Tuesday June 9 Ag News

Changing Grid Premiums and Discounts Due to Underlying Changes in the Fed Cattle Industry
Elliott Dennis, Extension Economist, Dept of Ag Econ, University of Nebraska - Lincoln

In recent weeks there has been increased attention given to the role of Alternative Marketing Arrangements, commonly referred to as AMA's, in the fed cattle market. The use of these AMA's varies greatly by region and some of the more common AMA's used include grid and formula pricing. AMA's pay producers premiums and discounts from a 'base price' based on a combination of the yield grade, quality grade, and weight of dressed cattle. It is common for the negotiated cash price to serve as the 'base price' for AMA's using the either the geographical region or the 5-market average. The decline in negotiated cash trade has varied by geographical region causing some market participants to wonder if the 'base price' truly reflects the local demand for cattle. For example, cattle formula priced in Texas using the 5-market average could, in certain weeks, be heavily weighted towards Nebraska and Iowa prices.

However, the current concern surrounding AMA's has more to do with lower cash prices received by producers due to market reactions to COVID-19 than the role of AMA's role in thinly traded markets. In an effort to effectively raise producer received prices, market participants have introduced a series of price and supply control proposals. The U.S. Senate, led by Senator Chuck Grassley (R-IA) and Senator Jon Tester (D-MT), have proposed a law that would mandate large-scale packers to procure a minimum of 50 percent of total cattle purchased in the cash market each week - commonly referred to as the '50-14' rule. The hope is that by increasing cash trade transactions it will solve issues with price discovery effectively increasing negotiated cash prices. Supply of fed cattle and demand for wholesale beef determines the price of fed cattle. In order to increase fed cattle prices, the '50-14' rule would either need to reduce the supply of fed cattle or increase the demand for wholesale beef. While the rule would increase negotiated cash transactions helping in price discovery in a given week, it is unlikely to affect the underlying fed cattle market supply and demand conditions to effectively increase cash price levels.

Two other efforts to increase cash transactions, in hopes of increasing cash prices, is 'bid-the-grid' through the Fed Cattle Exchange platform and the 'set aside' program (similar to the one used in Canada). Many details and questions still lack regarding the 'bid-the-grid' process and potential efficacy in increasing regional cash trade. Its aim is to increase prices by having each producer negotiate grid the starting base price. While this may help in price discovery (i.e. arriving at a transaction price for a given quality and quantity of a product at a given time and place) this method once again falls short of fundamentally changing price determination. The 'set aside' program aims to control the number of cattle that enter the market each week that can be processed. Producers would be paid a set amount per day to compensate for the cost of feeding. Who would be willing to pay for the program as well as program start and end dates is likewise uncertain. This may help reduce the backlog due to packing plant closures, cattle will be processed quickly as soon as food service demand increases.

So what has been happening to cattle transactions (i.e. negotiated cash, forward contract, formula, and negotiated grid) during COVID-19? Looking at all cattle in the U.S., formula transactions have largely been replaced by negotiated grid. For example, in April formula trade was 74% of total weekly transactions and negotiated grid was 4%. In May formula trade fell to 48% and negotiated grid was 20%. The past few weeks cattle sold on formula has steadily increased while cattle on the negotiated grid have decreased. There has been little change in the negotiated cash and forward contract trade, on average for the U.S., since January 1, 2020. As in most cases there were significant differences across geographical regions. Formula trade fell in the Texas-Oklahoma-New Mexico region but not below 5-year historical levels. This was offset by trade in the negotiated grid. Formula priced cattle fell from 95% of cattle priced in April to 30% in May. This was replaced entirely by negotiated grid priced cattle. In both the Texas-Oklahoma-New Mexico and Kansas region there was little movement in the negotiated price. Pricing in Nebraska has been somewhat more volatile. Negotiated cash fell a historic low of 2% of transactions in May and entirely offset by increased formula trade. Negotiated grid and forward contract transactions were historically constant.

Since negotiated cattle can be sold either live or dressed final cash payment is always determined by quantity (i.e. lbs. of animal/carcass) times negotiated price. Formula or grid priced cattle rely upon a base price plus discounts or premiums for cattle quality or characteristics. Premiums for quality are paid for carcasses grading Prime or Certified Angus Beef (CAB) or production practices such as 'All Natural' or 'Non Hormone Treated Cattle' (NHTC). Choice is the base quality grade and discounts are applied to carcasses grading select. Since Jan 1, 2020 NHTC and 'All Natural' premiums have remained constant, CAB premiums have increased, Prime premiums have decreased, and Select discounts have increased. The difference between Choice and Select, commonly referred to as the Choice-Select spread, is largely consistent with historical patterns of widening during the first quarter. The deterioration in the premium for Prime and the sharp increase in CAB are abnormal. One reason for the deterioration in the premium for Prime product is likely due to the reduced demand for high end steaks at restaurants from quarantine restrictions accompanied by an increase in supply due to fed cattle being on feed longer as packing plant closed.

Grids or formulas also require cattle carcasses to be within a given weight range, generally between 600-900 lbs. on dressed basis. Cattle that fall outside of these limits are discounted. Cattle slaughter weight has increased as packing plants closed causing reduced packing capacity and cattle to be on feed longer than anticipated. For example, the dressed weight for steers and heifers has increased by about 10 lbs. at a time when dressed weight historically decreases. So how have weight discounts changed since January? Weight discounts were constant for all weights prior to January 1, 2020. After that, the discount for cattle carcasses over 1050 lbs. has decreased. In other words, packers discounted heavy carcasses less than in months and years prior. All other weight discounts have remained unchanged. Seen in the light of historical discounts, this change in grid pricing for heavy cattle is unprecedented. For context, cattle are usually harvested between 1200-1350 lbs. on live weight basis. Given a 63% dressing percentage, cattle are weighing upwards of 1500 lbs. Assuming an ADG of 3 lbs. per day, cattle harvested were on feed approximately 1.5 to 2 months longer. This would align well with the timing of COVID-19 cases in packing plants.

The underlying makeup of cattle transactions the market is seeing, and previously discussed above, is likely more due to a change in the grid premiums and discounts than a fundamental shift in producer preference for the way cattle are transacted. As the grid premiums and discounts have changed, in some cases dramatically, more cattle have once again shifted away from negotiated grid towards formula. As the U.S. come out of the COVID-19 quarantine restrictions, it is likely that share of cattle transactions are likely to normalize to historical levels. Fed cattle cash prices are likely to increase as a result due to an improvement in domestic retail and food service beef and export beef demand. Current proposals to increase the number of cattle transacted through a particular channel is unlikely to affect beef demand derived from consumers and passed along the supply chain down to producers or alter the current supply of fed cattle ready for harvest. While their long-term implications are unknown, creating new transaction prices are unlikely do little to fundamentally change price determination, potentially causing increased costs and reducing profitability for the beef complex. Consistent with the economic theory of derived demand, the economic burden of these policies are likely to largely carried by the cow-calf industry.



Webinar: Farm Survival Marketing Strategies

The University of Nebraska-Lincoln’s Department of Agricultural Economics’ Farm and Ranch Management team is presenting a series of webinars focusing on COVID-19’s impact on agriculture in Nebraska.

The live webcasts will cover topics related to management and economic issues relevant to producers and communities in the state. They will be presented by experts from across the country and include time for questions and answers.

WEBINAR: Farm Survival Marketing Strategies
Thursday, June 11, noon Central Time.
From the Department of Agricultural Economics at the University of Nebraska-Lincoln:
    Robert Tigner, Agricultural Systems Economist and Extension Educator
    Cory Walters, Associate Professor and Grain Marketing and Insurance Specialist
    Jessica Groskopf, Agricultural Systems Economist and Extension Educator

COVID-19, the oil price collapse and world-wide lockdowns have caused a challenging economic environment for farmers. The marketing challenge may increase as the growing season progresses. Farmers can meet the challenge through a consistent marketing approach that reduces risk and tries to ensure cash flow in 2020. Some marketing strategies reduce risk and others may increase farmer risk. This webinar will help attendees understand which marketing strategies these are.

You must register to access this event at farm.unl.edu. 



Free Farm and Ag Law Clinics Set for June

Free legal and financial clinics are being offered for farmers and ranchers across the state in June 2020. The clinics are one-on-one meetings with an agricultural law attorney and an agricultural financial counselor. These are not group sessions, and they are confidential.

The attorney and financial advisor specialize in legal and financial issues related to farming and ranching, including financial and business planning, transition planning, farm loan programs, debtor/creditor law, debt structure and cash flow, agricultural disaster programs, and other relevant matters. Here is an opportunity to obtain an independent, outside perspective on issues that may be affecting your farm or ranch.

COVID-19: For the time being the clinics are being conducted as conference calls or as Zoom meetings.  It is therefore possible to attend a clinic from any location in the state. In-person clinics are expected to resume in the near future, at which time locations will be announced.

Clinic Sites and Dates
    Wednesday, June 10th
    Thursday, June 18th
    Wednesday, June 24th

To sign up for a free clinic or to get more information, call the Nebraska Farm Hotline at 1-800-464-0258.  Funding for this work is provided by the Nebraska Department of Agriculture, and Legal Aid of Nebraska.



IDALS Expands Disposal Assistance Program to Include Animals Euthanized in May

Iowa Secretary of Agriculture Mike Naig announced today that the Iowa Department of Agriculture and Land Stewardship is extending the financial assistance offered through the Iowa Disposal Assistance Program to pork producers who were forced to euthanize their animals due to COVID-19 supply chain disruptions before the program launched on May 26. Producers can start applying for retroactive funding today, which includes hogs that were euthanized between May 1-25, 2020.

COVID-19-related worker shortages are causing meat processing facilities to reduce production. Iowa State University estimates that, as of mid-May, approximately 600,000 pigs in Iowa were unable to be harvested.

“COVID-19 is causing ongoing disruptions to the food supply chain. Pork producers are going to extraordinary lengths to find solutions but it’s not enough to make up for the backlog happening on farms,” said Secretary Naig. “Euthanasia is a very difficult decision for producers to make and is always used as a last resort. The disposal assistance program just one way the state is trying to help producers during this challenging time.”

The Department is offering producers $40 per approved animal to help cover some of the disposal costs for market-ready hogs (weighing at least 225 pounds). Producers must provide documentation, including proof of proper disposal, and an affidavit from their herd veterinarian confirming impending welfare issues, to receive funding. Each approved applicant may receive funding for up to 30,000 animals per round, depending on the number of applicants.

To qualify for retroactive funding (Round 0), producers must submit their applications to the Iowa Department of Agriculture between June 9-22. Applicants will be notified of approval by June 24. To qualify for Round 0 funding, producers must have euthanized animals between May 1-25. Disposal claims must be received by the Iowa Department of Agriculture by June 29, and proof of proper disposal must be submitted by July 6.

Pork producers can also apply for Round 3 assistance between June 9-22. Applicants will be notified of approval by June 24. To qualify for Round 3 funding, producers must euthanize animals between June 9-26. Disposal claims must be received by the Iowa Department of Agriculture by June 29, and proof of proper disposal must be submitted by July 6.

Questions about the Iowa Disposal Assistance Program can be directed to (515) 281-5321 or IDAP@iowaagriculture.gov.



Iowa Corn Announces $25,000 Matching Grant to the Food Bank of Iowa

Iowa Corn has partnered with the Food Bank of Iowa to raise funds towards feeding and supporting Iowans. Iowa Corn will provide a matching grant up to $25,000 with a goal to raise at least $25,000 and then match those contributions equating to a goal of $50,000 for the Iowa Corn Team. This would provide over 200,000 meals of corn-fed meat, dairy, and eggs to Iowans across the state. We encourage anyone who wants to support those in need of meals as well as farmers to join the Iowa Corn Team and donate.  Food donations are always critical but even more so now during COVID-19. The Food Bank of Iowa is proud to serve hungry Iowans across 55 counties in our state.

“Farmers are dedicated to feeding people. Here in Iowa, we are number one in corn production that goes to livestock feed, ethanol fuel, and over 4,000 everyday products. Iowa Corn farmers want to help feed hungry Iowans, and provide education on all products made from corn,” said Roger Zylstra, Iowa Corn Promotion Board (ICPB) President and farmer from Lynnville. “ICPB works to develop new uses for corn, create market demand for corn in all forms as well as educate consumers about corn and the farmers who grow it. Sharing our farms and creating awareness on food origin is why we are proud to support the Food Bank of Iowa as they continue to combat hunger. Please help to feed our fellow Iowans by donating to the Food Bank of Iowa as part of the Iowa Corn Team.”

In addition to establishing a team, Iowa Corn donated 5,000 shopping bags to the Food Bank of Iowa to assist in safely distributing meals across the state. 

“Corn grown in Iowa benefits our entire state whether it’s feeding livestock and fueling cars or being enjoyed on the tables of our friends and neighbors,” said Michelle Book, president and CEO of Food Bank of Iowa. “We are so grateful for everything Iowa Corn does to support our state and for this generous gift that encourages others to get involved."

To learn more about the Iowa Corn fundraiser and to donate, visit give.foodbankiowa.org/teams/13796-iowa-corn?ref=1&uid=447024. 



Dig into Soil Health During Virtual Field Day

Iowa Learning Farms, in partnership with the Iowa Nutrient Research Center and Conservation Learning Group, is hosting a free virtual soil health field day on Thursday, June 18 at 1 p.m.

Participants will dig into soil health with Marshall McDaniel, assistant professor in soil-plant interactions at Iowa State University, with video footage from the field and live interaction during the event.

The term soil health has recently become popular due, in large part, to the increased awareness of the importance of soil biology. However, current biological soil health tests are expensive, highly variable and difficult to interpret. McDaniel studies the relationship between soils and plants and how this relationship is affected by management and the environment. The McDaniel Research Group’s goal is to understand what enhances soil-plant interaction, soil health and agroecosystem sustainability.

“Farmers want to be able to monitor changes in their soils,” McDaniel said. “While traditional fertility tests have major limitations when it comes to measuring soil biology, commercially available soil health tests are very expensive. We want to highlight some good do-it-yourself soil health tests that farmers and landowners can implement relatively inexpensively.”

Make plans to join and participate in the live field day. Shortly before 1 p.m. CDT on June 18, click this URL: https://iastate.zoom.us/meeting/register/tJUpduihpj8iE9ZHcjpsenc2DWQILG41wg0D or visit www.iowalearningfarms.org/page/events and click “Join Live Virtual Field Day”.

Or, join from a dial-in phone line by dialing +1 312 626 6799 or +1 646 876 992; meeting ID: 914 1198 4892.

The field day will be recorded and archived on the ILF website so that it can be watched at any time. The archive is available online.

A Certified Crop Adviser board-approved continuing education unit has been applied for, for those who are able to participate in the live webinar. Information about how to apply to receive the credit (if approved) will be provided at the end of the live field day.



America’s Meatpacking Facilities Operating More Than 95% of Capacity Compared to 2019

U.S. Secretary of Agriculture Sonny Perdue today applauded the safe reopening of critical infrastructure meatpacking facilities across the United States. As of this morning, across the cattle, swine, and broiler sectors, processing facilities are operating more than 95% of their average capacity compared to this time last year. In fact, beef facilities are operating at 98%, pork facilities are operating at 95%, and poultry facilities are operating at 98% of their capacity compared to the same time last year. America’s meatpacking facilities are safely resuming operations following President Trump’s Executive Order directing the facilities to implement the Centers for Disease Control and Prevention (CDC) and the Department of Labor’s Occupational Safety and Health Administration (OSHA) guidelines specifically created for the meat and poultry sector response to the COVID-19 pandemic. The U.S. Department of Agriculture (USDA) in conjunction with the CDC, OSHA, and state and local health officials have been working around the clock to ensure a safe and stable supply of protein is available for American consumers all while keeping employees safe.

“President Trump took decisive action to ensure America’s meatpacking facilities reopen in a safe way to ensure America’s producers and ranchers will be able to bring their product to market,” said Secretary Perdue. “I want to thank the patriotic and heroic meatpacking facility workers, the companies, and the local authorities for quickly getting their operations back up and running, and for providing a great meat selection once again to the millions of Americans who depend on them for food."
 
Background:
CDC and OSHA have issued guidance for plants to implement to mitigate the spread of COVID-19 and ensure employee safety while maintaining operations. USDA will continue to work with the CDC, OSHA, and state and local officials to keep these critical facilities open while maintaining worker safety.



 ARA, NCFC Ask for Further Clarification on EPA Dicamba Order

The Agricultural Retailers Association (ARA) and the National Council of Farmer Cooperatives (NCFC) today called on the Environmental Protection Agency (EPA) to further clarify the agency’s cancellation order on use and distribution of dicamba products.

The call came in a letter sent by ARA President and CEO Daren Coppock and NCFC CEO Chuck Conner to EPA Administrator Andrew Wheeler. On June 3, the Ninth Circuit Court of Appeals vacated three dicamba registrations and yesterday the EPA clarified that under the order farmers or applicators with existing stocks of dicamba may apply the herbicide until July 31.

“While the Agency’s cancellation order provided some guidance to end-users as well as applicators, it failed to address several scenarios where product is in the pipeline at various points in the supply chain,” the groups stated in the letter. “These questions need quick answers during this critical time of the growing season as weeds will not wait for protracted legal analysis.”

One example given is one in which a producer has pre-paid or contracted for the product before June 3 but had not yet had it delivered. The letter also notes that several states allowed sale and distribution of these dicamba products after the court decision; since the order is retroactive to June 3, however, guidance is needed on whether farmers are permitted to use product they purchased between June 3 and June 8.

“[W]e request the Agency issue further clarification following the issuance of the cancellation order for the three dicamba products,” the letter concludes. “Such clarification can come in the form of a ‘frequently asked questions’ section on the Agency’s web site and be updated in a timely manner as issues arise during this critical time.”



Bayer Crop Protection on Court ruling on XtendiMax Herbicide registration
www.roundupreadyxtend.com

On June 8, 2020, the U.S. Environmental Protection Agency (EPA) issued an order in response to the U.S. Court of Appeals for the Ninth Circuit’s June 3, 2020, ruling that vacated current U.S. registrations of certain low-volatility dicamba products, including XtendiMax® Herbicide with VaporGrip® Technology. The Court ruled in favor of a petition challenging the EPA’s 2018 registration decision. The subsequent action by the EPA provides, among other things, that “growers and commercial applicators may use existing stocks that were in their possession on June 3, 2020, the effective date of the Court decision. Such use must be consistent with the product’s previously-approved label, and may not continue after July 31, 2020.”

The EPA’s order addresses the use, sale, and distribution of existing stocks of XtendiMax herbicide and the other low-volatility dicamba products impacted by the Court’s ruling. Click here for the EPA’s full order – see page 11 for key details.

We welcome the EPA’s swift action to provide that customers who have already invested in XtendiMax and the Roundup Ready® Xtend Crop System can continue to protect their crops from difficult-to-control weeds.

We will keep www.roundupreadyxtend.com/xtendimaxupdates updated with the latest information for our customers. Our top priority is making sure all our customers have the support they need to have a successful season.

The Court’s June 3 ruling pertains specifically to the EPA’s 2018 registration decision, which expires in December 2020. The EPA is currently reviewing a new registration for XtendiMax for the 2021 season and beyond – we hope the EPA completes the review and issues a new registration by this fall.

Know that Bayer stands fully behind XtendiMax herbicide. We are proud of our role in bringing innovations like XtendiMax forward to help growers safely, successfully, and sustainably protect their crops from weeds. We will continue working with the EPA, growers, academics, and others to provide long-term access to this important tool.



Farm Bureau Commends EPA Action on Dicamba Use

The American Farm Bureau Federation commends the swift action by the Environmental Protection Agency to allow farmers who have already purchased dicamba products to use existing stock this season. Last week, the Ninth Circuit Court of Appeals prohibited the use of three dicamba products, effectively taking them off the market as of June 3, 2020. AFBF President Zippy Duvall wrote a letter to the EPA requesting farmers be allowed to use dicamba this season.

American Farm Bureau Federation President Zippy Duvall:
“Farmers across the country invested in dicamba-resistant seeds based on the EPA’s previous approval. Millions of acres of crops have already been planted and there’s no turning back. The clarity provided by the EPA provides certainty for farmers who were left wondering how they would protect their crops and stock America’s pantries.”



Peterson, Costa, Plaskett, and Vela Highlight CFAP Concerns in Letter to Perdue

In a letter to Agriculture Secretary Sonny Perdue Tuesday, House Agriculture Committee Chairman Collin C. Peterson of Minnesota, and Subcommittee Chairs Jim Costa of California, Stacey E. Plaskett of the Virgin Islands and Filemon Vela of Texas relayed concerns with the implementation of the Coronavirus Food Assistance Program (CFAP) by the U.S. Department of Agriculture.

Highlighting the continued loss in both value and demand for agricultural products related to the COVID-19 pandemic, the Members detailed the following concerns in the letter:
-    CFAP does not include commodities under contract, even though several of the most impacted crops are typically grown under contract, including potatoes and malting barley.
-    USDA chose to cover livestock sales between January 15th and April 15th when COVID-19-related livestock market declines did not begin until February 2020 and some of the lowest market prices persisted well beyond April 15th, effectively arbitrarily picking winners and losers based solely on when livestock was sold without regard to actual market conditions.
-    CFAP does not recognize the cost premium of organic crops, by differentiating organic prices for certified organic producers.
-    USDA used data not fully representative of the farmgate value of some specialty crops to determine their eligibility for CFAP and CFAP payment rate.
-    CFAP payments do not distinguish between livestock raised for restaurant or higher value market chains, such as heritage breeds or grass-fed.
-    It remains unclear how producers of products that are not sold in cash markets with publicly reported prices (e.g., commodities that sell primarily to retail, farmers’ markets, fast food, and restaurant markets) and suffered significant market losses will meet the price data requirements of the CFAP Notice of Funding Availability. Impacted sectors include domestic aquaculture, bison, poultry, cut flowers, nursery products, and potatoes.
-    CFAP payments do not distinguish for the higher value given to crops that are marketed directly through restaurants, farmers’ markets, and other alternative markets.

Additionally, the Chairs pointed to lingering concerns over staffing levels and existing workload at Farm Service Agency county offices, and what delays those factors may cause in CFAP-related assistance.



U.S. Farm & Biofuel Leaders Demand Answers on Retroactive EPA Exemptions

In a letter today, America’s top biofuel and farm advocates called on the Environmental Protection Agency (EPA) to offer answers on a new effort to undermine the Renewable Fuel Standard (RFS). During a Senate hearing last month, administration officials confirmed their consideration of retroactive small refinery exemptions (SREs) covering previous years. The “gap-filings” are designed to reconstitute a continuous string of exemptions for select oil companies “to be consistent with the Tenth Circuit decision,” thus circumventing court limits on new oil industry handouts at the expense of farmers and biofuel producers.

“These ‘gap filings’ appear to be little more than the latest in a string of oil industry tactics designed to subvert the law and sidestep a court order to uphold the RFS,” wrote the Renewable Fuels Association, Growth Energy, the National Biodiesel Board, the National Corn Growers Association, the American Farm Bureau Federation, the American Soybean Association, the National Farmers Union, the American Coalition for Ethanol, and Fuels America.

“The biofuels industry has been hit especially hard by the sharp decline in fuel demand across the country, as residents follow local, state, and federal guidance to practice social distancing and minimize travel,” added biofuel and farm advocates. “Over 100 biofuel plants fully idled or cut production, with ripple effects negatively impacting agricultural commodity prices, farmers, and the food supply chain. EPA inaction on court orders and prolonged SRE uncertainty continue to stifle investment in American biofuels and destabilize agricultural markets. Backfilling SREs to circumvent a court decision would exacerbate market uncertainty at a time when rural communities already face unprecedented economic challenges.”



NGFA, ag groups, urge congressional support of FARM to TABLE Act

The National Grain and Feed Association (NGFA) and more than 60 other organizations urged members of Congress to support a bill that would help the nation’s agricultural suppliers, producers and transporters by ensuring hours-of-service rules for agricultural haulers are consistent throughout the year and across state lines. 

The “FARM to TABLE Act,” introduced by Rep. John Joyce, R-Pa., would help make the agricultural exception to the federal hours-of-service rules more widely available by making it available year-round and providing clarity with respect to its application to agricultural products, the groups said in a June 9 letter. 

“As COVID-19 clearly has demonstrated, a reliable food and fiber supply chain is critically important to meeting the needs of families across the nation,” the letter stated. “This commonsense legislation will provide relief to agricultural producers and their drivers who have worked tirelessly to feed America during this crisis.”

Federal law currently provides an exception from federal hours-of-service rules for the transportation of agricultural commodities within a 150-air-mile radius from the source of the commodities during planting and harvesting periods, which are determined by each state. While most states have year-round planting and harvesting periods, 15 have chosen to narrowly define their planting and harvesting seasons.

“These varying regulations create confusion as to what rules a driver is operating under at any given time,” the groups said. In addition, “the current narrow definitions unnecessarily inhibit industries, such as dairy, livestock and agricultural inputs, which transport their supplies year-round.”

The “FARM to TABLE Act” would simplify the exception for agricultural commodities by eliminating the state-by-state planting and harvesting period definition and by allowing the exception to apply year-round. Further, the bill also would provide greater clarity of the products included within the definition of an “agricultural commodity” covered by the federal hours-of-service rules exception, such as by adding the term feed ingredients to include soybean meal, distillers grains and other feed ingredients. This is consistent with input provided to the Federal Motor Carrier Safety Administration by more than 100 agricultural and trucking organizations last fall.



Valmont Acquires Majority Stake in Brazil-Based Solar Company

Valmont Industries, Inc., a leading global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today announced the purchase of a majority stake in Energia Solar do Brasil (Solbras), a leader in the photovoltaic (PV) energy sector. Effective immediately, the company will go to market under the Valley brand.

"As the irrigation industry's worldwide leader, Valmont supplies products that support critical infrastructure, and the Valley brand is the market innovator in irrigation technology," said Len Adams, president of Valley Irrigation. "This acquisition allows us to expand our product offerings to include not only the most durable and advanced pivots available, but also a sustainable, low-cost energy source to provide power to them, with Valmont Solar Solutions."

Solbras was founded in 2013, with locations in São João da Boa Vista (SP) and Goiânia (GO). Geraldo Afonso Dezena da Silva, president of Solbras, believes the acquisition marks an important new phase in their history. "Combining the global strength of Valmont with the market leadership of Solbras, we will be able to expand the presence of solar energy in agri-business and all sectors of the economy."

Solbras operates throughout Brazil; with the acquisition, their services will expand globally through the strength of the industry-leading Valley dealer network. They offer the most advanced solution in photovoltaic solar energy, efficiently converting the sun's rays to clean electric power. Their services include distributed or centralized generation of photovoltaic energy; approval, design, and engineering of detailed technical projects; and consulting on new PV plants focusing on agri-business. In addition, every Valmont Solar installation includes remote monitoring and control capabilities.

"Solar energy is already a fundamental strategy for projects that seek to maximize efficiency and sustainability," said João Rebequi, vice president of Valmont Irrigation -- Latin America. "Combined with the strong presence of Valley equipment in fields around the world and our industry-best dealer network, we will leverage the expertise of Solbras beyond Brazil. This will further our leadership position in all facets of irrigation and agricultural technology."

According to the Brazilian Solar Photovoltaic Energy Association (ABSOLAR), the installed power of solar photovoltaic generation in Brazil grew by around 1 GW between January and May this year. The country's total volume reached 5.5 GW.

Renato Silva, general manager of Valmont Irrigation -- Brazil, adds that photovoltaic energy has several benefits for the automation of irrigation systems, in addition to an important role in reducing environmental impacts. "Growers can optimize the efficiency of their operation, saving on energy expenses and reducing water usage."

Both the positive environmental impacts and the potential to contribute toward developing local economies are exciting, says Adams. "Our market-leading technology is furthering our mission of delivering a complete package of solutions to help growers make smarter decisions and produce greater yields while using fewer resources. Valley, the brand trusted by generations of farmers, is helping reduce their environmental footprint for generations to come."



Elanco Announces EU Approval of Bayer Animal Health

Elanco Animal Health Incorporated Monday announced that the European Commission (EC) has granted approval of Elanco's pending acquisition of Bayer AG's (ETR: BAYN) animal health business. The company continues to progress toward a mid-year closing, anticipated August 3, 2020.

"Approval from the European Commission is an important milestone toward the completion of our acquisition of Bayer Animal Health," said Jeff Simmons, president and CEO of Elanco. "As the transaction edges closer to fruition, we look forward to turning our full attention to delivering innovation and an expanded portfolio of solutions for farmers, veterinarians and pet owners across the globe. The recent months have only underscored the critical work our farmers do in delivering meat, milk, fish and eggs, and the importance of providing pet owners and veterinarians with a variety of solutions in multiple channels from telemedicine and e-commerce to direct home delivery. Combining Bayer Animal Health's leadership in these areas better positions Elanco to deliver on these needs."

The complementary nature of this transaction, combining Elanco's long-standing focus on the veterinarian with Bayer's direct-to-consumer expertise, will strengthen and accelerate the company's Innovation, Portfolio and Productivity strategy. The transaction advances Elanco's portfolio transformation, creating a balance between the farm animal and pet businesses. It will also expand Elanco's omnichannel approach, substantially diversifying its pet health business into the retail and e-commerce channels as Elanco continues to determine the best methods for reaching pet owners and veterinarians.

Elanco previously announced divestiture agreements in the range of $120 million to $140 million of revenue to help advance the needed regulatory reviews. The EC's approval is conditional on several of these proposed divestitures, including:

- Divestiture of the worldwide rights for Osurnia, a treatment for otitis externa in dogs, being sold to Dechra Pharmaceuticals PLC

- Divestiture of the worldwide rights for Vecoxan, used for prevention and treatment of coccidiosis in calves and lambs being sold to Merck Animal Health (also known as MSD Animal Health).

- Divestiture of European Economic Area and UK rights to the Drontal and Profender product families and related pipeline assets from Bayer Animal Health being sold to Vetoquinol SA, a - French pharmaceutical company. These products are broad-spectrum de-wormers for dogs and cats.

In addition to EC approval, Elanco has received antitrust clearance for the transaction in China, Colombia, South Africa, Turkey, Ukraine, Vietnam, and provisional clearance in Brazil. Elanco continues to cooperate with agencies in other jurisdictions. Further, Elanco fully secured financing early in the first quarter of 2020 to complete the transaction through its completed equity issuance and pricing of its Term Loan B, which will fund at deal close.

The transaction remains subject to additional regulatory approvals and customary closing conditions.