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Quick Fix
— The Trump administration is overhauling the federal rules aimed at protecting farmers from unfair practices by major meatpackers. Several farmer advocacy groups, however, argue the proposal doesn’t go far enough to ensure a competitive landscape in the increasingly consolidated meat and poultry sector.
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— Federal auditors will review the EPA’s use of biofuel blending waivers for oil refiners, a Trump administration policy that has enraged corn farmers and ethanol producers who say the exemptions are wrecking the domestic biofuel market.
— African swine fever is on the brink of crossing the border into Germany, the EU’s largest pork producing nation, after spreading to parts of Eastern Europe. The deadly pig disease has already decimated hog herds in Asia and upended global meat markets.
HAPPY MONDAY, JAN. 13! Welcome to Morning Ag, where your host is getting used to this warm weather in D.C. It’s the first time in decades that the city has recorded consecutive 70-degree days in January. Send tips to rmccrimmon@politico.com and @ryanmccrimmon, and follow us @Morning_Ag.
Driving the Day
PERDUE SETS A MARKER ON MEAT MARKET FAIRNESS: The Agriculture Department on Friday unveiled a proposed rule that lays out new criteria to determine when action by meatpackers and large livestock dealers creates an unfair business environment for farmers, writes Pro Ag’s Catherine Boudreau. The latest step in the long-running debate over so-called GIPSA rules comes as producers, lawmakers and even presidential candidates have been paying closer attention to anti-competitive practices in agriculture, especially within the meat sector.
How we got here: The 2008 farm bill directed USDA’s Grain Inspection, Packers and Stockyards Administration to beef up protections for contract farmers who supply livestock to meatpackers. As the industry rapidly consolidates, producers say they need more legal options for challenging unfair and discriminatory practices by conglomerates.
— The Obama administration tried repeatedly to finalize such rules, but those proposals were either blocked by Congress or later scrapped by the Trump administration. Agriculture Secretary Sonny Perdue withdrew the latest Obama-era proposal in 2017 shortly after he was sworn in, arguing that it would have opened the door to excessive litigation.
The new plan: Perdue’s proposed rule isn’t as broad as previous efforts. It outlines four factors to determine whether actions by meatpackers is so unfair that it harms a farmer’s success, like negotiating higher prices with a favored livestock supplier for no justifiable business reason.
How it’s playing: The National Farmers Union suggested the new rule is “unlikely to provide needed protections to farmers.” Roger Johnson, the group’s president, said it doesn’t go far enough and doesn’t address other imbalances between producers and corporations.
— Julie Anna Potts, president of the North American Meat Institute, said the group is reviewing the proposal to ensure it will “protect marketing agreements between packer/processors and livestock producers.” She warned that if plaintiffs weren’t required to demonstrate actual or likely harm to competition, “frivolous lawsuits could flood the courts and hurt the producer-processor relationship.”
The big picture: The U.S. meat industry is dominated by four behemoths — Tyson Foods, Cargill, Brazilian-owned JBS and Chinese-owned Smithfield Foods — that control half the poultry market, 66 percent of pork and 84 percent of beef processing, as of 2016. Consolidation in the industry has caught the eye of Democratic presidential hopefuls like Bernie Sanders and Elizabeth Warren, who are calling for breaking up big agribusinesses and giving farmers more bargaining power.
WATCHDOG TO PROBE EPA’S ETHANOL WAIVERS: The GAO will review the biofuel blending exemptions handed out to oil refiners under President Donald Trump, the audit agency said Friday. A bipartisan group of lawmakers, including House Agriculture Chairman Collin Peterson (D-Minn.), requested the probe in August.
— The EPA under Trump has dramatically expanded the use of waivers, which allow oil refiners to get out of their Renewable Fuel Standard obligations to blend certain volumes of biofuel into the U.S. gasoline pool.
— The White House has struggled to find a compromise between the oil and ag sectors, two key pieces of Trump’s political base. Corn growers and biofuel producers remain unhappy with the EPA’s latest plan for 2020 blending volumes. Pro Energy’s Eric Wolff has more details.
A DECADE OF WEATHER DISASTERS: The 2010s smashed the record for devastating weather events, with 119 disasters that cost at least $1 billion, according to NOAA data. That’s twice as many as the previous decade, driven by a surge in severe storms amid continued global warming. Pro DataPoint’s Patterson Clark has the details.
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Trade Corner
SWINE FEVER THREATENS TO SPREAD IN EUROPE: Germany is bracing for the arrival of African swine fever after an infected wild boar was found in Poland near the German border, POLITICO Europe’s Eddy Wax reports.
The deadly pig disease could wreak havoc on the nation’s 26 million hogs, and farmers are feeling nervous. “This is going to be a nightmare if it happens in regions with a significant livestock density,” said Bernhard Krüsken, secretary general of DBV, Germany’s largest farm lobby.
Berlin is mounting a last-ditch effort to keep the virus at bay, including a public awareness campaign and discussions of building fences on both sides of the border with Poland, where ASF has already spread. EU officials and academic experts have said it’s nearly inevitable that the disease will ultimately cross the border.
“We are ready, we are really well prepared,” said German farm chief Julia Klöckner. “Everybody knows what the consequences will be. It’s important to inform everybody, to inform tourists, inform the farmers.”
Unaffected EU nations have been cashing in as African swine fever spreads in China, creating massive Chinese demand for protein imports and pushing up global pork prices. European pork exports through October 2019 were up 28 percent over the previous year.
TRIO OF TRADE CHIEFS IN TOWN: Chinese trade officials are visiting D.C. this week to sign the “phase one” trade pact with the Trump administration. Japan’s new trade minister is scheduled to meet with U.S. Trade Representative Robert Lighthizer this week, and EU Trade Commissioner Phil Hogan is also in town as he attempts to reset relations with Washington. (Pro Trade’s Doug Palmer has more here on Hogan’s mission impossible.)
Row Crops
— The House on Friday passed a sweeping package of bills to regulate toxic PFAS “forever chemicals.” The legislation would direct the EPA to set drinking water limits for PFOS and PFOA and discharge restrictions to prevent contamination of waterways, an initiative opposed by industry groups, Pro Energy’s Annie Snider reports. The White House threatened to veto the bill and Senate GOP leaders aren’t likely to take it up.
— South Carolina law enforcement officers arrested a farmer and bulldozed his hemp crop, estimated to be worth several million dollars, because he had used acreage not permitted for hemp production after Hurricane Dorian battered the farm in September. The Washington Post has more.
— Despite rising bankruptcies among small dairy farmers and giant milk processors, there are bright spots in the dairy sector as U.S. consumers buy more grass-fed and lactose-free milk, CNN reports.
— House Democrats are aiming to mark up a package of green energy tax breaks by the end of March, potentially including provisions for biodiesel production, per Pro Tax’s Aaron Lorenzo.
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