By Catherine Boudreau | 05/18/2017 10:12 AM EDT

With help from Megan Cassella, Sarah Ferris, Jenny Hopkinson, Adam Behsudi, Helena Bottemiller Evich, Doug Palmer and Brianna Gurciullo

WHITE HOUSE SET TO FIRE OFF NAFTA REDO LETTER: The Trump administration this morning is expected to send a letter to Congress notifying lawmakers of its intent to start trade talks with Canada and Mexico, in a bid to update NAFTA, an administration official and congressional aides tell our Pro Trade colleagues. The move would trigger a 90-day consultation period that must conclude before formal negotiations can begin - a process outlined in the 2015 Trade Promotion Authority bill that gives the White House the authority to fast-track passage of a trade deal. U.S. Trade Representative Robert Lighthizer on Wednesday wrapped up two days of meetings with the Senate Finance and House Ways and Means committees, as well as with separate special trade advisory groups from both chambers - which needed to happen before the letter could be sent. The letter's timing would mean that NAFTA talks could start right after Aug. 16, at the earliest.

Trouble ahead? The tumult and investigations surrounding President Donald Trump could threaten the big-ticket aspects of the GOP agenda, NAFTA 2.0 included, POLITICO's Nancy Cook and Burgess Everett report. While lawmakers seem prepared for a go-it-alone strategy, even a Republican-controlled Congress needs a president to help close deals, and a White House beset by controversy and congressional investigations could weigh down legislative efforts.

Trade experts question whether the White House's woes could become so significant that Mexico and Canada - which weren't keen on a redo in the first place - would have little incentive to negotiate. Mexico has elections next year to worry about. And a new hurdle to updating the Clinton-era free trade deal emerged on Wednesday, as Democrats say they'll only get on board if the Trump administration persuades Mexico to improve its labor standards.

What say Conaway? House Agriculture Chairman Mike Conaway, who is leading the House Intelligence Committee's investigation into Russia's meddling in the election, told reporters Wednesday that the GOP is capable of moving forward on its agenda despite the "swirl of information" surrounding the Russia probes. But he added that even though DOJ has named a special counsel to conduct its investigation, that doesn't take any pressure off Congress. House Ag member Doug LaMalfa (R-Calif.) acknowledged there will be a drag on what Republicans can accomplish, but lawmakers "should be able to walk and chew gum at the same time."

HAPPY THURSDAY, MAY 18! Welcome to Morning Ag, where your host doesn't plan on drinking a charcoal latte anytime soon. Send your questions, comments and tips to or @ceboudreau. Follow the team at @Morning_Ag.

SIMPSON SEES ONE LONG STOPGAP ON HORIZON: GOP infighting over Trump's proposed spending cuts for fiscal 2018 will likely force Congress to pass a yearlong stopgap spending bill, Rep. Mike Simpson, chairman of the House Appropriations energy and water development subcommittee, said Wednesday. He doesn't see the party's divide over spending levels being worked out anytime soon, so finding a path forward on fiscal 2018 appropriations legislation, due by September, may be unattainable.

Get the add-ons ready: The Idaho Republican said he's already instructed staff to start a list of potential add-ons to the current spending package, in case it's extended this fall - and he may not even hold hearings this year.

"The rest of the appropriators and chairmen will probably kill me, but, I think we're into a CR for 2018," Simpson told reporters, pointing at OMB Director Mick Mulvaney. "This is Mulvaney's budget. Like I want to go home after having voting against Meals on Wheels and say 'Oh it's a bad program, keeping seniors alive.'"

Fate of Meals on Wheels. The White House "skinny" budget, unveiled in March, recommended eliminating federal spending on community block grants, which some states and cities use to support Meals on Wheels. The program, a network of more than 5,000 organizations that deliver food to seniors' homes, also gets a lot of its funding from private donations and another program, run by HHS. That program wasn't mentioned explicitly in Trump's budget outline, though HHS was targeted for a cut of nearly 18 percent. The White House is due to unveil a more detailed budget early next week.

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CONAWAY TO DEFEND AG BUDGET IN OMB CHAT: The House Agriculture chairman told reporters Wednesday that he is set to meet with Mulvaney today to make a case that agricultural programs should not be marked for deeper cuts in the upcoming White House budget - particularly with 2018 farm bill negotiations looming. The skinny budget called for USDA discretionary spending to take a 21-percent hit.

"The backdrop of the 2018 farm bill versus the 2014 farm bill with respect to the farm economy is dramatically different. In four years we've had a 50 percent drop in net farm income, and the next two years don't look any better," Conaway said. "So the reason we need a safety net is clear, so we're trying to communicate that." Pros, for more on farm bill spending, read my story on the ghost of farm bills past.

CONFLICTING SUGAR FORECASTS: House Agriculture ranking member Collin Peterson said he expects a deal soon to resolve the U.S.-Mexico sugar trade dispute, based on his talks with Commerce Secretary Wilbur Ross and Agriculture Secretary Sonny Perdue. "They're not that far apart," he told reporters Wednesday.

But an industry source told POLITICO a different story. "The impression I got is the parties are pretty far apart," the source said. "I don't think a breakthrough is imminent." The U.S. is standing firm on its proposal to set a new standard for raw sugar as it tries to reach an agreement with Mexico that would stave off steep duties on imports from south of the border, said industry sources who are closely following the talks.

The U.S. position: The Trump administration wants all raw sugar Mexico ships north of the border to be defined by a polarity level, a measure of refining purity, of 99.2 or below. Anything above that would qualify as refined sugar. The current suspension agreements set a 99.5 threshold on raw sugar. The U.S. is also pushing for the deal to require that 80 percent of Mexican sugar imports be raw and 20 percent refined, sources said. That would be a shift from the 53-47 raw/refined percentage split in the current arrangement. Still unclear is whether a revised deal would set new prices for Mexican raw and refined sugar imports or expand quota access for other countries that export sugar to the U.S.

U.S. refiners have argued that a new standard and ratio are necessary to prevent Mexican producers from circumventing the suspension agreements and flooding the U.S. market with sugar that is technically raw but needs little to no refinement for end use. Refiners say the current situation has led to a shortage of raw supply and a glut of refined product.

WHEN IN DOUBT, CHECK THE 2002 FARM BILL: Secretary Perdue's testimony before the House Agriculture Committee on Wednesday - and subsequent remarks to reporters - spread more confusion around the "assistant secretary" for rural development position that is being created by the USDA reorganization. Perdue, in his first Hill testimony as secretary, told lawmakers the new post - which he referred to as an "assistant secretary" position - would require Senate confirmation. But that may have been an oops. "I may have misspoken about that; I'll confirm that," he told reporters afterward. "Obviously, Congress can determine which positions are Senate confirmed." The new assistant secretary post would replace an undersecretary position, a move Perdue argued would "elevate rural development issues throughout the country" because the occupant would have direct access to him, instead of reporting to the deputy secretary. "With the assistant secretary reporting directly to me, I can't believe that would be diminished," he said.

Farm bill check: MA did some sleuthing, and according to the 2002 farm bill, USDA officials may have to come up with a new title. That law allows USDA to establish three assistant secretaries - for congressional relations, administration and civil rights - but is mum on creation of any additional positions. What's more, the statute for the federal executive schedule limits assistant secretaries of agriculture to three, though it doesn't define the positions. Only two of the existing assistant secretaries - civil rights and congressional relations - require Senate confirmation. (h/t to Ferd Hoefner of the National Sustainable Agriculture Coalition for the explainer on USDA leadership laws.)

A possible fix: Shortly after the reorganization was announced last week, a USDA spokeswoman told MA it would be an "assistant to the secretary" position, though that term has never been used by the secretary, nor in USDA press releases and notices about the reorganization. The title of "assistant to the secretary" likely wouldn't fall afoul of the farm bill, nor the executive schedule.

Press blame game: The shuffling of USDA rural development has received a lot of negative attention, with even Republicans at the hearing raising concerns about whether the mission area would still be prioritized under the reorganization. While Perdue sought to assuage those concerns, he also blamed the press for starting them. "It's unfortunate that the media chose to portray it as a diminishment of rural development. That's not the case," Perdue told lawmakers.

COTTON, DAIRY DEJA VU AT USDA: Perdue seems to be finding himself in a similar situation to that which confronted former Agriculture Secretary Tom Vilsack when it comes to authority to help cotton and dairy farmers. Perdue told House Ag members he doesn't want to give them "false hope," because the agriculture secretary's administrative options for changing farm bill policies - as both sectors have advocated for - are limited. Cotton growers had asked Vilsack to make cottonseed eligible for farm bill commodity support programs, but Vilsack said that is up to Congress. "We can look for a resolution in the '18 farm bill, as you indicated," Perdue told Conaway during the hearing.

Tell 'em why you're mad: Conaway, in his final words at the hearing, took "one last shot across the bow" of Democratic Sens. Debbie Stabenow and Patrick Leahy for their roles in the fiscal 2017 spending package being passed without the cottonseed provision, which was designed to send out more financial assistance to growers. Stabenow and Leahy may not have cotton farmers in their states, but that's no reason to "take them hostage to get something that would never work," Conaway said, noting that the northern lawmakers' proposal to help dairy producers would've cost $800 million over 10 years but didn't come with an offset.

"They stabbed our cotton farmers in the back because they couldn't come up with their own solution for dairy, and pitting one segment of the industry against another has never worked, except when you want to use it as a tool to get your own way," Conaway said.

In defense of dairy: A Leahy spokesman said the senator does not oppose support for cotton farmers, but was instead advocating for the cottonseed and dairy provisions to be accepted together. "He opposed using a must-pass, year-end appropriations bill to solve a problem for only one commodity, when so many commodity issues must be addressed by the authorizing committee in the next farm bill," the spokesman emailed MA, adding that Leahy looks forward to working with Conaway to "provide innovative and creative solutions for all farmers."

NO SCURVY FOR HOUSE AG: All 46 committee members popped into Wednesday's hearing at one point or another, Conaway said - and they were greeted at their seat by a bottle of orange juice supplied by GOP Rep. Ted Yoho of Florida. Freshman Sunshine State Rep. Darren Soto even referenced his bottle of OJ when asking the secretary about support for research on citrus greening. "I'm a great consumer of the product you have in your hand and want there to be more of it," Perdue said.

What about Sonny's neckwear? He went with a light pink necktie adorned with brown dogs.

Tweet of the week: Perdue's 14 grandchildren should be impressed with his texting abilities. Check out the emoji-only message he sent to Conaway.

SANTA FE SODA-TAX FIGHT'S FINAL TAB: Groups for and against the failed soda tax in Santa Fe, N.M., spent more than $4 million in the runup to the vote, a sum that blows away local political spending records. The beverage industry, which emerged victorious, ended up outspending tax proponents, though going into the final stretch it appeared the Michael-Bloomberg-backed advocates were winning the money war.

In the final days before the vote, per local press reports, Bloomberg donated another $295,000, bringing his total contribution to nearly $1.48 million. On the other side, the American Beverage Association put down more than $2 million to combat the measure, which would have funded pre-K for low-income families. The tax went down with 58 percent voting no. The Albuquerque Journal has more on the spending breakdown, which also included money from the American Heart Association. That's here.

WHAT TRUMP'S INFRASTRUCTURE PLAN WON'T DO: It will not "specify any list of projects," Transportation Secretary Elaine Chao told the Senate Environment and Public Works Committee on Wednesday. Iowa Sen. Joni Ernst, who sits on EPW as well as Senate Ag, had asked Chao what she meant earlier this week when she said the administration would prefer to use federal dollars to cover the total cost of "projects that have the potential to significantly increase GDP growth or to lift the American spirit," and otherwise use federal cash to incentivize projects that already have some sort of funding behind them.

"We will not specify any list of projects or anything like that," Chao replied, noting that her remarks were intended to reassure "that this administration understands the needs of rural America, and, as we go forward, we need to find some way to address the needs of rural America." She added that some "financing mechanisms" used for urban projects - namely, public-private partnerships - don't always fit rural projects. Chao said an infrastructure task force consisting of 16 federal agencies was considering the issue.

Senate infrastructure action: EPW Chairman John Barrasso said the committee is working on its own infrastructure package, even as the White House promises a "statement of principles" later this month. Pros, more here.


- Dairy farms are working to make cows more comfortable - adding amenities like water beds and mechanical backscratchers - in order to increase milk production, The Wall Street Journal reports.

- The U.S. Chamber of Commerce is pouring last-minute cash into the Montana special congressional election to replace Interior Secretary Ryan Zinke, POLITICO's Alex Isenstadt reports.

- A federal appeals court has upheld payments to Native American farmers and ranchers who say they were subject to discriminatory lending practices by USDA, Brownfield Ag News reports.

- Nestle has lost its bid to get a U.K. trademark for the KitKat's four-fingered shape, the Associated Press reports.

THAT'S ALL FOR MA! See you again soon! In the meantime, drop your host and the rest of the team a line: and @ceboudreau; and @JennyHops; and @hbottemiller; and @BrentGriffiths; and and @JsonHuffman. You can also follow @POLITICOPro and @Morning_Ag on Twitter.

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