Senate Ag Committee Passes GMO Labeling Measure

A news update today from the Senate Agricultural Committee indicated that, “U.S. Senator Pat Roberts, R-Kan., Chairman of the Senate Committee on Agriculture, Nutrition and Forestry, today held a business meeting where the Chairman’s Mark on Biotechnology Labeling Solutions [bill here, summary here] was favorably reported with a bipartisan vote of 14-6.”

“The legislation, which creates a national solution for a state-by-state patchwork of biotechnology labeling laws, now heads to the full Senate for consideration. Chairman Roberts will continue to work toward a final solution that wins approval on the Senate floor.”

Today’s news release added that, “The legislation has the support of more than 650 farmers, cooperatives, agribusinesses, processors, seed makers, handlers, food and feed manufacturers, lenders, and retailers.

“The U.S. House of Representatives last July passed legislation on this topic with a bipartisan vote of 275-150.

“The Senate Agriculture Committee last October held a hearing on agriculture biotechnology with federal regulators and perspectives from producers and consumers – the first biotechnology hearing in 10 years. The hearing focused on science and the role of the regulatory system to help ensure a safe and affordable food supply for consumers at home and around the globe.”

Senator Heidi Heitkamp (D., N.D.) noted in a news release that, “[She] today voted with a bipartisan majority of the Senate Committee on Agriculture to advance a bill on biotechnology labeling introduced by Chairman Pat Roberts (R-KS). The bill can now be considered by the full Senate.

“Heitkamp continues to have concerns that the bill, which aims to prevent a variety of differing state laws on GMO labeling rules, will not guarantee consumers access to the information they want about their food. She will continue to push to strengthen Roberts’ bill as it moves forward by pressing for more robust disclosure of biotech ingredients in foods, without stigmatizing biotechnology.”

However, Ag Committee Ranking Member, Debbie Stabenow (D., Mich.) indicated at today’s markup that, “We agree that science has shown us that biotechnology is safe.

“We agree that biotechnology is an important tool for farmers and producers – particularly as we tackle the challenges of climate change and the need to feed a growing population around the world.

“And we agree that a 50-state patchwork of labeling laws is not a workable, long-term solution.

“But I also recognize that a growing number of American consumers want to know more about the food they eat.”

Ranking Member Stabenow noted that, “As I have said from the beginning of this process: for a solution, which includes a 50 state preemption, to receive the broad support necessary to pass the Senate; it must contain a pathway to a national system of mandatory disclosure that provides consumers the information they need and want to make informed choices.

“Mr. Chairman, I share your urgency to get this done.

“However, the bill before us today does not meet that important requirement.

“A voluntary program is not enough to meet consumer demand. That is why I cannot support it.”

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Agricultural Prices- Key Crops Down From Year Ago Levels

The USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report today, which noted that, “The corn price, at $3.66 per bushel, is up 1 cent from last month but is down 16 cents from January 2015.”

The NASS report added that, “The soybean price, at $8.71 per bushel, decreased 5 cents from December and is $1.59 lower than January a year earlier.”

http://farmpolicy.com/wp-content/uploads/2016/02/crn.png

And today’s update also stated that, “The January price for all wheat, at $4.82 per bushel, is up 11 cents from December but is $1.33 below January 2015.”

http://farmpolicy.com/wp-content/uploads/2016/02/crn.png

With respect to livestock, the NASS report stated that, “At $43.60 per cwt, the January hog price is up 80 cents from December but is $13.80 lower than a year earlier. The January beef cattle price of $130.00 per cwt is up $8.00 from the previous month but $34.00 lower than January 2015.”

And Purdue University agricultural economist Chris Hurt observed today at the farmdoc daily blog that (“Weekly Outlook: Pork Industry – A Little Profit for 2016“), “The outlook for the pork industry has turned somewhat more optimistic in recent weeks. The sources of that optimism include a $2 to $4 increase in spring and summer lean hog futures prices since the first of the year and slightly lower new-crop soybean meal prices. A bit higher hog prices and a little lower cost add to the potential for a profitable year.”

The farmdoc update also included this graph:

http://farmpolicy.com/wp-content/uploads/2016/02/crn.png

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U.S. Supreme Court Will Not Consider Chesapeake Bay Case

DTN writer Todd Neeley reported today that, “The EPA pollution controls in the Chesapeake Bay watershed will stand as the U.S. Supreme Court Monday denied a review in the American Farm Bureau Federation’s legal challenge. A previous appeals court ruling in favor of the U.S. Environmental Protection Agency’s action in the watershed will stand.

“The decision allows EPA to continue requiring the seven states in the Chesapeake Bay to clamp down on nitrogen and phosphorus runoff into the watershed.”

Mr. Neeley observed that, “It’s not known how the death of Supreme Court Justice Antonin Scalia affected the chances of the Chesapeake Bay case being rejected for a hearing. It takes four justices to decide whether to accept a case. On Monday, however, the Supreme Court accepted no new cases for hearings.

“Agriculture groups made the case farmers operating in the Chesapeake Bay shoulder the brunt of responsibility in cutting nutrient runoff through expensive conservation efforts and other means, and that state governments have the primary authority to improve water quality.”

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U.S. Supreme Court Vacancy: Impact on Business

Joshua Jamerson and Brent Kendall reported last week at The Wall Street Journal Online that, “The death of Supreme Court Justice Antonin Scalia has cast a cloud over the outcome of class-action lawsuits that target businesses, leading Dow Chemical Co. to pay $835 million to settle a case rather than risk an appeal without the conservative justice.

“Dow Chemical’s decision is a signal of worry among businesses with cases before the high court, which could operate without its former 5-4 conservative majority well into next year. Justice Scalia was an ally to companies in their decadeslong push to block multiparty lawsuits such as the one Dow faced.

“A political stalemate between the White House and the Senate over when to fill the seat means the court is more likely to deadlock 4-4, including on such business-related issues as class-action litigation.”

Recall that agricultural reporters have also highlighted the potential impact the vacancy on the court could have on farm issues.

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Start-Up Focus: Artificial Intelligence

Steve Lohr reported in today’s New York Times that, “Today, a start-up that can lay claim to doing artificial intelligence has increased its odds of getting attention and funding. A.I. efforts, scientists agree, are far more advanced than in past boom and bust cycles for this type of technology.

“Yet if the technology seems almost magical at times, success, venture capitalists and entrepreneurs say, will rely on basic business virtues like focus, flexibility, speed and resilience.

“That is particularly true for start-ups. ‘Big companies like Google can make A.I. investments with a 10-year horizon, but a start-up has to release a product in a year or two,’ said Chris Dixon, a general partner at Andreessen Horowitz.”

The Times article explained that, “In past cycles, research advances in A.I. generated excitement but not much business. ‘It was a long, long way from being practical,’ said Forest Baskett, a computer scientist and partner at New Enterprise Associates. ‘What makes it investable now is there are applications, things you can do with these tools.’

“The technical ingredients behind modern A.I., he noted, were vast new sources of data, machine-learning software and powerful, inexpensive computing delivered over the so-called computing cloud.”

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A Closer Look at Start-Up Risk

Claire Cain Miller reported on the front page of the business section in Sunday’s New York Times that, “Silicon Valley can seem like the land of overnight success. College dropouts show up and become billionaires a few years later. Mark Zuckerberg was a billionaire by the time he was 23, and Facebook paid $19 billion for WhatsApp when it was just five years old.

“But despite their hold on the imagination, these examples aren’t typical. Much more representative are the companies you never hear about because they never get off the ground.

“Venture capital firms invest in 1 percent of the companies that pitch them. The overwhelming majority of entrepreneurs who are funded are white men. Just 1 percent are black, 8 percent are female and 12 percent are Asian, according to data from CB Insights, which tracks private companies and investors. Even for start-ups that raise money, the mortality rate is high, with most dying after an average of 20 months and $1.3 million in financing.”

The article pointed out that, “In recent months, the fund-raising atmosphere has cooled as venture capitalists react to the poor stock market performance of some public tech companies and question whether the recent fast pace of investment is sustainable. Venture capitalists are making fewer investments at lower valuations.

“‘There is this delusion that it’s easy to raise money in Silicon Valley,’ said Sam Altman, president of Y Combinator, a mentorship and investment program for start-ups. ‘Raising money is incredibly hard.’

“Nonetheless, Silicon Valley keeps seducing people. For those who come, the risk is worth the potential reward — not just riches, but also the more dreamy belief that tech entrepreneurialism is a force for good.”

Sunday’s article also noted that, “Venture capitalists, who hold the keys to success in Silicon Valley by providing start-up money, are even more likely to be white and male than tech company employees are. Theirs is an insular business. Most investors accept pitches only from entrepreneurs who come through an introduction, and they tend to finance people who have succeeded before, or who remind them of those who did.

“According to a 2014 study published by the National Academy of Sciences, investors prefer pitches by men, particularly attractive men, to those by women, even when the content of the pitch is the same. In addition to studying the results of three entrepreneurial pitch competitions, the researchers conducted two experiments in which a representative sample of working adults heard identical pitches in male and female voices. Sixty-eight percent of people preferred to finance the company when it was pitched by a male voice, while 32 percent chose the female.”

Ms. Miller indicated that, “Some investors are working to change this. Venture firms like Kapor Capital were formed specifically to finance start-ups with a diversity mission and to prioritize underrepresented founders. Others fill their partner ranks with people who are not white men.

“‘Deal flow comes in through people’s network, and if you’re a young woman or a person of color, a lot of times you just might not know who that senior person is at that top-tier firm’ said Joanne Yuan, an associate partner at Cowboy Ventures, whose investment team of four has three women who are minorities. ‘Our portfolio looks more diverse because we know a lot of people who aren’t white males.'”

More broadly, the Times article stated that: “The flip side of overnight success in Silicon Valley is overnight failure. Start-ups can be so dependent on a single investor or partnership that a turn of events can change their fates.”

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Backgrounder: Cotton oilseed and the 2014 Farm Bill

In December of last year, House Agriculture Committee Chairman Mike Conaway (R., Tex.), along with 100 of his colleagues, made a formal request to Secretary of Agriculture Tom Vilsack to “use legal authority provided under the 2014 Farm Bill” to provide additional federal assistance to struggling cotton farmers.

The depression in cotton prices was highlighted at a House Agriculture Subcommittee hearing in December, while earlier this year, an economist from the University of Georgia noted that cotton producers “can expect prices to remain low for their crop until worldwide demand improves.”

Specifically, Chairman Conaway requested “that the Secretary use his authority under the Farm Bill to designate cottonseed an oilseed, allowing farmers who produce cottonseed to access the same risk management tools available under the Farm Bill to other oilseed farmers.”

Reporter Rick Kelly has explained that, “If cottonseed oil is designated an oilseed, cotton growers will be eligible for federal programs that could help farmers in the event of catastrophic weather, or provide protection from losses due to commodity price drops. Canola oil and flax seed oil producers already have that safety net.

“Without those federal guarantees, and with cotton prices bottoming out below 60 cents a pound, some growers are worried they won’t be able to obtain financing to plant this spring.”

Media reports subsequently indicated that Secretary Vilsack had concluded that he did not have the authority to designate cottonseed as an oilseed.

In a statement released in early February, Chairman Conaway noted that, “The Department has not only the legal authority to designate cottonseed as an ‘other oilseed,’ but the responsibility to act…”

After receiving an official denial of the cottonseed request from Sec. Vilsack, Chairman Conaway sent a letter to USDA  that included a detailed rebuttal to the Secretary’s conclusion. Chairman Conaway also noted that, “Given the increasingly dire conditions farm families face in the cotton belt and the grave consequences of failing to act, I have little choice but to continue to press for the same kind of responsible, urgent, and meaningful response that has always been taken to address emergencies impacting producers of other commodities.”

An update posted on February 24 at AgWeb (“Vilsack Explains Why Cotton Can’t Qualify for ARC/PLC”)  included this explanation from Secretary Vilsack:

“Just before the holidays, I received a request from the cotton industry to designate cotton as an ‘other oilseed’ in order to qualify for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) payments. We examined the laws closely—the 2014 Farm Bill, the 2016 Appropriations law, and other authorities—and after close scrutiny, we determined that such a designation is not authorized under the 2014 Farm Bill. The reason is very clear: The Farm Bill expressly removed eligibility of cotton for such payments, as cotton is no longer listed as a ‘covered commodity.’ In other words, the Farm Bill intended to exclude cotton from ARC and PLC payments and USDA was provided with clear direction that it would not be included nor covered. Instead, at the request of the cotton industry, the Farm Bill created two new programs for cotton as an alternative to ARC and PLC: STAX, or the Stacked Income Protection Plan, and the Cotton Transition Assistance Program (CTAP).”

University of Illinois Clinical Assistant Professor Jonathan W. Coppess explained to me that, “So the whole reason cotton is not a covered commodity under the 2014 Farm Bill is because of the World Trade Organization dispute with Brazil over cotton support policies that date back to 2002 until 2014, about 12 years this dispute had ran. In the end, Brazil won overwhelmingly before the WTO against American cotton support policies, programs, the old countercyclical program and those sort of things.”

Mr. Coppess added that, “And so Brazil won. They then won on appeal. They then won the right to retaliate. They won on appeal on the right to retaliate against American exports. And, that got a lot of attention in 2009, 2010. Somewhere around 2010, I believe it was, USDA settled kind of a temporary agreement with Brazil to hold off on retaliation.”

“But the Secretary made it clear that the administration couldn’t change farm programs, Congress had to do it, so they basically held Brazil in abeyance, they sort of held off retaliation pending Congress rewriting the farm bill in 2014,” Mr. Coppess said.

In addition, Mr. Coppess pointed out that, “Brazil was very adamant that cotton supports be changed in the farm bill, and so they were. So you can imagine that aside from the sort of legal arguments about whether the Secretary could do this, there’s another whole set of questions about how Brazil would look at and react to this, and what that would do in the WTO situation, so it raises a lot of questions.”

With respect to the situation cotton producers are in, Mr. Coppess observed that, “The challenge is they don’t have that ARC or PLC program. Cotton does continue to have the Marketing Assistance Loan program, so they can take out loans on cotton and get LDPs or marketing loan gains. The 2014 Farm Bill did create a new insurance program just for cotton, but there is not that sort of long-term price until you get into the marketing loan situation. And that’s where they’re concerned and have had issues, which is where this has come about.”

In his explanation at AgWeb, Sec. Vilsack added that, “In addition to this assistance provided through the Farm Bill, USDA began to explore other ways to provide support to struggling cotton producers as we’ve done in the past. This has been done in two ways, historically: first, provide temporary assistance to cotton producers facing low prices through a Congressional action or, second, administratively use either Section 32 (of the Act of August 24, 1935) or Section 5 of the Commodity Credit Corporation (CCC) Charter Act to provide some level of support. Unfortunately, these administrative options have been severely limited by the law that funds the government, also called the Appropriations Act.”

At a House Ag Committee hearing on February 24, Sec. Vilsack and Chairman Conaway discussed this issue in more detail. A transcript of this portion of the hearing is available here.

Sec. Vilsack stated that, “First of all, in putting together the ARC and PLC program, there was obviously a decision to remove cotton from those programs. I think everybody acknowledges that. Within the law, essentially there’s provisions that define the opportunity for the Secretary to include additional oil seeds as crops as they evolve. That listing of other oil seeds includes a variety of other oil seeds. It includes sunflower seeds, rape seeds, canola seeds. Clearly Congress could have also included cottonseed in that list. They did not. That’s an issue.

“Secondly, the industry came to us, when we were crafting the risk management program under STAX, and requested oilseed to be included in that risk management program. So those two facts—Congress didn’t include it in the list, and the industry asked us to include it in the risk management program—indicate what the intent was at the time. Now, if Congress wants to reopen the farm bill, then obviously you’ll have to deal with the issue of the cost, which I think is one of the motivating reasons why all of this was established.”

With respect to the oilseed provision, Chairman Conaway asked, “Are you arguing that the list of oilseeds included is exclusive and that you have no discretion?”

Sec. Vilsack pointed out that, “What I’m arguing is that that list and that provision is set up for oilseeds that arise during the course and between farm bills… Not seeds that have existed, Mr. Chairman, but seeds that have come up in between farm bills to allow us the flexibility.”

Going forward, Mr. Coppess of the University of Illinois explained that:

“Then the question becomes without that authority, then the only thing left would be for Congress to somehow step in and basically grant the Secretary the authority. Like they’re going to have to do something that would say, you know, in this case, you’re allowed to do it, or we’ll write cottonseed in as a covered commodity. Whether Congress would open a farm bill at this point to do that is obviously another big question.

“You know, we’re still dealing with budget scenarios, so that would mean figuring out how to pay for it, you know, in a standard baseline discussion. To add something in like that that’s going to cost, that’s going to have to be paid for somewhere, so that’s another challenge.

“The Brazil response clearly is another challenge; getting retaliation against American exports did not go unnoticed by the American manufacturing industry, by the intellectual property right questions that came up with cross retaliation. I mean, it opens a whole lot of that. I think everybody is realistic about what Congress could do, even in a good year, and then you add onto it this is probably not a good year, we don’t expect to see Congress do much.”

Meanwhile, an update posted on February 25 at AgWeb (“Agriculture Secretary Can Relieve Crisis in Cotton Country”) Chairman Conway noted in part that, “The Secretary argues that Congress removed cotton from Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) in the 2014 Farm Bill and, thus, his hands are tied. Here’s what Congress actually did in the 2014 Farm Bill: As a result of a WTO settlement with Brazil, Congress effectively removed cotton lint from ARC and PLC. Cottonseed has not historically been a covered commodity, and Congress never discussed adding cottonseed to the list of covered commodities. Rather, Congress left intact the Secretary’s authority to designate any oilseed as an ‘other oilseed.'”

Chairman Conway added that, “The Secretary has also argued he cannot designate cottonseed as an oilseed because the provision is reserved for ‘emerging oilseeds.’ That is also not the case. The Farm Bill defines an oilseed as ‘a crop of sunflower seed, rapeseed, canola, safflower, flaxseed, mustard seed, crambe, sesame seed, or any other oilseed designated by the Secretary.’ The Farm Bill does not restrict this authority to ’emerging oilseeds.’ The Secretary imposes this limitation on himself.”

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Forced Arbitration Clauses

David Lazarus noted in the business section of today’s Los Angeles Times that, “If you’ve got a credit card, you’ve been forced to kiss away your constitutional right to sue the card issuer. But it’s looking increasingly likely that this is about to change.

“The Consumer Financial Protection Bureau is examining so-called arbitration clauses in terms and conditions for financial products. Last week, the head of the bureau, Richard Cordray, sent the strongest signal yet that the regulatory whip soon will come down on banks and other lenders denying customers their day in court if they feel mistreated.

“‘By inserting an arbitration clause into their contracts, companies can sidestep the legal system, avoid big refunds and continue to pursue profitable practices that may violate the law and harm consumers,’ he said in a speech to the American Constitution Society.”

Mr. Lazarus explained that, “Forced arbitration has become a routine part of many companies’ dealings with customers, thanks to the U.S. Supreme Court, which has issued several rulings in recent years upholding the practice [see related blog update from Feb. 8, here].

“But under the financial reform law enacted in 2010, the Consumer Financial Protection Bureau was empowered to study forced arbitration by financial services firms and to issue new regulations if deemed necessary. It now seems certain that rule changes are in the works.”

Today’s article added that, “This would affect banks, credit card issuers and other firms falling under the agency’s jurisdiction. It wouldn’t affect non-financial businesses that also inflict arbitration clauses on customers, such as phone companies, pay-TV providers, rental car firms and others.

“That would take an act of Congress. And, as it turns out, that’s also a possibility…”

For a more detailed look at the recent Congressional activity on the arbitration issue, see this blog update from Feb. 5; and, for a more general discussion of arbitration, see this recent series in The New York Times.

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ABA Business Law Article: Online Use of Third Party Trademarks

Linda A. Friedman penned an article in the February edition of the ABA’s Business Law Today (“Online Use of Third Party Trademarks: Can Your Trademark Be Used without Your Permission?“) where she noted that, “The explosion of user-generated content on the Internet, not to mention the proliferation of domain name registration options and the competition among advertisers and other businesses to attract visitors to their websites, has increased the burden of trademark owners to police the online use of their trademarks by others. Consumers, competitors, and others are increasingly posting comments, ads, or other content on social media, in which they freely use trademarks owned by another party for their own purposes. These purposes are often at odds with the trademark owner’s interests, such as diverting internet traffic to the user’s website or disparaging the trademark owner or its products in blogs over which the trademark owner has no control.

“However, simply because the use of another’s trademark is unauthorized by the trademark owner does not make it an infringing use. Trademark owners must not only be diligent in monitoring use of their trademarks online, but also recognize the differences among infringing uses to be challenged, questionable uses to be further monitored, harmless uses to be ignored, and uses that may be annoying, but do not infringe.

“Likewise, anyone who chooses to use a trademark without the owner’s permission should be mindful not only of the potential liability for infringement, but also of other potential consequences, such as violation of laws other than trademark laws or violation of a social media platform’s terms of use, leading to loss of privileges.”

Ms. Friedman provides a valuable overview of trademark issues, including terms of use issues for YouTube, Twitter, Facebook and Instagram; and concludes the article by stating that: “If an online ad, post, domain name, or even hidden text is misleading, deceptive or likely to cause confusion, or if it threatens to dilute a famous trademark, it will and should be challenged. All organizations should monitor online unauthorized uses of their valued trademarks. In addition, if an organization hosts an interactive website that invites customers to post endorsements or other comments, the terms of use should prohibit inappropriate content and the organization should monitor postings for improper trademark uses.“

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Des Moines Register Headline- USDA: 2016 To Be A Bad Year

Christopher Doering reported on the front page of the business section in today’s Des Moines Register that, “Commodity prices will not recover this year, the federal government said Thursday in a forecast that will be a blow to producers hoping for a rebound in the slumping farm economy. [Note: A summary of the government’s forecast is available here].

“The U.S. Department of Agriculture said producers should expect slumping farm income, modest declines in land values and cash rents and a less-than-favorable trade environment.

“Even so, the USDA declared that the financial health of the agriculture sector is strong because producers took advantage of record harvests and high prices in past seasons to strengthen their bottom line.”

Mr. Doering added that, “The prolonged downturn in commodity prices has curtailed cash flow for producers and left many struggling to cover input costs, which have not fallen at the same rate as corn, soybeans and other crops.

“More farmers say they are holding off on buying new tractors or combines, with many looking to cut back fertilizer use or buy cheaper seed.”

Today’s Register article indicated that, “The cautiousness felt by producers has been a blow to Deere & Co., DuPont Pioneer, Monsanto and other agribusiness companies that have announced job cuts and shrinking profits and warned of a challenging year.”

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