April 7, 2020
Tariffs drag down California exports, with COVID-19 impacts coming soon
Agricultural exports have continued to help buoy the state’s economy. According to the latest report by Beacon Economics, the state’s exports were down slightly in February over last year. Yet agricultural products and raw materials were up nearly 5% to about $1.8 billion.
The positive numbers were pulled down by re-exports, however, which were down 12%, adding to a growing trend. By commodity, shipments of agricultural products declined by nearly 3%. Beacon’s trade adviser, Jock O’Connell, also had stark hopes as the impacts of the outbreak sink in: “We do not expect the numbers to be as buoyant over the next two or three months,” he said.
With March payrolls declining by 700,000 across the nation, UCLA economist Edward Leamer agrees that “the worst is yet to come.” The data presents a stark reality but does not include terminations after March 12. Unemployment claims since then are now adding up to more than 10 million. “We are in trouble here,” said Leamer.
Restaurant industry asks for delay in minimum wage hike
Seeking regulatory relief during the crisis, the California Restaurant Association has asked Gov. Newsom to put on “pause” the state’s minimum wage increase set for next year. It would be $14 for most businesses and rise to $15 in 2022.
In a letter to the governor last week, President Jot Condie pleaded that there will be “scorched earth on the employment and restaurant landscape” once the crisis passes.
Efforts to update California’s food safety guidelines go online
The public can now take a more active role in drafting new food safety guidelines for California’s leafy greens farmers. The Western Growers Association and the California Leafy Greens Marketing Agreement launched a new website yesterday for organizing public discussions and taking comments for food safety programs.
Sonia Salas said that with COVID-19 “top of mind” for industries, “the important work of improving food safety continues, with broad agricultural industry engagement and complete transparency among leafy green growers.”
Reclamation doubles water allocation for Friant
The U.S. Bureau of Reclamation announced yesterday it will deliver 40% of the contracted water allocation for the Friant Water Authority from the Central Valley Project (CVP). That is up from a 20% allocation in February for the Class 1 supplies.
“The increase will allow Friant contractors to stretch their limited CVP water supplies further into the growing season,” said Michael Jackson, an area manager for Reclamation. “At the same time, the increase will reduce energy costs and potential subsidence concerns associated with the over-pumping of the groundwater basin that occurred during the most recent drought.”
AND IN NATIONAL NEWS…
More money for forgivable loans pledged
Banks and Farm Credit System institutions continue to be frustrated by the rollout of the Paycheck Protection Program, the massive forgivable loan initiative that they are charged with handling on behalf of the federal government.
But Florida GOP Sen. Marco Rubio, who worked to get the PPP included in the $2 trillion economic stimulus package known as the CARES Act, says the administration is working to address regulatory issues that have cropped up.
Larry Kudlow, the chief White House economic adviser, said Monday that President Donald Trump would ask Congress for more money for the program if it’s needed. Rubio thinks PPP will run out of money by late May.
As for the glitches in the program, Kudlow said, “I think we're doing OK, frankly. I know there are always a few glitches, but I'd give it an ‘A.’”
Farm Credit institutions look for outside help
Just getting on the SBA system to process applications was still a problem on Monday.
On a call with stakeholders on Monday, USDA officials told stakeholders that SBA was working to try to get the access issues resolved within 24 hours, according to Mark Scanlan of the Independent Community Bankers Association.
In an update to congressional offices Monday, the Farm Credit Council said many “Farm Credit institutions are racing to reinvent their own lending systems to be able to make a loan guaranteed by SBA in the event that they get final SBA approval to move forward. Others are working to identify an outside vendor with deep experience in SBA lending that might be able to support Farm Credit customers.”
Take note: One of the concerns among farmers is wages paid to H-2A workers couldn’t be counted toward calculating how much of a PPP loan a farm could get because H-2A visa holders are not domestic employees. So far, banks have varied in whether they allow H-2A employees to count toward calculating loan amounts, says Chris Schulte, a lawyer with the D.C. firm CJ Lake.
Farm Bureau: US ag exports to China sharply lagging
U.S. agricultural exports to China are lagging far behind what they need to be to finish the fiscal year at the $14.5 billion total that was forecast by USDA, according to a statement and data tweeted Monday by American Farm Bureau Federation Chief Economist John Newton.
USDA drew gasps when it forecast the meager $14.5 billion forecast, but as of now U.S. ag exports are only about halfway there at about $7.2 billion through February, says Newton.
“Our current pace would put us between ($10 billion and $11 billion), which is well below USDA’s $14.5 billion,” Newton told Agri-Pulse. “It needs to start to accelerate.”
The $756 million worth of U.S. ag exports in February would have had to roughly double in March and then stay far above historical averages to reach the USDA forecast for FY 2019, which runs through September.
Ag groups plead to avoid fees at congested ports
Ships with containers full of everything from produce to livestock feed are getting hit with steep fees as the coronavirus slows trade and forces shipments to idle at docks. Eighty groups representing ag and food shippers are begging the White House to intervene.
“These fundamentally unfair fees are frequently exorbitant in nature, even exceeding the negotiated freight rates in some cases, and render U.S. agriculture exports less competitive in the global markets,” the National Grain and Feed Association, National Chicken Council, U.S. Apple Association and other groups say in a letter to Kudlow and Agriculture Secretary Sonny Perdue.
The situation was extremely bad in China at the height of the country’s battle to stem the spread of the virus and port workers and truckers did not go to work. The work stoppage has lessened in recent weeks, but delays remain, industry officials tell Agri-Pulse.
HHS: Rural hospitals struggling in pandemic
Rural hospitals have told the Department of Health and Human Services they need financial help to make it through the coronavirus crisis.
Smaller, independent hospitals, such as those in rural areas, told HHS in a survey conducted at the end of March that they are at more risk because they are not part of larger systems. “There is no mothership to save us,” one hospital administrator told HHS’ Office of Inspector General.
“Notably, some hospitals reported needing assistance in a matter of weeks in order to avoid insolvency,” the IG report said.
While we’re at it: Agri-Pulse recently reported on the plight of rural hospitals, finding that they “were already struggling to stay open before the COVID-19 pandemic struck” but now they’re in even more dire straits, in part because of the cancellation of elective surgeries and steep increases in the price of personal protective equipment.
He said it:
“Our work isn’t done but we’ve shown that working together is a much more beneficial process than fighting our battles in the courts.” - Roger Cornwell, a Yolo County farmer, in an op-ed for CalMatters arguing for a more collaborative approach to managing Delta pumping.
Bill Tomson, Steve Davies, Ben Nuelle and Sara Wyant contributed to this report.
Comments? Questions? Tips? Email comments to brad@agri-pulse.com.
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