FarmPolicy

August 21, 2019

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.”

DTN Political Correspondent Jerry Hagstrom noted yesterday (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., told reporters Thursday he expects Agriculture General Commodities and Risk Management Subcommittee Chairman Bob Etheridge, D-N.C., to bring up alternative 2007 farm bill proposals and possibly vote on them when that subcommittee meets Tuesday.

“Those alternatives would include the bill introduced last week by Reps. Ron Kind, D-Wis., and Jeff Flake, R-Ariz. [FARM 21], the Bush administration’s farm bill and a plan developed by Citigroup under which the government would use bonds to buy out farmers’ rights to farm payments. Fearing that the subcommittee will look negatively upon their proposal, Kind and his allies have scheduled a news conference Tuesday morning to defend it.”

Mr. Hagstrom added that, “If the subcommittee votes to reject the proposals, Peterson would certainly use that action if the bills are brought up again when the farm bill gets to the House floor. None of the alternative farm bills is likely to find much support among committee members.”

With respect to the Bush administration’s proposal, Stu Ellis, writing yesterday at the farm gate blog (University of Illinois) pointed to a recent analysis conducted by the Food and Agricultural Policy Research Institute (FAPRI) entitled, “Missouri Representative Farms- Farm Level Impacts of Three Commodity Title Provisions in the Administration’s 2007 Farm Bill Proposal.”

After a explaining how the administration’s proposals would differ from current law, and looking at issues such as total government payments, market receipts and net farm income, the FAPRI report concluded by noting that, “The changes in direct payments, marketing loan benefits and countercyclical payment program in the administration’s 2007 farm bill proposal have a minimal impact on the Missouri representative farms. For farms raising primarily feedgrains, total government payments increase while market receipts decrease. The cotton farms total government payments are reduced, market receipts increase. However, the increase in market receipts is greater than the decrease in government payments and results in an increase in net cash farm income. The rice farms decrease in market receipts is the driving force behind their lower net cash farm income. The rice farms experience the largest decrease in net cash farm income of all the farms analyzed, but even for rice farms the decline is less than one percent.”

Yesterday the American Soybean Associated issued a news release, which noted in part that, “The American Soybean Association (ASA) is calling the House Agriculture Committee’s draft Commodities Title a ‘step in the right direction and an improvement over the 2002 Farm Bill.’ While the draft released late last week does not go as far as ASA has proposed to Congress, ASA is urging Members of the Subcommittee on General Farm Commodities and Risk Management to support the proposal as they mark up the Commodities Title of the Farm Bill this week.

“ASA has urged Congress use the new Farm Bill to adjust target prices and loan rates to make them equitable percentages of recent average prices as a means to balance income support between commodities, and to reduce planting distortions.”

Bartholomew Sullivan, writing in Sunday’s Commercial Appeal (Tennessee) reported that, “This year’s Farm Bill is shaping up to be anything but business as usual as the six Agriculture subcommittees cobble together the commodity support, nutrition and Food Stamps, conservation, rural development, research, food safety, forestry and energy policies of the U.S. Department of Agriculture for the next five years.

“That’s because an unusual coalition of environmentalists, budget deficit hawks, taxpayer watchdog groups, religious organizations, anti-poverty groups, people concerned with the plight of Third World farmers and smaller American farmers eager to broaden the impact of the $80 billion or more annually delivered through agriculture programs may get a seat at the table.

“They will, but only after the official committee bill reaches the House floor and can be amended, a process chairman Collin C. Peterson, D-Minn., dreads and has called ‘a recipe for chaos.’”

The article also explained that, “On Tuesday, the House Agriculture Committee will take up the final title of the Farm Bill, the one dealing with crop subsidies. Commodity associations and lobbyists representing rice, soybeans, corn, and wheat will be there, as will [Gary Adams, the National Cotton Council’s vice president for economics and policy analysis].

“But so will representatives of groups such as Bread for the World, Citizens Against Government Waste, the National Taxpayers Union, Oxfam America, the Environmental Working Group and Taxpayers for Common Sense. With their chief interests so diffuse, some decline to call it a coalition.

“‘We sort of call it an alliance,’ said Common Sense’s Demian Moore.

“They’ll be pushing for bills like the one introduced recently by U.S. Rep. Earl Blumenauer, D-Ore., which seeks to extend farm bill benefits to growers of specialty crops, vegetables and nurseries while encouraging local marketing of locally produced crops.

“They’ll be lobbying for a bill authored by U.S. Rep. Ron Kind, D-Wisc., which would transition commodity subsidies to risk management accounts on which farmers could draw to cover shallow losses or buy additional crop insurance. Republican Richard Lugar of Indiana, the ranking member of the Senate Agriculture Committee, is sponsoring similar language in the Senate.”

Near the article’s conclusion, Mr. Sullivan noted that, “The Environmental Working Group’s Ken Cook said he hopes some principles will end up enshrined in the new farm bill.

“‘Part of that might be that we would ask farmers large and small if they need the money before we provide it, in some formal way, like we do with (federally guaranteed) student loans.’”

Meanwhile, the House Ag Committee posted the draft proposal for the Title I – Crop Insurance program to their webpage yesterday, to view this draft, just click here.

II. Doha

Bloomberg news writers Simon Kennedy and Mark Drajem reported on Sunday that, “Deal or no deal, the latest round of global trade talks may be the last of its kind.

“Officials from the United States, the European Union, India and Brazil met last week to try to advance the faltering Doha round of negotiations. The talks are part of a six-decade push to liberalize trade that is yielding diminishing returns as technology and an increasingly integrated global economy render it less relevant.

“‘I don’t want to be apocalyptic about the world trading system, but it is in danger, no doubt about that,’ said Peter Sutherland, a former director general of the World Trade Organization and now the London-based chairman of BP.”

The article also noted that, “Edward Alden, a senior fellow at the Council on Foreign Relations in Washington, said a successful Doha round was still needed to maintain momentum for dismantling trade barriers, like those governing foreign investment, and for commitments to let financial organizations offer cross-border services.

“‘Failure will make it harder to move forward on any aspect of trade liberalization,’ Alden said. ‘The question is not do the U.S. and world continue to move forward on a path of serious trade liberalization? The question is: Is there any real backsliding? If there is, that could be seriously detrimental.’”

Dow Jones writer Geraldine Amiel reported today that, “French business leaders’ association Medef Tuesday said French small- and medium-sized companies would be affected if no deal is reached at the next meeting of the Doha round of global trade talks.

“At a press conference, Medef head Laurence Parisot said the lack of a deal by the so-called G4 nations – the European Union, the U.S., Brazil and India – would renew risks of protectionism and trigger bilateral deals.

“‘Such a global trade environment would make France’s foreign trade more difficult,’ Parisot noted.”

Meanwhile, Dow Jones writer Laurence Norman reported yesterday that, “The developed world must reduce agricultural subsides and other barriers to ‘fair trade’ as efforts to wrap up the Doha trade round move ahead, India Trade Minister Kamal Nath said Monday.

“We are ‘struggling today for concluding the Doha Round,’ Nath said. ‘We plead, we urge the developed world that’ it remove ‘structural flaws’ like agricultural and trade subsidies.

“Nath heads to Germany his week for talks with ministers from the U.S., Europe and Brazil aimed at wrapping up the Doha round by year-end. The group hopes to have a framework for an accord in place by July to reach the year-end goal.”

The Associated Press reported yesterday that, “A meeting this week of the World Trade Organization’s four most powerful members will determine whether a new global trade pact is still possible, the European Union’s top negotiator said Monday.

“Analysts, however, are playing down hopes of a big agreement at the talks in Potsdam, Germany, involving the EU, the United States, Brazil and India. Even a major breakthrough among the four will leave months — and possibly years — of negotiations to conclude a deal liberalizing world trade in agriculture, manufacturing and services, they said.

“‘There’s an absolute mess of controversial detail that has not been not resolved,’ said David Woods, director of World Trade Agenda Consultants and a former WTO spokesman.”

III. Biofuels

Fiona Harvey and Ed Crooks reported yesterday at the Financial Times Online that, “Turning grains and sugar cane into fuel is not the answer to cutting greenhouse gas emissions from transport, one of the most influential economic experts on climate change has said.

“Sir Nicholas Stern, author of a landmark report on the economics of climate change last year and adviser to the UK government, told the Financial Times: ‘I don’t believe that sugar and corn could possibly carry the weight of transport.’”

The FT article added that, “Sir Nicholas acknowledged that the crops could contribute to greenhouse gas emissions reductions, but warned that turning over too much land to the cultivation of such crops would be counter­productive. ‘[Biofuels] have a role to play, but I’ve worked a lot in India, as you know, and other countries in agriculture, where you don’t have to be very knowledgeable to know that sugar is highly water-intensive and needs fertile land.’

“Instead, he said, biofuels production should be concentrated on crops that can grow on land where food crops cannot be grown. ‘The key thing is to grow it on marginal land, [of] which [there] is a lot in central Asia, western Brazil, around the Sahara, and in parts of Indonesia – there are huge areas.’”

And 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.”

The Post-Dispatch article noted that, “Even as they argue about benefits and costs, Europeans are leaping into a biofuels race that is well under way in the United States and has sped around the world from Brazil to Beijing.

“Europe is starting to see a dividend on European Union subsidies paid to farmers — at least $25 for every acre of energy crops produced. Earlier this month, Europe’s first regular passenger train service powered by biodiesel departed London for Wales.

“Still in its early stages, biofuels has the agriculture business booming in parts of Europe: Near Letang’s farm, 75 miles southwest of Paris, implement dealer Philippe Bernard said he expects to sell $650,000 worth of canola-cutters, tools put on farm machinery to harvest canola plants, this year. A few years ago, he sold none.”

Mr. Lambrecht also indicated that, “Nonetheless, the European Union is planning a new biofuels push to require its 27 member countries to blend 10 percent-blended biofuel by 2010, well beyond the requirements even in the ethanol-hungry United States.

“Europe’s motivation is somewhat different than the U.S. aims. Rather than stressing independence from foreign energy imports, European leaders speak often of threats from global warming.

“And while U.S. farmers are converting fields to corn production for ethanol, in Europe it’s canola, a weedy, knotty, waist-high plant — called rapeseed here — that is being sowed on swaths of land in France, Italy and Germany.

“But Europe also must import palm oil to make all that biofuel. And that’s one reason why environmentally conscious Europeans have proceeded with caution up to now and why early biofuels goals on the continent have fallen short.”

Bill 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.

With respect to the future direction of U.S. energy policy, John J. Fialka reported in today’s Wall Street Journal that, “Facing a tight deadline imposed by House Speaker Nancy Pelosi, Democratic leaders of the Energy and Commerce Committee postponed until the fall House debates on several controversial energy issues, including tougher standards for automobile fuel efficiency.

“It wasn’t immediately clear what impact the House move toward a simplified, less-controversial energy measure will have on the Senate version of the bill. The Senate is scheduled to debate auto-efficiency standards and a mandate for coal-based liquid fuels on the floor this week.”

On the Senate bill, the editorial board at The New York Times indicated today that, “The Senate will tell us this week whether it really wants to do something about oil dependency and global warming or if it is just fooling around.

“The first week of debate on an energy bill, which the Senate majority leader, Harry Reid, says he is determined to finish before the Fourth of July recess, produced a few satisfying moments — mainly involving bad ideas that were made to disappear. The days ahead will be more combative.”

Later, the Times stated that, “Renewable Fuels. Biofuels offer a far cleaner and more promising approach to oil dependency than coal-to-liquids. The bill would quintuple production, chiefly ethanol from sources other than corn. This is a generally popular provision that must be amended to make sure that the rush to ethanol does not destroy valuable forest and conservation lands.”

Keith Good

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