Policy Updates and Issue News July 2019

Wall Street Leaving Farm Sector

When the housing and real estate crash occurred ten years ago, Wall Street banks went hunting for new ways to expand loan business beyond the troubled mortgage sector.  They found those new opportunities in the rural Midwest and piled into the agriculture sector.   It was easy to lend to farmers who had plenty of income and collateral as commodity and land prices surged.  Now, as farm income falls, the U.S.-China trade war intensifies, and farm debt rises to $427 billion this year, Wall Street players are headed for the exits.  Chapter 12 federal court filings, a type of bankruptcy protection largely created for small farmers a few years ago, increased from 361 filings in 2014 to 498 in 2018.

Pathway for Hemp Hits Regulatory Bump

The effort to implement the legalization of industrial hemp authorized by the 2018 Farm Bill is complex.  The USDA is working on crop insurance, the Food and Drug Administration is trying to determine health risks to humans and animals of hemp-derived cannabidiol (CBD) and the EPA is looking for research on crop protection chemicals that are safe to use on hemp.  The agencies are scrambling to publish regulations this fall.

Rewrite of Contract Grower Rule Expected

For many years, producers who grew animals (mainly broiler chickens) on contract for meat processors have accused those companies of unfair preferential treatment among growers.  They have become more vocal that their relationship with the integrator – the company providing the chicks, feed and veterinary care to contract growers – has become more and more strained.  Growers feel pressured into costly repairs and upkeep while fearing retaliation (sudden cancellation of contracts) for speaking out publically.  Several Farm Bills directed the USDA to propose enforcement criteria to address such concerns but annual appropriations riders prevented funding to be used for their development.  USDA recently announced it intends to publish proposed regulations later this summer to specifically address the issue of undue preference.

Farm Prices to Suffer as Increasing Productivity Outpaces Demand

According to the United Nation’s Food and Agriculture Organization (FAO), global demand for agricultural products will not keep up with agriculture’s productivity growth over the next decade.  This will cause inflation-adjusted prices of the major commodities to remain at or below their current levels. Yield improvements and higher production intensity are being driven by technological innovation which will result in higher output even as agricultural land use remains nearly constant.

Democratic Presidential Hopefuls on Rural Issues

It’s still early, but here’s what we know about candidates’ support so far:

• Biden wants to invest in climate–friendly farming, strengthen antitrust enforcement, grow the bioeconomy, invest in clean energy, support deployment of methane digesters, invest in rural broadband, expand the Conservation Stewardship Program, give persistent poverty counties more federal funding, protect and build upon the Affordable Care Act, “decarbonize” the food and agriculture sector, and is endorsing the Green New Deal.
• Sanders endorses the Green New Deal, and wants to address climate change, transition to regenerative family farming practices, and transition to more sustainable management for livestock systems.
• Warren wants to invest $2 trillion over the next 10 years in green research, manufacturing, and exporting that links American innovation directly to American jobs, and helping achieve the ambitious targets of the Green New Deal. She supports family farms, likes country-of-origin labeling on food products and is committed to breaking up agribusiness monopolies.
• Harris wants to forge a Green New Deal to tackle the climate crisis, build a clean economy that creates good-paying jobs for the future, and confront environmental injustice head on.
• Klobuchar vows to get the United States back into the Paris climate change accord and wants rural housing reform.
• Buttigieg wants to implement a Green New Deal with all available tools including a carbon tax-and-dividend for Americans, and major direct investment to build a 100% clean energy society.
• O’Rourke wants a 10-year $5 trillion climate change investment, allow farmers and ranchers to profit from capturing greenhouse gasses, and have government procurement programs create a new “buy clean” program.
• Booker is a vegan who is critical of concentrated animal feeding operations and committed to addressing climate change with an eye on vulnerable communities.

Changes Proposed to the H-2A Farmworker Visa Program

The Labor Department is proposing to allow more workers, overhaul wage requirements and streamline the H-2A application certification process in a 489- page notice released in mid-July.  Grower groups and worker advocacy organizations are pouring through the proposed rulemaking document to offer expert comment to the DOL.  Farmers and ranchers are generally pleased so far with the proposed changes.   Demand for certified H-2A applicants has increased sharply year-over-year with a 21 percent increase from fiscal 2017 to fiscal 2018 as an example.  For several years the National Grange has asked the Department of Labor to revise and streamline H-2A regulations and will work to finalize a much-improved rule.

Mexico’s Migration Crackdown

The number of people taken into custody along the U.S. southern border fell 28 percent in June, a drop U.S. authorities say reflects the early impact of Mexico’s crackdown on Central American migration.  In May, President Trump agreed to withhold additional tariffs on Mexico and Mexican President Obrador agreed to dramatically increase enforcement efforts on the Mexican side of the border.

Senate Urged to Keep Part D Intact

The National Grange along with 28 additional groups with a focus on senior citizen health, urged the Senate Finance Committee to reconsider many of their plans to restructure the Medicare Part D program.  The groups raised concerns that the Committee‘s proposed changes to Part D have been discussed without meaningful stakeholder input and reportedly lacks significant reforms to address seniors’ out-of-pocket cost sharing.  The Committee should first address high senior out-of-pocket costs in any reform proposal, not just government savings.  The National Grange had previously sent the Committee a cautionary statement that adding an inflation rebate penalty to Part D could arbitrarily target innovative medicines and may hamper patients’ access to new and innovative treatments.

“Cadillac Tax” Repeal

The National Grange has joined numerous patient advocacy groups on letters to both the House and Senate urging repeal of the so-called “Cadillac Tax.”  This is a 40% tax on higher cost employer-provided health care benefit plans.  This tax is especially onerous for middle income families and small businesses that already struggle to offer health care coverage to their employees.  Employer-provided coverage is the backbone of our health care system and the primary source of coverage for the majority of Americans.

Support for Airwaves Act

The National Grange has issued a statement strongly supporting the reintroduced bipartisan Airwaves Act in the Senate.  The Act would make spectrum available for auction to be used to relieve network congestion and support 5G implementation.  It includes the stipulation that 10% of the proceeds be used specifically for rural broadband infrastructure build-out.

Lifeline Service Support in New York

Roger Halbert, Secretary of the New York State Grange, recently represented the National Grange to support the Lifeline program before the State of New York Public Service Commission.  Several wireless providers have petitioned the Commission to be allowed to participate in New York’s Targeted Accessibility Fund to deliver additional access to the Lifeline Program.  Lifeline offers discounted phone and broadband service to elderly, disabled, shut-in, low-income citizens and to veterans.

Parameters of a U.S.-China Trade Deal

At the late June G-20 leaders summit when President Trump and China’s President Xi Jinplng shook hands, extended olive branches and agreed to reopen trade talks, they apparently had a mutual understanding.  The trade war would come down to the U.S. easing up on Huawei and China buying agricultural products.  President Trump has since agreed to give timely licensing decisions to allow several tech companies to sell to Chinese telecom giant Huawei.  Huawei  was blacklisted in May effectively stopping its ability to buy U.S.-made chips.  Chinese companies have since reached out to U.S. exporters to inquire about pricing and also filed applications to remove tariffs on agriculture goods.   These goodwill gestures seem likely to pave the way for in-person meetings soon.  However, on Capitol Hill Huawei is viewed as a threat to national security so stay tuned for further developments.

Japan Trade Promising

Talks are set to resume on a free trade agreement with Japan August 1 in Washington.  Japanese Economy Minister Motegi will lead a visiting delegation for meetings with U.S. Trade Representative Robert Lighthizer.  U.S. ag producers have been pushing for a free trade agreement with Japan since President Trump pulled out of the Trans-Pacific Partnership trade pact.  Japan is America’s fourth largest ag market and a major buyer of beef, pork, dairy, wheat, wine, fruits, vegetables and other commodities.

Congress will be on recess August 2-September 9.   That means that your senators and representative will be spending at least some time at home.   Remember the famous quote from legendary House Speaker Tip O’Neill who often proclaimed, “All politics is local.” Survey after survey of congressmen and congressional staff say by far the most effective way to get your message to Washington is your action right from home.  Go to local town hall meetings, listening sessions, fairs, rallies, celebrations, community events and other opportunities to come face-to-face with your member of Congress or their staff.  Br courteous and respectful but direct and to the point as you summarize your issues.  Make sure you have factual information and know both sides of the argument.  Give the person you are talking to your contact information and ask for follow-up.