China Steals Seed Technology

Sen. Tom Cotton (R-AR) stated, “People in Washington and Silicon Valley are overlooking the threat of Chinese agricultural technology theft because they think that food grows in a grocery store.”

In a Washington, D.C, newspaper article, Cotton claimed only President Trump is attempting to stop China from stealing intellectual property. He is particularly concerned about China’s espionage tactics in relationship to farm crops and seeds.

It appears many of agriculture’s commodity organizations are only concerned about exporting more product to China and seldom ever support Trump in his efforts to stop the stealing of intellectual property. The news media focuses on national security matters and Silicon Valley.

Cotton, who was born and raised on a cattle farm in Arkansas, said China is not capable of feeding itself. He claims this is why “…it tries to steal modern techniques and strategies of growing crops from places like Arkansas.” Cotton believes China’s espionage tactics are focused in-particular on crops and agriculture. Even FBI Director Christopher Wray states, “Put plainly, China seems determined to steal its way up the economic ladder, at our expense.”

A recent article by Jack DeWitt published on Oct. 17, 2019, raised the question of whether it is too late to stop China from stealing agriculture technology. He recites the familiar story of a 2014 case that exposed a group of Chinese nationals attempting to steal seeds by digging up freshly planted corn seed. He noted that only one Chinese person was arrested and the other six fled to China. However, it was noted this Beijing company “… had been stealing U.S. seeds since 2007.”

As we know, China bought the Swiss company Syngenta through a state-owned company – Chemchina. DeWitt notes by this one move China “….gained access to one of the world’s largest portfolios of patented seeds and agricultural crop protection products.“ DeWitt also noted in his article that President Xi Jinping has stated he would like to “…speed up the innovation and application of biotechnology breeding in agriculture.”

The FBI has called agricultural economic espionage “a growing threat.” Another example of stealing agricultural technology involves rice, which concerns Cotton. Ventria Bioscience, a Kansas company, has developed a genetically engineered rice. The intellectual property included in the engineered rice is to grow human proteins for medical uses. Ventria Bioscience, according to one report, invested approximately $85 million in developing the engineered rice. The company expected the potential from this rice to be approximately a billion dollars a year. China, through one of its contacts, conspired to steal the company’s trade secret and the rice was found in their luggage. This case occurred in 2013. This case and Iowa are cases which have given rise to criminal prosecution.

These cases are being prosecuted under the Economic Espionage Act of 1996. It is this kind of stealing of seed technology the Trump administration is attempting to protect American agriculture from. It should be no surprise that China is interested in technology related to agriculture. There is simply no way any entity in agriculture can dispute the value created by seed research and technology.

What is a surprise is that leaders in agriculture are not vocal in supporting Trump’s efforts to improve the trade relationships between China and the United States. Given that agriculture is a large industry in virtually every state, it is critical that technology developed for farmers is not stolen by China. Agriculture is just as much a national security issue as computer and military technology.

A version of this commentary originally appeared in the November 12, 2019 edition of the online Farm Futures.

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Virginia Retailers should see holiday sales higher than the national forecast

The kickoff to the holiday selling season starts this month.

It is an important time of year for retailers as holiday sales represent about 20% of the retail industry’s total sales.

Despite businesses having uncertainty over tariffs and seeing somewhat slower economic growth, consumer spending continues to expand at a 2.9% annualized pace in the third quarter, according to the latest gross domestic product report.

The strong consumer spending makes sense in light of the continued strong employment growth and increasing wages in October.

Personal income is up 4.9% over the 12 months ending in September, an increase of $880.5 billion.

American consumers like to spend, so much of that increase in income usually translates into purchases.

But will that result in more sales over the holidays than last year?

The National Retail Federation, the nation’s largest retail trade group, predicts holiday sales will increase between 3.8% and 4.2%, which translates into $727.9 billion to $730.7 billion.

The forecast, which excludes sales at automobile dealers, gas stations and restaurants, represents sales to be generated in November and December. Holiday sales saw an average increase of 3.7% during the last five years.

Global financial services firm Deloitte is looking for this year’s holiday sales to rise between 4.5% and 5% from November through January compared with the same period a year ago. They expect e-commerce sales to rise between 14% and 18%.

In its 34th annual survey of more than 4,000 respondents, Deloitte found that the average household expects to spend nearly $1,500 during the holidays. Three-fourths of the respondents say they are likely to spend the same or more than last year during the holiday season.

One concern for retailers this year is that there are six fewer shopping days between Thanksgiving and Dec. 25.

Sales in Virginia’s metropolitan areas are likely to fall somewhere between the NRF and Deloitte forecasts.

Virginia’s nonfarm employment grew 0.6% in the 12 months ending in October — less than half of the 1.4% pace for the nation. During the same period, employment increased 0.8% in Richmond and 1.2% in the Washington metro area.

The seasonally adjusted unemployment rate in Virginia stood at 2.7% in September — lower than in the national rate of 3.5% for that month. The seasonally adjusted Richmond metro unemployment rate also was 2.6%, but Northern Virginia was even lower at 2.1% in September.

A seasonally adjusted six-month moving average of retail sales in Virginia shows 4.8% growth from a year ago in August. The Richmond area has seen an average retail sales growth of 3.9% over the same period, and retail sales are up 5.6% in Northern Virginia.

Based on recent trends in retail sales in Virginia, retailers in the state likely will see growth in holiday sales higher than the national expectations when compared with last year. Of course, a federal government shutdown would put a dent in sales.

With such low unemployment rates in the nation and state, however, some retailers may be hard pressed to find the workers needed to serve all their customers.

Long lines and slow delivery times could put a damper on in-store sales while shifting more of the market share to e-commerce.

A version of this commentary originally appeared in the November 10, 2019 edition of The Richmond Times-Dispatch.

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Express Toll Lanes’ Expanding Track Record

With the opening of Virginia’s I-395 Express Lanes now open up to the Potomac River, its worth asking: “How many express toll lane projects are in operation in the United States today?”

As of mid-summer, according to a tally provided by the International Bridge, Tunnel & Turnpike Association’s TollMiner database, there were 51 such projects. Texas has the most (18), followed by California (9), Florida (5), Georgia and Virginia (4 each), Colorado and Minnesota (3 each), Washington (2) and Maryland, North Carolina, and Utah (1 each).

Some of these projects were simple, low-cost conversions of existing high-occupancy vehicle (HOV) lanes. An increasing number of projects are lane additions, requiring serious capital investment. For these projects, a growing trend is issuing toll revenue bonds, sometimes by a state agency (as in Riverside County, CA) but more commonly by a long-term public-private partnership (P3) entity. In my July 2018 column in Public Works Financing, I reported that Fitch Ratings has assigned (low) investment-grade ratings (BBB) to most such bonds, except for the 24-year-old SR 91 ETLs in Orange County, CA, whose revenue bonds are rated A+. That’s because they went through the Great Recession with a revenue decline of only 12 percent and recovered nicely thereafter. Most of the other ETLs opened after that period and have not yet been tested by a recession.

The positive track record is leading to the ongoing expansion of ETLs, with more states considering this approach to dealing with serious freeway congestion. One of these states is Massachusetts, where Gov. Charlie Baker in August said that adding optional priced lanes would be a good idea to deal with Boston-area congestion that has reached a “tipping point.” His Transportation Secretary, Stephanie Pollack, said their DOT will do a feasibility study on this in 2020.

Recent new project announcements have included the planned start of construction to add ETLs to the 101 freeway in San Mateo County, CA; Georgia DOT promising release of a request for quotation (RFQ) for the Georgia 400 ETL project in first-quarter 2020, and several ETL projects either planned or under construction in the Tampa/St. Petersburg, FL metro area. Also in Florida, the Turnpike has opened ETLs on its SR 528 toll road in the Orlando metro area.

Extensions of existing ETLs are under way in at least six states, as follows:

  • California: plans are moving forward for more ETLs on SR 60, SR 91, and I-215;
  • Florida: construction continues on extending the I-95 ETLs northward from Ft. Lauderdale to West Palm Beach;
  • Texas: Austin’s existing MoPac ETLs have been greenlighted for a southward extension;
  • Utah: a project extending the existing I-15 ETLs is under way;
  • Virginia: extensions ETLs on I-95 north (as I-395) to the DC line and south to Fredericksburg are under way, with the former now open; and,
  • Washington: a major project under way to add ETLs to I-405 from Renton to Bellevue, as a southerly extension of the existing ETLs going north from Bellevue.

There are ETL problems and conflicts here and there, but I will save those for a future commentary.

A version of this commentary appears in Surface Transportation Newsletter #193.

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Demography is Destiny

“Demography is Destiny.” It was a phrase first popularized in the 1970 bestselling book The Real Majority by Democrats Richard Scammon and Ben Wattenberg in which they argued that the Democratic Party was veering leftward (particularly on social issues and “law and order”) and that, to win, the Party had to pay attention to the demographics of the rising middle class. To a large extent, their thesis echoed that of Republican Kevin Phillips, who the year before had written The Emerging Republican Majority.

There will be a great many excuses why Republicans lost their majorities in both houses of the General Assembly yesterday, and two stand out as reasonable propositions: The abrasive personality of President Trump alienated huge swaths of voters and the Democratic Left outspent the Republican Right by massive margins using outside money from billionaires.

But perhaps it is time to dust off the argument that “demography is destiny.”

Two maps developed by the Virginia Public Access Project demonstrate an irreversible trend the Republican Party has largely ignored. The first shows the change in partisan performance between 2013 and 2017; the other shows the actual and projected population change from 2010 to 2040:

One doesn’t need to read the county-by-county details to see the trends: The areas voting Democratic are growing in population. The areas voting Republican are declining in population.

A long-time political operative told me a few days before the election that he’d heard absentee ballot requests had been running strong from voters identified as Republican. The problem is that those “identified Republicans” had voted Democratic in 2016, 2017, and 2018. They’d gotten in the habit and once the habit is created, it’s hard to break: Ask the Baby Boomers who fell in love with Ronald Reagan.

Forty years ago, political consultant Arthur Finkelstein was able to elect Republican after Republican with one simple accusation against their opponents: “He’s a liberal!” and pound it home. Too much of Campaign 2019 sounded like Campaign 1979, with appeals for Republicans to get out and vote using Bernie Sanders and Alexandria Ocasio-Cortez as bogeymen to drive turnout.

A campaign empty of ideas is no campaign at all.

Indeed, while Republicans had an enviable record that should have appealed to suburban voters – four teacher pay raises in six years and college tuition freezes – the overarching choice of issues for Republicans seems aimed at rural and small town voters. But the number of rural voters is declining and what once had a small town feel isn’t feeling so small anymore: Chesterfield/Henrico and Fairfax/Prince William ain’t what they were 40 years, or even 20 years ago.

Politics is the art of addition. This can be a challenge for conservatives who may be torn between reverence for the past and a belief in the individual. But across America, where their emphasis has shifted to empowering individuals and families, freedom-loving conservatives have seen their policy prospects advance.

In education, an emphasis on giving families choices about their child’s education has cut across party and philosophical lines, especially when the focus is on low-income families with children in low-performing schools and without alternatives. Virginians looking to “create their own jobs” are blocked by state regulations making the commonwealth the seventh worst state for occupational licensing restrictions. Millennials seeking a place to live find housing expensive and limited, owing to permitting restrictions, zoning codes, comprehensive plans and other government requirements. Conservatives know that certain law enforcement techniques enhance safety, others have little effect on safety, and some may actively diminish public safety because law enforcement dollars are being spent inefficiently or in counterproductive ways. We now need to act on that knowledge and recognize that – like the social welfare system – criminal justice systems are expensive and make mistakes.

Under the new state regime, conservatives will find plenty to fight for … but also plenty to fight against. Health care, which should be about choices, portability and quality will find all three declining as new state leadership imposes mandates limiting choice and lowering quality. Small businesses and entrepreneurs need to be free to grow without more economic and regulatory barriers. New or higher taxes, a mandated minimum wage higher than federal law, an end to the Right To Work law, the existing local “gross receipts tax” and increased costs from a “Green New Deal” … these all combine to hurt employers. And without employers there are no employees.

Non-profits like the Thomas Jefferson Institute do not take sides in partisan elections – but partisan elections are proxies for the health of a movement and the ideas it fosters and by that measure the time is overdue for a reinvigoration of ideas.

The old top-down conservatism of the past needs to yield to a more welcoming and inviting bottom-up conservatism that helps every Virginian succeed because economic and regulatory barriers are low, individuals and parents are empowered to make informed choices for themselves and their families, and that recognizes the primary role of government is protecting citizens from each other and the overreach of government itself.

Demography may be destiny. But it all depends on what you do in response to those changing demographics.

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The Message is the Game

You know Virginia has changed when being labeled a socialist by your opponent is less damaging than being labeled a Republican.

Republican candidates all across the commonwealth sought to link their opponents with the national Democrats running for president on platforms of economic wealth transfer and nationalized health care. In the key suburban districts, which were once the GOP base, and in a massive turnout for a ballot with no statewide race, voters were unmoved. “We’ll take some of that here, too,” they seemed to say.

It was a Republican message tailor-made to turn out their opponents in droves.

Contrast that with the following statement issued by Speaker (for two more months) Kirk Cox of Colonial Heights, who was returned by his court-drawn district despite a nationwide effort to destroy him:

“I am deeply proud of what the House of Delegates has accomplished during the last two decades. We balanced the budget, protected our AAA bond-rating through a major recession, passed four teacher pay raises in six years, froze college tuition, made major reforms to our transportation system, secured our state’s pension system for the future, and guided Virginia to the nation’s top state for business.”

When did that clear statement of Republican accomplishment get communicated? Late Tuesday night as the results were showing an apparent six-seat gain for the Democrats in the House. In other words, after the smoke had cleared. That was not the message being emphasized as the nasty television and social media advertisements proliferated pre-election.

Even more obviously lacking was any message about what a refreshed Republican majority would do next. There was nothing as clear and magnetic as “No Car Tax” or “Bob’s for Jobs,” which elected the last two Republican governors. Voters on November 5 knew what Democrats would do with power but had no clue what Republicans would do.

Note the analysis so far has not even mentioned the greatest Democratic turnout generator in history, President Donald J. Trump. Given the results obtained by Republicans seeking to stay out of his shadow, his many partisans will say with some justification that was a mistake. Perhaps more should have proudly worn their MAGA hats on Election Day, as did one (one!) voter I saw in my Richmond City precinct.

None of the House seats which flipped to Democrats in the 2017 post-Trump wave election flipped back this year. Winning at least a few of those back was crucial to any strategy to maintain Republican control, and the Democrats held them all. Even where the 2017 winners departed to run for the Senate, new Democrats held the seats. Instead, a few more marginal seats moved to the Democrats.

The Senate GOP ran a purely defensive election, seriously challenging no incumbent Democrats. In the end, it retained 19 seats and some functional leverage in the Senate. The two seats it lost were seats it barely won in 2015, and all knew they were uphill. It staved off a worse outcome. The House Republicans ventured more and lost more.

A strategic move which succeeded wildly was the redrawn House of Delegates map, clearly a net gain for Democrats overall. When opportunity beckoned, Democrats ignored their previous support for the 2011 district plan, blessed by a Democratic Department of Justice, and united in denouncing it as racist. Several of the districts changed sides just as the new plan ordained.

Yes, an obscene amount of money was spent, much of it flowing in from liberal and union special interests outside of the commonwealth. But many of the failed Republican campaigns also had the largest budgets they have ever seen. If their national dollars didn’t match up, why not? What the Democrats really had, and the Republicans really lacked, was a message, which also motivates donors. All the money in the world cannot invent a positive reason for voters to show up.

The state Senate races in the Richmond region were instructive. Democrats targeted GOP senators Siobhan Dunnavant and Glen Sturtevant for defeat, largely on the strength of growing Democratic margins in Henrico County. To add to their chances, a major effort sought to tie them both to Chesterfield Republican Senator Amanda Chase, with her almost Trumpian gift for self-inflicted damage. Dunnavant was also directly attacked for supporting Trump. (See above.)

Ultimately Dunnavant saved her campaign by looking straight into the camera and telling voters about all the healthcare bills she had sponsored in one term that were signed by two Democratic governors. In a health care election, it’s an advantage to be a recognized and liked provider.

Sturtevant’s final message, on the other hand, was a virtual me-too of the main Democratic themes, promising support for additional gun restrictions, health insurance mandates and teacher pay. A final mailer attacking his opponent for her faith didn’t sit well with many voters. His many references to his own “independence” from partisan considerations irritated his base.

Message. This game is all about message. Tell the voters what you have done, what you will do next, and why it matters. In some districts the partisan outcome is not in doubt, but in competitive seats, message matters most.

Stephen Haner is Senior Fellow for State and Local Tax Policy at the Thomas Jefferson Institute for Public Policy.

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