Trump Administration Hits Small Farmers With More Bad News

Farmers already concerned with President Donald Trump’s policies on trade and immigration just got another reason to worry.

The U.S. Department of Agriculture this week delayed implementation of an Obama administration rule aimed at making it easier for livestock producers to sue the large meat-processing companies they contract with over abusive practices.

The USDA Grain Inspection, Packers and Stockyard Administration rule, proposed in 2010 and approved by the Obama administration in December, had been set to take effect later this month. The USDA postponed it for at least six months.

The government delay was welcomed by industry groups, including the National Chicken Council, the National Cattlemen’s Beef Association and the National Pork Producers Council. The groups claim the rule would welcome frivolous, “government-sanctioned” lawsuits targeting corporations, and could raise prices for consumers and put farmers out of business.

Colin Woodall, vice president for government affairs at National Cattlemen’s Beef Association, said his organization wants the rule eliminated altogether.

“Our request to the Trump administration is that they withdraw this rule and throw it away,” Woodall told HuffPost. “We don’t believe there’s anything that can be done to fix it. We believe it’s bad across the board.”

Influential members of Congress agree. Sen. Pat Roberts (R-Kansas), the Senate Agriculture Committee chairman, this week called the rule “disastrous.” House Agriculture Chairman Mike Conaway (R-Texas) similarly criticized the rule last month.

The meat industry typically contracts with farmers to raise animals until they are old enough for slaughter. Farmers, particularly those in the highly consolidated poultry industry, have increasingly accused companies like Tyson Foods and Pilgrim’s Pride of deceptive and retaliatory practices.

One lawsuit filed earlier this year called the companies a “cartel” and said they have colluded to depress pay for contractors, who are saddled with high debt that threatens their businesses. The industry rejects the allegations.

“We’re hoping to bring about a change in this system,” a West Virginia farmer who has been raising chickens for Pilgrim’s Pride for 16 years, told The Associated Press this year. “It has to be done. If not, the American family farmer is going to disappear.”

Lawsuits, however, run into the Packers and Stockyards Act of 1921, which courts have interpreted to require an extremely high burden of proof. Farmers suing companies must prove practices they’re forced to follow affect not just one farmer, but the entire industry.

“It’s like if your house was burned down by an arsonist and you would have to show that all the houses in your neighborhood or city were impacted by that to prove you were damaged by the arson,” Paul Wolfe, senior policy specialist at the National Sustainable Agriculture Coalition, told HuffPost. “That’s very hard to do in any case.”

The Obama rule would change that, and is long overdue, according to Barbara Patterson, director of government relations at the National Farmers Union, the nation’s second-largest farm organization.

“This rule is such common sense and such a plain-language interpretation of the regulation that it’s hard to believe that they need more time,” Patterson said. “These are pretty basic protections and there has been plenty of time to review this. It should have been put into place eight years ago.”

It remains unclear whether the Trump administration will scrap the rule. Trump’s pick for agriculture secretary, Sonny Perdue, hasn’t been confirmed by the Senate. A vote on his nomination has been scheduled for April 24.

Supporters said they hope Perdue’s background as governor of Georgia — the biggest U.S. producer of broilers — shapes his thinking on the rule. Georgian Zippy Duvall, who served on Trump’s agriculture advisory committee and is president of the powerful American Farm Bureau Federation, recently expressed support for some aspects of the rule.

“We hope that he [Perdue] has heard this story from the poultry farmers in his state, and hopefully that experience will help him rethink this decision that was made without him,” Wolfe said.

Meanwhile, many farmers in rural communities who backed Trump’s presidency are growing anxious his administration will renege on campaign promises to make America great again.

Sally Lee, program director at the Rural Advancement Foundation International-USA, told HuffPost the majority of the farmers she works with voted for Trump and believed his administration would be a boon for their communities. 

“They felt sure this would be a no-brainer for the Trump administration, and there’s a lot of anxiety about this,” Lee said. “There’s a feeling that this is an action that does not reflect the commitment this administration made to rural America.”

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Joseph Erbentraut covers promising innovations and challenges in the areas of food, water, agriculture and our climate. Follow Erbentraut on Twitter at @robojojo. Tips? Email

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‘Stretched’ Chevron’s possible exit to help pure-play oilsands companies consolidate: analysts

CALGARY – Chevron Corp. is rumoured to be the latest oil major shopping its oilsands properties, as analysts believe the U.S. producer doesn’t see growth potential in Alberta’s ultra-heavy oil at a time when Canadian rivals are doubling down on the basin.

Reuters reported Thursday, citing anonymous sources, that California-based Chevron was mulling the sale of its 20 per cent stake in the 225,000 barrels per day Athabasca Oil Sands Project, located north of Fort McMurray, Alta., valued at $2.5 billion.

Chevron Canada spokesperson Leif Sollid would not comment on a possible sale, but said in an email the project continues to generate cash or strong “financial performance.”

Rumours of a possible sale have been circulating through Calgary’s corporate towers for months following several other major divestments.

“Eventually they will sell, because having a small position in the oilsands – one with no growth, really – doesn’t make a lot of sense in the longer term,” said Anish Kapadia, a London-based analyst with Tudor, Pickering, Holt & Co.

The 20 per cent stake in AOSP represents a strategic opportunity for Canadian oilsands rivals who have been beefing up their operations.

In March, Royal Dutch Shell PLC and Marathon Oil Corp. sold their stakes in the AOSP, which includes mining operations and an upgrader, to Calgary-based Canadian Natural Resources Ltd. for $12.7 billion. Like Chevron, Marathon also owned a 20 per cent stake in the AOSP and agreed to sell it for $2.5 billion, which provides a direct price comparison to Chevron’s stake.

One analyst, who declined to be identified, said eventual AOSP operator Canadian Natural may be a likely buyer, given the synergies. Canadian Natural’s existing stake in AOSP will allow the company to integrate it with the Horizon oilsands mine, which will in turn provide more options in terms of where its bitumen is ultimately refined.

The possible Chevron exit would add to the steady procession of oil majors walking away from the oilsands. Apart from the Shell’s divestment, ConocoPhillips Co. also announced in March it would sell its stake in its oilsands project along with natural gas assets to joint-venture partner, Cenovus Energy Inc. for $17.7 billion. Total SA and Statoil SA have also been cutting their oilsands exposure over the past few years.

Chevron, like other major companies, has focused its capital spending around shorter-cycle shale projects recently, and analysts say the company is likely to dispose of its oilsands position as it realigns its global portfolio.

“Does Canada fit into Chevron’s core? Not really,” Edward Jones senior energy analyst Brian Youngberg said. He added that Chevron previously admitted it had “stretched itself too thin” between its massive liquefied natural gas projects, shale assets and overseas projects.

Energy producers across the industry are increasingly focusing on fewer geographic areas and, for Chevron, those areas are its LNG export facilities and the Permian shale basin.

Concerns over carbon taxes, environmental opposition, costs and the fact that it owned a non-operating interest in the project would likely contribute to Chevron looking to sell its interests in the oilsands, Youngberg said.

“The oilsands are going to be mostly Canadian producers, and two or three others, because you need scale,” he said, noting that the oilsands are a high-cost formation and scale is necessary to bring down costs.

Suncor, Canadian Natural and Cenovus have all cited size and scale as part of the rationale for their multi-billion-dollar deals in the oilsands as that would allow the companies to drive down their per-barrel costs during a time of weak oil prices.

“There are definitely economies of scale to doubling down on your oilsands assets – you can spread your cost structure over more and more barrels and I think that’s what you see CNRL thinking,” IHS Markit director of Canadian oilsands Kevin Birn said, adding, “Cenovus is thinking the exact same thing.”

“If the world is going to be in this lower (oil) price environment, then you’re going to have less cash flow to work with, and you’ll have less money to invest in the breadth of portfolios they might have had when oil was US$100,” Birn said.

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