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May 24, 2024
By Carson Fort & Joe Prosser, ASA Policy Managers
In this quarter’s policy update, we introduce ASA’s new government affairs managers, both of whom recently joined ASA in the D.C. policy office. Here, they share updates from their portfolios, starting with a connection between the work of ASA and USB/the soy checkoff to support soy research.
Carson Fort is ASA’s Conservation & Precision Ag Advocacy Team staff liaison. His portfolio includes conservation (including WOTUS), precision ag and ag data, fertilizer (excluding anti-dumping/countervailing duty cases), soy foods and domestic nutrition, farm labor/H-2A and research.
The United Soybean Board serves as a primary tool for investing in soy research, but ASA also supports soy research by advocating for congressionally directed funds into federal programs like the Agricultural Research Service and the Agricultural Food Research Initiative. These programs increase the competitiveness of American growers by aiding in the development of new technologies to compete in the global market. Federal spending on programs like AFRI has slowly increased over the years, but overall, public spending on agricultural research has fallen since the early 2000s1 The decline in public spending has coincided with an increase in agricultural research by foreign competitors, including research specific to soybeans.
According to USDA’s Economic Research Service, China invested twice as much as the U.S. on agricultural research in 2015 and has increased its level of funding; meanwhile, ag research in the U.S. has steadily declined.2 China is not the only country ramping up its research; the same can be said of Brazil. Brazil’s research funding remains below that of the U.S. However, following the tariffs levied on U.S. beans by China in 2018, Brazil is now the world’s largest producer of soybeans and has been investing more into soybean-specific research. It is clear that soy’s largest competitor and largest market is putting forward resources to compete with the U.S. The work of the soy checkoff and federally directed funds for agricultural research are both essential to maintaining the competitiveness of American soy growers.
Joe Prosser is ASA’s Farm Policy Advocacy Team staff liaison. His portfolio includes the Commodity Futures Trading Commission, Securities and Exchange Commission, credit, disaster assistance, biobased products, solar and broadband.
Impending implementation of two international banking regulations continues to worry agricultural risk managers and traders. Proposed changes to the Globally Systemically Important Banks surcharge and the Basel III Endgame proposal are the focus of concern. The rulemaking would increase capital requirements and alter how credit risk and operational risk are calculated. If adopted, individuals across the agricultural value chain will be affected. The industry will face diminished clearing capacity, hurting its ability to effectively manage risk through the use of derivatives. Furthermore, consolidation of clearing merchants may raise the cost of hedging. This cost will most likely be passed on to end users such as farmers, ranchers and energy producers. Aside from cost, if firms are underserved by constrained clearing capacity, industrywide risk exposure could also increase. ASA has joined the effort of many other ag advocacy groups throughout D.C. in engaging with lawmakers to bring attention to the disproportionate effect this proposal would have on the agriculture community’s ability to adequately manage risk. Unfortunately, the power for change is beyond congressional action. Instead, the Federal Reserve will have to weigh the merits of the ag stakeholder’s argument in their decision on what execution will look like.
For months, the SEC has considered what the implementation of climate disclosures for publicly traded companies will look like. For the agriculture world, the controversy was found in what are referred to as scope 3 emissions. These carbon emissions are largely outside of the control of the principal entity they are accounted to. Thankfully, the SEC scrapped Scope 3 emission counting in the rule completely. This comes as a relief to the agriculture sector, which would have been disproportionately affected. ASA voiced this concern in comments submitted to the SEC and in coalition letters signed by various agricultural stakeholders.
