Does not matter: Focusing on the rural side of USDA

Mar 21, 2022

Presented by Feeding America Action

With help from Doug Palmer and Alex Daugherty

QUICK FIX

— The Senate Agriculture Committee will discuss the state of rural communities this week. The focus of the hearing is rural health care, but broadband and job creation are likely to dominate the discussion as well.

— The Senate Commerce Committee is slated to mark up an ocean shipping reform bill this week, bringing it one step closer to President Joe Biden's desk.

— A worker strike in Canada over the weekend brought a key trading corridor to a halt, raising concerns over rising oil and fertilizer prices in the U.S.

IT'S MONDAY, MARCH 21. Welcome to Morning Ag, where your host knows there are a couple of " Agriculture Week " celebrations! What should we keep an eye on? Send tips to xbustillo@politico.com and @ximena_bustillo, and follow us @Morning_Ag.

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DRIVING THE WEEK

SENATE AG TURNS TO RURAL HEALTH: Members of the Senate Agriculture Committee will hear from USDA Rural Development Undersecretary Xochitl Torres Small on Tuesday during a hearing on the rural care economy and quality of life.

It's not all food and ag: Many forget that USDA is essentially the main department for rural America, providing assistance for energy, housing, health care and broadband access.

Earlier this year, Deputy Secretary Jewel Bronaugh announced the rollout of a $1 billion program to help build and upgrade infrastructure in rural areas with an emphasis on health care facilities. The money is expected to fund 730 projects that range from building or expanding hospitals to buying medical or firefighting equipment.

Torres Small's Senate appearance follows a House Ag hearing last week on rural development, where broadband expansion was among the top items discussed . That's likely to be a major topic this week as well, given the importance of steady internet access to rural health care, education, ag and industrial production, among other areas.

Agriculture Secretary Tom Vilsack has previously pleaded with Congress to focus on strengthening rural development programs in the 2023 farm bill and helping create "circular economies" in rural communities.

"For some time, rural America has been at the mercy of an extraction economy, where resources are taken from rural lands only to create jobs and economic opportunity in urban and suburban areas," Vilsack said. "That's why USDA is committed to doing what we can to change that extraction economy into a circular economy."

What we're watching: Lawmakers are poised to question Torres Small on the funding that USDA has recently unveiled for rural development. In addition to the health care facilities program, the department is also offering $1.4 billion for grants and loans that support nonprofits, utilities and small businesses in rural areas, among other efforts.

Now that the omnibus has arrived: Regular MA readers may recall that Vilsack previously argued that Congress' failure to pass a final appropriations package for fiscal 2022 was holding back funding for rural development. Indeed, the newly signed $1.5 trillion spending package did include a major boost for rural development, as your host and Meredith Lee reported.

EYES ON THE NEXT BUDGET: The president is expected to release his next budget request to Congress in one week, outlining his tax and spending goals for the next fiscal year that begins on Oct. 1, report POLITICO's Jennifer Scholtes and Paul McLeary.

Biden's fiscal 2023 budget request will follow not only the new omnibus package, which locked in spending levels for the current fiscal year, but also Senate confirmation of Biden's new budget director, Shalanda Young.

Let's get moving: Congressional leaders and top appropriators have already started discussing their plans for moving quickly to pass the 12 annual spending bills for fiscal 2023. After Biden last year was delayed in releasing his budget until late May, committee leaders say they hope the earlier release will speed appropriations work this time.

Reminder: Biden's last budget called for record-high spending for the Agriculture Department — a 16 percent increase from fiscal 2020 spending levels — with a particular focus on rural development and climate spending.

A message from Feeding America Action:

As we celebrate National Ag Day this week, Feeding America thanks America's farmers for supporting local food banks in the fight against hunger. Farmers and farm organizations provide food for those in need, volunteer in communities across the country to help distribute food, and advocate for food donations that help their neighbors. Their work to promote and provide for programs like The Emergency Food Assistance Program (TEFAP) is especially important right now. Learn more.

WHY CONGRESS CARES ABOUT CONTAINER SHIPS: As the House and Senate consider revamping ocean shipping laws for the first time since 1984, Pro Transportation's Alex Daugherty has a rundown on the major issues at play — and why both parties are largely in agreement with Biden's assessment that shipping companies are hurting U.S. exporters and consumers as container costs remain sky-high.

Bill's a movin': The House passed a measure that would overhaul container shipping regulations as part of a broader bill seeking to help the U.S. better compete with China, H.R. 4521 (117). The Senate is looking to follow suit: Senate Commerce Chair Maria Cantwell (D-Wash.) announced that the Ocean Shipping Reform Act, S. 3580 (117), led by Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.), will receive a markup tomorrow.

Meanwhile, Senate Majority Leader Chuck Schumer has begun the process that will lead to conference negotiations between the House and Senate.

Big ships, easy targets: The world's largest container shipping companies all belong to one of three shipping alliances: 2M, Ocean Alliance or THE Alliance, which have come under legal scrutiny over antitrust concerns.

What's next? There are some differences between the House and Senate bills, notably on antitrust FMC enforcement, but lawmakers from both chambers and both parties have expressed a desire to find a consensus.

Rep. Dusty Johnson (R-S.D.) said any differences won't deter ultimate passage: "We're going to fight for our preferences, but we're going to get something done," he said.

Related: On Friday, USDA announced plans for a partnership with the Northwest Seaport Alliance to create a "pop-up" port in Seattle to accept either dry agricultural or refrigerated containers for temporary storage.

Per the department, the Northwest Seaport Alliance has seen a nearly 30 percent decline in the export of agricultural commodities in the last six months of 2021, and the ratio of loaded versus empty container exports has shifted to predominantly empty containers since May 2021. Read more on the partnership here.

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Trade Corner

CANADIAN STRIKE HALTS TRAINS: Canadian Pacific Railway, Canada's second-biggest railroad operator, came to a halt over the weekend amid a work stoppage of 3,000 conductors, engineers, train and yard workers, after the company failed to secure a contract deal with the Teamsters Canada Rail Conference union, reports the Associated Press.

U.S. officials have been warning for a week that a failure to avoid strike could result in even worse inflation for American consumers. The stoppage shut down a key corridor between the two major trading partners, threatening a new wave of price spikes and shortages if commerce doesn't swiftly return.

By the numbers: Canada has been shipping around 140,000 barrels of oil per day to the U.S. by rail, and Canadian Pacific is a major route for those shipments.

Meanwhile, about 15 percent of Canadian Pacific's business is shipping fertilizer — a key part of food production. The price of fertilizer has doubled in the past year, according to the Agriculture Department, which in turn pushes up food prices.

SENATORS ASK ITC FOR FERTILIZER DUTY RELIEF: A bipartisan group of lawmakers has asked the U.S. International Trade Commission to help farmers struggling with high fertilizer prices by selectively waiving duties in two trade remedy cases — even though it appears the agency has no authority to take such action.

In a letter sent late last week, Sen. Chuck Grassley (R-Iowa) and more than 80 of his Senate and House colleagues urged the ITC to "reconsider the duties" placed on phosphate fertilizer products from Morocco last year and to "suspend the current process" to impose new duties on urea ammonium nitrate fertilizer from Trinidad and Tobago.

The lawmakers do not mention that Russia is also targeted in the two trade remedy cases, presumably because they do not want to pressure the ITC on Moscow's behalf. But Linda Dempsey, vice president of public affairs at CF Industries, the company who filed the urea ammonium nitrate case, said it's impossible to ignore Russia's role in the cases.

"Russia is central to the U.S. government's trade cases on both phosphate fertilizers and UAN. Events of the past few weeks have highlighted the importance of making sure America is not dependent on countries like Russia for critical supply chain inputs like fertilizers. CF supports the full enforcement of the laws at issue in these cases, which are designed to remedy foreign trade abuses," Dempsey said.

ITC spokesperson Jennifer Andberg suggested the lawmakers should be directing their request to the Commerce Department instead.

"While the Commission does not comment on ongoing matters, the concerns noted in the letter seem to be matters for Commerce rather than the Commission," she said.

Last year, the Commerce Department set final countervailing duties on phosphate fertilizers from both Morocco and Russia in a case filed by The Mosaic Co. The U.S. imported $729 million worth of fertilizer from Morocco and $299 million from Russia in 2019.

Other options: The lawmakers have other options if they want to help farmers struggling with high fertilizer prices, rather than weakening fairly-won trade remedy protections, Brightbill said. Grassley and several colleagues outlined a number of ideas in a letter sent to Biden on March 11. Those included direct financial support for farmers.

A message from Feeding America Action:

Row Crops

— The U.S. Conference of Mayors wants Congress to take up legislation to extend certain federal nutrition benefits and eligibility to avoid a "cliff" when the expanded programs expire. Read the mayors' letter here .

— Christopher Davis, a senior adviser at the Energy Department, will replace Tarak Shah next month as chief of staff, reports Pro Energy's Kelsey Tamborrino.

— The Florida legislature is sending Gov. Ron DeSantis a bill that would authorize a program to deal with rising sea levels. But the statehouse avoided legislation aimed at curbing climate change effects, reports POLITICO Florida's Bruce Ritchie.

— Educators in Beaver, Pa. launched a library program to encourage kids to learn about agriculture and food production. The Beaver County Times has the story.

THAT'S ALL FOR MA! Drop us a line: xbustillo@politico.com; hbottemiller@politico.com; meredithlee@politico.com and ecadei@politico.com .

A message from Feeding America Action:

As we celebrate National Ag Day this week, Feeding America thanks America's farmers for standing side-by-side with us every day in the fight against hunger. Farmers, ranchers, and farm organizations not only provide food for those in need, they are also among our nation's strongest advocates for increasing food donations that help address hunger. Their voice, labor, land, and foods all help nourish and protect our neighbors when times are tough. Their work to promote and provide food donations for programs like The Emergency Food Assistance Program (TEFAP) is especially important right now. Learn more.