FarmPolicy

May 30, 2017

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.”

Mr. Morgan added that, “The House Agriculture Committee could revise the subcommittee’s work when it takes up the farm bill later this month, but major changes are not expected.

“Before 10 Democrats and eight Republicans voted to extend the program, Charles F. Conner, the deputy secretary of agriculture, implored the subcommittee to think again.

“New farm legislation, he said, should be tailored to the ‘very dynamic changes in American agriculture,’ which include new markets for biofuel and environmental pressure. The existing farm program, which dates to 2002, ‘provides the least help when the farmer needs it the most,’ he said.”

And with respect to international implications, the Post article indicated that, “Yesterday’s action could spell trouble for U.S. trade negotiators seeking a new global trade deal to lower foreign tariffs on American products and commodities. Developing countries and the European Union are demanding major changes in U.S. farm subsidies and protections, which they say distort trade.

“‘If you were looking for a signal that the U.S. is serious about negotiating lower farm supports . . . the House Agriculture Committee is basically saying ‘To heck with you,’’ said University of California economist Daniel Sumner, an adviser to Brazil in a trade dispute with the United States.”

Andrew Martin, writing in today’s New York Times, reported that, “The panel, a subcommittee of the House Agriculture Committee, brought each of several proposals for change to the farm bill to a vote before rejecting them, sending a strong message to those pushing for major changes to farm legislation. They include the Bush administration and a bipartisan coalition led by Representative Ron Kind, Democrat of Wisconsin.

The Bush proposal received one vote. The Kind proposal was defeated unanimously, as was an unusual proposal from Citigroup that suggested a voluntary buyout to farmers receiving subsidies. Even modest reforms introduced by committee leaders were rejected.

“By opening such a wide chasm between themselves and the advocates of change, the members of the panel appear to have increased the chances that the farm bill will stir a fierce debate on the House floor.”

(Last June, I spoke with Mr. Martin (while he was still a reporter with the Chicago Tribune) about prospects for Farm Bill reform; to listen to our conversation, just click here.)

Reuters writer Charles Abbott indicated yesterday that, “Panel members said budget constraints made current law the best option. The 2002 law is popular in farm country, they said, and there is no consensus among farm groups on a replacement. Members voted 18-0 to base the new farm bill on an extension of current crop support rules.”

Congressional Quarterly’s Catharine Richert noted yesterday that, “Full committee ranking Republican Robert W. Goodlatte of Virginia said the subcommittee version of the bill is a temporary place holder. If the Democratic leadership finds more money to support an overhaul of crop subsidies, the debate is bound to resurface in the full committee markups sometime after the July Fourth recess.”

The CQ item added that, “Lawmakers are working with less money than they did in 2002. Crop prices have remained high over the past few years, so the Congressional Budget Office set a lower budgetary baseline for crop subsidies in this year’s rewrite.”

DTN’s Chris Clayton reported yesterday (link requires subscription) that, “Using the 2002 commodity title as the markup would keep the current $360,000 payment limit, the three-entity rule and the $2.5 million adjusted gross income cap for eligibility.

“The Bush administration offered to change the 2002 farm bill because of a weakness that the bill provides the least help when a farmer suffers a major crop loss. Without the yield, the farmer has no aid from loan-deficiency payments or counter-cyclical payments.”

Philip Brasher reported in today’s Des Moines Register that, “Ron Litterer, a Greene, Ia., farmer who is first vice president of the National Corn Growers Association, attended the subcommittee’s meeting.

“His organization has been pushing a proposal to replace price-based subsidies with a system of payments that would provide more help to farmers when their overall revenue is down because of a drought or other problems.

“He said the farm legislation will undergo a number of changes before it becomes law. ‘We’re going to stay with our proposal,’ he said.”

Brownfield’s Peter Shinn noted yesterday that, “And the farm bill process will likely take longer than originally thought. Peterson said he’s strongly considering rescheduling the full-committee mark-up of the 2007 farm bill from next week to after the July 4th recess.

“In fact, Iowa GOP Senator Chuck Grassley told reporters time may run out on lawmakers before the 2002 farm bill expires at the end of September. That’s one reason Grassley said he’d support either reauthorizing or extending the 2002 commodity title.

“‘I’d prefer reauthorization but it’s something that’s worked well for five years,’ Grassley said. ‘If we extended it into the future how could I find fault with that?’”

U.S. Secretary of Agriculture Mike Johanns issued a statement on yesterday’s developments, which noted in part that, “I am disappointed in the Title I legislation put forth today by the House Subcommittee on General Farm Commodities and Risk Management. The bill fails to recognize the need for greater equity and predictability in farm policy, and does nothing to provide a more responsive safety net.

“Having said that, I am encouraged by the signal from subcommittee members that this is only a starting point and I’m gratified by the kind and thoughtful comments offered by several members regarding the Administration’s proposal.”

Sec. Johanns also noted that, “Additionally, the bill advanced today paints a bulls-eye on farmers’ backs and risks jeopardizing a portion of the $78 billion in U.S. agricultural exports by increasing trade-distorting support. This is especially disappointing when the Administration proposes an alternative that provides greater protection from international trade challenges, an increase in predictable, non-trade distorting support and overall reforms that help to fund emerging priorities.”

A news release issued by the American Farmland Trust stated that, “‘Today a Subcommittee of the House Agriculture Committee failed miserably in its responsibility to America’s farmers, ranchers and consumers,’ said Ralph Grossi, President of American Farmland Trust (AFT). ‘While there have been some efforts in the 2007 Farm Bill to create reasonable and responsible agriculture policies that better meet the needs of producers who must lead economically viable operations and compete in a rapidly changing global market place, the Committee shouldn’t try to design the future of U.S. agriculture policy by looking in the rearview mirror.’

“AFT has led the agriculture community in developing plausible alternative policies and program recommendations that respond to the extreme budget conditions under which the 2007 Farm Bill is being written, the trade distortions of existing policies, the inequitable distribution of farm bill benefits and the insufficient focus on infrastructure investment and on conservation, environmental, energy and other programs of great potential benefit to consumers and rural America.

“‘For over three years, agricultural leaders have recognized that U.S. farm policy is broken and doesn’t serve the farmers and ranchers who work nearly half the land in America,’ said Grossi. ‘Quite simply it is time to generate future prosperity for all types of farms and ranches with a revenue-based risk management program to replace counter-cyclical programs.’”

(To listen to a conversation I had with Mr. Grossi in September on farm policy issues and reform ideas proposed by AFT, just click here (MP3)).

The National Cotton Council issued a press release yesterday, which noted that, “After rejecting three alternative proposals, including a proposal put forward by the Administration, the subcommittee adopted Chairman Bob Etheridge’s (D-NC) proposal to extend current law, replacing an earlier proposal which would have adopted most cotton industry recommendations to improve the operation of the program but would have reduced the base loan to 50 cents, the target price to 70 cents and imposed direct attribution on direct and counter- cyclical payments.

“The Subcommittee then adopted an amendment by Rep. Jim Marshall (D-GA) that includes a majority of the recommendations adopted by the National Cotton Council’s Board as developed by a special industry working group. The provisions would, if enacted and implemented, improve market orientation of the program, competitiveness in all markets and the flow into marketing channels while enhancing market income and preserving an effective safety-net for growers.”

Environmental Working Group President Ken Cook noted yesterday that, “Today’s vote is Exhibit A in the case for not letting farm subsidy policies be decided by the subsidized. The subcommittee asked itself: Is the current inequitable crop subsidy system the best that we can do with billions of dollars of taxpayers’ money every year?

“And the subcommittee answered, unanimously: Yup!

“The subcommittee couldn’t even bring itself to protect taxpayers by tightening limits on federal payments to the largest, wealthiest subsidized farming operations in the country. If anyone wants to see who the very biggest winners were today, go to the list.

“This vote should serve as a rallying cry for everyone who seeks reform of our broken federal farm subsidy system.

“Districts represented by the 18 subcommittee members collected $8.2 billion in crop subsidies between 2003 and 2005, almost a quarter of all crop subsidies. Here’s the breakdown.

“The rhetoric we heard today was all about the need to preserve the status quo in our farm subsidy system in order to feed and clothe America—and the world.

“The reality we saw today was the farm subsidy lobby once again crowding around the government trough.”

Tom Karst, writing at the Fresh Talk blog, noted yesterday that, “‘We are extremely disappointed.’

“While the specialty crop industry has tried to work within the subcommittee process, Robert Guenther of United Fresh told me tonight that more tangible results and real dollars are needed for [fruit and vegetable] priorities. Guenther said United and other specialty crop alliance members are looking at all options, including amendments at the full House Agriculture Committee and beyond that, on the House floor. And, of course, the Senate farm bill remains to take shape.”

A press release issued yesterday by the National Farmers Union stated that, “The National Farmers Union board of directors today urged that members of Congress look after the well-being of America’s family farmers and ranchers by developing a farm bill beneficial to rural America and not trade negotiators.

“In a letter sent to the Chairmen and Ranking Members of the U.S. Senate and House Agriculture Committees, Senate Finance Committee and House Ways and Means Committee the board said, ‘We are concerned that as a last ditch effort to propel and extend Trade Promotion Authority, the administration may seek a WTO agreement that unfairly and unjustifiably reduces the safety net for our nation’s farmers.’”

II. Doha

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.”

Mr. Palmer added that, “Development groups fear the pressure to reach a deal after more than five years of talks could lead to a bad result.

“‘Poor countries badly need fairer trade rules and an end to trade-distorting subsidies if they are to reduce poverty,’ said Marita Hutjes, acting head of Oxfam’s Make Trade Fair campaign.

“‘What they don’t need is a deal done at any cost, that exposes them to further dumping, and undermines future development prospects.’”

III. Washington Post: “Harvesting Cash”

Harvesting Cash,” the ongoing Washington Post series continued today with an article written by Gilbert M. Gaul and Dan Morgan, entitled, “A Slow Demise in the Delta.” The article was datelined from Shelby, Mississippi.

The article explained that, “From 2001 to 2005, the federal government spent nearly $1.2 billion in agricultural subsidies to boost farmers’ incomes and invigorate local economies in this poverty-stricken region of the Mississippi Delta.

“Most residents are black, but less than 5 percent of the money went to black farmers. They own relatively little land, and so they generally do not qualify for the payments. Ninety-five percent of the money went to large, commercial farms, virtually all of which have white owners.

“In Bolivar County, where Shelby is located, farmers received a total of $200 million in crop subsidies over the five-year period, while just $11 million in Rural Development grants from the Agriculture Department went to replace the abandoned factories, decaying houses and boarded-up downtowns in dozens of dirt-poor, majority-black Delta towns.

“Many of these towns are trapped in a long, painful death spiral, plagued by poverty, crime and unemployment. More than 100,000 people — nearly a quarter of the population — have fled in recent decades in search of a better life.”

The article indicated that, “The farm bill that Congress is now crafting is a complex mosaic of competing goals, including income support for farmers, conservation incentives and the preservation of rural communities by spurring economic growth. Farm subsidies are meant to tide growers over when prices fall or when disasters strike. The Rural Development grants, on the other hand, are supposed to help small, struggling communities such as Shelby. Yet in the Delta, farm subsidies are massive, while Rural Development money is relatively scanty. From 2001 to 2005, the Agriculture Department awarded $1.18 billion in subsidies but just $54.8 million in Rural Development grants for housing, new businesses, water systems and other projects, a Washington Post investigation found.”

In addition, the article stated that, “The wide disparity between subsidies for farmers and Rural Development money for agriculture communities highlights one of the contradictions of federal farm policy, which favors big agriculture over small farms and poor rural towns. In the Delta, it has helped to preserve a two-tiered economy and a widening economic chasm between the races, according to local residents, government officials and researchers.

“‘You’re in the Delta. Most of the real economy is controlled by large families. It has been that way for 200 to 300 years,’ said Ben F. Burkett, a black small farmer who also works part time for the Mississippi Association of Cooperatives. ‘We’d like to break that cycle and create new businesses. But there’s not much money for that. You see what we get from Rural Development. It’s not much, is it?’

“Agriculture Department officials declined to comment for this article.”

Keith Good

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