FarmPolicy

December 13, 2018

USDA Reports: Implications for U.S. Farm Policy Stakeholders

Categories: Farm Bill

Yesterday, the U.S. Department of Agriculture released two key reports that shed more light on the potential supply of corn and soybeans as the 2007 crop continues to mature. The information contained in these reports, along with their impact on the market price of some program crops, is also of interest to U.S. farm policy makers.

Updating a projected plantings report that was released in March, yesterday’s USDA Acreage Report indicated that, “Corn planted area for all purposes is estimated at 92.9 million acres in 2007, up 19 percent from 2006 and 14 percent higher than 2005. Farmers increased corn plantings 3 percent from their March intentions, resulting in the highest planted area since 1944 when 95.5 million acres were planted for all purposes.”

And with respect to soybeans, the Acreage Report stated that, “The 2007 soybean planted area is estimated at 64.1 million acres, down 15 percent from last year’s record high. Area for harvest, at 63.3 million acres, is also down 15 percent from 2006. This is the lowest planted and harvested area for soybeans since 1995. With the exception of New York, Pennsylvania, and the Southeast States, planted acreage decreased in all States across the country.”

Meanwhile, USDA’s Quarterly Grain Stocks Report, which was also released yesterday, stated that, “Corn stocks in all positions on June 1, 2007 totaled 3.53 billion bushels, down 19 percent from June 1, 2006;” and, “Soybeans stored in all positions on June 1, 2007 totaled 1.09 billion bushels, up 10 percent from June 1, 2006 and the largest June 1 stocks on record.”

To put these reports in perspective, and to analyze what the updated data estimates in these new releases means for U.S. farm policy stakeholders, I turned yesterday to University of Illinois Agricultural Economist Darrel Good.



University of Illinois Agricultural Economist Darrel Good

We talked for about 10 minutes and discussed the historic nature of the reports, as well as the price outlook for some program crops. Dr. Good also tied in what this current production picture means as increased interest in updating renewable fuels mandates stems from Congress, and as the 2007 Farm Bill debate unfolds.

To listen to our conversation, just click here (MP3- 10 minutes).

In other coverage analyzing the USDA reports, Reuters writer Charles Abbott reported yesterday that, “U.S. farmers are on track to grow their biggest corn crop ever, an astonishing 12.8 billion bushels, a government report said on Friday, enough for livestock feeders and the booming fuel ethanol industry.

“‘There will be enough corn,’ Agriculture Secretary Mike Johanns said. ‘It looks to me … some of the pressure went off.’”

Mr. Abbott added that, “‘It’s just incredible,’ said USDA chief economist Keith Collins of the possible huge crop and the prospect of a larger corn stockpile. It meant ‘a little cushion’ against bad weather, he said, and will ‘give livestock feeders some relief.’”

Lauren Etter and Bill Tomson
reported in today’s Wall Street Journal that, “The USDA report was much higher than analysts and traders had expected, and Keith Collins, USDA chief economist, said ‘this is a report that’s probably pretty good for everybody.’

“The huge crop could send corn prices lower over the next few months. Still, Greg Wagner, director of marketing risk management for Horizon Ag Strategies, cautioned that ‘we are not out of the weeds yet.’ There is a looming risk that harsh weather could roll through the Midwest and cut into yields, or that a drought in China could send more American corn overseas, keeping prices buoyed.”

Graph from The Wall Street Journal Online.

Philip Brasher and Donelle Eller
added in today’s Des Moines Register that, “Farmers saw high prices for corn this spring and planted even more than expected. That may help hold down food prices, but it’s bad news for struggling biodiesel makers who depend on soybean oil.

“The U.S. Department of Agriculture reported Friday that farmers nationwide planted 92.9 million acres of corn this year – 19 percent more than last year and 3 percent more than the government had projected in March. The demand for ethanol led U.S. farmers to plant the most corn since 1944.

“But that extra corn acreage means that farmers planted 15 percent less land to soybeans.

“The price of soybean oil is ‘almost to the point where it’s not economically feasible to make biodiesel,’ said Dan Holesinger, manager of Clinton County Bio Energy.”

And Bill Hord noted in today’s Omaha World Herald that, “November futures for soybeans rose 50 cents to $8.92 Friday after the USDA issued its report. That amount is the maximum allowed in a single day of trading.

“The combination of corn and soybean demand promises at least short-term prosperity for many farmers.

“For the first time in 41 years of farming, there is real market demand for crops, said Sidney, Iowa, farmer Darrel McAlexander.

“Corn and soybeans, the nation’s two biggest crops, are profitable, which should save billions of dollars that otherwise would be spent on federal programs designed to prop up low crop prices.”

Keith Good

Two Versions of the Farm Bill May be Considered by the House Ag Committee

Categories: Doha / Trade /Farm Bill

Reuters writer Missy Ryan reported today that, “Washington wants to enrich its flourishing farm sector at the cost of millions of dirt-poor farmers, India’s commerce minister said on Thursday in his first U.S. visit since trade talks hit a major snare…Commerce Minister Kamal Nath’s visit to Washington comes one week after U.S., Indian, European and Brazilian negotiators abandoned talks which many hoped would push the World Trade Organization’s Doha round, plagued by discord for more than five years, closer to an agreement.”

I. Farm Bill
II. Doha / Trade

I. Farm Bill

Congressional Quarterly writer Catharine Richert reported yesterday that, “House Agriculture Chairman Collin C. Peterson, D-Minn., is expected to announce Friday that he will bring two versions of the farm bill to the full committee in July.

“One version would stay within a limit of $226 billion over 10 years imposed on the farm bill under the fiscal 2008 budget resolution and would make some cuts to farm subsidies, according to aides and lobbyists.

“The other version would allocate $20 billion in reserve funding set aside for various farm programs under the budget resolution that Congress adopted in mid-May, according to aides. Peterson’s office declined to comment on the plan.”

Ms. Richert added that, “Now farm lobbyists say one version of the farm bill to be considered by the full committee will include changes to the current subsidy structure. Cuts to direct payments — or stricter limits on how much money farmers can collect from the government every year — could anger corn, soy, wheat, cotton and rice growers. In particular, Southern farmers who grow cotton and rice rely heavily on direct payments to cover the high production costs associated with their crops.”

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Farm Bill: Timing Could be an Issue

Reuters news reported yesterday that, “India and the United States pressed one another to watch out for poor countries’ interests in global trade talks, but struck a conciliatory note less than a week after acrimony erupted in the WTO’s Doha round…‘There has to be a convergence of respecting each other’s sensitivities,’ Indian Commerce Minister Kamal Nath said in a speech to the U.S.-India Business Council. ‘And I want to assure you from here, that Susan and I will find that convergence,’ Nath said, referring to U.S. Trade Representative Susan Schwab, who was with him on the panel.”

I. Farm Bill
II. Doha

I. Farm Bill

Peter Harriman, writing yesterday at the Argus Leader (South Dakota), reported that, “A delay in the U.S. Senate in marking up new Farm Bill proposals means neither the Senate nor House is likely to consider parameters of a bill in July, Sen. John Thune said Wednesday.

“If Congress postpones serious work on a Farm Bill until after the summer recess in August, chances increase lawmakers will run out of time in the legislative year and will probably be forced to extend the existing bill.

“If it comes to that, Thune says Congress should extend the bill for two years, not just one.

“‘In my view, we don’t want to be writing a farm bill in an election year,’ he says.”

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“Base Acres”

Categories: Farm Bill

A FarmPolicy update from earlier today noted that, “Along with reducing the so-called direct payments, Tom Harkin, an Iowa Democrat, said land no longer producing crops should be ineligible for subsidies and that crop acreage ‘bases’ should be updated, a step that could save millions of dollars” (Charles Abbott, Reuters).

A Congressional Research Service Report from September of 2005 by Jim Monke (“Farm Commodity Programs: Base Acreage and Planting Flexibility”) provides relevant background information that puts this policy proposal in some historic context.

The CRS report explained that, “A farm’s base acreage and program yield are historical averages of crop production, and are used to calculate certain government payments. The Farm Security and Rural Investment Act of 2002 (the 2002 farm bill) offered farmers a rare opportunity to update their program base acreage and yields (P.L. 107-171, sec. 1101-1102). Previous farm bills had frozen program yields since 1985, and base acreages since 1996. Moreover, even when base acreages could be increased in the 1980s and early 1990s, many farmers did not change their base acreages because they would lose program benefits during the time they established a different planting history. Thus, for the vast majority of farmers who chose to participate every year, bases and yields had not been updated for over a decade.”

Mr. Monke went on to explain that, “Participating farms have a unique ‘base acreage’ and ‘payment yield’ recorded with the USDA’s Farm Service Agency (FSA) for each of the ‘covered commodities’ and peanuts. These bases and yields are used to calculate government payments such as direct and counter-cyclical payments, but are unrelated to the marketing loan program.

“The law gives farmers considerable flexibility to plant nearly any crop (except fruits and vegetables) on base acres and still receive payments. Having an established base for a particular crop entitles farmers to receive direct and counter-cyclical payments for that crop, regardless of whether that crop is actually grown on the farm in the current year.

A farm’s base acreage and payment yield depend on its planting history of the crop, and can change only when bases are allowed to be updated. Certain exceptions allow prevented plantings to be counted as planted acres after droughts or floods. Farmers report acreage and yields annually at their local FSA county office.”

The CRS report also noted that, “USDA data indicate that 78% of farms benefited from the opportunity, with 37% of farms updating base acreage for all crops, and 41% adding oilseed acreage to their 1996 base acreage. Regional differences were apparent, particularly between western regions, which tended to make fewer changes, and midwestern and eastern regions, which more frequently added oilseeds or updated bases.”

Keith Good

Farm Bill Debate Continues- Chairman Harkin Offers Ideas

Categories: Doha / Trade /EU /Farm Bill

Reuters writer Charles Abbott reported yesterday that, “Congress should scale down the $5.2 billion paid annually to U.S. grain, cotton and soybean farmers so that crop subsidies flow when they are needed, the Senate Agriculture Committee chairman said on Tuesday.

“Along with reducing the so-called direct payments, Tom Harkin, an Iowa Democrat, said land no longer producing crops should be ineligible for subsidies and that crop acreage ‘bases’ should be updated, a step that could save millions of dollars.

“There has been no overall update in decades of the ‘bases’ that qualify a grower for crop supports. Pat Westoff, an analyst at a University of Missouri think tank, said most crops have larger acreage bases than actual plantings.

“‘I’m 99 percent sure you would have a savings,’ said Westoff, because an update would result in less land being eligible for high support rates.”

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Fischer Boel- “EU Needs to go on the Offensive More in its Trade Policy”

The Associated Press reported yesterday that, “A group of Latin American and Asian members of the World Trade Organization proposed Monday a ‘middle ground’ in talks to liberalize trade in manufactured goods — a sign that developing countries are breaking ranks with Brazil and India…The proposal, obtained by The Associated Press, calls for greater concessions by both rich and poor countries as part of efforts at reaching a new global trade pact and comes only days after talks among the WTO’s four biggest powers collapsed in Germany over eliminating barriers to farm and manufacturing imports.”

I. Trade Issues
II. Farm Bill
III. Crop / Weather
IV. Biofuels

I. Trade Issues

Dow Jones writer Devon Maylie reported yesterday that, “The European Union needs to go on the offensive more in its trade policy and actively target new trading partners in emerging markets, E.U. commissioner for Agriculture and Rural Development Mariann Fischer Boel said Monday.

“Speaking at an agricultural trade conference in Brussels, Boel said the E.U. must cooperate more to promote and expand the number of agricultural products exported.

“‘No one is talking about knocking down our border protection with a sledgehammer,’ Boel said. ‘Rather, I’m saying that we cannot mold our entire strategy around defense.’”

The article added that, “India, China and Central America are potential markets which E.U. food companies should tap into, Boel said.

“She added that in India the middle class is ‘hungry for exciting food and drink experiences that go beyond Indian cuisine’ and is growing at the rate of 35 million people a year.”

(more…)

Farm Bill News

Categories: Doha / Trade /Farm Bill

Ben Shouse reported in yesterday’s Argus Leader (South Dakota) that, “A top agriculture official from the Bush Administration says the House of Representatives is so far taking a ‘backward-looking’ approach to government farm payments…Mark Rey, under secretary of agriculture for natural resources and environment, visited Brookings to announce two conservation grants Friday. While in Sioux Falls, he said today’s farm program ‘is not a safety net, it’s a bull’s-eye.’…‘It basically invites our trading partners from around the world to take their shots.’”

I. Farm Bill
II. CRP / CSP
III. Doha

I. Farm Bill

Robert Barron, writing yesterday at The Enid News & Eagle (Oklahoma), reported that, “Supporters of the commodities section of the 2007 farm bill successfully defeated an amendment [FARM 21] they said would have changed the direction of the bill.

“U.S. Rep Frank Lucas, R-Okla., spoke against the amendment, blasting U.S. Rep. Ron Kind, D-Wis., for his amendment that would have ‘gutted’ the commodities title from the farm bill. Kind introduced the amendment, which was struck down successfully, in a subcommittee meeting.”

USDA announced on Friday that, “more than 14,000 agricultural producers and landowners may be eligible to re-enroll their land in the Conservation Reserve Program (CRP) continuous sign-up if their contracts expire on Sept. 30, 2007…Of the 300,000 acres eligible to leave the program, about 71,800 acres are in major corn producing states (Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska and Ohio).” USDA Photo by: Bill Tarpenning

Mr. Barron went on to explain that, “Lucas said Kind attempted to insert a similar amendment into the previous farm bill, and Lucas was selected to defend it on the House floor. He managed to defeat the amendment then but indicated the vote was close. Now, with new faces in the House and new leadership, Lucas said he is troubled by the possibility a similar amendment could succeed.

“The next threat will be the Rules Committee, which sees every bill and sets rules for debate on the House floor. Lucas believes Kind’s next step is to try to persuade the Rules Committee to allow his version to become a total substitute, which would bring it to a vote of the full House.

“‘About 50 (members of the House) understand agriculture, and 385 don’t have much of a clue. It’s ironic, all these years, some of my very conservative friends who believe in a super free market have talked about ending support of agriculture. Now, we have a liberal Democrat from Wisconsin who will have the opportunity to force a vote on the floor,’ Lucas said.

“The result will be a mixed coalition of hard left and hard right who will support the issue.”

(more…)

Reuters: “Modest WTO free trade deal seen better than nothing.”

Categories: Doha / Trade /Farm Bill

On Thursday, Senate Ag Committee Chairman Tom Harkin (D-Iowa) issued a news release, which stated in part that, “Yesterday, the Washington Post ran the latest in a series of articles spotlighting inequities in the distribution of funds under USDA’s farm commodity and other programs. The story profiled the extremely poor community of Shelby, Mississippi, where most of the residents are African-American. This community desperately needs funds for rural economic development. But while the surrounding county has received $200 million in crop subsidies over the last five years – almost all of it going to very large farms – it received just a tiny fraction of that amount in USDA Rural Development grants.”

I. Doha
II. Farm Bill

I. Doha

Late last week, the Associated Press reported that, “China should play a more proactive role in bringing global trade talks to a successful conclusion, the top U.S. trade official said, fresh from a failed attempt in Germany this week by four major economic powers to break the deadlock on the so-called Doha round.

“China, which was not part of the meeting in Potsdam between Brazil, India, the European Union and the United States, has a responsibility to make the World Trade Organization it joined in 2001 a success, U.S. Trade Representative Susan Schwab told reporters Friday.”

The AP article went on to explain that, “Both developing countries and developed countries have been wary of further opening their markets because of fears they could be flooded with cheap imports from China, hurting domestic producers.”

On June 13, The German Marshall Fund of the United States hosted David Blandford, Professor of Agricultural Economics at Pennsylvania State University (left), to discuss globalization and farm policy reform in developed countries. The event was moderated by GMF transatlantic fellow Dan Morgan.

Meanwhile, Reuters writer Laura MacInnis reported this morning that, “Even a modest global trade pact may be better than nothing, according to economists and analysts who say the implosion of faltering World Trade Organisation talks would carry big costs.”

The article stated that, “David Woods, a trade analyst and former WTO spokesman, said failure to secure a Doha deal would likely trigger a rash of two-way and regional trade deals, making life difficult for businesses navigating imports and exports through each system.

“He warned that a breakdown in the Doha round could cause an escalation of trade conflicts between major powers, who have already lodged complaints at the global trade body over goods such as corn, cotton, aircrafts and car parts.

“The WTO plays a vital role in easing tensions in economic circles, Woods said, noting a rise in protectionism in the wake of a Doha collapse may well aggravate simmering tensions between China and its trading partners such as the United States.

“‘A diminution of the credibility of the institution through a failure in the Doha round is not going to help that. It makes everybody’s job of dealing with China more difficult,’ he said.”

(A more detailed background on the G4 breakdown was posted at FarmPolicy.com on Saturday).

(more…)

Doha- G-4 Recap

Categories: Doha / Trade

The Financial Times reported yesterday that, “India and Brazil’s fear of growing Chinese imports was behind their decision to help prompt the collapse on Thursday of the G4 trade talks in Potsdam, said Susan Schwab, the US trade representative, in an interview with the FT.

“Ms Schwab, who now faces a steeper uphill climb to persuade the US Congress to renew the Bush administration’s fast-track trade negotiating authority [or trade promotion authority (TPA)], which expires next week, said she was also surprised by India and Brazil’s ‘rigid’ negotiating positions.”

(For more on the potential impact the G4 collapse will have on Congressional renewal of TPA, see this article by Reuters writer Missy Ryan, which noted that, “The Bush administration is billing the collapse of world trade talks this week as good news for its drive to renew negotiating powers in Congress, but it is not clear that U.S. lawmakers will see things that way… ‘By walking away from a bad deal, we are once again able to show the Congress that we can be trusted,’ U.S. Trade Representative Susan Schwab said on Thursday after U.S., European, Brazilian, and Indian negotiators abandoned talks in the troubled Doha round of trade negotiations”).

USTR Susan Schwab and USDA Secretary Mike Johanns at a Press Conference yesterday in Geneva.

The FT article added that, “Ms Schwab said that the process by which Brazil and India reached a common negotiating position with other developing countries at their various groupings – G20 and G33 in particular – also deprived [Kamal Nath of India] and [Ceslo Amorim of Brazil] of the flexibility to adapt their offers.

“‘What you have seen is they spend huge amounts of time and political capital fighting it out internally and then they preclude their leaders [Brazil and India] from taking different positions – at Potsdam, Brazil and India were taking the same positions as they had almost two years ago.’

“Ms Schwab hinted that both countries had still not figured out how to provide leadership to the developing world. ‘It is a very different negotiating dynamic to be in the inner circle and to be in a leadership position,’ she said. She reserved her toughest words for India, which walked out of the talks and – according to some accounts – approached the negotiations with the expectation they would fail.”

(more…)

“Analysis from Washington”- By Dan Morgan- House Debate

House Debate

By Dan Morgan- Dan is a special correspondent of The Washington Post and a Transatlantic Fellow at the German Marshall Fund of the United States. “Analysis from Washington” is posted exclusively at FarmPolicy.com.

House Agriculture Committee Chairman Collin Peterson (D-Minn.) has spent his 16-year House career working closely with Republicans. He’s against abortion, gun control and gay marriage, and often votes with the GOP. He once pulled the car of Republican Katherine Harris out of a snow bank in Aspen, Colo., before she became famous as a Florida election supervisor in 2000.

Even so, the chairman reacted like a red-blooded partisan last week when Bob Goodlatte (R-Va.), the committee’s ranking Republican, suggested that Democratic leaders were “cutting” farm programs and “turning their backs on rural America.”

“It doesn’t do anybody any good to point fingers, that’s what the American people are fed up with,” said Peterson, who gave examples of how the White House and the Republican Congress had made cuts in farm spending between 2001 and 2006.

As Goodlatte well knows, there has been no “cut” in funding for farm programs under the Democrats. What has changed is the American farm economy. Congressional Budget Office estimates of future subsidies are down sharply, due to soaring farm prices. Under budget rules, this means that programs in a new farm bill have to stay within those spending estimates. But that isn’t a cut. On Tuesday, a key House Agriculture subcommittee proved that by voting unanimously for a 5-year extension of the current farm program, considered by critics to be one of the most generous ever. There were no complaints from the Congressional Budget Office.

It’s understandable that the usually easy-going Peterson is a bit touchy. As the House Agriculture Committee gets ready to draft a final version of a farm bill next month, political pressures on him are mounting from all directions. He can satisfy one group—but that only rankles another.

The big winner Tuesday was cotton, which once again demonstrated its political muscle. A committee “discussion draft” would have eliminated government storage payments and—under some readings—exposed growers to more stringent payment limits. The panel’s decision to simply extend the farm program dropped those changes. Cotton-state lawmakers then added new concessions for shippers and millers, including a 4 cent a pound trade adjustment payment to help spinners and millers upgrade their plants.

“Cotton was actually in the room working on it,” said Peterson. “Without southern support you can’t pass a farm bill.”

But a bill that satisfies all cotton’s desires may not be passable, either.

Peterson has stated previously that going to the floor without changes in payment limits was “not sustainable.”

Over in the Senate, Agriculture Committee Chairman Tom Harkin put it bluntly: “What happened will never pass on the House floor.” He called the action “a very narrow view of agricultural policy,” driven by a “minority segment” of the farm community.

Corn and wheat interests don’t favor continuing the status quo, as the Tuesday action would do.

The National Corn Growers Association advocates a new kind of safety net that would protect farmers from swings in their incomes, rather than the ups and downs of prices. Wheat growers feel they’ve been shortchanged by the current program, and Harkin, for one doesn’t disagree. “Supports for rice and cotton have been alot lot better than for other crops,” he said.

Then there is the threat of a floor fight that could take matters out of the hands of the committee, turning it over to a rabble of lawmakers responding to the concerns of environmentalists, ranchers, fruit and vegetable growers, and the rural and urban poor.

In 2001, the two top Democrats, Speaker Nancy Pelosi and Majority Leader Steny H. Hoyer both voted for an amendment that would have shifted funds from big farmers to conservation programs. That measure received 200 votes and gave the Agriculture Committee a genuine scare. This time around, Rep. Ron Kind (D-Wisc.) is leading a coalition in support of a bill, known as Farm 21, that would phase out subsidies altogether.

This week, half the members of the California congressional delegation wrote Peterson and Goodlatte, asking for a revised farm bill that would provide more funding for “organic, family and beginning farmers,” and for new programs to protect the environment and preserve farmland.

But it might be a mistake to overestimate the strength of the reformers.

Thursday’s collapse of G-4 negotiations on a new global trade agreement only serves to reduce pressure on the committee to steer clear of trade-distorting subsidies. Presumably, it will give Peterson a freer hand to cut the annual allowances, known as direct payments, that the World Trade Organization views as acceptable. Those funds could then be redirected to other popular farm subsidies to lock in more backing for the bill among various farm groups.

Her 2001 vote notwithstanding, is Pelosi an advocate of farm program reform? That isn’t clear as yet.

Her top priority now is protecting the class of Democratic freshmen elected in 2006, many of whom come from swing districts in farm country. All four freshmen among the 10 Democrats voted on Tuesday to extend the existing farm program, and against Kind’s reform. Within the whole farm bill, Pelosi’s top priority isn’t reforming the farm program, but securing funding for energy programs and nutrition.

The committee has already moved to do that. One subcommittee has approved more than $2 billion in loan guarantees and credits for biofuels research and new plants producing cellulosic ethanol. Another panel has proposed adding $5 billion for nutrition programs over five years—a key to winning the backing of the black and Hispanic caucuses. America’s Second Harvest, an anti-hunger group, called the action “hope for millions of hungry Americans.”

A wild card is the fruit and vegetable industry, centered in California and Florida, states with lots of votes in the House. To curry favor with the industry, the committee is proposing new funds for research, and Peterson has ruled out any change in the rule that bars the growing of fruits and vegetables on land that qualifies grain and cotton farmers for direct payments. Lifting the ban, the industry fears, would create competition and drive down prices.

The ban isn’t popular in the grain belt, and the panel gave two freshmen Democrats a high profile moment to represent their constituents. Minnesota Democrat Tim Walz’s proposal to ease the ban was defeated. But the subcommittee went along with a pilot program proposed by Brad Ellsworth of Indiana, allowing the planting of 10,000 acres of tomatoes to supply a processing plant near his district.

On the face of it, Peterson’s statement this week that the full committee would probably end up approving the existing farm program law “with some tweaks” may seem astonishing. U.S. agriculture is changing fast, driven by the biofuels revolution, new environmental concerns, and the global economy. Peterson himself acknowledges that southern agriculture must change: “We probably should be producing less cotton,” he said.

But he is determined to protect “my farmers.”

In the final analysis, all the good ideas for reform and change come down to this: Do they have 218 votes on the House floor? Or does Peterson?

By Dan Morgan

Doha Deadlock

Categories: Doha / Trade /Farm Bill

Reuters writer Charles Abbott reported yesterday that, “Congress wants reform in U.S. farm policy and is ‘never going to pass’ an extension of crop subsidies forecast to cost $10 billion this year, the Senate Agriculture Committee chairman said on Thursday…’It’s an ideal time to do some reform, to rearrange our priorities and to look ahead,’ said chairman Tom Harkin, who wants to expand land stewardship programs, spend more on public nutrition, boost biofuels and aid specialty crop growers…A House Agriculture subcommittee voted on Tuesday to extend for five years the grain, cotton and soybean subsidies created in 2002. Congress is writing a successor to the 2002 law.”

I. Doha
II. Farm Bill

I. Doha

Alan Beattie, in an article posted yesterday at the Financial Times Online, reported that, “The chance of a global trade deal being clinched before President George W. Bush leaves the White House shrank dramatically on Thursday with talks between core negotiating partners collapsing again in division and acrimony.

In a near-exact repeat of events last summer, talks in Potsdam, Germany, between the four partners at the centre of the so-called Doha round of negotiations – the EU, US, Brazil and India – broke up with sides still far apart on cutting agricultural subsidies and goods tariffs.

“The collapse makes it unlikely that an outline deal can be agreed before the summer, a step necessary to complete a detailed agreement by the end of the year. With the US presidential race starting in earnest next year, many in the talks believe the political sensitivities in any deal mean no agreement can be concluded until there is a new incumbent in the White House.”

Mr. Beattie also indicated that, “Unlike last year’s collapse, when the US found itself isolated, the EU on Thursday joined the Americans in demanding bigger cuts in goods tariffs. Peter Mandelson, EU trade commissioner, told reporters: ‘It emerged from the discussion on [industrial goods] that we would not be able to point to any substantive or commercially meaningful changes in the tariffs of the emerging economies.’ He said [Kamal Nath, the Indian trade minister] unilaterally declared the talks over without consultation.”

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Commodity Title

On Tuesday, members of the House Agriculture Subcommittee on General Farm Commodities and Risk Management “voted 18-0 to base the new farm bill on an extension of current crop support rules” (Reuters).

Brownfield’s Bob Meyer reported yesterday that, “Wisconsin Congressman Ron Kind [is] among those quite disappointed by the House Ag Subcommittee decision to extend the current commodity title through the next farm bill. The group completely ignored the changes suggested by Kind’s FARM 21 plan. ‘Reform is going to occur one way or the other,’ the La Crosse Democrat says, ‘I’d rather have Congress deal with some of the reform proposals rather than have it done for us by outside entities through these challenges with the World Trade Organization.’

“Kind agrees with comments that the subcommittee decision is a starting-point; he says there is a lot of interest in seeing a strong conservation title, reform of the nutrition programs, more for biofuels production. Kind says the only way these things can be accomplished is by reforming the commodity subsidy programs, ‘I hope the Committee, I hope Chairman Peterson keep an open mind.’”

To listen to a Brownfield interview with Rep. Kind, just click here (MP3).

In the six-minute interview, Rep. Kind used a phrase that Secretary of Agriculture Mike Johanns often delivers and stated that; it was time “take this bulls eye off the backs of our farmers.” Kind and Johanns use this phrase in reference to potential risks associated with WTO litigation asserting that current Title I commodity supports may not be in compliance with WTO covered agreements.



Graph from The Wall Street Journal Online.

Rep. Kind also noted that the market prices for some program crops are currently strong and that this price environment would be conducive to a change in the direction of Title I.

(more…)

Washington Post: “Harvesting Cash” Series Continues

Reuters writer Doug Palmer reported today that, “Trade powers launched an eleventh-hour effort to rescue global trade talks on Tuesday as negotiators prepared for what the United States called a critical week…U.S. Trade Representative Susan Schwab, leaving the first of five days of closed-door talks in Germany with counterparts from the European Union, Brazil and India, told reporters that this was ‘a critical week’ for the talks, and that the U.S. was prepared to do its part to make progress.”

I. Farm Bill Update
II. Doha
III. Washington Post: “Harvesting Cash”

I. Farm Bill Update

A news release issued yesterday by the House Ag Committee stated that, “The Subcommittee unanimously approved an amendment offered by Chairman [Bob Etheridge of North Carolina] that substituted an extension of the 2002 Farm Bill language for the commodity programs under the Subcommittee’s jurisdiction in the place of the discussion draft considered by the Subcommittee. This retains the basic farm safety net by extending marketing assistance loans, direct payments and counter-cyclical payments and keeps intact the percentage of base acres for which farmers may receive payments. The committee also considered and rejected amendments representing alternative Farm Bill proposals.”

The release also noted that, “‘Today the subcommittee began to chart the direction that the Agriculture Committee should take with the Commodity Title of the Farm Bill,’ said Chairman Etheridge. ‘Every member on the subcommittee is sincerely interested in improving the safety net for our nation’s hard-working farmers. Our challenge is to accomplish that goal with a smaller baseline and without any new resources. As we move to the full committee we will continue to strengthen the safety net to ensure that farmers can provide a plentiful food supply for the American family’s table.’”

In addition, three days of previously scheduled full Committee work on the Farm Bill that was to take place next week has been postponed.

Dan Morgan, writing in today’s Washington Post, reported that, “Setting the stage for a contentious congressional debate over farm subsidies, a House panel voted unanimously yesterday to extend for five years the current system of payments to farmers and rejected a series of proposed changes.

“The action left in place the system of income supports and guaranteed prices that has cost taxpayers more than $70 billion since 2002. Environmental groups, the Bush administration and budget watchdogs say that the program is too generous to big commercial farmers in a few states. But yesterday’s vote by the House Agriculture subcommittee on general commodities signaled that the farm bloc is geared to defend the subsidies, despite record profits and soaring prices for commodities and farmland.”

(more…)

Farm Bill

Bill Lambrecht reported in Saturday’s St. Louis Post-Dispatch in an article datelined from Provin, France, that, “On Francois-Xavier Letang’s farm, yellow-flowering canola fields hold the promise of a payoff that is changing the color of the European landscape and the future of its transportation: biodiesel…Thanks to government subsidies and long-held concerns about climate change, European farmers are trying to match their American counterparts in the ethanol business and expecting rewards when they deliver their crops to newly built biodiesel refineries.”

I. Farm Bill
II. Doha
III. Biofuels

I. Farm Bill

Congressional Quarterly reporter Catharine Richert reported yesterday that, “The top Democrat on the House Agriculture Committee has backed off a plan to cut one type of farm subsidy and boost another.”

The CQ article added that, “Agriculture Chairman Collin C. Peterson, D-Minn., had wanted to shrink the [direct payment] program — which pays farmers annually based on their acreage and the type of crop they grow — and spend more money on the countercyclical and loan-deficiency subsidies that kick in when the price of a crop drops.

“But after talking to the Congressional Budget Office (CBO) on Monday evening, Peterson realized that he would not have to cut direct payments to afford increases in the other subsidies.”

Today the Subcommittee on General Farm Commodities and Risk Management will consider the Title I draft proposal at 10:00 am; live audio of the hearing will be available here.

Ms. Richert noted that, “The panel also will consider a proposal by Ron Kind, D-Wis., that would establish farmer savings accounts and a farmer buyout plan by Citigroup Inc., Peterson said.”

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St. Louis Post-Dispatch: “New catalyst for ethanol: Elephant dung.”

Reuters writer Missy Ryan reported on Friday that, “Fears are growing among U.S. farm groups that the Bush administration may sell them out to cut a deal in world trade talks which appear to be inching closer to a breakthrough…’There is a lot of concern in the agriculture community about what you can call the negotiating landscape,’ said Don Phillips, trade adviser for the American Sugar Alliance.” The article added that, “That anxiety sharpens as the Bush administration signals its intent to make a last-ditch push for an agreement in the Doha round, the World Trade Organization talks that have been bogged down for over five years over agricultural trade.”

I. Biofuels
II. EU Agriculture
III. Doha
IV. Farm Bill Update

I. Biofuels

Bill Lambrecht, in an article posted yesterday at the St. Louis Post-Dispatch Online, reported that, “A company in the land of windmills thinks it has found a Holy Grail of ethanol technology in a pile of elephant dung.

“The discovery is just one of many hopeful projects around the world aimed at producing fuel from plants without sacrificing the environment or food.

“Research on the new technology has progressed to the point that a Dutch company, Royal Nedalco, plans use it to build a ‘second-generation’ ethanol plant using grasses, trees and other non-food plants. The Dutch government may contribute more than $50 million to the project and an American company has agreed to license the technology.

“‘If we can prove it, and I think we can, it would certainly be a big breakthrough,’ said Mark Woldberg, Nedalco’s manager of business development.”

“Senators Jeff Bingaman of New Mexico and Amy Klobuchar of Minnesota discussed energy legislation on Friday at a news conference” (Picture and caption from The New York Times Online).

More specifically, Mr. Lambrecht went on to explain that, “Working with researchers at Delft University in the Netherlands, Nedalco scientists found a fungus in elephant droppings that they believe speeds the process of breaking down materials such as wheat bran, straw and even wood in the manufacture of ethanol.

“At a plant Nedalco wants to build in the Netherlands, they won’t need a herd of elephants: The fungus has been genetically engineered to be readily available for producing the biofuel that the company intends to market.

“Nedalco has support in the United States, including an arrangement with a Boston company, Mascoma Corp., to license the technology.

“Colin South, president of Mascoma, observed that the Nedalco technology is not unique but ‘could prove to be the best in the field.’”

Todd Gleason of the University of Illinois and WILL AM-580 radio also filed an audio report on the second-generation research being conducted at Nedalco, to listen to this segment, just click here (MP3).

Both Bill and Todd traveled to the Netherlands, Poland, France and Belgium with other U.S. journalists as part of a European agricultural study tour arranged by the German Marshall Fund of the United States. GMF is a nonpartisan public policy institution that promotes greater understanding of transatlantic issues. For more details about the trip, just click here.

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Washington Post: “The Rising Tide of Corn.”

Reuters writer Doug Palmer reported yesterday that, “Months of behind-the-scenes work could lead to dramatic progress in world trade talks next week when top trade officials from the United States, European Union, Brazil and India meet in Potsdam, Germany, the chief U.S. negotiator said on Thursday…‘We’re really hoping we can move the ball forward and ideally move it forward dramatically,’ U.S. Trade Representative Susan Schwab told Reuters in an interview. ‘The United States is committed to doing our share and then some’ to reach a final deal in the talks, she said.”

I. Corn / Biofuels
II. Farm Bill Debate
III. Doha

I. Corn / Biofuels

Michael S. Rosenwald reported in today’s Washington Post that, “The nation’s unquenchable thirst for gasoline — and finding an alternative to what’s been called our addiction to oil — has produced an unintended consequence: The cost of the foods that fuel our bodies has jumped. (Picture at right from The Kansas City Star Online).

“Beef prices are up. So are the costs of milk, cereal, eggs, chicken and pork.

“And corn is getting the blame. President Bush’s call for the nation to cure its addiction to oil stoked a growing demand for ethanol, which is mostly made from corn. Greater demand for corn has inflated prices from a historically stable $2 per bushel to about $4.

“That means cattle ranchers have to pay more for animal feed that contains corn. Those costs are reflected in cattle prices, which have gone from about $82.50 per 100 pounds a year ago to $91.15 today.”

The article also noted that, “But now some economists and analysts say the corn price increase could combine with other factors — poor weather and soaring energy costs — to unsettle the food industry, since corn products are used not just to feed animals but also in high-fructose corn syrup, the sweetener of choice for such products as soft drinks and cookies.”

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