Tag Archives: Sonny Perdue

The U.S. Department of Agriculture plans to relocate the headquarters of two research agencies to the Kansas City area, intensifying concerns that research will suffer.

Agriculture Secretary Sonny Perdue announced the move Thursday and said it will bring the Economic Research Service and National Institute of Food and Agriculture closer to farmers and agribusinesses. He also said it would save about $20 million a year.

But the Union of Concerned Scientists predicted the move will drive off researchers and called it “a blatant attack on science.”

A union representing Economic Research Service employees said the move is “coldhearted” and called for keeping workers in Washington.

Members of the Kansas and Missouri congressional delegations and the state’s governors applauded the decision. It’s expected to bring 550 jobs to the area.

WASHINGTON –Nine U.S. Senators, led by Debbie Stabenow (D-Mich.), Ranking Member of the U.S. Senate Committee on Agriculture, Nutrition, & Forestry, today raised concerns that the U.S. Department of Agriculture (USDA) will continue to allow foreign companies to profit from the Trump Administration’s plan to assist American farmers affected by their trade policies.

Last week, the Administration announced it would provide up to $1.4 billion to purchase commodities targeted by retaliatory tariffs. In the previous round of aid, lucrative purchasing contracts were awarded to several foreign entities, including nearly $62.5 million in pork products from JBS USA, which is owned by Brazilian parent company JBS SA.

“…It is counterproductive and contradictory for these companies to receive assistance paid for with U.S. taxpayer dollars intended to help American farmers struggling with this Administration’s trade policy,” the Senators wrote.

The USDA has indicated that foreign corporations could continue to profit from tariff aid. In a written response, the Under Secretary for Trade and Foreign Agricultural Affairs stated the USDA would take no action to prevent foreign companies from profiting from U.S. taxpayer-funded aid, writing that the agency “awards purchases to the lowest bidder through their procurement process and will not manipulate the integrity of the process to exclude particular companies.”

“It is unacceptable that American taxpayers have been subsidizing our competitors through trade assistance,” the Senators wrote. “We ask that you ensure these commodity purchases are carried out in a manner that most benefits the American farmer’s bottom line –not the business interests of foreign corporations.”

The letter was signed by Senators Stabenow, Sherrod Brown (D-Ohio), Charles Schumer (D-N.Y.), Patrick  Leahy (D-Vt.), Richard Blumenthal (D-Conn.), Patty Murray (D-Wash.), Amy Klobuchar (D-Minn.), Tammy Baldwin (D-Wisc.), and Kirsten Gillibrand (D-N.Y.).

The full text of the letter is below. A PDF of the letter is available here.

Dear Secretary Perdue:

As you know, American farmers continue to be caught in the middle of the Administration’s action on trade, and face ongoing challenges from retaliatory tariffs imposed by key trading partners. While we understand the U.S. Department of Agriculture’s (USDA) desire to aid farmers impacted by this trade disruption, we urge you to stop making trade mitigation commodity purchases that benefit foreign-owned companies.

Last year, the Administration made up to $1.2 billion available for commodity purchases through a new Food Purchase and Distribution Program, which was intended to assist producers harmed by retaliatory tariffs. Under this program, the Agricultural Marketing Service (AMS) will continue to make hundreds of millions of dollars in commodity purchases throughout the rest of calendar year 2019.

On top of that, you recently announced that the Administration is planning further trade mitigation assistance, including additional commodity purchases. As such, we are deeply concerned that the Department’s efforts to assist farmers harmed by trade disruptions may continue to benefit foreign-owned entities.

Under the Food Purchase and Distribution Program, the USDA has awarded lucrative purchasing contracts to several entities with foreign ownership, including $240,000 in pork products from Smithfield Foods, a subsidiary of the Chinese-owned WH Group, and nearly $62.5 million in pork products from JBS USA, which is owned by Brazilian parent company JBS SA. While the USDA permitted Smithfield to terminate its purchasing contract upon the company’s request, the Department awarded numerous contracts to JBS and has not established sufficient procedures to ensure that taxpayer-funded trade assistance for American farmers is not ultimately benefiting foreign companies.

Whether it’s the WH Group, which is closely tied to the Chinese government, or JBS SA, which is benefitting from the U.S’s loss of market share in certain countries, it is counterproductive and contradictory for these companies to receive assistance paid for with U.S. taxpayer dollars intended to help American farmers struggling with this Administration’s trade policy.

Following a U.S. Senate Agriculture, Nutrition, and Forestry Committee hearing on U.S. agricultural trade in September 2018, this concern was raised with Ted McKinney, USDA’s Under Secretary for Trade and Foreign Agricultural Affairs. He was asked how USDA would ensure that these trade mitigation commodity purchases would benefit American farmers and not benefit foreign-owned companies. In response, Under Secretary McKinney showed no concern with commodity purchases benefitting foreign companies, writing, “AMS awards purchases to the lowest bidder through their procurement process and will not manipulate the integrity of the process to exclude particular companies.”

It is unacceptable that American taxpayers have been subsidizing our competitors through trade assistance. We ask that you ensure these commodity purchases are carried out in a manner that most benefits the American farmer’s bottom line –not the business interests of foreign corporations. Thank you for your attention to this important matter.

This spring’s planting decisions may be as clear as mud, yet they carry heavy financial consequences.

“You couldn’t have planned this to be more confusing,” said University of Illinois economist Gary Schnitkey. “The falling out of the trade deal happened right when we were getting to the point of planting corn.”

Then, persistent heavy rains across wide swaths of the Corn Belt kept farmers from their fields, forcing many producers to weigh their options: take a prevented planting payment from crop insurance, plant corn but with lower insurance coverage levels or switch to soybeans.

“So it just becomes a point of looking for the alternative that you think has the highest expected return, even though it’s probably not the return that you’d like,” he said. Many farmers will still be looking at negative incomes as they put pen to paper.

VARIOUS FACTORS

Farmers have to factor in their local weather forecast, fluctuating markets and USDA’s revised Market Facilitation Program. USDA released its proposal on Thursday afternoon — $14.5 billion of direct payments to farmers with a rate based on county-level trade impacts and the total acreage a farmer plants to eligible commodity crops.

“They’ve tried to structure it in a way that doesn’t necessarily favor switching to soybeans sooner, which is what a lot of people were worried about, but it does suggest that people who get toward the end of that (soybean) planting window might wind up stretching it a little farther,” Jim Mintert, director of the Center for Commercial Agriculture at Purdue University, said in a webinar.

While that program could help lift farmers’ bottom lines, USDA hasn’t released payment rates, which it says will be based on trade losses at the county level. (For more details on how the program would work, please read https://www.dtnpf.com/….)

“USDA is going to have to provide some clarification as far as how those payments are going to be computed, but if our interpretation is on track, it’s going to discourage prevented planting,” Mintert said.

DEPENDS ON LOCATION

Determining whether it’s worth it to continue planting corn after the final planting date, which is sometime between May 25 and June 5 depending on where you are in the Corn Belt, is complicated.

Farmers have to consider whether they’ll have a window to plant, what they may be giving up in yield, changes to their insurance protection levels and whether they believe they’ll be able to sell the crop at a profit. Many of those are still moving targets.

Robert Nielsen, Purdue Extension agronomist and corn specialist, said planting date is only one factor in determining yields. After about the middle of May, corn yields decline approximately 1 to 2 bushels per acre per day. So, if you plant corn on June 10, you’re looking at a yield loss of about 30 to 60 bushels per acre.

“That still doesn’t tell us what the actual yield will be at the end of the season,” he said on the webinar. For example, if the rest of the season turns out perfectly, yield potential could have been 260 bushels per acre. Subtract 60 bushels because you planted late, and you’re still looking at a 200 bpa yield. But if the rest of the summer has poor growing conditions, that topline yield could fall to 200 bpa, leaving you with a yield of 140 bpa.

“I accept the fact that we lose yield as we delay planting, but that doesn’t tell me what the actual yield will be at the end of the season, and so we’re playing these what-if scenarios trying to budget in numbers that require yields, not loss. It’s really what’s going to happen the remainder of the season that’s going to dictate the actual absolute yield,” Nielsen said.

TOUGH DECISION

Michael Langemeier, associate director at Purdue’s Center for Commercial Agriculture, said he thinks there’s a danger farmers could pull the plug on corn planting too soon because they’re wary of the yield impact. “If the yield drops are not very big, corn does look like it’s more profitable and has less downside risk than soybeans. It’s a tough decision this year.”

DTN Lead Analyst Todd Hultman concurs that there’s more profit potential in corn this year, even though the marketing year got off to an unusual start. Noncommercial traders made record-large bearish bets early in the season based on the size of Brazil’s and Argentina’s crops. That pushed prices down this spring, limiting farmers’ pricing opportunities.

“So, for a while, it looked like the seasonal pattern in corn wasn’t really forming up, and that actually happens, maybe, one out of four years,” Hultman said. “When it does, we usually see a seasonal peak come later in the year than it normally does.”

Now, with the wet spring and inability to plant corn in May, those noncommercials are being forced to cover their positions, putting the market in a bullish situation. Hultman said it’s tough to guess how high the market will go.

“The planting problem is for real. It’s not because it’s exaggerated by anybody yet,” he said. “The noncommercials being that heavily short just adds fuel to the fire. I think we can continue to bet on higher corn price.”

MARKETING UPSIDE

Mintert said the upside from a marketing standpoint is “clearly on the corn side because it looks like we’re going to pull some acres away from corn, maybe tighten up the supply a little bit. On the soybean side, the failure to negotiate the trade agreement with China is huge.”

The 2018-19 stocks-to-use ratio for soybeans, at 25%, is the highest it’s been since the 1980s.

“If we chart ending stocks-to-use ratios compared to where they have typically traded in the past, we’re talking about cash soybean prices with a $6 in front of them,” Hultman said. “The bearish potential for this situation we’re in is clear and very hard to argue. Why would anybody plant soybeans in that situation? But if they can be assured of getting a bonus check, that certainly might help them.”

Hultman has recommended DTN customers establish a price floor under their 2019 soybean production by buying out-of-the-money puts. A put option allows the owner the right, but not the obligation, to sell the underlying commodity at a set price. When he initially made the recommendation, those options were less than a nickel per bushel. Despite that option price more than doubling to date, Hultman says there is still potential in the strategy.

“This year, I don’t think we can say it’s really a bad price yet because of the potential downside risk.”

For farmers looking to cash in on the corn market’s rally, Hultman suggests a mix of old-crop and new-crop sales. He’s recommended farmers price up to 25% of new-crop corn, being careful not to overestimate their production potential. For old-crop sales, he suggests pricing another 25%.

“That can certainly help boost their cash position, and if we get a little more here in the next few weeks, that would help a lot too,” Hultman said. He suggests feeding this rally, instead of trying to catch the top.

“The big picture for grains in general is still extremely bearish, especially with record wheat supplies and the ending stock numbers we’re talking about for beans. It seems like a real gift to get some better corn prices, so we want to take advantage of it.”

U.S. Ag Secretary Sonny Perdue is in Japan this week, talking with officials from America’s fourth-largest agricultural customer. In a Twitter post, the secretary says he was on the phone with President Trump and discussed the increase in tariffs on $200 billion in Chinese imports and the negative impact it will have on farmers.

Perdue’s tweet says, “While China may backtrack, @POTUS is steadfast in his support for U.S. farmers. He directed @USDA to quickly put together a plan to help American farmers. @POTUS loves his farmers and will not let them down!” Perdue will make stops in Japan and South Korea, participating in the G-20 Agriculture Minister’s Meeting.

President Trump said in a Friday Twitter post that the increase in the tariffs will be used to buy farm goods. He expects the new duties to generate more than $100 billion in extra revenue. The president was unhappy with the pace of negotiations and increased duties from 10 to 25 percent on $200 billion worth of Chinese goods. In a Friday tweet, Trump said, “You’re all-time favorite president got tired of waiting for China to help out and start buying from our FARMERS, the greatest anywhere in the world!” Beijing has promised to retaliate in kind.

TOKYO (AP) — U.S. Agriculture Secretary Sonny Perdue has picked up his barbeque tongs to convey his message to Japan: Buy more American beef. Perdue said Monday that as a top consumer of U.S. beef, Japan should treat the U.S. fairly.

He said he hoped President Donald Trump and Japanese Prime Minister Shinzo Abe will strike a trade deal during his boss’s visit to Japan later this month, but acknowledged more time might be needed.