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USDA to ensure all have equal access to crop and livestock reports

WASHINGTON — The U.S. Department of Agriculture last week announced new procedures for the release of market-affecting crop and livestock reports from the National Agricultural Statistics Service and World Agricultural Outlook Board to ensure that all members of the public have access to the information at the same time.

Under current “lockup” procedures, information is released to the public at 12 p.m. (Eastern), though the news media are allowed access approximately 90 minutes early, with their reports embargoed until the noon release time. Prompted by inquiries from the public, USDA examined the procedures and determined that technological advancements have afforded recipients of customized media reports a market advantage not enjoyed by members of the general public. The USDA also sought analytical assistance from the Commodity Futures Trading Commission to help inform a policy update to the lockup procedures. As a result, beginning Aug. 1, 2018, USDA will provide media the same access to the NASS and WAOB reports as the public, with the information becoming available to all at 12 p.m. on days the reports are released.

“These reports are greatly anticipated each time they are released, and they can have significant market impacts,” said U.S. Secretary of Agriculture Sonny Perdue. “Everyone who has interest in the USDA reports should have the same access as anyone else. Modern technology and current trading tactics have made microseconds a factor. This change addresses the ‘head start’ of a few microseconds that can amount to a market advantage. The new procedures will level the playing field and make the issuance of the reports fair to everyone involved.”

BACKGROUND

USDA produces a number of reports with significant market impacts, such as commodity futures sold on the Chicago Board of Trade. Those reports are prepared by NASS and WAOB staff under special lockup conditions at USDA: no electronic transmission devices are permitted into lockup (such as cellular telephones) and once people enter the lockup they cannot leave until the reports are sent out to the public at 12 p.m.

The public is allowed to enter lockup at 10:30 a.m. to hear about the lockup facility and to sit in on the data briefing that occurs at approximately 11:45 a.m. Again, no transmission devices are allowed into lockup and the public is not allowed to leave until 12 p.m.

Lockup is open to any media outlet that meets a set of strict standards. Currently, six news services participate in lockup and are given pre-access to reports: Associated Press, Dow Jones/Wall Street Journal, Thompson Reuters, Market News Int’l/Deutsche Boerse, Bloomberg News and DTN/Progressive Farmer.

The media are provided an electronic copy of the report at 10:30 a.m.

The media write their articles and other custom reports between 10:30 a.m. and 12 p.m.

The media transmit their information at 12 p.m.

It takes USDA data roughly 2 seconds to be transmitted and posted for the public to read. Meanwhile, press organizations have access to high-speed fiber optic lines out of the USDA lockup and advertise paid services to clients that offer ultra-low latency data transmission speed. They have approximately 90 minutes to distill the reports down to their clients’ needs.

There is evidence to suggest that there is significant trading activity worth millions of dollars that occurs in the 1 to 2 second period immediately following 12 p.m., which could not be based on the public reading of USDA data. The inference is that private agents are paying the news agencies for faster data transmission to get a jump on the market.

What is USDA doing to fix this?

USDA is requiring the media to participate in lockup in the same way as the public. Media will no longer receive the reports in advance nor can they utilize high-speed transmission cables from within USDA’s lockup facility. ❖

Congressional Budget Office crop insurance report riles up crop insurance convention

PHOENIX — A Congressional Budget Office report on how the federal government could reduce expenditures for crop insurance has angered House Agriculture Committee Chairman Michael Conaway, R-Texas, and led lobbyists to conclude critics of the federal crop insurance program are better organized than during past farm bill debates.

Speaking at the Crop Insurance Industry Convention on Jan. 5, Conaway said CBO reports are usually analytical, not prescriptive. Conaway said when he asked a CBO official why a December report, “Options to Reduce the Budgetary Costs of the Federal Crop Insurance Program,” was written in a prescriptive manner, the official said it was at the request of a member. When Conaway asked for the name of the member, the CBO official refused to divulge it.

Conaway said the report has not gotten “a lot of play” but it will probably be discussed more in March when crop insurance critics prepare amendments to bring to the floor of the House.

The report contains ideas that have been promoted by the Heritage Foundation, the American Enterprise Institute, Taxpayers for Common Sense and the Environmental Working Group, which are all critical of the crop insurance program.

Later, as a panel of farm lobbyists discussed the upcoming debate, Zack Clark of the National Farmers Union said that “the angles” that critics will use against crop insurance are not new, but “the opposition seems a lot more organized this time. There are a lot more of them this time around. I am a lot more nervous.”

Clark said the CBO report caught the attention of many congressional aides, and said that means the crop insurance industry and farm lobbyists need to spend time defending the program.

One of the policy options is to eliminate the Harvest Price Option, which allows farmers to buy policies that use prices at harvest time, which can be higher than anticipated prices when the policies were purchased, to determine losses.

Bev Paul of the American Soybean Association said almost every soybean farmer maintains a policy that includes harvest price coverage, and eliminating the Harvest Price Option would cut the crop insurance program by 25 percent.

“That is not a little tweak,” she said.

Paul Bleiberg of the National Milk Producers Federation and a former Capitol Hill aide, noted there are members who will support the farm bill but will also vote for amendments to cut the size of programs because they like to tell farmers they support the bill but also tell others they vote for amendments to cut spending.

Bleiberg and Robbie Minnich of the National Cotton Council said it is vital Congress fix the problems in the cotton and dairy programs, either through the farm bill or other legislation.

Josh Tonsager of the National Association of Wheat Growers said that about 100 members of the House have no record of voting on crop insurance and that his group is trying to educate them even when they are not from wheat-growing areas.

Robbie Boone of the Farm Credit Council pointed out that Farm Credit institutions are the largest writers of crop insurance policies in the country in addition to depending on crop insurance to provide stability to its member borrowers.

Kellis Moss of Ducks Unlimited said his members want to maintain the swampbuster rules and the Regional Conservation Partnership Program.

Ducks Unlimited’s alliance with USA Rice has been helpful in maintaining duck habitat, he said.

Robert Guenther of the United Fresh Produce Association noted that fruit and vegetable producers seem to have gotten used to the idea that they must comply with federal conservation standards in order to qualify for crop insurance premium subsidies.

He added growers would be interested in crop insurance policies that address quarantine and food safety risks.

Guenther said what happens with the farm bill, including crop insurance, also will depend on how the White House gets involved. President Donald Trump told the American Farm Bureau Federation recently that he supports crop insurance, but Agriculture Secretary Sonny Perdue has made comments about restricting the program.

Guenther noted that there has been “a lot of back and forth on many issues” from the Trump administration. ❖

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