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Blockbuster week for agriculture

Article cover photo
U.S. Deputy Secretary of Agriculture Steve Censky talks about trade, farm policy and other issues important to soybean farmers at the Iowa Soybean Association Policy Conference last week. (Photo:Joseph L. Murphy/Iowa Soybean Association)

By Matthew Wilde, ISA senior writer

Two Iowa Soybean Association (ISA) leaders will witness President Donald Trump sign the 2018 Farm Bill today, capping off a big week for agriculture.

ISA President-elect Tim Bardole and ISA Policy Director Michael Dolch will represent the association at the White House signing ceremony. The U.S. Department of Agriculture (USDA) extended the invitation earlier this week on behalf of the Trump administration.

“It’s truly an honor to attend such an important event,” Dolch said. “After everything that happened in agriculture this year, from poor market conditions to the trade war, watching the president sign a bill that will provide stability and strengthen the farm safety net provides optimism for 2019.”

The farm bill signing was one of several important happenings in agriculture in the past week:

  • The government approved the second round of Market Facilitation Program (MFP) payments as promised. Billions of additional dollars are available to help mitigate losses from trade disputes with China and other countries.
  • China made significant purchases of soybeans for the first time since it placed a 25-percent tariff on the legumes in July.
  • The government proposed a new waters of the United States (WOTUS) rule.

“It’s been a blockbuster week for agriculture and the farm economy,” Dolch said. “Not only at the federal level, but for the state as well.”

U.S. Deputy Secretary of Agriculture Steve Censky and Sen. Joni Ernst provided insights on the developments to soybean farmers at the annual ISA Policy Conference in Ankeny Dec. 13.

Farm Bill

The 2018 Farm Bill garnered bipartisan support in Congress. After controversial work requirements to receive food assistance were removed, the bill passed 369-47 in the House and 87-13 in the Senate.

Ernst, in a video call with ISA members during the policy conference, said the last few years have been rough on “our great soybean farmers” and rural America. The legislation will provide farmers more certainty during turbulent financial times.

The USDA Economic Research Service projects net U.S. farm income this year will decline 12 percent to $66.3 billion. That’s about half as much as the all-time high in 2013.

“It’s been an exciting week in Washington, D.C., especially with the passage of the farm bill,” Ernst said. “It will help make sure the full value of ag production can be realized.

“The bill does make important updates to ARC (agricultural risk coverage) on the county level like location of the farm,” she added. “Farmers will be able to prorate acres and payments where appropriate.”

Farm bill highlights:

  • Price Loss Coverage (PLC) — The new effective reference price would be 85 percent of the five-year moving average (minus the highest and lowest years) for the commodity’s average market price but could rise no more than 15 percent above the current reference price. For soybeans, the crop most likely affected, the maximum price would go from $8.40 to $9.66 per bushel.
  • ARC — The bill modifies the guarantee calculations to allow a substitute “transitional” T-yield of 80 percent of the county T-yield. An increase from the 70 percent now allowed.
  • Marketing loans — Many commodity loan rates were increased. Soybeans jumped from $5 to $6.20 per bushel.
  • Conservation Reserve Program — Maximum enrollment was increased from 24 million to 27 million acres. Payments would be capped at 85 percent of local rental rates for general signup acreage and 90 percent for continuous signup.

Passage of a new farm bill was a Christmas miracle, according to ISA District 3 Director Suzanne Shirbroun.

“Judging by history, I was afraid it would drag on into 2019,” she said. “As far as the ARC and PLC provisions, I like the added flexibility with sign-up. The government is trying to work with the ag sector, which is a good thing.”

Seve Censky on the Farm Bill and Market Facilitation Program payments
Seve Censky on the Farm Bill and Market Facilitation Program payments

Trade aid

After initial hesitation by the White House Office of Management and Budget (OMB) to disperse the second round of MFP payments, the president authorized U.S. Secretary of Agriculture Sonny Perdue to do so.

“Today (Dec. 17) I am making good on my promise to defend our Farmers and Ranchers from unjustified trade retaliation by foreign nations. … Our economy is stronger than ever — we stand with our Farmers!” the president tweeted.

Soybean producers have until Jan. 15 to apply for full MFP payments of $1.65 per bushel at local Farm Service Agency offices. The deadline to certify production is May 1. More information and instructions are available at www.farmers.gov/mfp.

Farmers that already applied for the first half of payments announced in August and certified 2018 production will be issued a payment for the remaining 50 percent of the producer’s production. The corn payment is 1 cent per bushel.

Iowa Soybean Association (ISA) CEO Kirk Leeds is grateful the president kept his promise to stand behind farmers that have taken the financial hit due to ongoing trade disputes. Soybean prices alone plummeted about $2 per bushel after China largely shunned the U.S. oilseed. Iowa State University estimates Iowa’s soybean industry lost, on average, $545 million.

“These payments don’t make farmers whole, but they help significantly as they deal with prices well below break-even,” Leeds said. “Let’s hope in 2019 the president delivers on his promise of significant export sales of soybeans to China.”

China back in the game

It was China’s purchase last week of 1.43 million metric tons of U.S. soybeans (more than 52.5 million bushels) that reportedly gave OMB pause about issuing the second round of trade loss payments.

China purchased more U.S. soy today, the USDA announced. The buy was nearly 1.2 million metric tons (about 44 million bushels).

While the purchases are welcomed, Censky told ISA members the administration’s support of farmers was unwavering. He said that’s why the $12 billion aid package was approved, which includes about $9.6 billion in direct payments to grain and livestock farmers.

“It’s OMB’s job to say no to federal spending,” the former American Soybean Association CEO said. “But he (the president) recognized farmers were on the tip of the retaliation spear.

“China is back in the market, which is good news,” he continued. “It’s a good first step, but we normally sell 30 to 35 million metric tons of soybeans to the nation. Even if they purchase 5, 10 or 15 million metric tons, farmers have already been negatively impacted by the retaliation.”

The government and the soybean industry are actively working to increase agricultural trade, especially soybeans, worldwide, he continued.

The United States, Mexico and Canada recently ratified a new free-trade agreement. The U.S. started negotiations with the European Union and Japan on new trade pacts as well.

Censky said the U.S. Soybean Export Council was a “robust applicant” for $200 million in ag promotion grants, which are part of the aid package.

“We understand how important trade is to American farmers,” he said.

WOTUS

The Environmental Protection Agency (EPA) and the Department of the Army proposed a new WOTUS definition last week that clarifies federal authority under the Clean Water Act. It’s clear, understandable and implementable, the agency said, unlike the old rule.

The 2015 WOTUS rule said dry creek beds and certain drainage ditches fall under federal oversight. Detractors said it was too broad and a clear overreach of government.

EPA Acting Administrator Andrew Wheeler said the new rule respects the limits of the Clean Water Act and provides states and landowners the certainty they need to manage natural resources and grow local economies.

“I think farmers will breathe a sigh of relief once they read the language,” Dolch said. “It’s less encompassing and less of a land grab by the federal government.”

Under the agencies’ proposal, traditional navigable waters, tributaries to those waters, certain ditches, certain lakes and ponds, impoundments of jurisdictional waters and wetlands adjacent to those waters would be federally regulated.

Features that only contain water during or in response to rainfall, groundwater, many ditches, including most roadside or farm ditches and storm-water control features are not “waters of the United States.”

Contact Matthew Wilde at mwilde@iasoybeans.com

For media inquiries, please contact Katie Johnson, ISA Public Relations Manager at kjohnson@iasoybeans.com or Aaron Putze, ISA Communications Director at aputze@iasoybeans.com

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