Buttigieg, Sanders take the lead in Iowa

With help from Eric Wolff

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— Better late than never… We finally have some results from the Iowa Democratic presidential primary: Pete Buttigieg was in first place, followed closely by Bernie Sanders, with votes still being counted Tuesday night. The former South Bend, Ind., mayor and the Vermont senator each rolled out agriculture policy plans as they campaigned in the key farm state.

— The #IowaCaucusDisaster on Monday night could be bad news for ethanol. The biofuel sector has long held outsized sway in presidential politics, but that power could be in jeopardy now that people are seriously rethinking Iowa’s spot at the front of the primary line.

— Farmer optimism jumped 11 percent in January as the new U.S.-China trade deal fueled high hopes for an uptick in agricultural exports, according to a monthly industry survey. But the White House is now cautioning that the “export boom” could be delayed because of the deadly coronavirus outbreak in China.

HAPPY WEDNESDAY, FEB. 5! Welcome to Morning Ag. Here’s an eye-opening story about “the joy of cooking naked.” Hat tip to the photographer who artfully pulled off this assignment. Send tips to rmccrimmon@politico.com and @ryanmccrimmon, and follow us @Morning_Ag.

BUTTIGIEG, SANDERS TAKE THE LEAD IN IOWA: The former South Bend, Ind., mayor was in the lead with 27 percent of the vote, while the Vermont senator had 25 percent, with some 62 percent of votes recorded. Massachusetts Sen. Elizabeth Warren was in third with 18 percent, and former Vice President Joe Biden was in fourth with 16 percent.

The candidates have been crisscrossing Iowa for months, and most of them put out detailed plans for rural development and agricultural policy — a big shift from past Democratic primaries as the party tries to make inroads with rural voters who mostly wrote them off in 2016. Here’s what the top finishers proposed:

Buttigieg: Mayor Pete’s Midwestern roots were a central piece of his pitch to Iowa voters, and he’s promising to funnel billions of dollars into rural communities to expand internet access, boost small-scale manufacturing and steer skilled immigrants to small towns with shrinking labor pools.

As for agriculture, he’s calling for stronger protections for farmworkers trying to organize; tougher antitrust oversight of agribusinesses; and $50 billion in federal spending to develop farming practices and technology to help mitigate climate change.

Sanders: The “democratic socialist” senator wants to break up big ag companies and restructure a suite of USDA programs to steer more federal funds to small and mid-sized farms. The plan includes “setting price floors and matching supply with demand so farmers are guaranteed the cost of production and family living expenses.”

He’s also calling for a “right to repair” law to let farmers fix their own equipment (which is prohibited by some manufacturers) and stricter environmental regulations for large ag operations.

ICYMI: Need a refresher on where each candidate stands on food and ag issues? POLITICO has you covered.

CAUCUS FLOP COULD DENT ETHANOL’S POLITICAL MIGHT: Oil refiners think the vote-counting debacle could spell doom for the ethanol industry’s political heft in future elections. “The other loser along with the Iowa caucus [Monday night] might be the death grip that ethanol … has had on the body politic,” said Stephen Brown, a long-time refining lobbyist, per our Pro Energy friends.

Iowa’s traditional status as the leadoff hitter has driven presidential contenders to ensure they were on solid ground with the corn lobby on the Renewable Fuel Standard, which requires certain levels of biofuels like ethanol to be blended into the U.S. gasoline pool. But in 2016, Sen. Ted Cruz (R-Texas) won the state’s GOP primary contest despite his opposition to RFS.

Now Monday’s chaos has ignited calls for Iowa to be bumped from its primary perch (and for scrapping the caucus format altogether). Such a change could sharply curtail the influence of biofuel producers and farmers in the major soybean- and corn-growing state.

“We think it’s headed in that direction,” the American Fuel and Petrochemical Manufacturers, a refining trade group, said in a statement. “We’ve long thought the stranglehold was political opportunism in its purest form, which is why you still see candidates who want to end liquid transportation fuels dropping RFS quips to Iowa audiences before making the hasty exit to New Hampshire.”

EUROPE’S PLAN TO PHASE OUT AG CHEMICALS: Farmers in the EU would need to slash their use of pesticides and fertilizers by at least 30 percent over the next decade under a draft of the European Commission’s biodiversity strategy, which was shared with our POLITICO Europe colleagues.

The hard targets mark a moment of reckoning for Europe’s farm sector, which has never been forced to comply with a specific blueprint for meeting the bloc’s mid-century climate goals — unlike other industries including energy and transportation. The biodiversity strategy would also require that at least 10 percent of Europe’s farmland is devoted to “non-productive and landscape features” such as hedges and trees, while 30 percent is reserved for organic farms.

Of course, the draft reduction targets aren’t guaranteed to become law. Powerful entities will lobby to water down the chemical reduction goals, and Brussels will need member nations and the European Parliament to sign off on its biodiversity plans, which are expected to be released in late March.

The big picture: Despite the cozy position farmers have long enjoyed in the EU’s political pecking order, the tide has steadily been turning against pesticides like glyphosate. A spokesperson for Bayer, which produces glyphosate, said the company is already aiming to reduce the “environmental impact” of its crop protection products by 30 percent over the next decade.

WHITE HOUSE ADMITS FARM EXPORT THREAT FROM CORONAVIRUS: The Trump administration now expects the coronavirus will throw a wrench into the new “phase one” trade deal with China, reports Pro Trade’s Adam Behsudi. “The export boom from that trade deal will take longer because of the Chinese virus, that is true,” Larry Kudlow, President Donald Trump’s chief economic adviser, said Tuesday on Fox Business.

China has not formally asked for flexibility on its commitments to buy around $200 billion in U.S. agriculture, energy and other goods and services over the next two years, which was a central piece of the limited trade deal that takes effect Feb. 14.

If the virus impact is real, it could spoil a recent spike in optimism among farmers and ranchers. Industry sentiment in January improved by 11 percent over December, according to a monthly survey by Purdue University and CME Group.

James Mintert, director of Purdue’s Center for Commercial Agriculture, said the deal has “largely been considered a win for U.S. exporters” even though it’s still unknown how the $200 billion in Chinese purchases will be distributed and how much it will boost the U.S. farm sector.

FROM THE LIQUOR CABINET: Bourbon and Scotch makers are facing a common threat, as tariffs between the U.S. and EU disrupt the increasingly globalized whiskey industry. In 2018, Europe leveled duties on bourbon — seen as a subtle shot at a certain influential Kentucky senator — and Trump last year added Scotch and Irish whiskey to his list of tariff targets. Pour yourself some, er, coffee, and read the deep-dive from Bloomberg.

— Senate Energy and Natural Resources Chairman Lisa Murkowski said her committee will release an energy package next week, and the Alaska Republican predicted the legislation will be “early up in the queue” to reach the Senate floor this year. The measure is expected to cover issues like energy storage and grid modernization but not public lands measures, reports Pro Energy’s Anthony Adragna.

— House Democrats are planning to examine the Trump administration’s implementation of the 2017 tax code rewrite and how the regulatory process might have helped corporations sharply reduce their tax bills, even beyond the steep corporate tax rate cut included in the law. Pro Tax’s Aaron Lorenzo has the details.

— Bovine Kobuvirus was detected in the U.S. after scientists tested the intestines of two dead calves. Researchers haven’t determined whether the cattle virus can be transmitted to people, but it’s similar to the bugs that cause colds and sinus infections in humans. More from DTN.

— Wayne Stoskopf joined the National Corn Growers Association’s D.C. office as director for public policy on risk management and taxes. Stoskopf was previously a senior staff member for the Senate Agriculture Committee, where he worked on commodity and disaster programs, crop insurance and other issues. Read the announcement.

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