Weekly Food & Agriculture Update 10.5

Monday, October 5th, 2020

WEEKLY FOOD & AGRICULTURE UPDATE

October 5, 2020

Programming Note: The MTA Newsletter will break for the Congressional Recess and will resume publication on November 9.


Contents
  • COVID-19 Updates
  • Big Picture Outlook
  • The Week Ahead
  • MTA in Action
  • A Quick Look Back
  • Contact the Team

COVID-19 Updates

Legislative Update– The Senate passed a Continuing Resolution (CR) on Wednesday afternoon to fund the government through December 11, thus avoiding a government shutdown. THE CR included funds for the Commodity Credit Corporation (CCC) with conditions prohibiting the use of the funds for the oil industry. The CR also included nearly $8 billion for nutrition assistance programs. The funding maintains current spending levels for the time being and allows lawmakers to work out longer-term spending details until after the election. The President signed the CR last week.

The House passed a $2.2 trillion COVID relief package this week as negotiations between the White House and House leadership continue. The revised HEROES Act contains funding for airlines, restaurants, and other needs that have arisen since May. The bill passed the House 214-207 with Republicans and eighteen Democrats voting against it. President Trump instructed Republican House leadership to come up from their original negotiating point of $1 trillion to $1.5 trillion, but no agreement has been reached.

The House bill includes funding for agricultural programs. Among a wide variety of USDA related programs, the proposal would include $350 million for the Agricultural Quarantine Inspection Service to keep pests and diseases outside the country, $1.5 million for the FDA to hold one or more committee meetings on COVID-19 vaccine applications, $2.5 million for the USDA Office of the Inspector General, and $20 million to strengthen activities and services that connect farmers and ranchers to stress assistance resources and programs. The bill also includes $10 billion for SNAP, $400 million for WIC, and $450 million to assist U.S. food banks.

Federal Update- According to an analysis published by the Environmental Working Group, USDA Coronavirus Food Assistance Program (CFAP) payments through June 30 show that the largest farm operations across the nation received the top 22 percent of the payments, with an average payment of $352,432. The smallest 80 percent received 23 percent for an average payment of $4,677. This same trend also applied to the Market Facilitation Program (MFP), a program that aimed to lift the effects of the trade war, with the top ten percent of farms receiving over half of the MFP payments with an average payment of $185,412.

The USDA released the latest statistics on the original CFAP. As of September 27, the Department has paid out $10.18 billion in payments and approved 642,871 applications. This information is exclusive to CFAP 1 as statistics and information regarding CFAP 2 will be available in the coming weeks.

Industry Update– ReFED, a nonprofit committed to reducing food waste, found in a recent study that despite global food waste drastically increasing at the onslaught of the pandemic, food waste is starting to return to normal levels, with the potential of decreasing beyond that. Actions taken on by the food industry in response to COVID-19, such as restaurants discontinuing buffets and having smaller menus, has aided in keeping smaller inventories and reducing food disposal. The report also found that consumers’ desire to make less trips to the grocery store has contributed to causing an equilibrium in food waste that could cause trends of reduction to continue.


Big Picture Outlook

AEI Analyzes Farm Income Estimates- The Agricultural Economic Insights (AEI) group analyzed the USDA’s data on farm income and financial data, highlighting seven insights from the data:

  • Overall net farm income is lower for 2019 than the Department reported.
  • The farm economy for the last three years has generally been unchanged.
  • Large ad hoc payments are dominating direct payments from the government (not accounting for CFAP 2).
  • More producers than ever before have been receiving direct payments because of CFAP 1.
  • Working capital has been stable over the last few years, although producers in 2020 may start liquidating to meet their financial needs.
  • Farm debt has increased mostly because of real estate debt.
  • There have been significant variations in cash receipts for farms because of ad hoc programs and reconciling higher net farm income with direct payments.

The researchers emphasized that different commodities faced different degrees of challenges, so generalizing across the farm economy is difficult to do equitably. They also suggested that consideration needs to be given on how to help farms transition off of ad hoc payments.

Industry Wants U.S. in the WTO– Despite U.S. Trade Representative Robert Lighthizer recently calling the World Trade Organization (WTO) ‘a mess’ and supporting the idea of pulling the country out of it, agricultural groups and companies are urging him to stay. The American Farm Bureau Federation (AFBF), Cargill, Syngenta, the Hershey Company and over 60 food and agricultural organizations sent a letter emphasizing it was more important for agriculture to propose reforms in the WTO rather than leave it. In the letter, leaders said “The WTO affords U.S. agriculture producers and exporters most-favored nation (MFN) treatment…representing over 80 percent of the global economy.” Last February, USTR released a document of complaints against the WTO, raising how the Appellate Body has “altered members’ rights and obligations through erroneous interpretations of WTO agreements.” Despite these complaints, AFBF President Zippy Duvall said the WTO is an important organization for facilitating growth in agricultural trade

China Purchases May Not Meet End of Year Goal– China has made record purchases of corn and soybeans in an effort to meet the conditions of the Phase One Trade Agreement with the United States. The USDA estimated that Chinese soybean imports from all origins in 2020-2021 at 99 million tons, one million more than the previous marketing year. However, with China buying record amounts of Brazilian products as well, the USDA has anticipated that China will not meet its purchase agreements by the December 31 date. Agriculture Secretary Sonny Perdue recently said in a forum in Illinois that “it is going to be tough to meet those numbers…we may reach it by the end of January before Brazil and South America come back into the marketplace.” Departing U.S. Ambassador to China, Terry Branstad, said the tough approach the U.S. took on China to get them to buy such high amounts was needed in order to have a better balanced and fair trade agreement. To date, China has so far purchased 10 million tons of U.S. corn, 19 million tons of soybeans, and 1.4 million tons of wheat for the 2020-2021 marketing year.


MTA in Action 

Torrey Participates in SNAC International Panel– MTA Principal, Michael Torrey, hosted a panel with political advisors Paul Begala and Mark McKinnon to discuss the current political climate and its volatility. Other topics of the panels included an economic outlook during and after the pandemic, artificial intelligence, and reputation management.

Kuball Participating in Trade Panel– On October 7th, MTA Vice President Cassandra Kuball will be participating in a virtual town hall entitled “Global Trade and Fresh Produce: Poised at the Intersection of Policy and Politics.” This session will provide focus from leaders in trade on how to navigate a difficult market environment. A link to the town hall can be found here.


The Week Ahead

To see a full list of House and Senate Committee business, visit here.

A Quick Look Back


Contact the Team 

Feel free to contact Michael TorreyTara SmithCassandra KuballJessica KuneyBarbara PattersonPerry Harlow, or Brandon Barnett with any questions or comments.