Individual Weekly Newsletter

House Agriculture Chairman Mike Conaway is struggling to cobble together the votes he needs from GOP colleagues to pass his farm bill while fending off amendments that would roll back the sugar program or cut crop insurance. 

The White House provided a lift to Conaway’s effort by issuing a statement of administration policy Tuesday endorsing the bill, saying it would provide certainty to farmers while imposing “common-sense work requirements” on the Supplemental Nutrition Assistance Program. 

“In contrast to previous farm bills that have contained minimal reforms to SNAP work requirements, H.R. 2 is clearly a step toward meaningful welfare reform,” according to the statement of administration policy (SAP) issued by the White House. 

The GOP leadership is helping Conaway make the case to Republicans that the bill’s SNAP reforms are reason enough to vote for the legislation despite misgivings that conservatives may have about other positions of the bill. 

But the crop insurance industry was still unsure Tuesday which of several amendments attacking various aspects of the program will be debated on the House floor. Also uncertain was whether Rep. Virginia Foxx, R-N.C., would get a vote on her amendment that would end domestic marketing controls for sugar and reduce sugar loan rates.

Conaway said Tuesday that he was still lining up votes on the bill and on key amendments. 

“We’re working with all factions of the family to make sure we can thread that needle to make sure that everyone gets to vote on what they want to and that we get it (the bill) passed,” he said. 

Conaway’s margin for error among his GOP colleagues has shrunk with the resignation on Saturday of Rep. Charlie Dent, R-Pa. There are now 235 Republicans and 193 Democrats in the House. Seven seats are vacant. If every member votes, it would take 215 to pass the bill.

In an unusual process, the House Rules Committee is setting up a series of two rules to govern the floor debate. The first of the two rules, approved Tuesday night, allows for debate of 20 of the less controversial or consequential amendments. 

The committee is due to consider the second rule on Wednesday afternoon that will determine which of the more far-reaching amendments, including those on crop insurance, sugar and commodity payment limits, get floor votes. Some 109 amendments were filed in all. 

Rules Chairman Pete Sessions, R-Texas, made clear in an interview that the SNAP reforms are the most critical part of the bill and that he was keeping that in mind as the second rule was drafted. “That’s the big deal,” he said of the SNAP provisions. 

He said GOP colleagues are coming to understand that “if they really want work requirements then we ought to make that they pass and that be the effort,” he said. He added pointedly, “I have a clear handle on what I’m going to do, and I’m not waiting for anyone to decide that.”

The White House’s statement of administration policy didn’t mention crop insurance even though President Trump had proposed major cuts in the program that are represented in a series of amendments that have been filed. 

The White House silence robs the amendment sponsors of some critical support. 

The statement did, however, applaud the bill for eliminating the Conservation Stewardship Program and reducing “overly generous payments” to landowners who have acreage enrolled in the Conservation Reserve Program. The bill would cap CRP payments at 80 percent of local land rental rates, mirroring a proposal in the president’s budget. The provision in the bill would help offset the cost of increasing the limit on CRP enrollment from 24 million to 29 million acres. 

Crop insurance uncertainty weighs on industry

A coalition of farm organizations organized by the crop insurance industry has held off sending a letter to House members until it’s clear what amendment or amendments attacking the program will be on the floor. More than half a dozen were filed. It was unclear whether a vote on just one of those amendments would be enough to appease critics of the program. 

An amendment sponsored by Rep. Mark Sanford, R-S.C., would reduce the target rate of return for insurance companies from 14.5 percent to 12 percent. Another by Rep. Keith Rothfus, R-Pa., would impose a means test on the program by restricting premium subsidies to producers with adjusted gross incomes (AGIs) under $500,000. 

Rep. Ralph Norman, R-S.C., proposed lowering crop insurance premium subsidies for insurance policies by 15 percentage points. 

A new study by Ohio State University economist Carl Zulauf found that corn and soybean growers would be hit especially hard by a reduction in premium subsidies similar to what Norman has proposed.

Zulauf estimates that a 14 percentage point reduction in premium subsidies would reduce the amount of corn acreage that is insured from 86 percent to 68 percent. Insured soybean acreage would fall from 87 percent to 67 percent. Insured wheat would fall from 82 percent to 77 percent.

Sugar program critics scale back reform proposal

In a bid to win over colleagues, Foxx has significantly changed her proposal to modify the sugar program from what she originally introduced last fall as the Sugar Policy Modernization Act. One congressional staffer calls her amendment a “half measure of a half measure.” 

But sugar producers say her revised amendment would still gut critical components of the program while at the same time reducing the loan rates that serve as a floor under prices earned by producers. The amendment would still abolish the domestic marketing allotments that USDA uses to manage domestic prices and end the “feedstock flexibility” program that enables USDA to divert surplus sugar to ethanol production. 

However, the amendment dropped a requirement that processors reimburse USDA for the cost of buying forfeited sugar, which would have undermined the role of the loans in supporting domestic prices, and also dropped a target level for domestic sugar supplies. Both provisions were in the Sugar Policy Modernization Act that Foxx introduced in November. 

The amendment continues a provision that would require USDA to manage the program to ensure there are “adequate supplies” of sugar at “reasonable prices.” Foxx considers that language as merely stating the wishes of Congress, but sugar producers fear it could be used by a future USDA to justify pushing down domestic prices. 

From the sugar producers’ perspective Foxx has been moving in the right direction, but her latest amendment would still undermine the sugar program significantly, said Jack Roney of the American Sugar Alliance. 

The U.S. Chamber of Commerce is circulating a letter this week supporting Foxx’s proposal. “It creates an adequate supply of sugar based on a reasonable competitive approach that reaches from the farm to the retail shelf – without risking an appropriate safety net for family farms,” the group says.

There were rumors Tuesday that the Foxx amendment might be considered separately from the farm bill. Asked about that, Conaway would say only that “all those decisions have yet to be made.” 

Freedom Caucus chair gets Grassley backing

Several amendments would tighten the bill’s payment limit provisions, either by eliminating the changes in the bill or by imposing new restrictions. The chairman of the House Freedom Caucus, Mark Meadows, is proposing the latter, and he got an endorsement Tuesday from the Senate champion of farm program payment limits, Chuck Grassley, R-Iowa. 

The Meadows amendment, which is modeled after one that was approved by both the House and Senate in 2013 before being discarded during negotiations on the final bill, would cap payments at $125,000 per person and limit subsidies to one manager per farm and to producers who are “actively engaged” in the operation. 

Grassley noted that if the farmer and manager were both married, the four individuals could qualify for as much as $500,000 a year. “That seems like a very generous limit for me,” he said. He hopes to amend the Senate farm bill with similar provisions. 

The House approved the 2013 version of the amendment, sponsored at that time by Jeff Fortenberry, R-Neb., by 230-194. 

Another amendment by Rep. Bill Posey, R-Fla., would remove provisions of the bill allowing members of LLCs and S corporations to individually qualify for commodity payments and add cousins, nieces and nephews to the list of a farmer’s family members who can be eligible for payments. 

An amendment sponsored by Rothfus would reduce the existing AGI limit for commodity and conservation payments from $900,000 a year to $500,000.

For more news, go to: www.Agri-Pulse.com

Until recently, the top negotiators for the U.S., Mexico and Canada were working “intensely” to finish up a deal for a new North American Free Trade Agreement, but activity has dwindled to a near standstill and pessimism has replaced those high hopes for a speedy conclusion.

Several thorny agricultural issues that industry and government officials feared earlier on would snarl the talks have not even been addressed in months while negotiators remain bogged down over a U.S. “rules of origin” proposal aimed at bolstering U.S. production of automobiles and car parts, according to sources involved in the talks.

“There’s just been no progress on the ag issues,” said one farm industry source, whose growing frustration was echoed by several others.

And a lack of progress - on everything from U.S. demands that Canada dismantle its dairy supply management system to a U.S. proposal to make it easier to sue Mexico for dumping fruits and vegetables – makes it less likely that the issues will even be included in a final deal.

“They’re still hammering on rules of origin and that’s going to have to get resolved if there’s any chance for the rest of it,” said another industry official, who asked not to be named in order to speak freely. “There’s been no progress on any of the ag stuff, so if they close the deal, all the pending ag issues will likely just fall by the wayside; they’ll be dropped.” That concern was repeated by three other ag industry representatives.

Still, not all parties are behind the U.S. “seasonality” proposal, which aims to make it easier for produce growers to sue Mexico for flooding the U.S. market with cheap fruits and vegetables. The proposal is widely opposed outside of Florida, Georgia and some other Southern states. Under current trade rules, farmers can only file anti-dumping suits if they can show damages across the entire country. The U.S. proposal would make an exception for perishable and seasonal crops, allowing complaints on a regional basis. It is being championed mostly by Florida tomato farmers who are struggling to compete with cheap imports from Mexico. Fruit and vegetable importers, packers and distributors are firmly opposed.

So is Mexico. Several sources said that the U.S. has offered to cap the number of crops that would be covered under the proposal to just two – tomatoes and peppers – but government officials have not confirmed that.

“For Mexico, it’s a red line, whether it’s two or 22 crops,” one U.S. source said. “It doesn’t matter.”

The rejection of the U.S. dairy proposal – vehemently opposed by Canada – would be disastrous for the U.S. dairy industry. Last year, when negotiations were just beginning, Jaime Castaneda, senior vice president of trade policy for the U.S. Dairy Export Council, told Agri-Pulse that the sector was counting on the U.S. to lift Canada’s barriers to U.S. exports.

“We see NAFTA as an incredible opportunity for us to open this market,” Castaneda said at the time. “If this is not addressed … it will be a failure.”

Beyond eliminating Canada’s supply management system, the U.S. dairy industry is also invested in seeing a successful NAFTA agreement to help save cheese exports to Mexico, according to the 20 U.S. senators who fired off a letter to U.S. Trade Representative Robert Lighthizer on Tuesday.

The bipartisan roster of lawmakers, led by Sen. Tammy Baldwin, D-Wis., stressed that NAFTA is necessary to counteract a recently signed pact between Mexico and the European Union that likely seeks to protect European cheese names like Roquefort, Asiago and Gorgonzola.

If Mexico agrees to the list of so-called “geographical indication” (GI) names, it would not be able to import U.S. cheese labeled with those names.

“As you work to renegotiate the North American Free Trade Agreement, we urge you to engage with your Mexican and Canadian counterparts to ensure that future trade policies do not limit export opportunities for American dairy farmers and processors,” the senators said in the letter. “In light of Mexico’s proposed agreement with the EU, we are deeply concerned that American cheesemakers will be harmed by a reversal of their current access to the Mexican market and will be denied the opportunity to sell products to Mexican consumers using common cheese product names that have been marketed for decades.”

While there are no signs that the ag issues are being debated by the three North American countries, President Trump made it clear this past weekend that he wants to see progress on the rewrite of the trade pact.

Canadian Prime Minister Justin Trudeau issued a statement Monday, saying that he and Trump “discussed the progress being made in the North American Free Trade Agreement negotiations and the possibility of bringing the negotiations to a prompt conclusion.“ 

For more news, go to www.Agri-Pulse.com

The fate of the North American Free Trade Agreement remains uncertain and a trade war with China continues to loom heavy over rural America, but the long-term forecast for U.S. soybean exports remains bullish, propped up by optimistic forecasts from the USDA.

Listen to Grant Kimberley, market development director for the Iowa Soybean Association, as he reacts to the USDA's most recent projections in its World Agricultural Supply and Demand Estimates.

“It’s full steam ahead at ISA as we continue to build overall demand and customer preference for U.S. soybeans,” said Kimberley, “The report is positive news, which is something farmers needed as they plant this year’s crop. Producers shouldn’t let uncertainties distract them from raising the highest-quality soybeans in the world.”

The bottom line, USDA Chief Economist Rob Johansson told Agri-Pulse, is that world demand for soybeans continues to grow, and the U.S. will have near-record supplies for the 2018-19 marketing year.

U.S. soybean exports for the 2018-19 marketing year – international sales of this year’s crop – are forecast at 2.29 billion bushels, a 225-million-bushel increase from the current 2017-18 marketing year, according to the WASDE.

“The 2018-19 outlook for U.S. soybeans is for higher supplies, crush, exports, and lower ending stocks compared to 2017/18,” the report concluded.

Last year Brazil had a bumper crop and Argentina suffered from devastating drought, but USDA expects both countries to have more normal harvests this year.

“All those things in place, given the fact that we’ve also got very healthy supplies and that global demand is expected to go up, means that we’re likely to export more than we did,” Johansson said.

The USDA is now forecasting that U.S. soybean exports will capture 39 percent of global demand next year. That’s up from this year, but still historically low. And just because the U.S. will export more than it did this year, doesn’t mean the situation is ideal.

“The U.S. share that we’re projecting is up in volume terms from last year, but … it’s still (near) the lowest on record,” Johansson said. “The U.S. share of global trade is still pretty low, so I wouldn’t say it’s all sunshine and puppy dogs.”

And Michelle Erickson-Jones, a Montana farmer who testified Tuesday at a U.S. Trade Representative hearing, wouldn’t say so either. She and many other farmers are horrified at the Trump administration’s burgeoning trade war with China and the impact it’s already having on the U.S. ag sector.

Next year may bring more trade for U.S. soybean farmers, but they continue to suffer this year as Chinese livestock companies shun the U.S. oilseeds out of fear that China will follow through with its threat to slap a 25 percent tariff on the imports.

The threatened retaliation is in response to a U.S. threat to punish China’s years of theft of intellectual property by placing tariffs on $50 billion worth of Chinese goods, and that is what Erickson-Jones testified about Tuesday.

“While the Section 301 tariffs are not yet in effect, the U.S. farm community is already feeling the effects of threatened tariff action including depressed commodity prices, shipments held up at port, increased inspections and cancelled orders,” she said, referring to a section of the U.S. Trade Act of 1974. “This comes at a time when the industry is already rife with uncertainty around re-negotiation of (NAFTA).  Make no mistake about it, these market interruptions can devastate ag prices and drive U.S. farmers out of business.”

But Al Kluis, the managing director of Minnesota-based Kluis Commodities, says he sees the silver lining and the U.S. ability to export even with the loss of some Chinese customers.

“Thank you, China,” said Kluis, who was quoted by the Iowa Soybean Association. “Whether they buy from the U.S. or Brazil, it doesn’t matter. It’s a global market.”

Nevertheless, Delbert Christensen, a United Soybean Board member, still wants the U.S. and China to settle their differences and scrap the competing tariffs.

“The main thing is we have product that needs to get exported,” he said. “We’re hoping that something can get figured out with China to continue selling soybeans to this valuable customer.”

The gulf between the U.S. and Chinese negotiators is still wide, U.S. Commerce Secretary Wilbur Ross said Monday, but he said the countries are making progress. Chinese Vice Premier Liu He arrived in Washington Tuesday for three days of talks – a follow-up to the recent trip made to Beijing by Ross, USTR Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The Financial Times is reporting that the two sides will discuss a possible “mini deal” in which the U.S. would reduce sanctions on ZTE, the Chinese telecommunications giant, and China would withdraw its threatened retaliation against U.S. agricultural exports.

“It is difficult to handicap the outcome, but my hope is that the strong personal relationship between President Trump and (Chinese President Xi Jinping) will facilitate an agreement, just as it seems to be doing relative to North Korea,” Ross said.

For more news, go to www.Agri-Pulse.com

Private telephone companies, cooperatives and other fixed-base wireless and start-up internet service providers are preparing to bid in July in a Federal Communications Commission auction that earmarks $198 million a year ($2 billion over 10 years) to subsidize new service in rural areas now lacking meaningful internet access.

In announcing the auction, FCC Chairman Ajit Pai said the agency had planned it for years, and "we need and want everyone to participate: rural telcos, electric co-operatives, cable operators, price-cap carriers, satellite companies, and fixed wireless providers . . . regardless of how you deliver connectivity." Nonetheless, some installers of both fiber wire cable and wireless broadband systems give mediocre marks, at best, to the fairness and inclusiveness of the FCC's auction rules.

"The rules and procedures the FCC ultimately adopted are still pretty complicated . . . (and) geared toward large providers  . . . as opposed to our smaller guys who typically use (publicly available) unlicensed spectrum," said Claude Aiken, president of the Wireless Internet Service Providers Association (WISPA). Nonetheless, he expects, "some members “are still willing to go through the necessary paperwork and do all the things necessary. . . to bid.”

The auction is called Connect America Fund Phase II (CAF-II) and will be one more down payment by the federal government to extend high speed internet service to more rural homes and businesses. In its first big CAF campaign, started in 2015, FCC offered major telecommunications (called “price-cap”) companies up to $9 billion overall to bring combined broadband and voice services to underserved rural areas. Ten of them applied for the FCC cash and are using it to continue expansion into areas they consider profitable. CAF-II is the FCC follow-up and will subsidize service to unserved areas left behind in CAF-I.

In fact, broadly, the FCC and USDA’s Rural Utilities Service continue to fund deployment of fiber cable and fixed wireless broadband plus mobile phone service with a bevy of loans, grants and subsidies. What’s more, the FCC has set $4.5 billion on its shelf, for example, to help finance mobile (cell phone) service in poorly served rural areas. Plus, it is buying back some segments of assigned radio spectrum and assigning new slices of it to accommodate the soaring demands for spectrum to carry mobile broadband.

When compared to the $9 billion for major companies, rural broadband advocates view the $2 billion for the decade of CAF-II expansions as a bit paltry, considering the high cost of investment to install fiber or even fixed wireless systems in remote areas. (But note that while a 15.5 percent cut in the FCC’s expected spending to assist “small rural carriers,” pointed out  recently by Commission Chairman Ajit Pai, will affect operating subsidies for existing rural telephone companies, it won’t hit the CAF-II or other broadband expansion programs.)

Indeed, the challenge in catching rural internet services up with what urban folks get is great. FCC says in its 2018 Broadband Deployment Report (data as of late 2016) that about 98 percent of Americans had access to either fixed service at 25 megabits per second (Mbps) download and 3 Mbps upload, or mobile phones with 10 Mbps download and 3 Mbps upload. But, for rural areas, the figure falls to 90 percent. FCC estimates that over 24 million Americans still lacked fixed download speeds of 25 Mbps at the end of 2016.

Those levels of service compare with what the FCC maintains as its “benchmark speed” for providers eligible for financial assistance: 25 Mbps download and 3 Mbps upload for fixed internet (fiber or wireless) services, though companies deploying much slower speeds still get FCC dollars.

The latest report from Orka’s Speedtest, which surveys the levels and advances in broadband service annually in many countries, found Americans’ average download speed on fixed internet soared from 48 Mbps in early 2016 to 91.5, up 90 percent, early this year, while their average mobile download jumped to 28.1 Mbps early this year, up almost 50 percent in two years. (Speedtest scored the U.S. well back in the global pack, however, with fixed download average speed ninth among nations; U.S. mobile devices’ average speed, 44th.)

Speedtest also surveys the share of time online that consumers who actually have internet service receive an “Acceptable Speed Ratio,” which it pegs at 5 Mbps or more, which “allows a user to do most of the things they expect on their phone.” For consumers in metropolitan areas, that was 76 percent of the time in early 2017; in rural service areas, 70 percent.

The framework of the CAF-II auction, meanwhile, like most any federally-funded initiative, gets mixed reviews across the range of expected participants.

The FCC proposed a U.S. map last fall with all rural areas to be eligible for CAF-II in predetermined clumps of Census tracts, and then decided in December, on the basis of updated data, to shrink those areas by about 30 percent overall. Many of the expected participants complain about both the grouping and the withering of the targeted districts.

Though grouping census districts “made it a lot easier for them (FCC),” says Brian O'Hara, senior director of regulatory issues for the National Rural Electric Cooperative Association. “Talking to my members, they’ve said the Census block groups do not line up well with their service territories where they have infrastructure.”

Grouping the districts would mean installing new equipment and facilities in order to service such areas, O’Hara said, and he knows some co-ops have formed consortiums in order to feasibly cover some of the larger tracts the FCC has designated.

The disappearance of districts from the FCC’s earlier map is more important for some co-ops than others, O’Hara expects. “One company had said they were eligible for $8 million, estimated from the original maps . . . (but) that went down to $50,000 in the second set of maps. That’s a huge difference in money,” and he says the change resulted because “the incumbent (phone company) reported that it served a lot more of that area.”

“We have many members that were – and some who still are – interested in the CAF II auction,” he said, and “what I really want to see is how many of my members can actually use (the FCC auction).” 

Asked about the reduction in eligible areas, Mark Wigfield, FCC media relations representative, said telephone companies provide the agency with updated information on operations every six months, and, “basically what happened was we got new data.” The first map “was relying on very old data . . . and we’re not going to subsidize service to compete with places where there is an unsubsidized competitor. It’s just not fair,” he said.

On the other hand, Jonathan Chambers, a current partner in Arkansas-based Conexon, a consultant group for rural broadband development systems and a former FCC internet services strategist, points out that the FCC bases its maps on telephone companies’ self-reported advertising in the agency’s Form 477. As a result, he said, the agency trimmed more than 400,000 potential rural home and business customers from eligibility and then made an exception to its usual procedures that did not allow anyone to challenge the data used.

Fixed wireless operators also have some difficulties with the rules and parameters FCC set for the CAF-II auction, including the predetermined grouping of Census districts.

WISPA's Aiken says that, as with CAF-II, FCC is also moving to assign enlarged marketing areas in its upcoming auction of Citizens Broadband Radio Service spectrum, rather than Census districts or other small areas. That makes it very difficult for most small operators to enter the market.

He says the agency did ease up somewhat on the paperwork for CAF-II but “the rules and procedures the FCC ultimately adopted are still pretty complicated. Our members are pretty small businesses, and many don’t have a lawyer on staff.”

Still, Aiken says, “some members are still willing to go through the necessary paperwork and do all the things necessary. . . to bid.”

The incremental tiers FCC set for level of service offered, and subsidies provided for each, are weighted toward rewarding fast, high-capacity service, say both co-ops laying cable and fixed-wireless operators.

Fiber cable service is much more expensive than fixed-wireless, but O’Hara points out, “we want this to be forward looking. You put fiber in, and that’s going to last for 30-plus years.” Besides, he said, fiber service can be upgraded later at the consumer’s end – “it’s scalable,” he says.

Aiken agrees that fiber provides the best service. The CAF II tier system for subsidies, he said, “is based on an FCC-adopted cost model, which is based on a fiber deployment, which is significantly more expensive than a fixed wireless deployment.” Thus, fiber deployment gets much more of the FCC cash.

But he says, “It goes back to a tradeoff: Are you looking to serve more Americans versus fewer, and how cost-effective is it going to be?”

In any case, the FCC’s Wigfield notes the agency will follow up this auction with a “Remote Areas Fund” auction in 2019.

For more news, go to www.Agri-Pulse.com.

The EBT cards that low-income people use to buy food with their Supplemental Nutrition Assistance Program (SNAP) benefits could become a thing of the past, replaced by smartphones. 

That’s the goal of a provision in the House farm bill that would authorize up to five demonstration projects using mobile technologies in place of EBT (Electronic Benefit Transfer) cards to deliver SNAP benefits. The bill would require USDA to make the smartphone technology available unless the demonstration projects show that the technology is not ready for implementation or is not in the best interest of the program. 

“We think the time to talk about modernization and innovation about EBT benefits is now,” said David Mounts, CEO of Inmar Inc., a company based in Winston-Salem, N.C., that offers the smartphone technology. 

SNAP recipients who don’t have smartphones could continue to use their EBT cards but they could benefit in several ways from switching, he said. SNAP benefits also could be combined with those issued through the Women, Infants and Children (WIC) nutrition program to simplify the administration of the programs. 

For one thing, retailers and manufacturers could provide digital coupons, including matching funds for fruit and vegetable purchases, via smartphones targeted to the recipients’ food needs. That would make their benefits go further, he said. 

Other advantages to the technology, according to Mounts: Using a smartphone at the supermarket checkout is more dignified than pulling out an EBT card, and smartphones could be used to deliver nutrition advice and recipes to SNAP recipients.

Retailers and taxpayers would benefit, too. For retailers, the technology can speed up checkout lanes and simplify the process of tracking what items are eligible for purchase; Inmar maintains and updates a database of product codes.

For the government, the technology could reduce administrative costs and also allow officials to better track spending patterns to see, for example, whether consumption of fruits and vegetables went up or down in the previous year.

“The new technology really allows everyone to have unlimited access to better services, information and opportunity,” Mounts said. 

This isn't the first attempt to help SNAP recipients use their smartphones to manage their benefits. The New York Times recently reported on a startup called Propel, which developed an app called FreshEBT that allows SNAP users to look up how much money is left on their EBT cards as well as link to food coupons and job openings. Another company, Conduent, which runs the SNAP networks in many states, is starting a rival app, the Times said.

For more news, go to www.Agri-Pulse.com

Beekeepers have been struggling with high winter loss rates for more than 10 years, but a report from USDA’s Economic Research Service says they have been able to offset the costs of replacing colonies by providing more pollination services.

In addition, ERS says beekeepers’ skill at replacing colonies lost during the winter has kept the overall number of colonies steady in recent years. “Findings show no systematic relationship between winter loss rates and subsequent annual changes in the number of managed colonies,” the report says.

The biggest driver in the growth of pollination services has been almond production. Between 1988 and 2016, “real beekeeper revenue per colony more than doubled,” ERS said. “This increase resulted primarily from a doubling of real honey prices over that time span, as well as dramatic growth in both almond acreage and almond pollination service fees.” According to the report, pollination services in 1988 accounted for only 11 percent of revenue, a figure that jumped to 41 percent by 2016.

Beekeepers used to derive most of their income from selling honey, but in 2016 revenue was almost evenly split, the report said. Beekeepers with more than five colonies earned total revenues of $338 million from pollination services and $335 million from honey in 2016, according to USDA data cited in the report.

Colony Collapse Disorder was first identified as a cause of high winter loss rates in 2006-07, but since then, “The lack of major changes in most economic indicators . . . suggests that adjustments in beekeeping, farming, wholesale production, and consumption have been made quickly and effectively. Direct evidence suggests that most of the adjustment has occurred at the level of the beekeeper, with less adjustment at downstream levels in the production and marketing chain.”

With winter loss rates averaging 28.7 percent since 2006, about double the historical rate, beekeepers have become adept at splitting existing colonies or creating new ones, the report notes. Splitting, as the name suggests, involves making two hives out of one.

“Splitting to replace lost colonies involves relatively few explicit costs beyond the usual costs of maintaining a colony,” the report says. “In addition to enabling beekeepers to expand their colony stock, splitting colonies provides beekeepers with a way to respond relatively quickly and economically to colony losses.”

Beekeepers, however, said that the report doesn’t take into account all the costs associated with being forced to create new colonies to replace lost ones.

“I think what the cost of splitting seems to exclude is the lost productivity of the colony being split,” said Dennis vanEngelsdorp, an entomologist and bee expert at the University of Maryland.

The report said it takes about six weeks for a split hive to be ready for pollination services, but California beekeeper Gene Brandi, past president of the American Beekeeping Federation, said that’s only if all conditions – including the availability of enough forage for the bees – are optimal. He said the report’s estimate of three weeks before the parent hive – the one that was split – is ready to go for pollination services is too short.

“Repopulating after splitting depends on how severely the colony was split, the season of the year, the quality of the Queen and her ability to lay an adequate number of good eggs, as well as the food availability/foraging conditions of the area,” he said. “In my opinion, it is not feasible for a colony that is truly split (in half) to be back to the way it was in three weeks.”

In addition, he said, about 10 percent of splits don’t survive long, meaning that beekeepers need to replace those, as well. “We’re splitting all the way through the season as necessary,” he said.

Brandi said beekeepers with diminished colony numbers also can miss a chance to provide pollination services in California. “There is also lost opportunity for beekeepers who are not able to pollinate almonds (as well as early blooming cherries and plums) in California due to the fact that their colonies that died over the winter are still dead in February when these crops are blooming and in need of pollination services,” he said in an email. “Major splitting of colonies to restock the mountains of dead hives begins in mid- to late March after almond pollination is complete.” 

“It is only due to the hard work and determination of the nation's beekeepers that our honey bee colony numbers have been able to rebound, so far, by May or June only to diminish again in the fall and winter,” he said. “I can think of no other industry that has continually experienced the rate of loss that the bee industry has experienced since 2004.”

Eric Silva of North-South Government Strategies, the registered lobbyist for the American Honey Producers Association, notes that about two-thirds of the honey consumed in the United States is from outside the country. Beekeepers would like to expand to meet demand but they cannot.

“If they could double their honey output, they would do that,” he said. “The concern is that somehow this ERS report says things are OK, but things are not OK.”

Randal Rucker, a co-author of the ERS paper who is a professor in Montana State University’s Department of Agricultural Economics and Economics, said that the time estimates on splitting were based on numerous conversations with co-author Mike Burgett, an entomologist “who has spent the last 30-plus years working with beekeepers in Washington and Oregon.”

Rucker said the authors did not mean to imply that splitting hives is not an onerous process. “Beekeeping is a really hard way to make a living,” he said. “Nowhere do we suggest that beekeepers have it easy, or are making a huge amount of money at what they do. One of our primary feelings is that beekeepers have done an amazing job of responding to conditions that changed fairly dramatically in recent years. We think they are amazing businessmen.”

For more news, go to www.Agri-Pulse.com

There’s a new kid on the health-care block called AHP, spelled out as association health plan.

In fact, just four years after the arrival of major Affordable Care Act (Obamacare) changes, President Trump, the U.S. Labor Department, plus some states and farm groups – even Congress via its upcoming farm bill – are jumping in to promote AHPs.

AHPs have been around a long time, and Karen Pollitz, senior fellow with the Kaiser Family Foundation and health care policy expert, says “associations kind of blur boundaries (between big group and individual coverage) and . . . kind of make your head explode . . . because they don’t fit the rest of the pattern.”

But many farm and other agribusiness households still pine for cheaper coverage that meets their insurance needs, and an executive order by Trump last October and the Labor Department’s follow-up proposal in January to redefine and expand the boundaries of association health care plans might offer them remedies. The executive order required the department to consider proposing regulations to promote expanded access to AHPs by allowing more employers to form them.” It called for “expanding the conditions that satisfy the commonality‑of-interest requirements (for legal recognition as an AHP) . . . on the basis of common geography or industry.”

The administration’s resulting proposal would keep AHPs as employer-sponsored insurance but would “allow employers (including sole proprietors) to join together as a single group to purchase insurance in the large group market . . . (and thus) reduce administrative costs through economies of scale, strengthen their bargaining position . . . enhance their ability to self-insure, and offer a wider array of insurance options.” Such associations could be formed by “employers in a state, city, county, or a multi-state metro area, or . . . in a particular industry nationwide.”

On May 3, the Labor Department sent its final rule to the Office of Management and Budget for review. The final rule is likely to be published this summer.

Pollitz says the proposal would add both new opportunities and risks for consumers. She explains that, for many years, regulators have kept large-group plans, on the one hand, separate from policies for small groups and individuals. The large-group plans – those that big companies provide for their employees – have enjoyed minimal regulation, she says, largely because of their long tradition of including rather comprehensive coverage.

On the other hand, individual and small-groups plans, she said, must include essential protections (cancellation because of illness, including medicines, etc.). As drafted, “the Trump rule is going to change that,” she said. “Now we’re going to just add up all the participants in the association, and if it’s more than 50 we will consider that a large group and the (more lenient) large-group market rules will apply.”

“So you could have an association health plan selling to individuals that doesn’t have a prescription drug benefit or, for example, (but) covers only generic drugs. And because it doesn’t cover those benefits it will probably be cheaper,” she says. As a result, she expects, “you will have people staying in the Obamacare marketplace when they need the more expensive coverage and coming over to the (marketplace) that is less regulated when they think they can get by without it. And that really shuffles up the risk pool.”

Nonetheless, Republicans in the U.S. House of Representatives want to give farm sector consumers help in finding association coverage that may fit their needs. They’ve included $65 million in their 2018 farm bill (Section 6004) through 2022 for USDA loans and grants to help create AHPs – essentially, to take advantage of the revised AHP regulations.

R.J. Karney, congressional relations director for the American Farm Bureau Federation, agrees that the administration’s proposal “would change the criteria for creation of association health plans, and AFBF supports growth of AHPs “and selling those plans across state lines.

Among more than 900 wide-ranging public comments on the Labor Department’s proposal, one sent jointly by Democrats on the House Education and the Workforce Committee points to historic problems with the solvency of association plans before they became closely regulated by federal and state agencies. They note the agency’s own observation that the expanded flexibility proposed for AHPs may encourage “mismanagement or abuse,” and said they “share the concern that this proposed rule could introduce rampant fraud and abuse - undermining reforms” made earlier in federal and state laws.

Karney points out that some state Farm Bureau federations, meanwhile, have long successfully offered various association-type coverages.

Virginia Farm Bureau, for example, sells individual policies of many insurers – Aetna, Anthem Blue Cross, Optima, Kaiser, Piedmont Community Health Plan, and United Healthcare – offering “everything from traditional comprehensive benefits to higher-deductible options with health savings accounts.”

Karney says, though, that “Washington (State) Farm Bureau is the only one that offers an actual association health plan.”

The Washington Farm Bureau Healthcare Trust “is what (regulators) consider a true, bona fide association plan and it serves a single industry, which in this case is agriculture,” said Alejandro Alvarez, the plan’s manager in Seattle. Washington State recognized the trust, which has operated for 14 years and offers comprehensive health plans and other coverage to agribusinesses (not individuals), as a large-group health plan, so it has lots of elbow room to design its coverage for participants and rate its premiums according to risk.

Alvarez is concerned that the Labor Department’s proposal, “the way it is written now, would have some detrimental effects . . . and potentially limit the way that we price our plan” if it became regulated as an association, rather than large-group, plan. Besides, he says, the proposal’s broadened definition of AHPs might mean the Farm Bureau plan there would soon have new competition from “non-bona fide associations” that offer stripped-down or poorly capitalized coverage.

Meanwhile, the association-like status of health coverage by Tennessee Farm Bureau Health Plans (TFBHP) is unique – so much that this insurer even avoids using the term “insurance.”

The way KFF’s Pollitz explains it, “the State of Tennessee allowed its Farm Bureau to sell health insurance . . . and said explicitly in statute that the stuff that the Farm Bureau sells is not insurance. It looks and walks and quacks like insurance, but it is not insurance under state law. (Thus) the Farm Bureau is not a licensed health insurer and not subject to state insurance regulation. The state legislature just said, ‘I trust ya.’” Plus, Congress did nothing to alter that status when it passed the ACA, she notes.

Benjamin Sanders, Tennessee Farm Bureau government affairs director, explains that TFBHP, which covers about 170,000 Tennessee residents, was already a big insurer statewide in 1994, and, “even though we aren’t an employer . . . we looked a lot like one.” So, the state legislature decided to essentially regard TFBHP as a large-group plan, leaving it largely unregulated the way the federal government treats big company health plans, he said.

One significant twist to the TFBHP coverage is that, because its plans are not officially health insurance under state law or ACA, its customers have to pay the ACA’s annual penalty for not buying health insurance. Sanders said the penalties pushed customers away from TFBHP initially. But as premiums soared nationally in 2017 and 2018, TFBHP clientele has been returning. Plus, he said, Congress terminated the penalties as of 2019, so next year “there will be more members wanting to buy our coverage because they won’t have to worry about that tax penalty.”

The Iowa Legislature recently passed a bill allowing roughly what Tennessee allowed with its Farm Bureau and what the Labor Department proposal would do nationally. It gives small employers freedom to band together in AHPs that don’t meet ACA, plus it allows the Iowa Farm Bureau Federation to sell health insurance plans that aren’t officially insurance and thus wouldn’t have to be ACA-compliant.

In Minnesota, the legislature last year approved provisions letting farmer cooperatives provide health insurance. A trade association of cooperatives, United Farmers Cooperative and others quickly formed a trust to fund a new self-funded health care plan operated by a nonprofit called 40 Square Cooperative Solutions. It enrolled over a thousand Minnesota farmers and small agribusiness operators by the start of 2018 in a range of six types of comprehensive policies, “and they all have to be ACA (Obamacare) compliant,” said Char Vrieze, the plan’s executive director. Members must all start by buying shares of the trust’s capital stock.

“We are the only the only independent, stand-alone, member-owned agricultural health care cooperative” in Minnesota, Vrieze said. “Our members are individual farmers, their families, their employees, as well as small agribusinesses.”

Also in Minnesota, Land O’Lakes has taken advantage of state laws' allowance for farmer co-op health plans and has extended new coverage, called Gravie, to its own member cooperatives.

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Legendary musician Bob Dylan is the latest celebrity to license his name and persona to a brand of alcohol, in Dylan’s case a line of craft American whiskeys under the name Heaven’s Door. Heaven’s Door’s first releases include a Tennessee straight bourbon whiskey, which has been aged for six-and-a-half years; a double barrel whiskey; and a straight rye whiskey. The premium spirits are made in collaboration with a number of master distillers and blenders from across the U.S., and the singer’s artworks adorn the bottles. For now, the whiskeys are available in six states – Tennessee, Texas, California, Florida, New York and Illinois – at prices ranging from around $50 to $80. The company says on its website that it plans to open a distillery and “brand experience center” in a 140-year-old church in Nashville in 2019. Other celebrities with their own alcohol brands include Justin Timberlake, Drew Barrymore, Dan Aykroyd and George Clooney. Dylan released “Knockin' on Heaven’s Door” in 1973.

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Poultry giant Pilgrim’s Pride this week posted earnings of $119.4 million for the first quarter of 2018, up from $93.9 million in the same period in 2017, a 27 percent increase driven by increased consumer demand for chicken in the U.S., Mexico and Europe. Sales for the quarter rose 11 percent to $2.75 billion. In the U.S., Pilgrim’s Pride’s largest business unit, sales rose to $1.84 billion during the quarter from $1.74 billion during the same period of the previous year. Operating income dipped to $182,370,000 from $188,306,000. The Brazilian-owned company’s Mexico business unit saw sales rise from $284 million during the first quarter of 2017 to $361.3 million in 2018. Pilgrim’s European business unit generated sales of $544.3 million, compared with $458.8 million in 2017.

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A long-running class-action lawsuit alleging USDA discrimination against Native American farmers and ranchers has finally made its way through the appeals process, clearing the way for distribution of additional payments to the plaintiffs and the establishment of a $265 million trust fund to support organizations that help Indian farmers and ranchers. The Obama administration settled the case for $760 million, but the number of claimants was fewer than expected, and $380 million was left over after the distribution of initial payments. The parties and the government reached an agreement providing for additional payments to the class members and the formation of the trust fund, but two members of the class objected, saying all the remaining funds should go to the claimants. The D.C. Circuit Court of Appeals upheld the settlement, and in March, the Supreme Court denied a petition seeking review of the appeals court’s decision. On Monday, the high court refused to reconsider its denial of the petition.

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The Kraft Heinz Company Foundation hosted a Rise Against Hunger event Tuesday morning on Capitol Hill, enlisting dozens of members of Congress and other officials in packaging meals for the hungry. John Cahill, vice chairman of Kraft Heinz, said the event surpassed its goal of 15,000 meals. Cahill said that having members of Congress volunteer at the event helped call attention to how critical it is to address hunger in the U.S. and beyond. In addition, he said, “It’s great for our employees to see that Congress is so supportive." Out of their 40,000 employees, 30,000 Kraft Heinz employees participate in meal packaging events throughout the course of the year. Cahill said he packed 2,500 meals at his table at Tuesday's event. “Nobody here is doing individual meals, it’s all an assembly line, so we're all in this together,” he said. Senate Ag Committee Chair Pat Roberts called the event "a wonderful display of a private/public partnership, adding, "Thank goodness to Kraft Heinz for doing this.” The Kansas Republican noted that 800 million people around the world go to bed each night malnourished. "We got quite a few organizations that are working on this, but the public/private part of this is so terribly important," he said.

 

 

USDA chief Sonny Perdue will soon have a new chief of staff. He’s Ray Starling, who’s been working at the White House as an ag adviser to President Trump. Effective June 1, he’ll replace Heidi Green, who’s heading home to Georgia after helping fellow Georgian Perdue during his first year in office. Starling, a lawyer who grew up on a farm in southeast North Carolina, has been on the staff of the National Economic Council since Trump took office. He previously was staff director for Sen. Thom Tillis, R-N.C. Green is a former commissioner of the Georgia Department of Economic Development and a founding member of Perdue Partners LLC, the grain trading company founded by Perdue, his cousin David Perdue, now a U.S. senator, and Trey Childress, another former Perdue gubernatorial administration official.

Several more top slots have been filled at USDA with the appointment of Richard Fordyce as administrator of the Farm Service Agency, Carmen Rottenberg as administrator of the Food Safety and Inspection Service, and Bruce Summers as administrator of the Agriculture Marketing Service. Fordyce, a former director of the Missouri Department of Agriculture, will oversee FSA’s effort to support agricultural production across the country through a network of 2,100 county and 50 state offices. He most recently was state executive director for FSA in Missouri. Rottenberg has been serving as the deputy administrator for FSIS and, since August 2017, as the acting deputy undersecretary for USDA’s Office of Food Safety. She’ll continue to hold that position until a nominee has been confirmed by the Senate. Rottenberg joined FSIS as an equal employment opportunity specialist in 2007. Paul Kiecker (pronounced KICK-er), who has been serving as acting administrator for FSIS since August, was named Rottenberg’s top deputy. Summers had been serving as acting administrator. He began at USDA in the Fruit and Vegetable program, and has been working in a number of key leadership roles at AMS for more than 30 years.

Melisa Augusto joined the Agricultural Retailers Association this week as its director of communications and marketing. Augusto, who grew up on a family farm in California’s Central Valley, came to ARA from the National Association of Conservation Districts, where she served as director of development. Prior to NACD, she led communications for the Volunteers for Economic Growth Alliance and held positions at National Farmers Union. She also spent time on the staff of the U.S. Grains Council.

CoBank named Citigroup’s Eric Itambo as the bank’s new chief banking officer, with responsibility for all lending operations and banking services. Itambo spent over 20 years at Citi and currently serves as managing director and Citi’s head of U.S. commercial lending. Originally from Kenya, Itambo is a Rhodes Scholar and holds an MBA from Oxford University. CoBank is a cooperative bank serving agribusinesses, rural infrastructure providers and Farm Credit associations throughout the United States.

The Grocery Manufacturers Association has three new board members: Steven Cahillane is CEO and board chairman of Kellogg Company; Bobby Chacko is president and CEO of Ocean Spray Cranberries, and Paul Chibe holds the same positions at Ferrero North America. The new directors were elected at GMA’s recent spring board meeting.

Jeanette Lombardo, immediate past president of the California Women for Agriculture, was elected president of American Agri-Women for 2018-2019. Lombardo is a co-founder and chief strategic officer for Global Water Innovations, a project developer of groundwater desalination solutions for agriculture. AAW’s new vice president is Karolyn Zurn from Minnesota. Other new officers are: Jenny Stelmach from Kentucky, vice president of communications; Jean Goslin from Kansas, VP for education; Katie Yost from Montana, treasurer; and Natalina Sents from Iowa, secretary. Doris Mold from Minnesota moved into the role of past president.

Marla Stelk has been appointed the next executive director of the Association of State Wetlands Managers. She takes over immediately as ASWM’s assistant director and will formally become executive director late this year after working with the current office holder, Jeanne Christie, in carrying out a transition plan. Christie will then move to another position in the organization. Stelk started her relationship with ASWM five years ago as a policy analyst. Since 2015 she has been an elected town councilor for the town of Gorham, Maine,

FLM Harvest says CropLife America CEO Jay Vroom is joining its board of advisors and will serve in a limited capacity on the board until his retirement from CLA at the end of 2018. Vroom has held the top position at CropLife since 1989.

A new group of executive officers for the U.S. Roundtable for Sustainable Beef was elected at the group’s recent General Assembly Meeting in Oklahoma City. Kim Stackhouse-Lawson, director of sustainability at JBS USA, will serve as chair. Ben Weinheimer, vice president of the Texas Cattle Feeders Association, is the chair-elect, and Debbie Lyons-Blythe, manager of Blythe Family Farms in the Flint Hills of Kansas, will be secretary/treasurer.

The board of the U.S. Farmers and Ranchers Alliance recently elected Cameron Gibson, a Virginia crop farmer, as its newest member, representing the United Soybean Board. The election took place at the 17-member board’s semi-annual meeting in St. Louis. USFRA also has announced the creation of a Sustainability Officers Council to provide food companies with access to the farmer and rancher perspective. The Council members are: Kyle Bridgeforth, an Alabama crop farmer; Tom Crave, a Wisconsin dairy farmer; Cassidy Johnston, a New Mexico cattle rancher; Nancy Kavazanjian, a Wisconsin crop farmer; Hilary Maricle, a Nebraska cattle, pig, corn and soybean farmer; and Leon Sheets, an Iowa pig, corn and soybean farmer.

Charles Santerre is settling into his new position as senior policy advisor at the White House Office of Science and Technology Policy. The Purdue University professor has a doctorate in environmental toxicology and food science from Michigan State University. Santerre will advise the Executive Office of the President on policies related to biotechnology, agriculture, rural prosperity and food safety.

Three peanut producers and three industry representatives have been appointed to USDA’s Peanut Standards Board. Representing the Southeast Region are: producer Martin L. McLendon, Leary, Ga., and producer rep Elizabeth Kaye Smith, affiliated with Golden Peanut Co., Alpharetta, Ga. From the Southwest Region, producer James Richard Chandler, Portales, N.M., and industry rep John Edward Bennett, affiliated with Mars Chocolate, Waco, Texas, were appointed. Board members from the Virginia/Carolina Region are: producer James Wilson Mason, Harrellsville, N.C., and industry rep Kathryn Olivia Swinson, affiliated with Golden Grove Inc., Warsaw, N.C. provides consultation to USDA on quality and handling standards for domestically produced and imported peanuts. The Board consists of a total 18 members, evenly split between producers and industry representatives. Members serve staggered three-year terms.

The International Dairy Foods Association named A. Bailey Wood Jr. to the expanded position of vice president of communications, public relations and marketing. The Syracuse University alum comes to IDFA from the National Stone, Sand and Gravel Association, where he served as vice president of communications since 2014. On Capitol Hill, Wood served as communications director for the House Homeland Security Committee and the Republican Policy Committee under former Chairman Christopher Cox, R-Calif. Wood also served as press secretary for former Reps. Mike Ferguson, R-N.J., and Paul Gillmor, R-Ohio, and worked as a legislative assistant for the House Committee on Education and Workforce.

Scott Stillwell, senior vice president of food safety and quality assurance at Tyson Foods, is among 18 new appointees to the National Advisory Committee on Microbiological Criteria for Foods. Agriculture Secretary Sonny Perdue, who made the appointments, said the committee members “represent a diverse group from academia, consumers, the food industry, laboratories, consultants and government agencies, all of which play an important role in providing scientific advice and expertise to USDA on food safety and wholesomeness.” A dozen member of the committee were reappointed. For a complete list of committee members, click here.

Agriculture Secretary Perdue this week also appointed five new members to serve two-year terms on the National Advisory Committee on Meat and Poultry Inspection. They are Thomas Gremillion, Consumer Federation of America; James Jenkins, Louisiana Department of Agriculture and Forestry; Dr. Amilton De Mello, University of Nevada; Tina Rendon, Pilgrim’s Pride Corp.; and Kimberly Rice, U.S. Foods. The committee advises on food safety concerns and other matters affecting federal and state inspection program activities. It also contributes to USDA’s regulatory policy development. Twelve other committee members were reappointed. For a complete list of the members, click here.

Marketing Manager Jason Lutz and his wife Danielle are the proud parents of the newest member of the Agri-Pulse team. Taylor Annette Lutz, arrived Monday afternoon, weighing 7 lbs. 8 oz., and is perfect in every way - because she is our first grandchild!