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Government payments up 65.7%

Legislative Watch: COVID package may include more ag aid; Taiwan easing restrictions; full agenda awaits Congress; think food safety; new ERS head.

Farm program payments to producers, excluding USDA loans and Federal Crop Insurance Corp. insurance indemnity payments, are forecast to reach $37.2 billion in 2020 or a 65.7% increase according to the USDA's "2020 Farm Sector Income Forecast" released this week. This increase is due to supplemental and ad hoc disaster assistance for COVID-19 relief. This is nearly three times what producers received on an annual basis prior to 2018.

Government payments will go even higher this year with details of a second round of the Coronavirus Food Assistance Program to be announced next week. Also, if Congress reaches an agreement on another coronavirus package it is expected to include additional funding for agriculture.

Government payments will represent 40% of farm income this year, which is the highest amount since 2001, according to an economist at the Kansas City Federal Reserve.

USDA is estimating net farm income, a broad measure of profits, at $102.7 billion or an increase of 22.7% ($19 billion) over 2019. Net cash farm income is forecast to increase $4.9 billion (4.5%) to $115.2 billion.

Report highlights for 2020 include:

  • Farm cash receipts are forecast at $358.3 billion, down $12.3 billion or 3.3%.
  • Total animal/animal products receipts are forecast to decrease $14.3 billion (8.1%).
    • Hog cash receipts are forecast to decline $3.5 billion or 15.9% because of lower price forecast.
    • Cattle and calves receipts are forecast to drop $5.1 billion or 7.7% due to lower prices.
  • Total crop receipts are expected to increase $2.0 billion (1.0%). Fruits and nuts receipts are forecast to increase with declines for corn, wheat, cotton and soybeans.
  • Total production expenses are forecast at $344.2 billion or a decrease of $4.6 billion (1.3%).

Taiwan to ease restrictions on U.S. pork and beef
Taiwanese President Tsai Ing-wen says Taiwan will begin easing the restrictions on U.S. pork and beef imports. Taiwan will adopt Codex-approved maximum levels for ractopamine in pork and eliminate the 30-month cattle age for beef.

President Tsai Ing-wen says, "The decision is in line with the country's overall interests and the goals of the nation's strategic development. It's also a decision that could boost Taiwan-U.S. ties. If we can take one crucial step forward on the issue of US pork and beef, it will be an important start for Taiwan-U.S. economic cooperation at all fronts."

According to the U.S. Meat Export Federation, Taiwan has taken steps to implement the changes, including publication of draft language for ractopamine MRLs for public comment. Language removing the cattle age limit has not been published. USMEF expects the implementation date will be Jan. 1.

As a result of this announcement, the United States and Taiwan will now begin an Economic and Commercial Dialogue which will provide a means to strengthen U.S.-Taiwan economic relationships. These restrictions have been a major impediment to further expansion of trade between the two countries.

Taiwan was the seventh largest export market for U.S. agriculture at $3.6 billion in 2019, according to USDA's Foreign Agricultural Service. Top products exported were soybeans, beef and beef products, wheat, fresh fruit and corn. In 2018, the United States was the fourth-largest exporter of pork and pork products to Taiwan even with the ractopamine ban.

Congress to return to full agenda
Congress returns next week with only nine legislative days before the end of the fiscal year, Sept. 30. The two biggest issues to be addressed are the fiscal year 2021 appropriations bills and a coronavirus aid package.

Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin have agreed to pass a continuing resolution to avoid a government shutdown. The House and Senate leadership will have to decide if it will be a short-term CR until after the election or a longer one that goes until March of next year.

The major, and most difficult, issue facing Congress and the administration is reaching an agreement on another coronavirus aid package. The House Democrats have offered $2.2 trillion and the Republicans have offered $1.3 billion. Both sides will try to use the package for their political advantage going into the November election.

September is Food Safety Education Month
This month USDA's Food Safety and Inspection Service is reminding the public to think about health and food safety in the kitchen for National Food Safety Education Month.

Mindy Brashears, undersecretary for Food Safety, says, "My vision for food safety includes enhancing and emphasizing consumer education. Consumers play a vital role in reducing foodborne illness — and by providing scientifically accurate and effective food safety information, we can help empower them to adopt and practice safe food handling behaviors in their own homes."

FSIS research shows that consumers still have problems with two key food safety steps: handwashing and preventing cross-contamination. Consumers should follow four simple food safety steps, "Clean, Separate, Cook and Chill."

Stefanou to Lead ERS
Spiro Stefanou has been named to be the new administrator of USDA's Economic Research Service.

Stefanou has been serving as a professor of Economics at the University of Florida's Institute of Food and Agriculture. Previously he was a professor of Agricultural Economics at Penn State University. He received his doctorate from the University of California, Davis; master's from the University of Maryland; and bachelor's from George Washington University.

Source: P. Scott Shearer, who is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.
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