Venture Capital Funding in China Rebounded in March

Financial Times writers Mercedes Ruehl and Ryan McMorrow reported this week that, “Venture capital funding in China rebounded in March, new figures showed, as investors hunted for bargains among start-ups after the coronavirus outbreak.

Chinese start-ups and technology companies raised more than $2.5bn during the month, marking a record sixfold rise from just $410m in February, according to data from the Asian Venture Capital Journal.

The rise in activity suggested that funds had taken advantage of lower valuations resulting from the pandemic to invest in sectors including biotechnology and online education. Authorities began reopening the Chinese economy in March after managing largely to contain the country’s coronavirus outbreak.”

The FT article noted that, “Fundraising in China remains significantly below the record levels seen in 2018, when a start-up boom peaked. That turned to a bust last year as returns languished and many investment companies went out of business.

“The recent pick-up in venture funding has not been matched in other markets that have been beneficiaries of Chinese capital, such as India and south-east Asia. Chinese venture capital investment in both fell to a two-year low in March, according to Refinitiv data.”

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USDA Addresses Milk Dumping, Authorizes Other Flexibilities To Help Producers Amid Coronavirus Pandemic

A news release on Friday from USDA’s Risk Management Agency (RMA) stated that, “[RMA] is ensuring that milk producers are not inappropriately penalized if their milk must be dumped because of recent market disruptions caused by the coronavirus pandemic. In addition, RMA is extending inspection deadlines, waiving inspection requirements and authorizing more crop insurance transactions over the phone and electronically to help producers during the crisis.

“Many state and local governments have issued ‘stay-at-home’ orders and have shut down non-essential businesses in response to the COVID-19 pandemic, resulting in market disruptions and preventing in-person crop insurance transactions.”

Friday’s update indicated that, “COVID-19 shutdowns have caused disruption in the milk market, and dairy producers are dumping milk as a result. For the 2020 calendar year, RMA is allowing Approved Insurance Providers (AIPs) to count dumped milk toward the milk marketings for the DRP or actual marketings for the LGM-Dairy programs regardless of whether the milk was sold. Producers will still have to provide to the AIPs supporting documentation from the cooperative or milk handler verifying the actual pounds dumped and that the milk was dumped.”

“RMA announced other flexibilities on March 27 and April 3, including enabling producers to send notifications and reports electronically, extending the date for production reports, providing additional time and deferring interest on premium and other payments, allowing the use of self-certification replant inspections for certain crops and waiving the witness signature requirement for approval of Assignment of Indemnity. See all RMA Managers Bulletins for more detailed information.”

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Kansas Can No Longer Enforce Its So-Called ‘Ag-Gag’ Law

DTN writer Todd Neeley reported earlier this month that, “The state of Kansas can no longer enforce its so-called ‘ag-gag’ law after a federal judge on [April 3] granted a permanent injunction.

“On Jan. 22, 2020, the U.S. District Court for the District of Kansas in Kansas City, Kansas, ruled the law was a violation of free speech. Two days later, animal rights groups led by the Animal Legal Defense Fund asked the court to issue a permanent injunction to prevent the state from enforcing the law.

“In motions filed with the court, the state indicated an injunction was not needed because it didn’t intend to enforce provisions deemed to be unconstitutional.”

The DTN article stated that, “‘Although defendants assert that they will abide by the court’s decision, as the law requires, their assertion gives plaintiffs little assurance that future defendants will not enforce the unconstitutional provisions against others who assert their First Amendment rights,’ District Judge Kathryn H. Vratil wrote in the order.”

Mr. Neeley indicated that, “A spokesperson for the Kansas Attorney General’s office told DTN, ‘We are disappointed with the ruling and we will be evaluating the next steps, including whether an appeal is warranted.’

Ag-gag laws across the country are aimed at thwarting undercover investigations of agriculture facilities in order to protect the business interests and property of farmers. Similar laws in other states have faced legal challenges.”

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USDA Announces Loan Maturity for Marketing Assistance Loans Now Extended to 12 Months

A news release today from USDA’s Farm Service Agency (FSA) stated that, “Agricultural producers now have more time to repay Marketing Assistance Loans (MAL) as part of the U.S. Department of Agriculture’s implementation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. The loans now mature at 12 months rather than nine, and this flexibility is available for most commodities.

“‘Spring is the season when most producers have the biggest need for capital, and many may have or are considering putting commodities under loan. Extending the commodity loan maturity affords farmers more time to market their commodity and repay their loan at a later time,’ said U.S. Secretary of Agriculture Sonny Perdue. ‘We are extremely pleased that USDA can offer these marketing flexibilities at this critical time for the agriculture industry and the nation.’

Effective immediately, producers of eligible commodities now have up to 12 months to repay their commodity loans. The maturity extension applies to nonrecourse loans for crop years 2018, 2019 and 2020. Eligible open loans must be in good standing with a maturity date of March 31, 2020, or later or new crop year (2019 or 2020) loans requested by September 30, 2020. All new loans requested by September 30, 2020, will have a maturity date 12 months following the date of approval.”

The FSA update noted that, “The maturity extension for current, active loans will be automatically extended an additional 3 months. Loans that matured March 31 have already been automatically extended by USDA’s Farm Service Agency (FSA). Producers who prefer a nine-month loan will need to contact their local FSA county office. Loans requested after September 30, 2020, will have a term of nine months.”

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UAE Ag Tech Start-Up Pure Harvest Smart Farms Raises $20.6 Million

Reuters News reported this week that, “United Arab Emirates agriculture technology start-up Pure Harvest Smart Farms has raised $20.6 million in fresh funding and secured commitments for a further $100 million, it said on Monday.

“Wafra International, an investment firm owned by the Kuwait state pension agency, is investing $10 million of the new funding, and committing $100 million in equity and project financing.

The food technology industry is still nascent in Gulf Arab states, where there is sparse arable land and temperatures in the summer rise above 50 degrees Centigrade (122°F).”

The Reuters article noted that, “Pure Harvest Smart Farms supplies tomatoes grown in an enclosed, environment-controlled farm to supermarkets, hotels and restaurants in the UAE.”

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Non-Bank Lenders put on Downgrade Watch

Financial Times writers Billy Nauman, Robert Armstrong and Laura Noonan reported last week that, “US non-bank lenders, which originate half of America’s home loans, are facing financial pressure and ratings downgrades as they await clarity from the federal government about how to deal with mortgage payment forbearance.

“Rating agency Moody’s switched its outlook for non-bank mortgage lenders in the US from ‘stable’ to ‘negative’ on Thursday, warning of the ‘intense’ liquidity pressures.

“‘Our baseline scenario is that over the next several quarters non-bank mortgage firms will face ongoing liquidity stress, weaker profitability, as well as declines in capitalisation and asset quality,’ the analysts wrote.”

The FT article stated that, “The non-bank lenders typically make loans that they then bundle and sell into bond markets, once the bundles have been insured by Fannie Mae and Freddie Mac, which are backed by the government.

But the lenders continue to act as servicers on the loans. If unemployed borrowers exercise their right to forbearance — as authorised by the recently passed stimulus law — servicers still must make the principal and interest payment to bondholders. Fannie and Freddie ultimately reimburse the servicers, but at a lag, creating the potential for cash crunches.”

 

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Mortgage Lenders Prepare for Delinquencies

Bloomberg writers Prashant Gopal and John Gittelsohn reported earlier this month that, “Mortgage lenders are preparing for the biggest wave of delinquencies in history. If the plan to buy time works, they may avert an even worse crisis: Mass foreclosures and mortgage market mayhem.

“Borrowers who lost income from the coronavirus — already a skyrocketing number, with a record 10 million new jobless claims — can ask to skip payments for as many as 180 days at a time on federally backed mortgages, and avoid penalties and a hit to their credit scores. But it’s not a payment holiday. Eventually, they’ll have to make it all up.

As many as 30% of Americans with home loans – about 15 million households –- could stop paying if the U.S. economy remains closed through the summer or beyond, according to an estimate by Mark Zandi, chief economist for Moody’s Analytics.”

The Bloomberg writers stated that, “If the pandemic has taught us anything, it’s how quickly everything can change. Just weeks ago, mortgage lenders were predicting the biggest spring in years for home sales and mortgage refinances.”

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USDA Adds Additional Flexibilities for Crop Insurance to Support America’s Farmers and Ranchers

A news release today from USDA’s Risk Management Agency (RMA) stated that, “[RMA] is authorizing self-certification on replant inspections and waiving witness signatures in certain situations as part of a broader suite of flexibilities to support producers during the coronavirus pandemic. Specifically, Approved Insurance Providers (AIPs) may allow the use of self-certification replant inspections for certain crops with 100 gross acres (before considering share) per unit in lieu of 50 acres, and they may waive the witness signature requirement for approval of Assignment of Indemnity through July 15, 2020, for applicable crop years.

“‘RMA recognizes the challenges the crop insurance industry and America’s farmers and ranchers face,’ RMA Administrator Martin Barbre said. ‘We will continue to provide flexibility that supports the health and safety of all parties while also ensuring the Federal crop insurance program continues to serve as a vital risk management tool.’

“Many state and local governments have issued ‘stay-at-home’ orders in response to the COVID-19 pandemic, which may prevent loss adjusters from completing on-the-farm replant inspections and obtaining associated signatures required for replant certification purposes. In the absence of ‘stay-at-home’ orders, loss adjusters and policyholders may also be prevented from meeting in person due to concerns of spreading COVID-19.”

Today’s update added that, “For the most current updates on available services, visit farmers.gov/coronavirus. “

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Entrepreneurs Want to Attract Venture Funding, Tech Talent to Inland Locations

Wall Street Journal writer Shayndi Raice reported last month that, “San Francisco entrepreneur Madhu Chamarty got the idea for his latest startup from Amazon. com Inc.’s search for its second headquarters, which included finalists like Indianapolis, Pittsburgh and Columbus, Ohio.

“For him, the search highlighted overlooked cities away from the coasts that had the talent pools to host tech companies. Early last year, he launched Beyond HQ, a startup that uses technology to find new homes for Silicon Valley firms looking to move inland.

“‘It’s not that magic only happens in San Francisco and New York,’ he said.”

The Journal article noted that, “Mr. Chamarty is part of a group of entrepreneurs working on spreading tech talent more evenly across the U.S. The goal is to attract funding and workers to places far from the large tech hubs in Silicon Valley, New York City, Boston or Seattle.

“Five metropolitan areas—Boston, San Diego, San Francisco, Seattle and San Jose, Calif.—accounted for 90% of all U.S. high-tech job growth between 2005 and 2017, according to a recent study led by Rob Atkinson of the Information Technology and Innovation Foundation and Mark Muro of the Brookings Institution.

“States between the coasts have long touted their low cost of living or quality of life to attract talent away from more-populous peers. The new crop of entrepreneurs is bringing relocation services, tech training and investor dollars to accomplish similar goals.”

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Record Low Mortgage Rates Are Delivering More Refinancing Demand

Wall Street Journal writers Orla McCaffrey, Julia Carpenter and Ben Eisen reported last month that, “Record low mortgage rates are delivering more refinancing demand than some lenders can handle.

“Homeowners are rushing to refinance their mortgages thanks to big falls in interest rates prompted by fears of the spreading coronavirus. Some lenders are having trouble keeping up with the red-hot demand.

“Weekly refinancing applications recently hit their highest level in nearly 11 years, according to the Mortgage Bankers Association. The average rate on a 30-year fixed-rate mortgage, the most popular home loan in the U.S., is close to its lowest level in nearly 50 years of record-keeping, hitting 3.36% [the week of March 9th].”

The Journal article added that, “Falling rates are generally considered good news for the mortgage market. But the current jump in refinancing demand presents a dilemma for some lenders, which must balance their desire for volume with their capacity to process applications.

Lenders are wary of expanding too quickly in the boom-and-bust mortgage market. What’s more, the coronavirus pandemic—though it helped send mortgage rates down—could hobble home sales during the important spring selling season. Some would-be sellers are already reluctant to stage open houses, and potential buyers could shy away because they are unsure about their jobs.”

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