Government Affairs Update July 31, 2017
Dawn Caldwell

Federal Issues

NAFTA Renogiation – August 16 is the day the renegotiation talks begin. As has been mentioned in the past, most of agriculture is feeling comfortable going into the talks. This has been reassured again by Secretary Perdue’s comments during a trip to Mexico just last week. Though certain sectors of agriculture have benefited greatly from the FTA with Mexico and Canada, others have not. For instance, grain has certainly benefited more than the vegetable sector. “The unfortunate thing is, in many trade negotiations or renegotiations…agriculture is always used as a retaliatory measure,” Perdue said. “Our goal is, first of all, to do no harm.”

Mexico is the United States’ third-largest export market for agricultural goods. Total ag exports in 2016 came to $18 billion, with corn ($2.6 billion) and soybeans ($1.5 billion) leading the way. Mexico is also the largest exporter of ag goods to the U.S. – with a dollar value of $23 billion in 2016, including fresh vegetables ($5.6 billion) and fresh fruit ($4.9 billion).

Trade Observations – I recently spent several days in Cartagena, Colombia for a U.S. Meat Export Federation event. This annual event is called the Latin American Product MeatSelectionsShowcase and is an incredibly efficient way to bring together red meat exporters from the U.S. with meat traders from the entire Latin American region, including the Caribbean. I believe my greatest “aha moment” was when I was visiting with an exporter from Atlanta, who was sitting with several of his customers. As farmers and ranchers, we often think about and comment that food consumers are far-removed from the farm and don’t have a true understanding of where their food comes from. The exporter, without knowing that I often participate in events to inform consumers about agriculture, stated, “beef producers have absolutely little to no idea what it takes to get meat from the packer to consumers in another country.” He is right! I learned a great deal listening to both Conferenceexporters and foreign importers. We have to remember, they are dealing with a perishable product, going into foreign countries, selling to everything from all-inclusive resorts that want 6 to 18 month price contracts to high end restaurants, and grocery retailers. As the grain farmers, ranchers, and cattle feeders involved in the process, we must depend on many other things to go right after the animals leave our places! And in the end, we still need to do all we possibly can to make sure whoever is on the far end of that market chain has a great eating experience.

Regarding trade, the conversation centered on a couple of different items. First, the U.S. pork exporters are feeling more challenged than grain and beef exporters going into the NAFTA renegotiations. Second, Latin American importers are feeling the pressure of China and Japan buying everything they can get their hands on, and pushing prices.

Farm Bill – The House Ag Committee is holding 3 listening sessions this week. The first was today in Texas. The following sessions will be on Thursday in Minnesota and Friday in California.

Tax Reform – NCFC staff member Marlis Carson, along with other members of the Ag Tax Coalition met with Treasury Secretary Steven Mnuchin and other White House officials on July 25 to discuss tax reform and its potential impacts on the agriculture sector. Shahira Knight and Ray Starling from the National Economic Council also attended. The meeting was part of the administration’s “listening sessions” with various industry groups and CEO’s.

In his opening remarks, Secretary Mnuchin said the administration’s top focus is economic growth, which will be achieved through tax reform, reducing regulatory burdens, and improving trade.

News Articles of Interest:
10 mega myths about farming to remember on your next grocery run
Nebraska agricultural center seeks to link crops and health
Court rules against EPA ‘supply’ interpretation in RFS case Pumps
07/28/17 1:00 PM By Spencer Chase

WASHINGTON, July 28, 2017 – The Environmental Protection Agency was wrong in its interpretation of “inadequate domestic supply” when decreasing required renewable fuel blending, the U.S. Court of Appeals for the D.C. Circuit ruled Friday.

In arguments before the court in April, lawyers for renewable fuel groups – collectively referred to as Americans for Clean Energy (ACE) – disputed EPA’s interpretation of “inadequate domestic supply” in the governance of the Renewable Fuel Standard.

“We hold that the ‘inadequate domestic supply’ provision authorizes EPA to consider supply-side factors affecting the volume of renewable fuel that is available to refiners, blenders, and importers to meet the statutory volume requirements,” Judge Brett Kavanaugh wrote in the decision.

However, he continued, “It does not allow EPA to consider the volume of renewable fuel that is available to ultimate consumers or the demand-side constraints that affect the consumption of renewable fuel by consumers.”

Under the law, the EPA is allowed to use waiver authority to set Renewable Volume Obligations (RVOs) at lesser volumes than what is called for in the statute. It did just that on Nov. 30, 2015, when the agency released RVOs for 2014, 2015, and 2016 in one swoop due to delays on previous years. Janet McCabe, then the acting assistant administrator for EPA’s Office of Air and Radiation, said the 2016 RVO – 18.11 billion total gallons of renewable fuel with 14.5 billion gallons potentially coming from corn ethanol –- represented “ambitious, achievable growth” for the program.

But renewable fuels groups disagreed. They wanted to see the statutory 15-billion-gallon availability for corn ethanol. EPA said that couldn’t happen because refiners and blenders lacked the necessary infrastructure to take that much product to market; ACE argued EPA wasn’t allowed to take that into consideration, saying refiners opposed to the program could turn it on its head by simply refusing to build out the necessary infrastructure.

In a sizable victory for the renewable fuels industry, the court ultimately agreed with ACE.

“Importantly, whether a thing is ‘available’ to someone has nothing to do with whether he or she decides to use it,” Kavanaugh stated in the decision. He further illustrating his point by noting “The fact that a person is on a diet does not mean that there is an inadequate supply of food in the refrigerator.

“So too here: Whether there is an adequate amount of renewable fuel available to allow refiners, blenders, and importers to meet the statutory volume requirements has little to do with how much renewable fuel that refiners, blenders, and importers – much less consumers at the pump – ultimately decide to use.”

A spokesperson for the EPA said the agency is “currently reviewing the decision.”
ACE is comprised of a number of groups – the Renewable Fuels Association, American Coalition for Ethanol, BIO, Growth Energy, the National Corn Growers Association and the National Sorghum Producers – some of which expressed their delight at Friday’s decision.

“We are still reviewing the decision, but the fact the court has affirmed our position that EPA abused its general waiver authority by including factors such as demand and infrastructure in a waiver intended to be based solely on available supply is a great victory for consumers and the RFS program,” Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a statement.

Emily Skor, CEO of Growth Energy, said the decision restores congressional intent and “will ensure that renewable fuels continue to play a growing and important role in America’s fuel mix.”

“This is a major win for consumers, who save money when American biofuels can compete at the pump with foreign oil,” she said. “We appreciate the court recognizing the value of the RFS, and we look forward to working with the EPA to make sure that America’s biofuel targets reflect the goals set down in law.”

The National Corn Growers Association called the decision “a win for farmers, the biofuels industry, and consumers.”

“Corn farmers have done our part to help expand the supply of renewable fuel, as well as help support use of renewable fuels with retailers and consumers,” the group said. “We look forward to working with the EPA to ensure that going forward, the Agency follows the law when implementing the RFS.”

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