Jan. 4, 2017 Volume 13, Number 1

Trump still mum on pick for Ag Secretary

Donald Trump takes office in just over two weeks and we still don’t know who his agriculture secretary is going to be. Last week, it appeared that Trump planned to select a Hispanic for the post, either former Texas Rep. Henry Bonilla or former Texas A&M University President Elsa Murano. Trump interviewed and had his photo taken with both.

But on Monday, reports confirmed by Agri-Pulse had a new leader for the position, former Georgia Gov. Sonny Perdue, whom Trump interviewed in November. Then on Tuesday, the search process took another twist: CNN reported that still another leader had emerged, former California Lt. Gov. Abel Maldanado, who also interviewed last week with Trump. The CNN report couldn’t be confirmed by Agri-Pulse.

The delay would appear to mean that USDA is likely to be without a Senate-confirmed secretary when Trump takes office Jan. 20. But who knows how this process really works? Agriculture Secretary Tom Vilsack was sworn in Jan. 21, 2009, after being announced the previous Dec. 17, more than a month earlier. The Senate Agriculture Committee held Vilsack’s confirmation hearing on Jan. 14, 2009. Sonny Perdue

Perdue, 70, served two terms as Georgia governor, from 2003 to 2011. Although he has a doctorate in veterinary medicine, Perdue spent most of his career in business, including agribusiness and transportation in rural Houston County. The president of the American Farm Bureau Federation, Zippy Duvall, was president of the Georgia Farm Bureau when Perdue was governor and tells Agri-Pulse that he “understands agriculture and its importance to our country and its citizens.”

Duvall, who traveled on several trade missions with Perdue, said he “always had an open door to farmers.”

The shift in focus toward Perdue took some observers in agriculture by surprise since it appeared that Trump had decided to use the USDA post to diversify his cabinet by picking a Hispanic. The cabinet so far is dominated by older white men, and Veterans Affairs is the only other seat yet to be filled other than agriculture.

www.Agri-Pulse.com 1 Lighthizer nomination confirms trade enforcement focus

Trump filled the last major trade position in his administration on Tuesday by announcing that trade lawyer Robert Lighthizer would become U.S. Trade Representative. Lighthizer, who served in USTR during the Reagan administration, is known for pursuing trade actions against China on behalf of U.S. companies and has served on Trump’s USTR transition team.

The nomination fits with Trump’s promise to get tough with China on trade. Bill Brock, who was U.S. trade representative from 1981 to 1985, says Lighthizer’s philosophy is in line with Trump’s. Lighthizer became deputy USTR shortly before Brock left. “Most of his work in the trade field has been more on the industrial side and more on the protectionist side. In that sense, he clearly would have been chosen to reflect the president-elect’s philosophy and his campaign commitments,” said Brock.

On the other hand, Brock says the nomination of someone with Lighthizer’s credentials suggests that Trump may not be downgrading USTR to the extent it has appeared he might be doing. The transition team has said that Trump’s nominee for the Commerce Department, Wilbur Ross, would take the lead on trade policy, and Trump is also forming a National Trade Council in the White House run by China hawk Peter Navarro. “Knowing Lighthizer, and knowing the respect the Trump team obviously has for him, I would hope that they are going to go to the more traditional pattern” Robert Lighthizer where USTR is the lead agency on trade policy, Brock said.

Some trade critics are pleased with the choice of Lighthizer. Lori Wallach, director of Public Citizen’s Global Trade Watch, said he has “quite a different perspective” on trade policy than GOP congressional leaders. He “is very knowledgeable about both technical trade policy and the ways of Washington, but what sets him aside among high-level Republican trade experts is that for decades his views have been shaped by the pragmatic outcomes of trade agreements and policies rather than fealty to any particular ideology or theory,” she said.

The National Milk Producers Federation and U.S. Dairy Export Council said in a joint statement that Lighthizer’s experience in trade enforcement would “serve him well in forging a path forward on trade policy that will benefit this country.” The statement went on, “A focus on preserving and growing what is working well, while cracking down further on what is not, will help to expand global markets for U.S. dairy farmers and the companies that turn their milk into nutritious dairy products shipped all over the world.”

According to Lighthizer’s bio, while at USTR he negotiated about two dozen bilateral agreements on products ranging from steel to grain.

WOTUS, Clean Power Plan on chopping block for EPA

The top priorities for the man expected to head the Environmental Protection Agency in the new administration will include getting rid of the “waters of the U.S.” rule (aka WOTUS) and the Clean Power Plan (CPP).

But neither can be accomplished by the snapping of Scott Pruitt’s fingers, or the stroke of Donald Trump’s presidential pen.

www.Agri-Pulse.com 2 The goals of Pruitt, Trump’s choice for EPA chief, are not difficult to predict. As attorney general of Oklahoma, he has filed lawsuits challenging WOTUS and the CPP.

WOTUS has been a target for farmers, ranchers, energy companies and developers since it was announced in 2015. They argue that EPA, which developed the rule with the Army Corps of Engineers but also ignored critical comments by the Corps late in the rulemaking process, vastly overstepped its legal authority. Pruitt says that WOTUS tries to exercise jurisdiction over non- navigable streams and dry creek beds with no connection to navigable waters, as required by the Clean Water Act.

Environmental groups argue otherwise. They note that the Clean Water Act itself defines navigable waters as “waters of the U.S.,” and contend EPA has reasonably defined “waters” to include small streams and tributaries with a “significant nexus” to navigable waters.

Before Pruitt gets a chance to tackle the definition of “waters” in the law, however, he will have to work with the Justice Department to determine a legal strategy. That’s because the rule is the subject of litigation, with more Scott Pruitt than half the states – and numerous trade associations, such as the American Farm Bureau Federation – challenging the agency.

The 6th Circuit Court of Appeals in Cincinnati has stayed implementation of the rule. Parties may submit briefs through March, with oral arguments to follow. But the new administration can put a halt to that.

Tim Bishop, a lawyer with Mayer Brown in Chicago who is representing AFBF and a host of other farm groups, says it’s likely that EPA and the Corps will ask the court to hold the matter “in abeyance” while the Trump administration decides what course to take.

“Then, once the agency people are in place, they can make a decision to reconsider the rule,” Bishop said in an email. “Reconsideration, the next step, could result in withdrawal of the rule, or withdrawal and replacement with another rule, either of which require notice-and-comment rulemaking.”

He noted that “the abeyance/announce reconsideration sequence is just what the Obama administration did” with the ozone rule approved by the EPA during the George W. Bush administration.

There’s another piece of the puzzle, Bishop noted: The Supreme Court is considering a petition filed by the National Association of Manufacturers – which he represents – questioning the appeals court’s jurisdiction over the matter. The proper place to litigate the matter is in federal district court, not the appellate court, NAM argues.

The Supreme Court is scheduled to consider the petition at a Jan. 6 conference. If it decides to review the matter, “then that would surely trigger a stay of the (6th Circuit) litigation separate from any issue of abeyance,” Bishop said.

Jon Devine, senior attorney for the Natural Resources Defense Council’s water program, said that the new administration will encounter “rough sledding” if it wants to repeal WOTUS, “because the rule’s protections are popular, rely on an extensive scientific record, and easily fit within the Clean Water Act.” www.Agri-Pulse.com 3

“Second, though we’re not going to speculate about what the new administration might try to do in court, we’d note that NRDC (the Natural Resources Defense Council) and many of our partners are full parties to the litigation, and can fight for these public health and environmental safeguards even if the government seeks to retreat from a full defense of the rule,” Devine told Agri-Pulse in an email.

WOTUS, of course, isn’t likely to be the only big issue targeted by Pruitt. The Clean Power Plan also will be on the chopping block.

Similar to the WOTUS rule, the CPP has been stayed by the courts, in its case by the Supreme Court. But a major difference is that the CPP, which is designed to reduce carbon pollution from power plants, has been partially implemented. (A report from the Carbon Tax Center says that the electricity sector is already four-fifths of the way toward reaching the plan’s 2030 carbon reduction goal.)

In addition, arguments have been held on the CPP before the D.C. Circuit Court of Appeals, which could decide to uphold the rule.

“Some states and some companies are on their way,” acknowledges attorney Tom Lorenzen of Crowell & Moring, who represents the National Rural Electric Cooperative Association in the litigation. But, he adds, “Whether this thing (the CPP) is the most sensible way of dealing with the climate change issue is a matter of serious debate.”

Lorenzen says the Clean Air Act’s Section 111, which EPA has used as the basis for the CPP, is not the right way to address carbon emissions – “you are cramming a square peg into a round hole.” However, repealing the CPP won’t be easy. Trump “won’t be able to sign an executive order to make it disappear. They have to go through a whole new rulemaking.”

If the CPP ends up back in EPA’s lap, Pruitt will have to choose how to kill it. One option, which Lorenzen calls a “huge undertaking,” would be to reconsider its 2009 “endangerment finding” that greenhouse gas pollution endangers human health.

Prospective Interior chief likes ‘responsible’ energy development

The incoming president’s pick to head the Interior Department, Rep. Ryan Zinke of Montana, will have his hands full overseeing agencies that have an enormous amount of public land under their control, and an enormous amount of influence over land-use decisions throughout the West.

Interior agencies oversee about 500 million acres of the 640 million acres of federal public lands in the U.S. About half of that – 248 million acres – belongs to the Bureau of Land Management (BLM), with the rest divided among other Interior agencies such as the National Park Service, Fish and Wildlife Service (FWS), Bureau of Reclamation and Bureau of Indian Affairs.

If past is prologue, expect Zinke to focus on expanding energy development on public lands and put pressure on the Fish and Wildlife Service, both to keep animals off the endangered species list and remove some that have been there for decades, such as the grizzly bear.

Just don’t expect him to unload the government’s natural resources portfolio.

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In June, when he voted in the House Natural Resources Committee against a bill sponsored by Rep. Don Young, R-Alaska, to transfer 2 million acres of Forest Service land to state ownership, he said, “I’m starting to wonder how many times I have to tell these guys in leadership, I’m not going to allow Montana’s public lands to be sold or given away.”

As might be expected of someone who was a Navy SEAL for 23 years, rising to the rank of commander, Zinke has no problem charting his own course. He was the only Republican on the committee to cross party lines to vote against the bill. Ryan Zinke While conceding that “the federal government needs to do a much better job of managing our resources,” he said that “the sale or transfer of our land is an extreme proposal and I won’t tolerate it.”

Zinke has consistently voted to fully fund the Land and Water Conservation Fund and was heartily endorsed for the Interior post by sportsmen’s groups, as well as by the Association of State Fish and Wildlife Agencies.

“He’s a lifelong outdoorsman, who we’ve found to be receptive to sportsmen’s interests in Montana and D.C.,” said Whit Fosburgh, president and CEO of the Theodore Roosevelt Conservation Partnership. “We won’t agree with him on everything, but we think he’s someone who will listen and has the right instincts.” Other groups with favorable things to say about him include Trout Unlimited and the Montana Wildlife Federation.

Other organizations blasted his record. Jamie Clark, CEO of Defenders of Wildlife, said Zinke’s “legislative record reveals targeted attacks on our public lands. He has repeatedly promoted increased logging, drilling, grazing and mining on federal lands throughout the country.”

But other environmental groups took a more cautious approach. American Rivers’ Northern Rockies Director Scott Bosse – in a web posting, “Ten Things You need to Know About Ryan Zinke” – said “it’s unclear” what kind of Interior Secretary Zinke will be.

“On some issues (for example, keeping public lands in public hands and permanently reauthorizing the LWCF), he is likely to be more like Teddy Roosevelt,” Bosse said. “But on other issues (promoting more fossil fuel extraction on public lands), he could be more like James Watt, the notorious Interior Secretary under President Ronald Reagan.”

When it comes to energy exploration and development, the Independent Petroleum Association of America sees Zinke moving away from what IPAA believes has been an overly restrictive approach by the Obama Administration.

“I think the key here is balance,” Dan Naatz, IPAA’s senior vice president of government relations and political affairs, said in an interview. Over the past eight years, “You had a sense that that balance has gotten out of whack,” with “conservation and single uses (allowed) on a lot of these (federal) lands” and “Keep It in the Ground” movement gaining momentum.

www.Agri-Pulse.com 5 “Nobody’s talking about drilling in national parks or wilderness areas,” Naatz said. But at the same time, “We don’t see any reason to put areas off limits in perpetuity,” because new technologies can allow energy development with a smaller footprint.

Zinke has emphasized innovation in development of American energy resources. “I’m a former geologist,” he told Agri-Pulse in a Meet the Lawmaker interview last year. “I was told we were going to run out of crude oil years ago. That’s not true with horizontal drilling and the innovation. As it turns out, America has an energy picture and a portfolio that’s larger than any nation on earth.”

Zinke emphasized “responsible” energy development in November, criticizing a BLM rule requiring oil and gas companies to take action to prevent or reduce venting and flaring of methane from their operations.

“BLM has issued a duplicative and unnecessary rule against responsible oil and gas development in Montana and on sovereign tribal lands,” Zinke said. “This rule is a stark reminder that we need to invest in infrastructure projects like the Keystone pipeline, so we don’t need to flare excess gas.”

IPAA’s Naatz agreed that “if there is venting and flaring going on, it needs to be addressed.” But, he said, in a comment that aligns with Zinke’s view, “States already do a really good job of (regulating) that already.”

On endangered species, Zinke’s positions have been in line with his party. He has backed amendments to appropriations bills to delist the lesser prairie chicken and the American burying beetle. And he has been an outspoken critic of federal land management plans, developed in consultation with 10 Western states, to conserve sagebrush habitat. The Obama administration used those plans to justify not listing the greater sage-grouse under the Endangered Species Act.

Zinke, however, has called the effort “BLM's ‘Washington knows best’ sage-grouse plan.” When the Interior Department announced in September 2015 that the bird wouldn’t be listed, he said the federal government was “executing a massive land grab that will restrict agriculture, mining, wind farms, oil and gas development, and other natural resource development.”

The government’s plans call for limits on grazing and energy development in sage-grouse habitat. BLM, for example, just proposed withdrawing 10 million acres of sage-grouse habitat in Idaho, Montana, Nevada, Oregon, Utah, and Wyoming from future mining claims.

Zinke also didn’t mince words in commenting on a proposal for a 3 million-acre free-range bison habitat in his state. After questioning BLM officials at a hearing last year and receiving what he thought were unsatisfactory answers, he said in a news release, “What’s the point of having these bureaucrats come before Congress if they don’t know a damn thing about multimillion acre projects that they have some jurisdiction over? Farmers and ranchers in the (Charles M. Russell National Wildlife Refuge) and surrounding area could lose their livelihoods. This is a big deal, and for the BLM and DOI to not even put the time in to learn about the issue is a slap in the face to Montana. Heads will roll. This is not acceptable.” As the top bureaucrat at DOI – assuming he gets confirmed – Zinke will now have a unique opportunity to make those heads roll.

www.Agri-Pulse.com 6 OMB director nominee Mulvaney once sought food stamp cut

Rep. John Michael (Mick) Mulvaney, R-S.C., President-elect Donald Trump’s choice for director of the Office of Management and Budget, brings a determination to cut federal spending that rivals one of his most notable predecessors, David Stockman – with one key exception.

Like Stockman, whose controversial tenure lasted through the first term of the late President Ronald Reagan, the Tea Party favorite Mulvaney has a record of attempting to slash food assistance spending and disdain for federal regulations. However, he differs by showing support for popular agricultural commodity programs such as those Stockman hoped to curtail.

According to contemporaneous reports and his own memoir, Stockman was rebuffed in attempts to sharply reduce the Food for Peace program in early 1981 and block supply control efforts of fruit and vegetable marketing orders in the summer of 1982. He also lost a high-visibility battle in late 1983 to persuade Reagan to veto the dairy diversion program that he called “a $2 billion ripoff.”

In each case, farm-state political clout prevailed over Stockman’s budget-trimming initiatives. A contemporary USDA official who worked with him recalled “his aggressive approach to cutting spending for almost everything” but added that, ultimately, “they didn't really get much done and the Reagan budgets and deficits were, generally, not a pretty picture.”

In his 1986 memoir, “The Triumph of Politics: Why the Reagan Revolution Failed,” Stockman describes a pattern of interest-group political influence that could help Trump and Mulvaney avoid the tripwires in negotiating Washington. In each of his three failures to cut deeply into farm spending and regulation, Stockman acknowledges the influence of “Dick Lyng, a California Reaganaut” who was deputy secretary and later would be Secretary of Agriculture.

Initially, Stockman had believed that he could defeat the farm lobby “if he kept the issues separate – attacking each commodity program in turn, and undermining urban support by Rep. Mick Mulvaney, R-S.C. (Photo by Gage cutting the food and nutrition programs,” Skidmore) according to an interview with William Greider in The Atlantic in December 1981. “My strategy is to come in with a farm bill that’s unacceptable to the farm guys so that the whole thing begins to splinter,” he said.

Mulvaney appears to have been chosen for reasons not unlike those behind the 1981 Stockman appointment. Trump’s transition announcement praises Mulvaney’s “strong voice in Congress for reining in out-of-control spending, fighting government waste and enacting tax policies that will allow working Americans to thrive.” It quotes Mulvaney as saying that the Trump administration will “restore budgetary and fiscal sanity back in Washington.”

His most noteworthy effort in the farm and food arena was an unsuccessful effort to cut food stamp spending in half. His amendment to the 2013 farm bill would have capped the Supplemental Nutrition Assistance Program (SNAP) at the 2008 level of $37.6 billion. SNAP spending reached a record $79.9 billion in 2013, since falling to $70.8 billion in 2016.

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Mulvaney said that he would “vote for just about anything in the farm bill if we got rid of the nutrition part of it,” according to a BuzzFeed report. “If we broke that unholy alliance between ag and nutrition once and for all, then I could vote for just about every subsidy in the book they could think of if they could make some real structural long-term changes,” he said.

His support for the failed effort to separate SNAP from the farm bill is consistent with the 2016 Republican National Convention platform but goes against the Trump campaign’s position. Sam Clovis, co-chair of the Trump campaign and Trump’s lead adviser on agriculture policy, said that nutrition programs should stay in the farm bill. Reductions in nutrition program costs should come from economic growth that puts people to work, he said.

In 2014, Mulvaney co-sponsored the “SNAP Verify Act” that would have required recipients to show photographic verification when using a SNAP electronic benefit card to buy food.

If Trump needs another candidate for a regulation to eliminate, Mulvaney may have one to offer. He was one of 18 original co-sponsors of legislation in 2014 that would have overturned Food and Drug Administration regulations against the interstate sale of raw milk that has not been pasteurized. FDA and the dairy industry have strong opposition to legalizing the sale of unpasteurized milk, noting that it is responsible for most dairy-related food poisoning.

GOP tax reform plans offer broad impact on agriculture

Congressional Republicans are preparing to move a broad overhaul of the tax code that would have significant implications for farmers. A House GOP proposal could raise the cost of fuel but wipe out the federal estate tax and lower income tax rates while allowing farmers and ranchers to immediately write off expenses.

The increase in fuel costs would come from a far-reaching proposal that would help carry out President-elect Donald Trump’s pledge to discourage companies from moving jobs overseas. The House plan would lower the corporate tax rate from 35 percent to 20 percent and apply the tax to all goods that companies import – but not to products that are exported.

Taxing imports, but not exports, is a concept known as a “border adjustment,” which is designed to mimic the value added tax (VAT) that most other developed countries have. The aim is to tax products where they are consumed, not where they are produced.

Under current tax policy, products shipped overseas by American companies bear the cost of U.S. income taxes but imported products don’t. The border- adjusted tax is likely to be a more palatable approach to Republicans than the sharp tariffs that Trump has been threatening to impose on companies that move jobs offshore.

The border adjustment offers a way to “make American products Rep. Adrian Smith, R-Neb. more competitive,” said Nebraska Republican Adrian Smith, a member of the House Ways and Means Committee. “We can and should focus our efforts very appropriately on things we can do to export more of our products.”

According to some analysts, the tax could raise gasoline and diesel prices, but is expected to strengthen the dollar, which could have the effect of offsetting the impact of the import tax on www.Agri-Pulse.com 8 consumers. A study by the Brattle Group estimated that the retail price of gasoline would increase by 13 percent, or about 30 cents a gallon, with the border adjustment tax. Diesel prices would rise by an estimated 11 percent, or about 27 cents per gallon.

Farm groups will be watching the plan closely. “Anything that increases exports of course is good for agriculture because such a large percentage of our commodities go overseas,” said Pat Wolff, who follows tax policy for the American Farm Bureau Federation. At the same time, she said, the tax “could make imports more expensive. For production agriculture, that would impact fuel because we import fuel and we import pesticides.”

Normally, a stronger dollar makes U.S. products less competitive, but Dermot Hayes, an economist at Iowa State University who specializes in trade policy, says the tax exemption for exported products should help offset at least some of the impact. “The tradeoff between the two forces would depend on the industry,” he said. “We economists do not really understand the forces that drive exchange rates well enough to do an accurate analysis of what would happen.”

Still, the border adjustment tax is a “huge revenue raiser,” which means that it is critical to offsetting the cost of the rest of the House tax plan, Wolff noted.

House Ways and Means Chairman Kevin Brady, R-Texas, has indicated that the border adjustment tax is essential for policy reasons, too. “We have made a pretty strong case that for America to compete and win again, we need to change the way we tax. And right now, all of our competitors border adjust their taxes,” he said in a recent C-SPAN interview. “They take the taxes off the goods and services coming our direction, so that gives them the advantage over us here in America. We don’t, sending our products around the world, and so today, we lose both here in America and we lose around the world. That can’t stand. This is the key part of our (proposal). … It is going to stay.”

Brady, however, pledged to listen to concerns from businesses that rely heavily on imported goods. “We think imports and exports are both important to the economy, but we will insist that they be taxed equally here in America,” he said.

What’s certain to be popular with most farmers and ranchers are the separate proposals to repeal the estate tax, reduce the capital gains tax, and to allow businesses to immediately expense new investments.

Allowing businesses to expense all new investment spending will do more to boost the economy than cutting tax rates, according to the Ways and Means Committee. “The reason this can be true is that full expensing applies only to new investment, whereas a reduction in rates would benefit both new and old capital,” according to the committee. The expensing allowance would apply to assets such as equipment and buildings, but not to land, according to a KPMG analysis.

Individuals would be allowed to deduct half of their capital gains each year as well as their dividends and interest. Ways and Means Chair Kevin Individual income tax rates would be consolidated from the current Brady, R-Texas seven to three basic rates: 12 percent, 25 percent and 33 percent.

www.Agri-Pulse.com 9 Republicans hope to move the tax plan later in the year as part of a fiscal 2018 budget reconciliation package that would need only 51 votes to pass the Senate. That would allow Senate Republicans to sidestep a possible filibuster that would take 60 votes to break.

“The important question at the end of the day is, are farmers going to owe more taxes or less taxes?” Wolff said.

Trump administration inheriting sugar dispute with Mexico

Is Mexico sneaking tons of refined sugar across the border, disguised as raw product? Some U.S. refiners believe so and the issue promises to be an early test for the incoming Trump administration.

The Commerce Department has already said in a preliminary finding that a 2014 “suspension agreement” to restrict Mexican sugar exports to the U.S. is not working, but government officials tell Agri-Pulse that a final ruling isn’t due until April.

For the next three months, Commerce will be conducting “an administrative review” of the suspension agreement, focusing on trade that occurred between Dec. 19, 2014, and Nov. 30, 2015, according to government documents.

“Based upon the current record of this review, there is some indication that certain individual transactions of subject merchandise may not be in compliance with the terms of the (antidumping agreement) and further, that the (antidumping agreement) may no longer be meeting all of the statutory requirements,” Commerce said. Meanwhile, quiet negotiations between U.S. and Mexican trade officials on a new agreement have stalled, according to U.S. industry sources. Commerce officials have presented the Mexican government with a new suspension agreement, but Mexico has not agreed to it or come up with a counter-offer acceptable to U.S. negotiators.

“The ball is in Mexico’s court,” one U.S. industry official said.

The U.S. tightly restricts the amount of sugar that can enter the U.S. from countries around the world, except Mexico. There is normally no cap on Mexican sugar, thanks to a provision in the North American Free Trade Agreement. In September 2015, however, Commerce ruled that Mexico was subsidizing its sugar shipments and allowing exporters to dump product into the U.S. at 40 percent below market prices.

Mexico concurred with the suspension agreement that limits the country’s exports in order to prevent retaliatory tariffs of about 80 percent.

Shortly afterward, U.S. industry representatives said they realized that the agreement was not working. It wasn’t keeping enough Mexican sugar out of the U.S. market, and too much of the product that entered was refined instead of raw.

An abundant supply of raw sugar is needed by refiners here to keep the industry operating, but those U.S. companies suffer when too much product that’s already refined comes in.

It’s a situation that spurred U.S. refiners to take their concerns to Commerce officials about 10 months ago and ask for help.

On March 3, 2016, Commerce officials met separately with U.S. sugar refiners and Mexican government officials, and the story each side told was completely different.

Representatives of the American Sugar Coalition, according to a written account by David Cordell, a senior policy analyst at Commerce, President-elect Donald Trump www.Agri-Pulse.com 10 complained that their refineries did not have enough sugar to process despite product flowing in from Mexico. The refiners said they expected the situation to worsen and provided a chart showing that record amounts of Mexican sugar were being classified as “other sugar” and bypassing U.S. refiners.

Four days later, Commerce staff met with representatives of the Mexican government and Mexican sugar companies. Cordell, in a separate account, described assurances from the Mexicans that “the agreements were working and that the (government of Mexico) and Mexican producers/exporters were complying with the agreements.”

But U.S. industry representatives saw things differently. According to Cordell, officials from Imperial Sugar, a refiner and subsidiary of Louis Dreyfus Company LLC, sent this message to Commerce at an April 6 meeting: “There is a core problem with the agreements because they permit far too much refined sugar and not enough raw sugar into the United States. As a result, Imperial Sugar representatives stated that the suspension agreements have caused a raw sugar shortage, a dramatic increase in raw sugar prices and an increase in U.S. refined beet sugar stocks such that there is now a refined sugar surplus in the United States.”

On Nov. 10, Imperial delivered test results to Commerce that the company said showed that imported sugar from Mexico that the company received was more refined than the Mexican exporters claimed, proving that at least some imports were fraudulent.

“While Imperial does not know how many other transactions may have the same problem…, there is no reason to believe that these transactions are not representative,” the company said in a letter to Commerce. “The information shows that the suspension agreements are being violated, the agreements are not capable of effective monitoring, and that the agreements are not in the public interest.”

Lawyers on behalf of the Mexican Sugar Chamber responded quickly to Imperial’s claims, saying the testing was conducted in the U.S., far away from Mexican mills and therefore suspect. That same sugar, they said in a Nov. 21 letter to Commerce, was also tested in Mexico and met all requirements.

“The testing results alleged by Imperial all appear to be based on testing after importation and arrival at Imperial’s refinery. As further detailed below, there are numerous reasons why testing in the United States may result in different polarity readings compared to the testing conducted in Mexico,” the lawyers said.

But regardless of whether or not there is fraud, U.S. sugar industry officials say that the suspension agreement is not working. The deal depends on the USDA predicting how much imported sugar will be needed from Mexico for an entire year and that is often unreliable.

The U.S.-Mexico suspension agreement does not allow for USDA to reduce the limit for imports after it has been set.

It was especially unreliable for the 2015-16 marketing year. USDA documents show that the department set the limit for Mexican imports at about 705,000 tons. Government and industry agreed that U.S. farmers produced more than expected and that meant that not nearly so much Mexican product was needed.

One industry source said the USDA-set limit was about 250,000 tons too much.

“That’s a lot of sugar,” the source said. “So now you’ve got the market well over-supplied. Adding sugar to a market is easy. Taking it out of the market takes a long time and it’s hard. So we’re stuck in this mess.”

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‘Outstate’ voters in 5 key states sent Trump to White House

Republican Donald Trump is headed for the White House because he upset Democrat Hillary Clinton in the “outstate” sections – counties beyond the metropolitan areas – in Iowa, Michigan, Ohio, Pennsylvania and Wisconsin.

The 50 electoral votes in those five states – all of them carried by Democrat Barack Obama in 2008 and 2012 – provided Trump the margin of victory, according to “The Outstate Effect,” a new paper by political analyst Michael Barone of the American Enterprise Institute.

“These states – with the exception of Iowa, which voted narrowly for George W. Bush in 2004 – were supposedly part of a ‘blue wall’ because they had not voted Republican for president since 1988 or 1984,” he wrote.

His paper breaks down, and shows in tabular form, the popular vote across the metro areas and outstate regions in seven Midwestern states – Illinois, Indiana, Michigan, Minnesota, Missouri, Ohio and Wisconsin – that contain substantial metropolitan areas with more than one million in population. He does the same for Pennsylvania, where, he says, “two-thirds of voters beyond metro Philadelphia are Michael Barone, AEI Midwestern in culture and concerns.”

Clinton prevailed in those states’ metro areas (other than Pittsburgh) but in most cases her margin was lower than what Obama polled in 2008 and 2012 and, in some cases, below Democrat John Kerry’s percentage when he lost to George W. Bush 12 years earlier.

In the outstate areas of those states, “Trump ran ahead of Bush in just about every state and way ahead of John McCain and Mitt Romney,” he said, citing the tally from the 2008 and 2012 elections. “Even more notable than this are the huge drop-offs for Hillary Clinton in those outstate regions,” Barone writes. “The numbers are stunning.”

He adds, “By the way, outstates are not small regions, and they are not significantly declining percentages of the electorate in these states. They include 100 percent of voters in Iowa, 47 percent in Ohio, 42 percent in Minnesota, 44 percent in Ohio, 47 percent in Pennsylvania, and 61 percent in Wisconsin.”

Adding Illinois, Indiana, Missouri and states with no million-plus metro areas – Kansas, Nebraska and the Dakotas – Trump’s 108-30 electoral vote advantage in the larger Midwest and Great Plains states shows a stark contrast from the three previous presidential elections. Kerry’s edge in 2004 was 69-66, while Obama’s was 118-27 in 2008 and 90-38 in 2014.

Barone opines that the outstate Republican gains in 2016 were presaged by Obama’s declining margins in two states that his campaign targeted in 2008 but did not contest in 2012 – Indiana and Missouri. “Southern Indiana and most of outstate Missouri were settled originally by Southerners, and people there still speak with southern-tinged accents.” Both states’ metro areas have become less Democratic, he says, “even as their outstate regions have become only one- third Democratic in Indiana and only one-quarter Democratic in Missouri.”

www.Agri-Pulse.com 12 The rural-urban contrast is even more pronounced in Kansas, Barone says, “where Trump’s 57 percent ran distinctly behind Romney’s 60 percent because of metro Kansas City.” The fastest growth in metropolitan Kansas City is on the Kansas side of the border in Johnson County – a “fast-growing county [that] now casts 24 percent of the statewide Kansas vote.”

“For many campaigns, the people’s votes in the outstate Midwest (and Pennsylvania), have mostly been taken for granted,” he says. “Those regions have not seen many big campaign events – and not just because it is hard to gather a large crowd in sparsely populated areas – and their concerns have not ranked high in campaign leaders’ concerns.”

And he adds, in one of the year’s understatements, “In the future, the 2016 election results might draw more politicians’ attention to voters in the previously disregarded outstate Midwest.”

News Briefs…

Results keep growing in NCGA Yield Contest. The National Corn Growers Association says a record five national entries surpassed the 400-bushel per acre mark in the 2016 National Corn Yield Contest. The 18 winners in six production categories had verified yields averaging more than 375 bushels per acre, compared to the projected national average of 175.3 bushels per acre. NCGA attributes the ever-higher yields to improved seed varieties, advanced production techniques and innovative growing practices. “The contest provides farmers more than just an opportunity for friendly competition; it generates data that impacts future production practices across the industry,” said Brent Hostetler, chair of NCGA’s Stewardship Action Team. “The techniques first developed by contest winners grow into far-reaching advances, helping farmers across the country excel in a variety of situations.” Click here for a complete list of national and state winners.

For American Agri-Women, Ag Day is every day! Ag Day will be officially celebrated on March 21, but for American Agri-Women, “Ag Day is Every Day.” That’s the title of the group’s campaign, designed “to show that everyone is part of agriculture, every day” and to raise awareness about who produces America’s food, fiber and energy supply. The “AgDay365: Ag Day is Every Day!” campaign was launched at the group’s 2016 annual convention, and AAW is hoping the initiative will develop into an ongoing effort among its affiliates and with other agricultural organizations and individuals. Some suggestions: Consider sponsoring a week, or even a day of the campaign; integrate the campaign into one of your group’s special events to reach your targeted audiences; host a national or regional gathering at one of your facilities for a special AgDay 365 event; or add Ag Day 365 as another layer to your campaign, expanding awareness of your efforts.

FDA extends comment period on use of ‘healthy’ in food labels. FDA is giving stakeholders an extra two months to comment on the use of the term “healthy” on food product labels. The new deadline is April 26. The initial comment period had been scheduled to end Jan. 26. The agency said it also plans to hold a public meeting on the topic. FDA said it is responding to requests for additional time for comment. FDA has noted that public health recommendations for various nutrients have evolved, as reflected by the 2015-2020 Dietary Guidelines for Americans and the updated Nutrition Facts label. For example, healthy dietary patterns now focus on food groups, the type of fat rather than the total amount of fat consumed and added sugars in the diet. Also, the nutrients of public health concern that consumers aren’t getting enough of have changed. FDA is also publishing a “request for information” to solicit public input. Click here for more information and directions on how to submit comments.

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AFBF Foundation launches Purple Plow Challenge. The American Farm Bureau Foundation for Agriculture has launched a new online platform for middle-school educators who want to encourage students to research scenarios related to food, hunger and sustainability. The platform, called the Purple Plow Challenge, also encourages students to build their own prototypes to solve problems. The resources are written by teachers, aligned to national learning standards and reviewed by industry experts. “The Purple Plow Challenge is a great fit for individuals, groups and classes in grades 6, 7 and 8,” as well as for 4-H clubs, Scout troops and more, said Angela Mayfield, education director of the Foundation. The Purple Plow Challenge contest will run seasonally beginning this month. Interested teachers, mentors and students can find out more about the challenge by going to its website. Resources will be available for free download. Spring submissions are due May 1.

Farm Hands on the Potomac…

Agriculture Secretary Tom Vilsack will become president and CEO of the U.S. Dairy Export Council when he leaves office this month, says a source familiar with his plans. Although Vilsack did not confirm or deny the move, Tom Suber retired at the end of the year as president of the organization, which is funded by checkoff revenue to track and promote trade in American dairy products and ingredients. Suber has been the group's president since its inception 21 years ago…….Matt Herrick has landed at the public relations firm Story Partners with the title of senior vice president. Herrick had been serving in USDA’s Office of Communication, most recently as communications director and senior adviser to Agriculture Secretary Tom Vilsack. He also previously worked for USAID and Oxfam America.

U.S. Wheat Associates promoted Ben Conner to director of policy. Conner, formerly the deputy director, is replacing Henry Dalton, who’s moving to Capitol Hill as legislative director for incoming Congressman Roger Marshall, R-Kan.

House Agriculture Committee Chairman Mike Conaway has hired Jennifer Tiller as the panel’s professional staff person for nutrition and welfare issues. The Syracuse, New York, native has been working since 2012 as director of America Works in Washington, D.C. Conaway says Tiller will be a big asset as the committee moves toward reauthorizing the Supplemental Nutrition Assistance Program.

New Hampshire Governor Maggie Hassan has taken on Meira Bernstein as press secretary in her Washington office when she joins the U.S. Senate in the 115th Congress. Bernstein handled the same job during the Democrat’s successful Senate campaign. Aaron Jacobs will be Hassan’s communications director.

Mark Warren joined Sen. John Thune’s personal office this week as tax and trade counsel. Warren comes from the House of Representatives where he was tax counsel on a Ways and Means subcommittee.

Scott Herndon has joined the American Sugarbeet Growers Association in the new role of director of biotechnology and regulatory affairs. Herndon was most recently a director of global government and public policy for S&P Global, where he was responsible for commodities issues. Prior to that, he was general counsel of the House Republican Study Committee.

www.Agri-Pulse.com 14 The Colorado Farm Bureau has named Spencer Kimball, a Republican professional staff member on the House Natural Resources Federal Lands Subcommittee, as its new vice president of public policy. In 2016, the farm group lobbied on issues including immigration reform, GMO legislation and EPA regulations.

FDA has selected Steven Solomon as the new leader of the agency's Center for Veterinary Medicine. Solomon practiced large animal veterinary medicine for 10 years before joining the agency in 1990 as a Veterinary Medical Officer.

Nathan Dorn is joining United Fresh as senior technology adviser, charged with helping to build the organization’s education and trade show technology platform, supporting the new United FreshTEC Conference & Expo in Chicago in June. In addition to his current consulting role, Dorn is the CEO and co-founder of Food Origins, a startup focused on precision data collection and analytic services for hand-harvested produce.

Charles Stamp Jr. has been appointed vice president for corporate strategy and business development at John Deere. Stamp joined Deere in 1999 as part of the acquisition of InterAg Technologies, Inc., where he was president and chief executive. He’s been serving as Deere’s vice president of worldwide public affairs since 2002.

Eric Ebenstein is settling into his new job as head of North America public policy at DJI, a leading civilian drone company. Ebenstein previously worked at ethanol producer POET as its state government affairs executive.

Paul Hill, of Ellsworth, Iowa, has been inducted into the Iowa Turkey Federation Hall of Fame. Hill’s family began raising turkeys in 1947 and a decade later the Hills started raising some of the first breeder turkeys in Iowa. A former chairman of the U.S. Poultry and Egg Association, Hill presented President George W. Bush with the traditional Thanksgiving turkey in 2008.

Cassidy Riley is the new communications director for the Iowa Renewable Fuels Association. The University of Iowa grad most recently worked as the Central Iowa field director for Sen. Chuck Grassley’s 2016 reelection campaign.

Missouri Governor-elect Eric Greitens has named hog farmer Chris Chinn as his secretary of agriculture. According to Greitens’ Facebook post, Chinn was selected in 2013 by the U.S. Farmers and Ranchers Alliance as one of their Faces of Farming & Ranching, an honor given to just four farmers around the country. If confirmed, she will replace Richard Fordyce, who was appointed to the job in 2013 by outgoing Gov. Jay Nixon.

Benjamin Boroughs is leaving the North American Millers’ Association, where he was director of regulatory affairs, to join USDA’s Foreign Agricultural Service as a foreign service officer trainee. The Texas A&M grad was previously a staffer for Sen. Amy Klobuchar, D-Minn.

Senate Environment and Public Works Committee Chair John Barrasso of Wyoming has hired Richard Russell as the panel’s Republican staff director. Russell is a long-time White House and congressional adviser.

Brian Grunenfelder, who has served for the past five years as the deputy assistant U.S. Trade Representative in the Office of Agricultural Affairs, will be joining Tuttle Taylor & Heron on Feb. 1. His new title: president and CEO of government affairs and trade. Prior to joining USTR, Grunenfelder spent 27 years with USDA’s Foreign Agricultural Service. www.Agri-Pulse.com 15

Renee Munasifi has been hired by the American Soybean Association as its new regulatory affairs manager. The South Dakota native and graduate of North Dakota State had been a senior policy adviser for Rep. Kristi Noem, R-S.D.

Ducks Unlimited named Jerry Holden as the next director of operations for its 13-state Southern Region, replacing Tom Moorman, who will move into the organization’s chief scientist position Feb. 1. In the nearly 20 years Holden has been with DU, he has managed conservation staff in multiple states and overseen critical programs in the Gulf Coast and Mississippi Alluvial Valley.

John Jacobs, owner and manager of Green Valley Dairy in Wisconsin, has been selected as president of the American Dairy Coalition, while Kari Kuehl was chosen to chair ADC’s executive advisory committee. Kuehl is currently the director of sales at the dairy nutrition group Feed Components. Jeff Burton, president of Burton Strategy Group, was announced as ADC’s lobbyist in Washington. ADC founder Laurie Fischer will take on the role of CEO.

Vermont Gov.-elect Phil Scott has chosen Anson Tebbetts, the news director at WCAX-TV, as his agriculture secretary. Tebbetts, who grew up on a dairy farm, served as the state’s deputy agriculture secretary from 2007-2009 and has earned a Friend of the Farmer award from the Vermont Farm Bureau.

The National Potato Council has hired Kam Quarles as its senior director of public policy. For the past seven years, Quarles has been representing NPC while working at McDermott, Will & Emery LLP. Before that Quarles worked as a lobbyist for United Fresh Produce Association and the National Council of Farmer Cooperatives.

INTL FCStone has selected Nate Donnay to lead its dairy economist team. For the last 11 years, Donnay has been part of the dairy analysis group at Informa Economics. Donnay will be based out of the FCStone office in Plymouth, Minnesota.

Hershey’s Chief Operating Officer Michele Buck will take over as president and CEO of the chocolate giant effective March 1. She will succeed John Bilbrey, who announced his plan to step down in October. Bilbrey will continue serving the company as non-executive chairman of the board.

Best Regards,

Sara Wyant.

Editor

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