Politico | Catherine Boudreau | February 18, 2020
— Hemp farmers aren’t thrilled about law enforcement’s role in regulating the crop, warning that new testing requirements could be a bottleneck in getting products to market.
— A federal watchdog has agreed to review the Trump administration’s $28 billion trade package for farmers, granting a request by the Senate Agriculture Committee’s top Democrat.
— The merger of two dairy titans, Dairy Farmers of America and Dean Foods, is being reviewed by the Justice Department amid concerns about consolidation stifling competition in the industry.
Driving The Day
LAW ENFORCEMENT PUTS HEMP FARMERS ON EDGE: Producers are feeling uneasy about the role of law enforcement in the burgeoning industry, saying they are being treated like criminals because laboratories testing the crop must be certified by the Drug Enforcement Administration, Pro Ag’s Liz Crampton reports this morning.
Under USDA’s new hemp regulations, farmers will have to get used to shipping off parts of their crop so those labs can verify it doesn’t contain illegal amounts of THC, the mind-altering ingredient in marijuana. If a hemp harvest is deemed non-compliant because THC levels are too high — above 0.3 percent — the crop must be destroyed under the supervision of a law enforcement officer.
Law enforcement shouldn’t be involved unless there is evidence someone was doing something improper, such as a farmer with a hemp license growing marijuana, argued Eric Steenstra, president of Vote Hemp.
Other critics are worried that DEA lab certification will be a major bottleneck to testing, which must take place during a 15-day window before harvest. There are 44 labs currently able to process hemp samples, according to USDA. Some states, including Alabama, don’t have a single lab.
GOVERNMENT WATCHDOG TO REVIEW TRADE AID: The GAO agreed to investigate whether USDA equitably distributed the $28 billion trade bailout for farmers, and whether the department accurately estimated the damages from retaliatory tariffs, according to a letter transmitted to Senate Agriculture ranking member Debbie Stabenow (D-Mich.) last week. Stabenow requested the review in January, following her office’s own analysis indicating that farmers living in Southern states were overcompensated on a per-acre basis, while wealthier operations and foreign-own companies benefited disproportionately over smaller farms.
Stabenow asked GAO to determine three things: how the payments would have been distributed if USDA abided by the same limits included in the 2018 farm bill; what measures the department is using to prevent waste, fraud and abuse; and whether USDA’s formula for calculating payments reflect all the actual trade damage to specific commodities, or if another model would be better. Stabenow also asked what criteria could be used to ensure that the farmers most vulnerable to going out of business are prioritized.
The USDA has defended its program, noting that Midwestern states like Iowa, Illinois and Minnesota have received the bulk of the aid and that foreign-owned companies like JBS USA — which qualified for the commodity purchase portion of trade aid — support American ranchers. Agriculture Secretary Sonny Perdue suggested there will not be another bailout in 2020, now that the “phase one” trade deal with China is expected to boost U.S. agriculture exports.
Higher payment limits under scrutiny: Under the 2019 program, USDA set limits on trade aid at $250,000 per person or legal entity, for three separate categories: planted commodities like corn, soybeans and wheat; specialty crops like cherries and almonds; and dairy and hogs. One farmer could theoretically receive payments under each category, although they can’t exceed $500,000 combined. This is a departure from the 2018 trade aid program and the 2018 farm bill, which set $125,000 caps on subsidies.
THE FOOD SYSTEM OF THE FUTURE: More and more people are making the connection between the food we eat and the toll it takes on the environment. This has led to a mounting challenge for farmers, policymakers, and activists to develop a solution to produce more food while mitigating the effects on the environment. Join POLITICO in Chicago on Tuesday, March 3, for conversation on the policy proposals and best practices to build a more sustainable food system in the United States. RSVP
DOJ EXAMINING A MILK MARRIAGE: America’s largest dairy cooperative, Dairy Farmers of America, will acquire most of bankrupt Dean Foods for $425 million, the companies announced Monday. Dean filed for bankruptcy restructuring in November and will need court approval for the sale. Dean operates 57 facilities in 29 states; under the deal, DFA would acquire 44 of them.
Not everyone is thrilled about the takeover. “It would be awful,” said Peter Carstensen, a professor at University of Wisconsin Law School. “It has potential to hurt consumers because it will eliminate a lot of competition. At the same time, it will hurt dairy farmers.” Carstensen, who specializes in antitrust in agriculture, said Dean and DFA are some of the only milk processors in the upper Midwest and New England.
“We are concerned about this,” said Bobbi Wilson, a government relations associate for the Wisconsin Farmers Union. “We don’t want to see a situation where DFA is the only buyer around.”
The Justice Department first needs to review the merger. DOJ has been in contact with Dean about potential transactions, including a tie-up with DFA, according to Anne Divjak, Dean’s vice president of government relations. She said the company believes the transaction would be “competitive and beneficial” for both farmers and consumers.
DOJ and some state attorneys general have also queried dairy farmers and smaller cooperatives about how a Dean-DFA merger might impact them. Last week, bankrupt milk producer Borden Dairy broke off merger talks with Dean because of antitrust concerns.
FARMER AWARDED $265M IN DICAMBA DAMAGE CASE: Bayer’s legal troubles over a portfolio of weedkillers the company inherited when it bought Monsanto worsened over the weekend. A seven-member jury awarded a Missouri peach farmer $265 million in a case against Bayer and BASF that alleged the herbicide dicamba ruined thousands of his trees in 2015 and 2016 when it drifted from neighboring cotton fields planted with biotech seeds resistant to the chemical.
The lawsuit brought by Bader Farms Inc. is the first involving dicamba to go to trial. There are about 35 other cases filed by farmers in Illinois, Arkansas, Missouri and other states, the Wall Street Journal reports. These cases allege that Bayer and BASF launched a new dicamba-resistant soybean ahead of the EPA approving a new version of the herbicide designed to minimize drift, giving farmers an incentive to illegally spray older forms of the chemical.
The companies have largely attributed crop damage from dicamba to farmers’ own mismanagement. The EPA by the end of this year is expected to decide whether farmers can continue spraying the herbicide.
Separately, Bayer has lost three cases over its most lucrative herbicide, Roundup, which tens of thousands of plaintiffs have alleged caused their cancer. The company has appealed those rulings and continues to defend the safety of the glyphosate-based product, which the EPA and other scientific agencies have signed off on.
— Some winemakers in Napa Valley see marijuana as a threat to their image and, potentially, the quality of their grapes, reports our Pro California’s Alexander Nieves and Debra Kahn. Others see cannabis as the only real way to diversify the county’s grape-dominant agricultural economy as millennials shy away from drinking wine.
— Unilever, owner of brands like Ben & Jerry’s, Breyers and Klondike, has pledged to stop advertising foods and beverages to children under the age of 12 in television and print, and for children under 13 via social media channels, by the end of the year. The company cited alarming rates of childhood obesity. Read more from The Washington Post.
— Wind turbine leases, generally several decades long, are giving farmers yearly income to help make up for some of their losses from more extreme natural disasters and unpredictable commodity markets, USA Today reports.
— The Los Angeles Times documents an Iowa farm family’s struggle with suicide and the stigmas associated with mental illness.