READ the NAFB’s National Ag News for Wednesday, May 24th

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READ the NAFB’s National Ag News for Wednesday, May 24th

White House Budget Proposal Cuts Ag Spending $46 Billion

A Reuters report says President Trump’s budget proposal contains $46.54 billion in cuts to government funding in the Ag sector, with those cuts spread out over ten years. The biggest proposed cut is $38 billion dollars from farm support programs. Those cuts include new limits on federal subsidies for crop insurance premiums and a cap on potential commodity program payments. The president proposes a 36 percent cut in the federally subsidized crop insurance program. That’s a larger cut than what the Obama Administration proposed and was ultimately rejected by farm state lawmakers. Crop insurance cuts would yield the largest savings, including $16.2 billion by limiting the government’s share of premiums. It would also save $11.9 billion by eliminating the harvest-price option. The proposed budget cuts would actually eliminate the Rural Development Program, which provides zero-interest loans to rural utilities and support to rural businesses. It would also reduce government costs for federal inspectors at meat plants in two years by adding $600 million in user fees for the USDA Food Safety and Inspection Service.


Ag Groups Respond to White House Budget Cuts

Several major Ag organizations and lawmakers representing farm states reacted negatively to the president’s budget proposals. American Farm Bureau President Zippy Duvall says agriculture has done more than its fair share to help reduce the deficit over the years. “The Administration’s budget proposal fails to recognize agriculture’s current financial challenges or its historical contribution to deficit reduction,” Duvall says. The National Farmers Union called the president’s budget proposal an assault on the farm safety net and rural communities. “It’s deeply disappointing that the president would propose such cuts, especially in the midst of a farm crisis that has families who’ve lost 50 percent of their farm income over the past few years,” said NFU President Roger Johnson. U.S. Wheat Associates is disappointed that the budget proposal eliminates funding for the USDA’s Market Access Program and the Foreign Market Development Program. “Without funding for these vital programs,” says USW President Alan Tracy, “we would not be able to continue the training necessary to promote our product and our competitors would swoop in and overtake American producers in foreign markets.” He adds that the effect on wheat prices would be obvious.


EPA Is The Top Target for Budget Cuts

Candidate Donald Trump vowed to get rid of the Environmental Protection Agency in virtually every way, leaving only tidbits of what it once was. A Washington Post article says his budget proposal aims to follow through on that campaign promise. The proposed budget from the White House hits the EPA with a 31 percent budget cut, down to $5.65 billion. The plan eliminates several regional programs, including those that restore the Great Lakes, Chesapeake Bay, and Puget Sound. It slashes funding for the Superfund Cleanup Program, which helps restore some of the most polluted sites in the nation. Despite the cut to the Superfund, EPA Administrator Scott Pruitt lists the program as one of his biggest priorities. Pruitt said the president’s budget respects the American taxpayer. “This budget supports EPA’s highest priorities with federal funding for priority work in infrastructure, air and water quality,” Pruitt says, “and it ensures the safety of chemicals in the marketplace.” The proposal does maintain funding for high priority infrastructure investments like grants and low-cost funding for projects that improve drinking water quality and wastewater treatment.


China/U.S. Beef Import Discussions Moving Faster

The pace of talks to resume U.S. beef exports to China appears to be picking up. Final details are expected to be in place by early next month. The U.S. Department of Agriculture says it’s great news for American farmers who will be able to pursue business in China that’s been lost by rival beef producer, Brazil. As a part of the final details of the hoped-for agreement, U.S. beef producers will stop the use of growth-promoting hormones in cattle specifically destined for the Chinese beef market. U.S. producers will also log the movements of those cattle to be marketed in China. The two sides are negotiating ahead of a deadline for shipments to start by the middle of July. If they’re able to finalize the deal by early June, that should give packing companies like Cargill and Tyson Foods the opportunity to sign contracts by the mid-July deadline. The timing of the new deal will allow American producers to benefit as rival Brazil is rocked by a scandal in their beef sector and Australia is in the middle of a drought that’s negatively affected the country’s beef production numbers. “This is a very opportune time for the American beef industry to step up,” says Darrel Peele, an Ag Economist at Oklahoma State University.


Brazil Launching Four New Probes Into JBS

Brazil’s securities regulator announced it’s launching four new probes into meatpacker JBS and other companies also controlled by J & F Investments. The probes are looking into suspicious trades made just before markets were rattled by the news of a plea deal by the company’s top executives. The investigation is looking into signs of “possible insider trading” of foreign exchange futures, derivatives, and JBS stock, all ordered by JBS and other companies. According to plea-bargain testimony, the controlling shareholders in JBS say Brazil President Michel Temer (Muh-shel’ Tuh-Mehr’) received approximately $4.6 million dollars in bribes from the world’s largest meat processor. Temer refused to resign last week. The Brazilian real fell 8 percent last week against the U.S. dollar. A report last week says the controlling shareholders in JBS bought over $1 billion in U.S. dollar contracts in the local market hours before news of the plea deal broke.


ChemChina Plans a Second Merger

ChemChina and Sinochem (Sih’-noh-kem) are planning a merger next year. Several senior bankers in Asia say the merger would create the biggest chemicals group in the world with $100 billion in revenues. The merger would come after ChemChina’s $43 billion merger with Syngenta. A Financial Times Dot Com article says China has 1.4 billion people to feed, so the country is looking for more control of technology in seeds, herbicides, and pesticides. The Chinese government is pushing for more control of technology despite widespread domestic opposition to genetically modified crops. Bankers across Asia told the Financial Times that the move is politically driven and intended to make sure that ChemChina has the financial strength to absorb Syngenta. The heavily indebted chemicals conglomerate will have achieved China’s largest overseas purchase when the Syngenta deal is complete.  While bridge financing has been in place for the Syngenta deal for over a year, ChemChina has revealed very little about its financing plans other than a mix of loans, equity, and support.

SOURCE: NAFB News Service