READ the NAFB’s National Ag News for Thursday, February 22nd

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READ the NAFB’s National Ag News for Thursday, February 22nd

Canadian Ag Minister Promoting Ag Trade in California

Canada’s top agriculture official is promoting trade between the U.S. and Canada in California this week. Canada says Minister of Agriculture and Agri-Food Lawrence MacAulay is traveling to California to promote the Canada-California economic partnership, and to highlight the strengths of Canada’s agriculture trade with the United States. Minister MacAulay previously visited the United States in January, speaking at the American Farm Bureau Federation’s annual convention. The visit comes as negotiations continue regarding the North American Free Trade Agreement. MacAulay is using the trip to California to promote the importance of NAFTA business on both sides of the border. In a news release announcing the trip, MacAulay said: “We’re keen to continue working with our NAFTA partners to deepen our economic relationship and strengthen trade between our great nations.”

Republicans Deliver Letter to Congressional Leadership Calling on Section 199A Changes

A group of Republican lawmakers Wednesday sent a letter to Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan calling for changes to Section 199A in the tax code. The group of more than 80 lawmakers says the changes will restore the competitive balance in the agricultural marketplace. Led by Iowa Representative David Young, the group says the changes “are necessary to restore the equity in grain marketing and set co-ops and other independent businesses on a more level playing field.” The Tax Cuts and Jobs Act unintentionally created a tax advantage for producers who sell to cooperatives instead of private and independent businesses. The letter says any remedy should retroactively restore the competitive marketplace for producers and replicate the benefits co-ops and farmers received under Section 199, before the enactment of Section 199A. The letter says the current Section 199A has resulted in a dramatic competitive imbalance impacting numerous agricultural value chain stakeholders including grain handlers, feed mills, seed companies, ag retailers, biofuels producers, banks, livestock marketers and dairy processors.

Efforts to Move Northey Block Continue

Iowa Republicans took a strike at Senator Ted Cruz of Texas this week, saying his hold on the nomination of Iowa’s Bill Northey to the Department of Agriculture will harm his political standing. As Cruz continued his attack of the Renewable Fuel Standard Wednesday, speaking at Philadelphia Energy Solution’s so-called anti-ethanol rally, the Iowa Republican Party warned Cruz that continuing the hold of Northey would risk him losing political support from Iowa. Cruz won the Iowa Caucus during the 2016 presidential campaign. Iowa GOP Chairman Jeff Kaufmann said: “Cruz has entertained this political position far too long, and it’s becoming increasingly harmful to both Iowans and the agricultural industry at large.” Northey, the Iowa agriculture secretary, is staring down a March 16th deadline to either file for re-election for his state post or remain in limbo on Capitol Hill, according to Politico. Meanwhile, Iowa Republican Senator Chuck Grassley says he is circulating a letter to other senators to gain support that would overcome Cruz’s filibuster of the nomination.

Joint Ventures in Dairy Increasing

As the dairy industry evolves, companies across the U.S. are looking to capitalize on increasing milk production through international joint ventures. A new report from CoBank says that while the U.S. has heavily invested in milk production, Europe and other regions that faced production constraints focused their effort and investment on technology for the processing sector. And, in 2017, many U.S. dairy companies and international partners collaborated to capitalize on each other’s strengths. CoBank says many cooperatives lack the available capital to take on new and costly processing facilities, noting that a cheese manufacturing plant can cost between $300-500 million, while many international processors see the possibility of diversifying their offerings both in the U.S. and globally. A Cobank researcher says: “The international dairy industry sees the U.S. milk supply as strong and reliable and they see opportunity in the U.S. consumer.”

How Potential ADM, Bungee Merger Would Impact Farmers

The possible merger of ADM and Bungee could decrease marketing outlets for farmers as the companies would combine operations. Chad Hart of Iowa State University told DTN-The Progressive Farmer this week that, however, unlike mergers in the seed business, there still is a fair amount of competition in crop marketing. Hart says there are “plenty of marketing outlets” independent from ADM and Bungee. And, for the broader ag economy, Hart says such a combined company could result in improved efficiency in moving commodities from the farm to end users. The move won’t move grain prices, however. The speculation of a potential merger between the two grain handling giants continues, while both companies offer little detail or comments regarding a merger. ADM, known as Archer Daniels Midland, is reported to be engaged in talked to take over Bunge. ADM reported $60.8 billion in annual net sales in 2017, while Bunge made about $45.8 billion in net sales in 2017.

Failed Refiner Had Bigger Problems than Ethanol

The reason an east coast refiner filed for bankruptcy appears to be much deeper than the Renewable Fuel Standard that Philadelphia Energy Solutions, known as PES, is blaming. Senator Ted Cruz spoke Wednesday claiming the RIN market was the downfall of the refiner, but bankruptcy documents perhaps suggest otherwise. Filings show a rail facility built to accept crude oil for the facility often sat idle, even though the refiner was making quarterly payments to use the railyard. The refiner was paying $30 million per-quarter to the railyard owner, North Yard, which along with the refinery, is owned by the Carlyle Group. Reuters reports the deal guaranteed lucrative payouts to Carlyle regardless of whether the refinery benefitted from the arrangement. When oil market conditions made the rail shipments unprofitable, the refinery took heavy losses while investors continued to collect large distributions for two years, collecting at least $594 million from PES before it collapsed. Refiners without the necessary blending facilities, such as PES, are required to purchase regulatory credits, known as RINs, from firms that do such blending. The refiner, however, failed to pay a large portion of that obligation, and still owes the Environmental Protection Agency about $350 million.

SOURCE: NAFB News Service