June 8, 2020
Tweaks to cap-and-trade could raise costs on industry
Farm and business groups are pushing back on a proposal to modify California’s cap-and-trade program. The budget agreed to by both houses of the Legislature on Thursday would charge the Air Resources Board (CARB) with reopening rulemaking on the program.
The action is in response to a steep decline in revenues from the market. Several lawmakers and policy advocates have argued that the program was intended to lower pollution, not raise money.
“We believe that the proposal will raise costs on Californians and compliance costs on industry at a time when financial and economic certainty is very much needed,” said Robert Spiegel, a policy advocate for the California Farm Bureau, during a budget hearing last week.
Asm. Jim Cooper of Elk Grove objected to granting CARB this authority. The Legislature went through “extensive negotiations” in 2017 to extend the program, he pointed out. Cooper and others criticized lawmakers for discretely inserting the measure into the large budget proposal over Memorial Day weekend without a committee hearing.
The proposal originated from the Senate version of the budget. According to the Ag Council, Sen. Bob Wieckowski of Fremont has proposed the measure in the past.
Sen. Bob Wieckowski, D-Fremont
Tasting rooms can reopen
Gov. Newsom announced Friday that winery tasting rooms can reopen to visitors, when permitted by counties.
The state also issued guidance to wineries for operating safely to prevent the spread of COVID-19. A month ago, the Wine Institute worked with an infectious disease expert and public health agencies to draft its own protocols to prepare businesses for the reopening.
Almond exports down 5%
California’s leading ag export is down from a year ago by more than 5%, at 104 million pounds. “Almond prices have been steadily declining since late last year,” according to a new trade report from Beacon Economics.
The “culprit” this time is India, which imported less than half the amount of almonds in April than it did a year earlier.
Overall, shipments of agricultural products from California have fallen by more than 2% to less than $3.4 billion.
US rice says ‘kanpai’ – that’s cheers in Japanese – to new saké
It’s been a constant struggle over the years to get Japan to buy more U.S. rice, and a new development may be just the ticket to help improve trade ties. The Ninki Shuzo brewery in Japan is now making saké with California-grown rice, according to the USA Rice Federation.
Koda Farms in Merced County, Calif., is shipping two varieties of organic rice to the brewer, which eventually plans to export what it calls “a sophisticated, well-balanced flavor” saké to the U.S.
“I was passionate about creating good quality saké using our rice and I think we accomplished that," says Ross Koda, a third-generation farmer. “My late grandfather, Keisaburo Koda, was dedicated to promoting relations between the U.S. and Japan, and I am seeking to do the same with this saké.”
Dems demand answers on Food Boxes
In a letter to USDA Secretary Sonny Perdue, Senate Minority Leader Chuck Schumer and Democratic members of the Senate Agriculture Committee are demanding answers to a series of questions about the program, including where gaps in distribution exist and how the department determined whether bidders were qualified to fulfill the contracts.
The letter also notes that USDA awarded fewer than 200 contracts within one week of receiving 550 bids. The senators want to know many contracting officials were involved in reviewing each bid.
Keep in mind: As of last week, USDA said last week 5 million boxes had been delivered. Perdue’s goal is to deliver 40 million boxes by the end of June.
USDA has not responded to a request from Agri-Pulse for a breakdown of the types of commodities included in the 5 million boxes. Commodity groups say they have not seen any data either.
New PPP law eases requirements
President Trump has signed into law a bill making it easier for businesses and farms to get their Paycheck Protection Program loans forgiven. However, a top agricultural accounting firm, KCoe Isom, is recommending that businesses wait on filing their forgiveness applications until the Small Business Administration and Department of the Treasury provide additional guidance on how the changes will be implemented.
In a note to clients, KCoe Isom says SBA is likely to significantly revise the forgiveness application and that waiting for the guidance will allow borrowers to incur more expenses that would be eligible for the loan forgiveness.
The new law, among other things, extends the period for covered expenses to 24 weeks from the original eight weeks.
Take note: The new law also reduces to 60% the amount of the loan that must be spent on payroll expenses. SBA had been requiring 75%. But ag accountant Paul Neiffer of CliftonLarsonAllen says it’s not clear whether businesses will be required to spend at least 60% on payroll to get any forgiveness of the loan.
SBA “may come out and indicate you can still get forgiveness if you spend less (than 60%), but reading the new law appears to indicate otherwise,” Neiffer writes.
Keep in mind: Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza will likely be questioned about PPP when they testify before the Senate Small Business Committee on Wednesday.
He said it:
“Losing that water now not only throws away all the money farmers have already committed, it does damage to the entire California economy.” – Mike Wade, executive director of the California Farm Water Coalition, on a State Water Board action to block a slight increase in federal water allocations
Bill Tomson and Ben Nuelle contributed to this report.
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