Financial statements of the meat-processing companies — which control 55 to 85 per cent of the market for beef, poultry and pork — contradict claims that rising meat prices were caused by higher labour or transportation costs, advisers led by National Economic Council director Brian Deese wrote in an analysis published on the White House website Friday.

Officials studied earnings statements from Tyson Foods, the chicken producer and biggest U.S. meat company by sales; Brazil-based JBS, the world’s biggest meatpacker; Brazilian beef producer Marfrig Global Foods, which owns most of National Beef Packing Co.; and Seaboard Corp.

Those statements showed a 120 per cent collective jump in their gross profits since the pandemic and a 500 per cent increase in net income, the analysis shows. These companies recently announced $1 billion in new dividends and stock buybacks, on top of the more than $3 billion they paid to shareholders since the pandemic began (all figures US$).

Trade group the North American Meat Institute accused the White House of “cherry-picking” data.

“It is no coincidence this blog post appears on the same day as the Consumer Price Index is released showing gas and energy prices are up nearly 60 per cent over the past 12 months which is nearly 10 times the rate of inflation for food,” president Julie Anna Potts said in a statement.

Profit margins — the spread companies are making over and above their costs — have increased significantly too, belying the argument that companies are just passing along higher labour and supply costs, the analysis said, with gross margins up 50 per cent and net margins up over 300 per cent.

“If rising input costs were driving rising meat prices, those profit margins would be roughly flat, because higher prices would be offset by the higher costs,” the analysis said.

Increases in meat prices accounted for 25 per cent of the rise in consumer prices for food consumed at home in November, a big driver in the surge in inflation seen in recent months.

Tyson increased the price of beef “so much — by more than 35 per cent — that they made record profits while actually selling less beef than before,” the advisers wrote.

The companies didn’t immediately respond to requests for comment.

The White House, hammered by Republicans over rising inflation, is scrambling to combat rising prices by clearing supply chain logjams and tackling what it views as uncompetitive practices by big companies, which are reporting big profit gains even as consumers suffer.

Friday’s blog — released after November consumer prices showed the largest annual gain since 1982 — reflects growing frustration by White House officials about continued increases in meat prices, an issue it flagged in September.

— Andrea Shalal reports on U.S. trade and economic policy for Reuters from Washington, D.C.

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Warren, a U.S. senator from Massachusetts and a fierce Wall Street critic, released a broad plan that she said would make it easier for small farmers to survive in the face of growing corporate consolidation in the rural economy.

She singled out several big agriculture corporations, naming Tyson Foods, Bayer-Monsanto and Dow-DuPont, and said the Bayer-Monsanto merger should not have been approved. Under her plan, regulators would review “anti-competitive” agricultural mergers and break up integrated businesses that control many different levels of the farming chain and markets.

“We can make better policy choices  – and we can begin by leveling the playing field for America’s family farmers,” Warren wrote in a Medium blog post outlining her proposal.

Warren released the plan ahead of a campaign trip to Iowa, a farm state that kicks off the Democratic presidential nominating contest in February 2020. During her visit, she will participate in a Democratic policy forum on rural issues as the party searches for ways to reverse Republican President Donald Trump’s win over Democrat Hillary Clinton in rural areas in 2016.

Earlier this month, Warren also proposed breaking up big tech companies such as Amazon, Google and Facebook to promote competition in the technology sector. She has made her populist economic message the heart of her campaign in a growing Democratic field of contenders, arguing the economy is rigged for corporations and the wealthy.

“Bad decisions in Washington have consistently favoured the interests of multinational corporations and big business lobbyists over the interests of family farmers,” Warren said in her agricultural proposal.

“Mergers mean that farmers have fewer and fewer choices for buying and selling, while vertical integration has meant that big agribusinesses face less competition throughout the chain and thus capture more and more of the profits,” she said.

Warren’s plan also would end “contract farming” by conglomerates, create a national right-to-repair law that allows farmers to repair their own equipment or take it to a mechanic of their choice instead of an authorized agent, and establish country-of-origin rules to require beef and pork producers to label where their livestock was raised and slaughtered.

— John Whitesides is a Reuters political correspondent in Washington, D.C.

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The rule expanding sales of so-called E15 was promised by President Donald Trump late last year as a way to help corn farmers, but includes measures sought by the oil industry to curb biofuel credit market speculation.

“We hope to expeditiously propose and finalize the rule consistent with the President’s direction,” EPA spokesman Mike Abboud said in an email to Reuters. Following the interagency process, the proposed rule will be published and put out for public comment before being finalized. Congressional approval is not required.

The process needs to be completed before June 1 to allow for gasoline with a higher blend of ethanol, also known as E15, to be available for summer sales when driving demand picks up.

E15 gasoline contains 15 per cent ethanol, versus the 10 per cent found in most U.S. gasoline. The ban over the year-round sales of the fuel had been imposed over concerns that E15 contributes to smog in hot weather.

The proposed rule was at the forefront of a brief interagency disagreement last week when Secretary of Agriculture Sonny Perdue said the EPA was not going to be able to finalize the rule on time. He walked back from his comments in a few hours, after speaking with EPA administrator Andrew Wheeler.

The EPA had planned to release the draft rule in early February but was delayed by a 35 day-long partial federal government shutdown.

Trump said in October he was directing the EPA to allow year-round sales of E15, a victory for the corn industry. Combining the rule with Renewable Identification Number (RIN) market reforms was a concession to the rival oil industry.

Oil and corn industries have been in the opposite ends of a tug of war and Wheeler has been caught in the middle of pressure from lawmakers representing oil and corn states. Five Republican senators in a letter criticized his biofuels policy last month, briefly raising questions about his confirmation.

Wheeler, who had been in charge of the EPA in an acting capacity since last July, was confirmed by the Senate last week.

Under the U.S. Renewable Fuels Standard, oil refiners have to blend increasing volumes of biofuels into the nation’s gasoline and diesel each year, or purchase credits — called RINs — from those who do.

— Humeyra Pamuk is a Reuters correspondent covering U.S. energy policy in Washington, D.C.

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The congressionally mandated report, written with the help of more than a dozen U.S. government agencies and departments, outlined the projected impact of global warming on every corner of U.S. society in a dire warning that is at odds with the Trump administration’s pro-fossil-fuels agenda.

“With continued growth in emissions at historic rates, annual losses in some economic sectors are projected to reach hundreds of billions of dollars by the end of the century — more than the current gross domestic product (GDP) of many U.S. states,” the report, the Fourth National Climate Assessment Volume II, said.

Global warming would disproportionately hurt the poor, broadly undermine human health, damage infrastructure, limit the availability of water, alter coastlines, and boost costs in industries from farming, to fisheries and energy production, the report said.

But it added that projections of further damage could change if greenhouse gas emissions are sharply curbed, even though many of the impacts of climate change — including more frequent and more powerful storms, droughts and flooding — are already under way. “Future risks from climate change depend primarily on decisions made today,” it said.

The report supplements a study issued last year that concluded humans are the main driver of global warming and warned of catastrophic effects to the planet.

The studies clash with policy under President Donald Trump, who has been rolling back Obama-era environmental and climate protections to maximize production of domestic fossil fuels, including crude oil, already the highest in the world, above Saudi Arabia and Russia.

White House spokeswoman Lindsay Walters said the new report was “largely based on the most extreme scenario, which contradicts long-established trends by assuming that… there would be limited technology and innovation, and a rapidly expanding population.”

The government’s next update of the National Climate Assessment, she said, “gives us the opportunity to provide for a more transparent and data-driven process that includes fuller information on the range of potential scenarios and outcomes.”

Trump last year announced his intention to withdraw the U.S. from the 2015 Paris Deal agreed by nearly 200 nations to combat climate change, arguing the accord would hurt the U.S. economy and provide little tangible environmental benefit. Trump and several members of his cabinet have also repeatedly cast doubt on the science of climate change, arguing that the causes and impacts are not yet settled.

Environmental groups said the report reinforced their calls for the United States to take action on climate change.

“While President Trump continues to ignore the threat of climate change, his own administration is sounding the alarm,” said Abigail Dillen, president of environmental group Earthjustice.

“This report underscores what we are already seeing firsthand: climate change is real, it’s happening here, and it’s happening now.”

Previous research, including from U.S. government scientists, has also concluded that climate change could have severe economic consequences, including damage to infrastructure, water supplies and agriculture.

Severe weather and other impacts also increase the risk of disease transmission, decrease air quality, and can increase mental health problems, among other effects.

Thirteen government departments and agencies, from USDA to NASA, were part of the committee that compiled the new report.

The entire report can be viewed online.

— Writing for Reuters by Richard Valdmanis.

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The White House on Monday proposed $46.54 billion in cuts to federal government funding for the agriculture sector over the next 10 years, including limits on federal subsidies for crop insurance premiums (all figures US$). Congress has the final say on the government’s budget and lawmakers said the president’s plan stands little chance of passing.

U.S. Agriculture Secretary Sonny Perdue said there was no “sugarcoating” the budget proposal, which could lead to the elimination of 5,263 jobs at the department if implemented, or about five per cent of its workforce.

USDA requested $18 billion for department spending in fiscal 2018, down from $24 billion in 2017.

Farmers in the U.S. agricultural heartland overwhelmingly supported Trump last November and are struggling with low crop prices that are hurting incomes.

“This budget seems to really go after the people that got the president elected,” said Zack Clark, director of government relations for the National Farmers Union.

Some of the biggest proposed cuts come from changes to the crop insurance system, which many farmers rely on to keep their operations running.

“It’s clear that this budget was written without input from farmers who would be severely affected,” Ron Moore, president of the American Soybean Association, said in a statement.

But changes in crop insurance that cause farmers to cut back on plantings could provide relief to a global balance sheet heavy with supplies. Falling production could pay off in the long run by helping to lift prices, said Scott Irwin, agricultural economist for the University of Illinois.

Trump’s budget imposes a $40,000 limit on crop insurance premium subsidies, which could prevent some farmers from insuring their entire acreage. There is currently no limit.

Typically, farmers pay a portion of their insurance premiums and USDA covers the rest, said Jeff Harrison, a lawyer who represents the Crop Insurance Professionals Association.

“In practical terms, you’re really going after full-time farm families.”

U.S. Senator Debbie Stabenow, the ranking Democrat on the Senate agriculture committee, said she would oppose the cuts, which “would leave our farmers, families, and rural communities vulnerable in tough times.”

House agriculture committee chairman K. Michael Conaway and Senate agriculture committee chairman Pat Roberts, both Republicans, said they “will fight to ensure farmers have a strong safety net.”

— Reporting for Reuters by Mark Weinraub and Tom Polansek in Chicago.

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It was unclear whether the order would be enacted by President Donald Trump, who has vowed to pull out from the U.S./Mexico/Canada trade pact if he cannot win better terms for America.

But the action under consideration could signal heightened prospects that one of the world’s biggest trading blocs could unravel in an economically damaging dispute.

The possible executive order, first reported by Politico, sent stocks and currencies falling in Mexico and Canada. Investors were rethinking their assumptions that Trump would back away from some of the drastic actions on trade that he had promised during the presidential campaign.

“It is a clear indication that they (in the White House) are wanting changes but we will have to see what emerges,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.

Trump has long accused Mexico of destroying U.S. jobs and recently ramped up his criticism of Canada, saying last week that Ottawa’s protection of its dairy industry was “unfair.”

Trump this week ordered 20 per cent tariffs on imports of Canadian softwood lumber, setting a tense tone as the three countries prepared to renegotiate the 23-year-old trade pact.

The U.S. president has faced a series of setbacks since he took office in January, with courts blocking parts of his orders to limit immigration and the Republican-controlled Congress pulling legislation he backed to overhaul the U.S. healthcare system.

As president, Trump has broad authority on trade policy, including the power to withdraw from NAFTA without votes by Congress, according to many legal analysts. It was under an executive order signed by Trump on Jan. 23 that the U.S. pulled out of the sweeping Trans-Pacific Partnership trade deal.

Mexico had expected to start NAFTA renegotiations in August but the possible executive order could add urgency to the timeline.

Trump criticized Mexico extensively during his presidential campaign. The U.S. went from running a small trade surplus with Mexico in the early 1990s to a US$63 billion deficit in 2016.

Canada said it was ready to come to talks on renewing NAFTA at any time.

“At this moment NAFTA negotiations have not started. Canada is ready to come to the table at any time,” said Alex Lawrence, a spokesman for Canadian Foreign Minister Chrystia Freeland.

At least one U.S. farm group, the National Corn Growers Association, warned Trump in a statement Wednesday that while corn producers helped elect him, a withdrawal from NAFTA “will cost America’s farmers and ranchers markets that we will never recover.”

Corn and corn product exports today account for 31 per cent of U.S. farmer income, NCGA president Wesley Spurlock, a Texas panhandle grain grower, said in a release.

“Mexico is the top export market for corn. Canada is also a top market for corn and ethanol. With a farm economy that is already weak, losing access to these markets will be a huge blow that will be felt throughout the ag value chain.”

— Steve Holland is a Reuters correspondent covering the White House in Washington, D.C. Additional reporting for Reuters by Fergal Smith in Toronto and David Ljunggren in Ottawa; writing by Jason Lange. Includes files from AGCanada.com Network staff.

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The administration has no position “either way on this issue at this time,” the White House official confirmed to Reuters. The statements come after news last week that Icahn had reached out to the White House regarding the change.

The debate centers on the Renewable Fuel Standard (RFS), a 2005 policy that requires increasing volumes of biofuels to be added to gasoline and diesel each year.

Oil refiners including Valero Energy and CVR Energy currently have to show environmental regulators they are meeting those annual mandates, and have urged the government to push this compliance further downstream to fuel blenders and integrated oil companies.

Opponents of the change say it will complicate ensuring compliance and that it could threaten the future of the RFS policy that sets the annual requirements for use of biofuels with gasoline and diesel.

Confusion over Trump’s plans for RFS sparked wild swings in energy and agricultural markets last week. Icahn, who owns a majority stake in CVR, said he had reached out to the White House about the issue.

The Environmental Protection Agency (EPA) has also been reviewing requests from oil refiners, including Valero and Delta Air Lines’ Monroe Energy. A public comment period on the issue wrapped up late last month.

Two sources familiar with the discussions told Reuters that they have been told by administration officials they are concerned about potential political backlash from biofuels companies and fuel marketers if they make the change that Icahn and Valero are seeking.

— Reporting for Reuters by Emily Stephenson in Washington; additional reporting and writing for Reuters by Chris Prentice.

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Both markets pared gains following a White House statement that no executive order was in the works on ethanol.

Wheat and soybean futures also closed higher. Investment by commodity funds at the end of the month and ahead of the U.S. planting season lent support, analysts said.

Chicago Board of Trade May corn settled up 5-1/2 cents at $3.73-3/4 per bushel after reaching $3.86-1/4, its highest level since Feb. 16 (all figures US$).

CBOT May soybeans ended up 13-3/4 cents at $10.35-3/4 a bushel while May soyoil rose 1.3 cents to 33.93 cents/lb. after reaching 34.74 cents, its highest price since Feb. 13.

CBOT May wheat finished up five cents at $4.43-3/4 a bushel.

Corn surged after the head of the Renewable Fuels Association said that U.S. President Donald Trump’s administration would shift the onus on combining biofuels with gasoline away from refiners, who had long requested this change to the nation’s biofuel program.

Changes to the program could include a waiver to allow greater volumes of ethanol to be blended into gasoline in the summer, and support for a congressional tax credit for domestic producers of soy-based biodiesel, a source said.

“If that is the case, then obviously demand for ethanol would increase,” said Dan O’Bryan, analyst with Top Third Ag Marketing.

Others said the strength across the grains complex had to do with commodity funds banking on weather uncertainty as the start of the U.S. growing season approaches.

“It just looks today as if we are seeing an inflow of fund capital,” said Rich Feltes, vice-president for research with R.J. O’Brien. “The funds, given the time of year, are still predisposed to own this thing ahead of the growing season, rather than bet on a great crop.”

Some said the corn market was primed for a bounce after open interest fell as prices sagged in the last week, an indication of investors liquidating long positions.

“You blew out the weak longs, and you get a bit of bullish news, and there is not a lot of selling in the way of that rally,” O’Bryan said.

— Julie Ingwersen is a Reuters correspondent covering grain markets from Chicago. Additional reporting for Reuters by Naveen Thukral in Singapore and Gus Trompiz in Paris.

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The U.S. House of Representatives on Thursday approved the Senate’s bipartisan bill S.764 by a 306-117 vote, sending it to the White House to be signed into law. The bill doesn’t yet include a clear date for when its provisions would take effect.

The bill, once in effect, would overturn any label laws passed at the state level, including Vermont’s, which took effect July 1.

“Averting a confusing patchwork of state labelling mandates serves the American economy, farmers and ranchers, and consumers well,” Senate agriculture committee chairman Pat Roberts said in a statement Thursday.

Senate ag committee ranking minority member Debbie Stabenow, who along with Roberts backed the bill through the Senate, hailed the law as “prevent(ing) a confusing patchwork of 50 different rules in each state.”

The bill, she said, would set up a national, mandatory system of disclosure for food that contains GMO ingredients and close “glaring loopholes under the Vermont law which would have allowed tens of thousands of processed food products, like frozen dinners or entrees that contain meat and GMO ingredients, to go unlabeled.”

Among the critics of Congress’ label law, Vermont’s Sen. Bernie Sanders recently panned it as “an unenforceable, confusing, weak piece of legislation paid for by the large food corporations in this country.”

While the bill makes it a “prohibited act” to fail to disclose GMO information where required, Sanders noted it doesn’t impose any penalties for violations and allows companies to use QR codes, whose messages require a smartphone and QR app to read, to meet the label requirement.

Vermont’s law, he noted, provides for a “uniform labeling standard” and has already led many large food firms to label their U.S. product lines nationwide rather than develop labels specifically for use in Vermont.

Another critic, Jean Halloran of the U.S.-based Consumers Union, said Congress’ bill offers “an ineffective federal standard to be set by the U.S. Department of Agriculture that omits many (genetically engineered) products from its purview.”

The bill, she said, would also “disregard citizens’ wishes by invalidating laws in states including Vermont, Alaska, Connecticut, and Maine, and produce a legal vacuum for at least two years while USDA writes federal rules.”

“Sufficient access”

As written, the bill requires foods with GMO ingredients to disclose that fact by way of a label with a “text, symbol, or electronic or digital link… with the disclosure option to be selected by the food manufacturer.”

The bill also commits the U.S. Secretary of Agriculture, within a year of the bill taking effect, to run a study as to whether the electronic options allow “sufficient access” to the information — and to provide “additional and comparable options” for labeling if the electronic options are found to fall short.

The bill also specifies that if a product is not required to carry a GMO label under its terms, that fact alone is not sufficient for a food manufacturer to market that product as “not bioengineered” or “non-GMO.”

However, where foods carry an accepted organic certification, the bill allows that certification to be “considered sufficient to make a claim regarding the absence of bioengineering in the food.”

The bill also prohibits the label law from considering foods derived from animals to be GMO — if the sole reason for the label was to be that the animals in question had consumed GMO feed.

The bill also emphasizes the label law is intended strictly to inform consumers and is not to be considered as a food safety measure.

Specifically, the bill requires that, for the purpose of any regulations to be drawn up from it, GMO foods that have successfully completed federal regulatory review “shall not be treated as safer than, or not as safe as, a non-bioengineered counterpart of the food solely because the food is bioengineered.” — AGCanada.com Network

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“Renegotiation is not an option,” Caroline Atkinson, Obama’s deputy national security adviser for international economics, said on a call hosted by the Atlantic Council think tank.

Senator Orrin Hatch, a Republican who chairs the Senate committee responsible for trade, last week said negotiators might have to meet again on the 12-nation Trans-Pacific Partnership (TPP), if support was lacking in Congress.

Japan, the second largest economy in the TPP, said the deal was like a “glass ornament” that would disintegrate if a part of it were to be renegotiated.

“There can be no re-doing of the agreement,” Economy Minister Akira Amari told a news conference in Tokyo.

Atkinson said many of the gains countries achieved during the negotiations, which took more than five years, had come indirectly, making it impossible to re-open individual issues.

“Every issue is tied to every other issue and every country’s outcome is balanced against every other country’s outcome on market access,” she said.

“It might be some area on agriculture that was of great interest for some country that they would balance against another area in manufacturing, and against what some other country was achieving in terms of market access.”

Hatch has criticized the deal for failing to secure longer protection periods for some medicine, while senior House Democrat Sander Levin has expressed concerns about worker protections in Mexico.

— Reporting for Reuters by Krista Hughes in Washington and Reuters’ Tokyo newsroom.

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