While you have been busy planting and now harvesting hay, your FarmFirst staff and our partners in Washington D.C. have also been busy working on your behalf on several legislative and regulatory issues. Below is a brief summary of just a few of the issues we’re working on.
Federal Order Reform – Earlier this spring federal order reform discussions focused on addressing the Class I mover formula adopted in the 2018 Farm Bill and how the spread between Class III and Class IV prices affected producer revenue on account of the formula. Discussions also focused on depooling of milk which is part of the reason for negative producer price differentials.
In April, the National Milk Producers Federation approved a Class I mover proposal to submit to USDA. NMPF’s plan was to request an emergency hearing and only consider the Class I mover issue. Under the NMPF proposal, the Class I mover would be adjusted every two years to reflect the difference between the former “higher of” Class III or IV and the current “average of” III and IV plus $.74/cwt. Shortly thereafter, FarmFirst announced our support for going back to using “the higher of the Class III or Class IV price” if there is a Class I mover hearing since it has served the industry well since 2000.
Although there is low Class I utilization in the Upper Midwest, FarmFirst is supportive of addressing the Class I mover issue, but there are several other issues of importance to Upper Midwest dairy farmers and processors that need to be addressed as well. At this writing, no Class I mover proposal has been submitted to USDA.
NMPF has met with USDA to discuss their Class I proposal as well as alternatives to get money back to producers on account of related losses. To date, there are few details and many questions with respect to how any plan would be implemented, but we understand that USDA is working carefully on a plan to partly account for uncompensated losses, which may include those relating to the Class I mover. Certainly, this is not a long-term fix and FarmFirst will continue to advocate for more encompassing, permanent solutions to address federal orders.
Capital Gains – While FarmFirst is supportive of investments in the nation’s infrastructure, we are greatly concerned with several proposed changes to the tax code that could impact farms and farmer assets. Primarily, our concerns are on any alterations to estate tax provisions that may increase the conditions when farmers are taxed on inherited farm assets as well as how farm and farm-related assets are taxed, due to the repealing of the “step-up” basis that is currently used.
Ag Labor Reform – In March, the House of Representatives passed a bill that provides legal protection to current workers and reforms the H-2A agricultural guestworker program, including granting dairy employers access to H-2A. The bill is now in the Senate where passage of a bill is much more difficult due to the narrow majority.
Waters of the United States – Just when you think you have something workable, the shifting political tides in Washington D.C. generate another change in the regulatory position of the Environmental Protection Agency regarding the Clean Water Act. The EPA has announced that they will repeal the Trump Administration’s rewrite of the Obama Administration Waters of the United States rule and attempt to rewrite again. FarmFirst will be monitoring the process to ensure that EPA does not again overreach in terms of agricultural impact in its efforts to regulate waters under the Clean Water Act.
Trade – With the expansion of dairy exports and their importance to dairy farmers’ pay price, FarmFirst is actively involved with several trade issues.
Recently, the U.S and Europe Union reached an agreement to end a decades-long dispute over aircraft subsidies and retaliatory tariffs. The concern for the dairy industry is that retaliatory tariffs imposed by the EU would impede dairy and other food exports. It is our position that the U.S. needs a holistic approach to the EU’s continued attempts to disrupt international trade which includes addressing EU tariff and non-tariff trade barriers.
One such EU barrier are new EU certification requirements for a wide range of food products which will add confusing and vague requirements that could impede U.S. food exports to the EU. The requirements are for imports of U.S. dairy and composite food products. The issue has the attention of Congressional leaders who have written to EU Ambassador to the United States Stavros Lambrinidis urging a delay in implementation of the new requirements and greater recognition of our system to produce safe exports.
Another issue is the chronic and unresolved challenge of finding sufficient ocean shipping capacity to facilitate dairy exports. This issue has received attention from Congress when the House Transportation & Infrastructure Committee received testimony examining the impacts of shipping container shortages and delays on supply chains critical to the global food supply.
The problem is that U.S. ag exporters continue to pay exorbitant costs to obtain containers on cargo ships or cannot get space for their goods at all. A significant contributor to the problem is that Asian exporters are paying premiums for shippers to unload at U.S. ports and return immediately across the Pacific, without taking on Asia-bound commodities like dairy, meat, fruits and vegetables. NMPF has urged Congress to allocate sufficient resources to the Federal Maritime Commission to ensure the agency prioritizes complaints of carrier malpractice to prevent shipping carriers from engaging in unfair trade practices.
Finally, in late May, the Biden Administration asked for a dispute settlement panel to investigate whether Canada has violated a commitment under the nearly one-year-old U.S.-Mexico-Canada Agreement to open its dairy market to more imports.
The Trump Administration initiated the case last December, when it accused Canada of violating the pact by setting aside and reserving a percentage of each of its dairy “tariff-rate quotas” exclusively for its own processors. That practice undermines the ability of U.S. dairy farmers and producers to use the agreed-upon quotas and sell a wide range of dairy products to Canadian consumers.
The two sides now have 30 days to appoint a panel to hear the case. Once the panel is formed, it has 120 days to decide the matter, with a possible 30-day extension.
As you can see there is no shortage of issues that could affect your farming operation. Be assured that FarmFirst will continue to advocate for your interests while you produce nature’s most perfect food.
