeGrand, President and CEO of the U.S. Grains Council, notes that the  agreement “solidifies trade with our second-largest corn market.” The agreement immediately reduces U.S. corn and sorghum imports for all purposes to a zero-tariff level, reduces the U.S. barley mark up and includes a staged tariff reduction for U.S. ethanol and U.S. corn, barley and sorghum flour. Also, U.S. feed and food corn, corn gluten feed, and DDGS will continue to receive duty-free market access. Meanwhile, the U.S. Meat Export Federation called the agreement “one of the biggest developments in the history of red meat trade.” With tariff rates mirroring those imposed on major competitors, USMEF’s forecast for 2020 is for U.S. beef and pork exports to Japan to reach $2.3 billion and $1.7 billion, respectively. Export volumes are projected to be roughly 360,000 metric tons for beef and 410,000 metric tons for pork.

Trump: USMCA Action up to Pelosi

President Donald Trump told reporters Wednesday the U.S.-Mexico-Canada Agreement is on the desk of House Speaker Nancy Pelosi. Trump says Pelosi, “doesn’t have to talk to anybody,” adding she “has to put it out for a vote.” The President made the comments to the White House press pool on the sidelines of the NATO summit in London. Talk of getting USMCA on the House floor this week brought optimism the agreement could be completed yet this year. However, it seems more likely to be finalized in early 2020, as the trade pact faces several procedural hurdles. Although, some fear the agreement could get lost in the shuffle of election-year politics next year. Mexico must first approve changes to the agreement before the House of Representatives can hold a vote on the agreement. A trade official from Mexico met with U.S. Trade Representative Robert Lighthizer Wednesday, as both sides are working towards a speedy compromise. Agriculture groups continue to urge the agreement be finalized as quickly as possible.

AFBF: Trade Progress Can’t Wait

The American Farm Bureau Federation says farmers can’t wait for progress on trade deals, including the U.S.-Mexico-Canada agreement and a deal with China. President Donald Trump earlier this week suggested there was no deadline to reach a final agreement with China, and that an agreement could wait until after the 2020 elections. However, a phase one agreement including agriculture provisions could still come this month. In his comments, Trump said  trade aid to help farmers cope with tariffs “got them whole.” AFBF President Zippy Duvall said in a statement that while the payments to farmers provide critical support, “trade aid payments are not making farmers whole.” Duvall says a trade agreement with China’s must be a priority, adding further delay in reaching an agreement “would make it hard for struggling farmers to hold on in the face of rising bankruptcy rates.” Duvall also says passing USMCA would “send a message to the rest of the world that we are back in the game” of global trade.

Bankers Association Welcomes Hemp Banking Regulations

The federal government this week released banking guidance for the finance industry related to hemp producers. The American Bankers Association says the guidance makes clear that banks are not required to file Suspicious Activity Reports on hemp producers operating under an approved federal, state or tribal license or plan. The guidance also states bank customers are responsible for complying with regulatory requirements, not the banks. The guidance came following an interim final rule in October from the Department of Agriculture, which provided a framework for how USDA will approve regulatory plans from states and tribes that wish to oversee hemp production, as well as a federal plan to license producers in areas without approved local plans. Federal regulators said they would issue further guidance after reviewing the USDA rule. While the 2018 farm bill reclassified hemp as a legal agricultural commodity, significant questions remained, and ABA encouraged regulators to provide additional clarity on banks’ ability to serve hemp producers and hemp-related businesses.

Grain Elevators Facing Tighter Margins, Revenue Pressures in 2020

Grain elevators face significant challenges in the year ahead as they buy basis on corn, soybeans and wheat at the highest levels seen in years, according to a new report. CoBank reports basis for the three major grains is significantly tighter across the country from strong end-user bids, limited pipeline supplies, and lack of farmer selling amid an uncertain fall harvest. A CoBank researcher says, “grain elevators are being compelled to offer farmers a range of incentives to sell bushels,” including lower rates on storage, free delayed pricing and free grain drying, all cutting into elevator margins. Grain quality issues resulting from high moisture at harvest and frost damage on immature crops will also raise management costs for elevators, potentially resulting in greater losses to shrinkage and spoilage. A propane supply shortage in some regions is also driving up the cost of drying grain. However, grain elevators also have an opportunity to improve margins in an otherwise stressful year, as basis will likely soften as more bushels come to market as harvest operations conclude.


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