FarmPolicy

September 18, 2019

Johanns Outlines 2007 Farm Bill Proposals

Categories: Farm Bill

Ag Policy Soup, the FarmPolicy.com podcast has been updated.

Today’s segment includes excerpts from a presentation by U.S. Secretary of Agriculture Mike Johanns, who outlined the Bush administration’s proposals with respect to the 2007 Farm Bill this morning.

The audio report also includes analysis from Mary Kay Thatcher of the American Farm Bureau Federation and Scott Faber, the Farm Policy Campaign Director for Environmental Defense.

Click here for complete details.

-Keith

Reuters: “The [U.S.D.A] Package Would Propose a New Approach to Farm Supports — So-Called Revenue Assurance That Protects Farm Income.”

I. U.S.D.A. Farm Bill Proposal
II. Trade-Doha
III. T.P.A- Farm Bill- Doha- Analysis of the Triangle
IV. Budget

I. U.S.D.A. Farm Bill Proposal

A recent U.S. Department of Agriculture news release stated that, “Agriculture Secretary Mike Johanns will report back to the people on the Bush Administration’s farm bill proposals. These proposals reflect the views heard during USDA’s 52 Farm Bill Forums held across the country. Webcast: January 31, 2007 10:00 a.m.

“WHO: Agriculture Secretary Mike Johanns

“WHAT: Discussion about Administration’s farm bill proposals

“WHEN: Wednesday, January 31, 2007 10:00 a.m. EST

“Please join us for the webcast at 10:00 a.m. EST – will require Windows Media Player. The link to the webcast can be found at http://www.usda.gov.”

Reuters writer Charles Abbott reported yesterday that, “The Bush administration plan to overhaul the U.S. farm program is too timid to meet its goal of producing 35 billion gallons a year of biofuels, said a Senate chairman briefed on the proposal on Tuesday.

“The package would propose a new approach to farm supports — so-called revenue assurance that protects farm income. Agriculture Secretary Mike Johanns was scheduled to unveil the package on Wednesday.

“By revising U.S. crop supports, the Bush administration could improve prospects for a world trade agreement as well as save money. Brazil won a World Trade Organization ruling against a U.S. cotton subsidy in 2004 and Canada challenged U.S. corn supports this month.”

President Bush discusses trade in a speech yesterday at Caterpillar in Peoria, Illinois.

Mr. Abbott indicated that, “[Senate Agriculture Committee Chairman Tom Harkin (D-Iowa)] declined to say if the administration would propose elimination of price support loans as part of its revenue assurance proposal. During an impromptu session with reporters, he repeatedly said more money was needed to develop biofuels.”

Concluding, Mr. Abbott added that, “Johanns seemed certain to propose elimination of the ban on growing fruits and vegetables on land eligible for crop subsidies, said one trade group official. It would be offset by more money for research and marketing promotion for fruit, vegetables, nuts and nursery crops.”

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President Bush & Secretary Johanns Could Deliver A “One-Two” on U.S. Farm Policy

I. Farm Bill
II. Ethanol

I. Farm Bill

On Friday, Reuters writer Charles Abbott reported that, “The decades-old U.S. farm subsidy system should be replaced by tax-deferred ‘income stabilization accounts,’ an environmental group said on Friday, amid rising expectation the Bush administration would propose farm reform within days.

“One farm lobbyist said the centerpiece might be an insurance-like program to protect farm income. That would be a dramatic change from subsidies offered for each bushel of grain and soybeans or pound of cotton and rice that a farmer grows.

“Agriculture Secretary Mike Johanns says the farm support system, created in the Depression era and costing $20 billion a year, needs to be modernized.

“A Johanns aide said ‘no date has been locked in’ for unveiling the administration plan but an announcement should come within a couple of weeks. He said the proposal would be very detailed and declined to outline it.”

“Participants at Nebraska’s Husker Harvest Days line up to discuss with Agriculture Secretary Mike Johanns about the next Farm Bill. Secretary Johanns and other USDA officials have been holding listening sessions across the country” (via U.S.D.A. webpage).

Mr. Abbott indicated that, “While several large U.S. farm groups want to maintain the farm-subsidy structure now in use, the National Corn Growers Association supports a switch to a ‘revenue assurance’ program. Wheat and soybean growers want higher support rates.”

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D.D.A. at Davos- More Background

Categories: Doha / Trade

Additional news regarding the Doha round of W.T.O. trade talks has been posted at the German Marshall Fund’s Trade & Development webpage, for complete details, just click here.

-Keith

Doha Talks

I. Doha
II. Ethanol

I. Doha

Alan Beattie reported in yesterday’s Financial Times that, “The Doha round of trade talks juddered back to life over the weekend, with leading countries expressing enthusiasm for clinching a deal but giving few details about how it would work.

“Meeting at the World Economic Forum in Davos, Switzerland, about 30 ministers instructed their officials to step up talks to reach a framework deal, especially on agriculture.”

As this graph from The Wall Street Journal indicates, corn prices are increasing rapidly.

The FT article also noted that, “The revival of the round after its suspension last July follows a series of bilateral talks that included the European Union, the United States and large emerging market countries such as Brazil. Negotiating committees of officials at the World Trade Organisation in Geneva will reconvene at a senior level, although the talks agreed it would be premature to call a full meeting of ministers from the WTO’s 150 member countries.”

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Doha Discussion

Categories: Doha / Trade

On Saturday, January 27, John K. Defterios moderated a panel of Trade Ministers at the World Economic Forum in Davos, Switzerland.

W.T.O. Director General Pascal Lamy and U.S. Trade Representative Susan Schwab at the World Economic Forum in Davos.

Among the participating Ministers were Celso Amorim, Minister of Foreign Relations of Brazil; Peter Mandelson, Commissioner, Trade, European Commission; Susan Schwab, US Trade Representative; and Pascal Lamy, Director-General, World Trade Organization (WTO).

The event lasted about an hour and fifteen minutes; however, I have included excerpts from the event that only last about 11 minutes.

To listen to the highlights, just on this Ag Policy Soup webpage.

-Keith

C.A.R.D. Report: "Should Area Revenue Coverage Be Offered through the Farm Bill or as a Crop Insurance Program?"

I. C.A.R.D. Report
II. Ethanol

I. C.A.R.D. Report

The Center for Agricultural and Rural Development at Iowa State University recently released a report entitled, “Get a GRIP: Should Area Revenue Coverage Be Offered through the Farm Bill or as a Crop Insurance Program?” which was written by Nicholas Paulson and Bruce A. Babcock.

In the report’s abstract, the authors indicated that, “The successful expansion of the U.S. crop insurance program has not eliminated ad hoc disaster assistance. An alternative currently being explored by members of Congress and others in preparation of the 2007 farm bill is to simply remove the ‘ad hoc’ part of disaster assistance programs by creating a standing program that would automatically funnel aid to hard-hit regions and crops. One form [of] such a program [c]an be found in the area yield and area revenue insurance programs currently offered by the U.S. crop insurance program. The Group Risk Plan (GRP) and Group Risk Income Protection (GRIP) programs automatically trigger payments when county yields or revenues, respectively, fall below a producer-elected coverage level. The per-acre taxpayer costs of offering GRIP in Indiana, Illinois, and Iowa for corn and soybeans through the crop insurance program are estimated. These results are used to determine the amount of area revenue coverage that could be offered to farmers as part of a standing farm bill disaster program. Approximately 55% of taxpayer support for GRIP flows to the crop insurance industry. A significant portion of this support comes in the form of net underwriting gains. The expected rate of return on money put at risk by private crop insurance companies under the current Standard Reinsurance Agreement is approximately 100%. Taking this industry support and adding in the taxpayer support for GRIP that flows to producers would fund a county target revenue program at the 93% coverage level.”

Although droughts do not have the visual impact of other natural disasters, the damage they cause is devastating (Photo B.B.C.).

The report noted that, “By almost any measure, the drive to induce farmers to increase their purchase of crop insurance through increased premium subsidies and support for the crop insurance industry has been a resounding success. Over 80% of insurable crop acreage was enrolled in the program in 2005, and more than half of those acres were insured at coverage levels of 70% or higher. Total liability for the 2006 crop year was approximately $50 billion. Despite this success, Congress once again seems poised to pass another disaster assistance program in 2007” (page one).

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FT: Breakthrough In Doha Possible “Within Weeks”

I. Doha
II. Ethanol- Market Dynamics

I. Doha

Financial Times writer Alan Beattie reported yesterday that, “Trade ministers continued to jockey for position ahead of their meeting on Saturday at the World Economic Forum in Davos, with the EU saying a big breakthrough on the Doha round could come within weeks.

“Peter Mandelson, EU trade commissioner, told the FT that the broad outlines of a deal in multilateral trade talks, with overall indicators of cuts in farm tariffs and subsidies and goods tariffs, was not far away.

“‘I believe we can get a breakthrough on the big numbers in agriculture and industrial goods in the next month or so,’ he said.”

“U.S. Sen. Dick Lugar discusses America’s dangerous energy situation at a press conference with (l to r) Sens. Tom Harkin (D-IA), Barack Obama (D-IL) and Byron Dorgan (D-ND).” (via Sen. Lugar’s webpage)

Mr. Beattie quoted Commissioner Mandelson as saying, “The agricultural consultations between the EU and the US are through the worst…We are approaching the end of the endgame in that regard.”

The FT article noted that, “The outstanding issue in agriculture was between the US and developing countries, said Mr Mandelson. The US has asked for substantial new access to the consumer markets of big emerging market countries such as India, Indonesia and the Philippines.”

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Doha: If Talks Fail, “The Lawyers Will Have a Field Day”

Categories: Doha / Trade /EU

Additional news regarding the Doha round of W.T.O. trade talks has been posted at the German Marshall Fund’s Trade & Development webpage, for complete details, just click here.

-Keith

Doha- “U.S. and EU Appear to be Within ‘Spitting Distance’ of an Agreement.”

I. Budget
II. Renewable Fuels- Post State of the Union
III. Doha
IV. Farm Bill

I. Budget

Yesterday, the Congressional Budget Office (C.B.O.) released a report entitled, “The Budget and Economic Outlook: Fiscal Years 2008 to 2017.” The report highlighted the projected growth of the U.S. economy and federal spending for major mandatory programs for the next ten years.

On page 60 of the report, C.B.O. noted that, “[Commodity Credit Corporation] CCC outlays to agricultural producers came to $18 billion in 2006, after varying between $9 billion and $31billion in the preceding six years. CBO estimates that those outlays will fall to $10 billion in 2007 and will range between $8 billion and $10 billion over the next decade. The reduction in 2007 primarily reflects lower income-support payments to farmers because of historically high crop prices, which are attributable in part to the strong market demand for ethanol. Following directions established by the Deficit Control Act, CBO’s baseline assumes that most major farm programs, which are scheduled to expire in 2007, will continue over the 2008–2017 period.” (Table 3-6 on page 66 of the report provides specific estimates for CCC outlays.)

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President Bush on Renewable Fuel

Quote of the Day: “I am not saying the US cannot spend money on farmers. They can spend as much as they like as long as it is not trade-distorting.” –EU Trade Commissioner Peter Mandelson.

I. President Bush on Renewable Fuel
II. Doha

I. President Bush on Renewable Fuel

Edmund L. Andrews and Felicity Barringer reported in today’s New York Times that, “Vowing to reduce the nation’s thirst for foreign oil, President Bush called on Tuesday for a huge government-mandated increase in renewable fuels — mainly ethanol — and tougher mileage standards for cars and light trucks.”

The Times explained that, “The centerpiece of Mr. Bush’s proposal, which he said would cut the projected use of gasoline by 20 percent over the next decade, was a nearly fivefold mandatory increase in the production of ethanol and other alternative fuels for cars and trucks. The most obvious beneficiaries would be makers of ethanol and other biofuels, but it could also promote the production of liquefied coal.

“Mr. Bush called for a mandatory requirement that makers of fuel produce 35 billion gallons of alternative fuels a year by 2017, replacing about 15 percent of the projected gasoline use in that year.

“A second major plank of Mr. Bush’s energy proposal calls for increasing fuel-efficiency standards of cars and trucks by 4 percent a year — about one mile per gallon — starting in 2010 for cars and 2012 for trucks.”

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Canadian Corn Case Grows

I. Canadian Corn Case Grows / Doha
II. New Farm Bill Proposal
III. Disaster Aid
IV. Ethanol, State of the Union

I. Canadian Corn Case Grows / Doha

The Associated Press reported yesterday (“Argentina, Brazil join WTO complaint against U.S. corn subsidies”) that, “South American agricultural leaders Argentina and Brazil have joined Canada in a complaint against the United States over what they claim are illegal government handouts to American corn growers, trade officials said Monday.

“The request for consultations, filed by the two countries and Guatemala last week at the Geneva-based World Trade Organization, threatens a major commercial dispute in the Western Hemisphere at a time when global free trade talks remain stalled over agricultural tariffs and subsidies and the U.S. begins debating a new multibillion-dollar farm bill.

“Under WTO rules, a three-month consultation period is required before a country can ask the trade body to launch a formal investigation. A WTO case can result in punitive sanctions being authorized, but panels take many months, and sometimes years, to reach a decision.”

The A.P. article reminded readers that, “The WTO, in a case brought by Brazil, already has ruled that some cotton subsidies are illegal and the administration of President Bush has been coming under pressure to reform a number of its farm support programs.

“‘Many of the issues in Canada’s complaint we have also complained about concerning U.S. cotton programs,’ said [Clodoaldo Hugueney, Brazilian ambassador to the WTO] in a telephone interview from Geneva.

“Canada’s complaint over U.S. corn support also challenged whether the billions of dollars in overall farm subsidies paid out by the U.S. government comply with international commerce rules.”

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Doha Update, Free Trade Area of the Asia Pacific (FTAAP) Also Noted

Categories: Doha / Trade

Additional news regarding the Doha round of W.T.O. trade talks has been posted at the German Marshall Fund’s Trade & Development webpage, for complete details, just click here.

-Keith

A Brief Conversation with U.S. Senator Richard Durbin of Illinois

Categories: Farm Bill

Ag Policy Soup, the official podcast of FarmPolicy.com, has been updated with a brief interview with U.S. Senator Dick Durbin of Illinois.

On Saturday, Senator Durbin hosted a Farm Bill listening session in Niantic, Illinois.

To read a summary of the event (including photos and audio), just click on this Ag Policy Soup webpage.

-Keith

FT: “US and EU Near Farm Trade Deal”

I. Doha-Canadian Corn Case
II. “Two Farm Bill Debates”- How Much Money and How it Will be Allocated
III. Renewable Fuels- Additional Budget Allocations?
IV. Farm Bill- Ethanol, Conservation
V. Market Dynamics
VI. Farm Bill Opinion

I. Doha-Canadian Corn Case

Eoin Callan and Alan Beattie, writing in today’s Financial Times, reported that, “Trade negotiators from the US and European Union have reached the brink of an agreement that could restart stalled world trade talks, according to people familiar with the discussions.”

The article added that, “The proposed outline of an agreement between the world’s two largest trading blocs includes politically explosive concessions that are already causing rifts in Europe and alarm in the US farm lobby.

“The fragile deal that is starting to emerge has yet to be finalised and comes amid tremendous uncertainty about whether negotiators can get the political backing to achieve a breakthrough in the Doha round of trade talks.”

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Producers Respond to Market Signals- More Corn Expected

I. Corn, Energy Issues
II. Conservation
III. Doha
IV. House Agriculture Subcommittee Leadership Named

I. Corn, Energy Issues

Associated Press writer John Seewer reported yesterday that, “Growing cotton is a family tradition on Webb Bozeman’s farm in central Mississippi. But not this year.

“Inspired by soaring demand for corn to feed the growing ethanol industry, Bozeman is joining a large number of farmers across the country who will plant corn instead of soybeans, wheat or cotton.

“Some in the Midwest are ending their longtime practice of rotating plantings of soybeans one year and corn the next, opting to grow corn in consecutive years. Livestock farmers are turning pastures into corn fields.

“‘We have farmers half-joking about planting corn in their front yards,’ said Matt Roberts, an agricultural economist at Ohio State University. ‘A lot of farmers see this as an opportunity to have a very good year.’”


“Wall Street commodity funds that have been investing heavily in energy futures are now loading up on agricultural commodities like corn and livestock futures” (The New York Times- 1.19).

The A.P. story added that, “Some farmers thinking about planting corn year after year, might also have to deal with pest problems and higher costs for fertilizer and seed, said Bruce Erickson, a Purdue University agricultural economist. Additionally, fields growing the same crop tend to produce less each year. That’s why most farmers rotate crops to maintain nutrients in the soil and deter insects and weeds.

“‘Most scientific research shows a 10 percent drop in yield when you plant corn on corn,’ Erickson said.

“In Louisiana, the number of acres devoted to corn likely will double and could triple, said David Bollich, a grain marketing specialist with the Louisiana Farm Bureau.”

(more…)


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