Taking stock of Trump's trade aid – Politico

Credit: Original article can be found here

With help from Helena Bottemiller Evich

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— The Agriculture Department has paid farmers more than $10 billion to offset this year’s losses under President Donald Trump’s trade war. But some producers might be hauling in more money than they lost due to retaliatory tariffs, while others are left out from the program altogether.

— USDA’s crackdown on work requirement waivers under the Supplemental Nutrition Assistance Program will make the program much less responsive to the next economic downturn, according to anti-hunger advocates. The department rolled out the final rule on Wednesday.

— Japanese lawmakers officially ratified a partial trade deal with the U.S., allowing the pact to take effect on Jan. 1. The agreement offers farmers similar access to Japan’s lucrative market as the original Trans-Pacific Partnership would have delivered, but it’s still a badly needed win for agriculture.

HAPPY THURSDAY, DEC. 5! Welcome to Morning Ag, where we’re bracing for the french fry apocalypse. Send tips to rmccrimmon@politico.com and @ryanmccrimmon, and follow us @Morning_Ag.

Driving the Day

TAKING STOCK OF TRUMP’S TRADE AID: The Trump administration has doled out $10.3 billion to farmers and ranchers stung by retaliatory tariffs in 2019, on top of $8.6 billion for last year’s production, a USDA spokesperson told MA. The bailout program has helped many producers stay afloat: Direct government payments are soaring by 64 percent this year compared with 2018, driven largely by trade aid, which has helped overall farm sector income move modestly higher this year.

But there are signs that taxpayers might be overpaying some farmers. Six academic studies found that USDA overestimated the trade war’s impact on soybean prices, Bloomberg reports, along with other commodities. Of course, that doesn’t mean farmers are suddenly raking it in — especially amid other market and weather challenges. But disparity among commodity groups, geographic regions and farms of different sizes has fueled criticism about the economic calculations USDA used for the program.

Blueberry blues: Other producers, like wild blueberry growers in Maine, say USDA failed to account for the financial losses they’ve suffered under Trump’s tariff brawl with China. Sen. Angus King (I-Maine) sent a letter to Secretary Sonny Perdue asking him to “immediately” make wild blueberry producers eligible for direct aid.

“The president’s trade war will lead to a 96.75 percent decrease in the value of my state’s wild blueberry exports to China since 2017,” King wrote. (Blueberry producers were included in a separate and much smaller trade relief program involving commodity purchases and redistribution.)

What’s next? The department is considering a third and final batch of 2019 payments starting in January, depending on trade and market conditions — and officials haven’t ruled out a whole new round for 2020 production. Perdue told CNBC on Wednesday that USDA is in wait-and-see mode as Trump’s trade team works to finalize a partial agreement with China.

Trump has claimed China will buy as much as $50 billion in U.S. farm goods under the agreement — but it’s unclear if such huge purchases are feasible, given supply and demand limitations. Perdue acknowledged it will “take a while to ramp up to that.”

SNAP CRACKDOWN COULD TEAR A HOLE IN RECESSION SAFETY NET: The final rule released by USDA on Wednesday to make work requirements stricter for millions of SNAP beneficiaries largely follows what the administration initially proposed earlier this year. As expected, it tightens the criteria that states must meet to get a waiver from existing work requirements for able-bodied adults without dependents, or ABAWDs.

But the department also made another significant, little-noticed change: It eliminated one of the key ways states get waivers from work requirements when unemployment is rapidly rising — a change that has anti-hunger advocates even more concerned, reports Pro Ag’s Helena Bottemiller Evich.

What about the next recession? The changes in the final rule, which will begin to take effect April 1 barring court action, would make SNAP less responsive to an economic downturn, according to the Center for Budget and Policy Priorities, a liberal group that analyzes and defends safety-net programs.

By the numbers: About 688,000 adults would be ineligible for the program under the changes, USDA estimated. The plan would save nearly $5.5 billion over five years.

Conservative cheer: Conservatives had long sought a major crackdown on waivers, arguing that USDA needs to rein in the social safety net and promote self sufficiency during a time of low unemployment. “Work requirements work,” said Kristina Rasmussen, a senior fellow at the conservative Foundation for Government Accountability.

Democrats flip: Democrats on Capitol Hill, meanwhile, issued a flurry of furious statements. Ohio Rep. Marcia Fudge, chairwoman of the House Agriculture Committee’s nutrition panel, accused USDA of having “callous and cruel intentions,” and called the department “the Grinch that stole Christmas.”

Trade Corner

JAPAN TRADE DEAL CLEARED FOR 2020 LAUNCH: The Japanese legislature has formally ratified the mini-agreement signed by Trump and Prime Minister Shinzo Abe in October, so the deal is set to take effect on Jan. 1, reports Pro Trade’s Adam Behsudi.

The partial trade pact will bring greater export opportunities for farmers and ranchers, who have been losing ground in Japan to competitors like Canada and New Zealand since the 11-nation TPP went into effect this year without the U.S.

But the new mini-deal doesn’t offer more for U.S. agriculture than the original TPP, which Trump exited in 2017 — and some farm sectors still won’t have as much market access as their competitors in countries included in the 11-nation Pacific Rim pact or a separate Japan-EU trade agreement.

Still, it’s a sorely needed win for ag producers who have borne the brunt of Trump’s trade wars since early 2018. Meat industry groups in particular celebrated Japan’s ratification of the deal. Dan Halstrom, president of the U.S. Meat Export Federation, called it “one of the biggest developments in the history of red meat trade.”

WARNING SIGNS FOR NAFTA 2.0: Disagreement between U.S. and Mexican trade officials over how to enforce labor standards under USMCA could derail the chances of Congress ratifying the three-way deal this year, write Pro Trade’s Sabrina Rodriguez and Megan Cassella.

Jesús Seade, Mexico’s undersecretary for North America, returned to D.C. to meet with U.S. Trade Representative Robert Lighthizer, hoping to strike a compromise on the labor enforcement provisions that would defuse political backlash in Mexico over the proposed changes that Lighthizer negotiated with House Democrats. But after six hours of talks, Seade emerged Wednesday night without a breakthrough.

Back to the NAFTA quo? One of the trade deal’s biggest Democratic backers, Texas Rep. Henry Cuellar, said that Mexican officials would rather walk away and keep the original NAFTA in place, Sabrina reports. Mexican sources with knowledge of the negotiations offered similar assessments of the situation.

Seade and other Mexican officials have made clear that “Democrats are asking for some very extreme positions we’re not going to accept,” Cuellar said. For example, Mexican leaders and businesses are opposed to allowing U.S. inspectors into Mexico to verify that companies are complying with USMCA’s stricter labor standards.

Row Crops

— EU leaders are urging European nations to terminate their pesticide license for chlorpyrifos, an insecticide that the bloc’s food safety regulator says can impair brain development in children. Diplomats from EU countries will be asked to vote Friday on a proposal to ban two versions of the chemical. POLITICO Europe’s Eddy Wax has more from Brussels.

— The FCC is launching a 5G fund offering up to $9 billion over 10 years for carriers to expand services in rural areas. The agency will set aside at least $1 billion in the fund for so-called precision agriculture, POLITICO’s Madi Bolaños reports.

— Schools waste an estimated 530,000 tons of food each year, costing as much as $1.7 billion per school year, according to a report due out today from the World Wildlife Fund. Wasted milk could be as high as 45 million gallons per year. The group analyzed food waste at 46 schools across nine U.S. cities. Read the report here.

— The meat industry is taking aim at the potential health benefits and risks of plant-based alternatives, hoping to blunt the growing popularity of products like the Impossible Burger and Beyond Meat. A new marketing campaign refers to such products as “ultra-processed imitations” and compares them to dog food. The New York Times has more.

— Georgia Gov. Brian Kemp appointed Republican finance executive Kelly Loeffler to fill the seat of retiring Sen. Johnny Isakson. The selection was opposed by Trump and other Republicans who wanted Kemp to appoint Rep. Doug Collins instead. POLITICO’s James Arkin and Alex Isenstadt have the story.