Does not matter: Lawmakers zero in on USDA food box contract

May 27, 2020

With help from Adam Behsudi

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Quick Fix

— Lawmakers continue to grill the Agriculture Department over its food box contracts for companies with little experience distributing perishable goods. One Texas Democrat is now asking USDA to tear up its contract with a San Antonio wedding planner.

— Small, local meat processors are thriving with large slaughterhouses shut down because of widespread coronavirus outbreaks and livestock producers struggling to sell their animals because of the market disruption.

— The Trump administration took a step toward launching trade talks with Kenya, negotiations that could yield the first bilateral agreement with a sub-Saharan nation and potentially higher ag exports.

HAPPY WEDNESDAY, MAY 27! Welcome to Morning Ag, where your host endorses pretty much all of these burgers-to-go in D.C. Send tips to rmccrimmon@politico.com and @ryanmccrimmon, and follow us @Morning_Ag.

Driving the Day

LAWMAKERS ZERO IN ON USDA FOOD BOX CONTRACT: Food banks and nonprofits across the country are receiving much-needed boxes of meat, dairy, fruits and vegetables under the department's new $3 billion commodity purchase program. But USDA is under rising pressure from Congress to justify some of the distributors it selected to procure food from farmers and package it for food banks, including one in particular:

CRE8AD8 (pronounced "create a date"), a San Antonio event marketing firm, received $39 million to deliver food boxes in the Southwest, sparking questions about its qualifications from produce industry veterans, local lawmakers and top ag policymakers in Washington. The San Antonio Express-News also reported that the company made dubious claims about its clients, credentials and affiliations.

On Tuesday, Rep. Lloyd Doggett (D-Texas) sent Secretary Sonny Perdue a letter asking him to immediately issue a "stop work order" and revoke CRE8AD8's contract — the seventh largest out of nearly 200 companies selected for the program — which Doggett claimed was "issued without a credible background check." The company agreed to supply 750,000 boxes across the seven-state region by June 30 but has yet to deliver any boxes, he said.

"A family cannot eat an IOU," Doggett wrote. "Poor performing, inexperienced contractors risk delaying food delivery or even delivering spoiled, dangerous food to families who need help now."

Rep. Joaquín Castro, another Democrat from San Antonio, raised similar concerns about CRE8AD8 last week in a letter to USDA asking for an "investigation of the awards process and subsequent execution by all awardees."

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A SILVER LINING FOR SMALL MEATPACKERS: Business is booming for butchers and local meat processing operations who haven't faced the same coronavirus outbreaks and subsequent shutdowns as massive slaughterhouses across the country, Business Insider reports.

"I could run this thing around the clock," said Jacob Wingebach, owner of a meatpacking plant in the Nebraska Sandhills. "Feedlots in this country are full, and ranchers and feeders cannot find anywhere to get this stuff processed."

Wingebach said his operation is now processing more than twice as many cows as it did before the pandemic started. He's hired four new employees and said he would bring on dozens more if only there was adequate housing nearby.

The sudden demand for local meat processors comes after a long period of decline, with many smaller businesses squeezed out by larger chains. Four meatpackers currently control 85 percent of the beef market, fueling antitrust probes and bipartisan backlash in Congress — especially now that the pandemic has further widened the gap between the prices of live cattle and retail beef.

Read on: Reuters has another take on the backlog at small meatpacking operations.

CRITICAL COROAVIRUS NEWS & ANALYSIS, NIGHTLY: The federal government is slowly coming back to work. Democrats want a lot more federal assistance, but Republicans aren't there yet. Some retailers are ending hazard pay. Sports leagues are figuring out what comes next and how. For critical Covid-19 insight, context and analysis from experts across our global newsroom choose POLITICO Nightly. Subscribe today.

Trade Corner

KENYA TRADE TALKS GETTING CLOSER: The U.S. International Trade Commission will begin an investigation into the impact of eliminating tariffs on imports of goods from Kenya, the ITC announced on Tuesday. The probe was requested by U.S. Trade Representative Robert Lighthizer in March as part of the process for negotiating a trade deal with the East African nation. The commission said it expects to submit its complete report to the president by Sept. 16.

Negotiating objectives: USTR on Friday released a summary of its negotiating objectives, which largely reflect how the administration approached negotiations for the USMCA and the recently launched trade talks with the U.K. Under the trade promotion authority law, the administration can formally begin 30 days after USTR releases its negotiating objectives.

"The current health crisis and economic challenges posed by COVID-19 underscore our desire to strengthen our economic relationship with Kenya and lay the foundations for stronger, more resilient economies to address the current and future health crises," USTR wrote in the document.

The U.S. largely sells aircraft and machinery to Kenya, but trade analysts see potential to expand farm exports.

Attention China watchers: America's relationship with China continues to have major implications for U.S. agriculture. Stay in the loop with the new China newsletter from POLITICO's David Wertime launching this week .

Row Crops

— Only 15 percent of eligible children have received benefits from a federal effort aimed at replacing school meals, two months after Congress approved the pandemic program. The New York Times has more.

— Disposable plates, straws, grocery bags and other non-reusable items are staging a Covid-fueled comeback. The CDC has said those items should be the default as restaurants reopen, but recycling and clean water groups in California are pushing back on the federal guidance, per POLITICO California's Debra Kahn.

— Data about coronavirus cases among meatpacking workers remains elusive as slaughterhouses reopen. In some communities, local officials received conflicting signals from state leaders and meatpacking companies about how much information to release about outbreaks in plants, NYT reports.

— Red meat production dropped by nearly a quarter in April, but poultry slaughter decreased by just 8 percent, according to USDA data. The Food and Environment Reporting Network has the details.

— WIRED has a deep-dive on meatpacking plants in Denmark that are unaffected by the coronavirus, because they're largely automated. Read the story.

— Wendy Rhein was appointed chief of staff for the World Food Program USA, the group announced. She was formerly managing director of UNICEF USA's Mid-Atlantic office.

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