FarmPolicy

April 20, 2014

Regional Editorials

Categories: Ethanol /Farm Bill

New York Times writer Wayne Arnold reported this morning that, “Dairy farming in New Zealand was not always this sophisticated. But ever since a liberal but free-market government swept to power in 1984 and essentially canceled handouts to farmers — something that just about every other government in an advanced industrial nation has considered both politically and economically impossible — agriculture here has never been the same…The farming community was devastated — but not for long. Today, agriculture remains the lifeblood of New Zealand’s economy. There are still more sheep and cows here than people, their meat, milk and wool providing the country with its biggest source of export earnings. Most farms are still owned by families, but their incomes have recovered and output has soared.”

I. Farm Bill
II. Biofuels

I. Farm Bill

The House version of the 2007 Farm Bill continues to draw the attention of newspaper editorial boards. Over the past few days, regional newspapers have devoted space to the subject, including papers in Iowa, Colorado and Wisconsin.

However, before focusing on opinion, it should be noted that the Congressional Research Service (CRS) has provided an excellent summary of the major provisions contained in the House-passed 2007 farm bill and compares these provisions in the House bill with current law. The CRS report is available here, “The House-Passed 2007 Farm Bill (H.R. 2419) at a Glance.”

A Des Moines Register editorial stated yesterday that, “The transformation of agriculture into a producer of fuel as well as food and fiber demands visionary American farm policy to position farmers and the nation to thrive in a new era.

“Unfortunately, the farm bill passed by the U.S. House last week, a five-year blueprint for the U.S. Department of Agriculture’s spending and priorities, reads too much like the farm bill of 2002. It breaks too little new ground in directing policy and dollars to embrace a new future for agriculture.

“It’s up to the Senate, under the leadership of Iowa’s Tom Harkin, chair of the Senate Agriculture Committee, to craft a better bill. It must unleash the capabilities of American agriculture to lead this energy revolution, while also better protecting the nation’s soil and water as farmers shift their operations to produce crops for biofuels.”

The Register added that, “Harkin can be counted on to fight for funding the Conservation Security Program, which he created. The problem is money.

“Part of it should come from placing reasonable limits on farm subsidies to ultra-wealthy farmers and from eliminating abuses such as payments on land that’s no longer farmed or made in the names of people who have died. And part needs to come from other cuts in the federal budget.

“A visionary farm bill will further the national priority of energy security, but also protect the soil and water that grow the crops fueling a biobased economy,” the Register said.

The editorial board at The Denver Post stated earlier this week that, “House Speaker Nancy Pelosi must have wanted a new farm bill in the worst way.

“Because that’s exactly what she got.

“There’s not much to be said in defense of the massive package of subsidies-as-usual that Pelosi shepherded through the House last week, except that it thoroughly deserves the veto that President Bush has threatened if it arrives on his desk in its current form. As blessed by the House, the new farm bill threatens to do equal damage to taxpayers and the environment alike, while preserving welfare for millionaire agri-businessmen.”

The Denver Post indicated that, “Ideally, the Senate would revive a plan by Rep. Ron Kind, D-Wis., and Rep. Jeff Flake, R-Ariz., that would have shifted $12 billion in crop subsidies and payments to farmers over the next five years toward conservation, rural development and nutrition programs that fight obesity. At Pelosi’s urging, the House rejected the Kind-Flake amendment, which was backed by an unusual alliance of environmentalists and fiscally conservative Republicans.”

The editorial noted that, “On the whole, however, the House settled for cosmetic improvements in aging New Deal farm programs that need major surgery. We hope the Senate will adopt the Kind-Flake reforms and yield a more taxpayer and environmentally friendly farm bill.”

A Wisconsin State Journal editorial noted yesterday that, “Sens. Herb Kohl and Russ Feingold should beware.

“Wisconsin is expecting the 2007 federal farm bill to give American agriculture a new direction. The bill should suit a new era shaped by the global economy, growing demand for biofuels, a sense of urgency about conservation, and a need to rein in federal spending.

“Yet, the House of Representatives this week adopted a farm bill that keeps agriculture stuck in the same old furrow — dependent upon subsidies, insulated from market demands — at a staggering cost of $286 billion over five years.

“It’s now up to the Senate to adopt the needed reforms.”

The editorial stated that, “The Senate, which takes up the farm bill this fall, is aiming to improve on the House bill in at least two important ways. The Senate is likely to impose a stricter limit on the amount of government aid any individual farmer can collect, and it plans to expand aid for conservation measures.

“But the Senate should look past what the House adopted to see what the House failed to adopt — a reform plan co-sponsored by Wisconsin’s Kind and Rep. Jeff Flake, R-Ariz.

“The Kind-Flake plan would make a forward-looking breakthrough. It would phase out subsidies in favor of a more cost-effective method of protecting farmers.”

Concluding, the Wisconsin State Journal indicated that, “At a minimum, the Senate should incorporate the principles of the Kind-Flake plan in its version of the farm bill.

“It’s time for American farmers to produce for market demands, not to collect a subsidy check.”

In a related news article, New York Times writer Wayne Arnold reported this morning that, “Dairy farming in New Zealand was not always this sophisticated. But ever since a liberal but free-market government swept to power in 1984 and essentially canceled handouts to farmers — something that just about every other government in an advanced industrial nation has considered both politically and economically impossible — agriculture here has never been the same.

“The farming community was devastated — but not for long. Today, agriculture remains the lifeblood of New Zealand’s economy. There are still more sheep and cows here than people, their meat, milk and wool providing the country with its biggest source of export earnings. Most farms are still owned by families, but their incomes have recovered and output has soared.

“‘Farming in New Zealand is now a cold, hard business,’ said [dairy farmer Malcolm Lumsden], who at the time of the farming revolution was president of Federated Farmers in the Waikato region, the heart of New Zealand’s dairy country. ‘I think we have benefited hugely.’”

The Times article noted that, “New Zealand’s farmers are not the only ones convinced that eliminating subsidies, or at least sharply cutting them, is a good idea. As negotiators struggle to revive the failing global trade talks and Congress moves ahead on a new farm bill in the United States, New Zealand and Australia — which also cut subsidies but not as drastically — are being extolled by economists and advocates for poor countries as models for Americans and Europeans to follow.

“‘They went cold turkey and in the process it was very rough on their farming economy,’ said Ray Goldberg, a retired professor of agriculture and business at Harvard Business School. ‘But they came out healthier and stronger. They proved it could be done.’”

However, Mr. Arnold indicated that, “Just how much the United States can learn from New Zealand is debatable: this country is small and its subsidies and tariffs were a relatively recent indulgence. And unlike the United States, where most farm output is consumed domestically, almost all of New Zealand’s milk, meat and wool is sold abroad.

“‘There’s a lot of differences between New Zealand and the United States,’ Tom Buis, president of the National Farmers Union in Washington, said in a telephone interview. ‘They are almost completely export oriented, and that’s quite the reverse of the U.S.’

“If the United States were to pursue a New Zealand-type strategy, Mr. Buis argued, large corporate entities would end up controlling most farms as smaller farmers went into bankruptcy. ‘Those people are going to get financially ruined,’ he said.

“Whatever the differences, the response in New Zealand’s dairy industry to the end of subsidies is broadly instructive. Output has quintupled since the end of subsidies, positioning New Zealand to take advantage of a global boom in demand for dairy products, driven from China and India.”

In other related Farm Bill news coverage, Brownfield’s Peter Shinn reported yesterday that, “Debate over the Iraq war may delay the next farm bill. That’s according to Nebraska Senator Ben Nelson (D), who told reporters Wednesday that he’s anxious to see Senate Ag Committee Chairman Tom Harkin’s farm bill mark-up language, and the sooner the better.

“The Senate adjourns at the end of this week for the entire month. And Nelson said the first week back in September may be the only time Senators have to work on the farm bill before Iraq takes center stage.

“‘On the 15th, General Petraeus’s report is due, and then I think the only that will happen before the end of the fiscal year, the year that the farm bill ends, will be about the Iraq war,’ Nelson explained.

“For his part, Harkin has already said he believes the 2002 farm bill will have to be extended for a few months until Congress finishes work on the 2007 edition. Congress took similar action when the 1996 farm bill expired on September 30th, 2001, months ahead of when President Bush signed the next farm bill into law in May of 2002.”

Philip Brasher
, writing yesterday at The Des Moines Register’s Cash Crops blog, provided this brief look at potential Senate action on revenue insurance; “A revenue-protection plan is expected to be part of the draft farm bill that the Senate Agriculture Committee takes up next month.

“The question is how the program whether payments would be based on changes in national, state or county-level revenue.

“The House-passed farm bill would offer farmers the option of having their countercyclical payments pegged to national revenue. But it’s not clear how many farmers would go for the revenue option if it’s based on national, not state or county-level changes. They would be less likely to get payments.”

II. Biofuels

Associated Press writer Amy Lorentzen reported today that, “Ethanol producers are clamoring over food industry claims that prices on everything from popcorn to soda are skyrocketing because of the rising demand for corn to make the renewable fuel.

“Ethanol backers in Iowa focused their ire on the industry, particularly the popcorn market, during a news conference here Wednesday.

“‘We’re here today to pop the popcorn propaganda bubble,’ said Monte Shaw, executive director of the Iowa Renewable Fuels Association.”

The AP article stated that, “When it comes to popcorn, Shaw said, recent claims that movie-goers will pay 25 cents more per bag of popcorn because of the ethanol demand is ridiculous.

“The $5 bucket of movie popcorn, he said, contains just .15 pounds of corn before popping. Based on 9-cents-per-pound rate that farmers made on the corn last year, that bucket contained slightly more than a penny of popcorn, he said. Higher corn prices means the moviegoer is getting about 2 cents of popcorn per bucket, he said.”

In addition, the AP article noted that, “For example, a six-pack of soda contains just 6 cents worth of corn sweeter – or about a penny a can, said Craig Floss, chief executive officer of the Iowa Corn Promotion Board and the Iowa Corn Growers Association.”

In a related item, The New York Times editorial board stated today that, “The House will begin debating Friday on a generally useful energy bill that would increase energy efficiency, encourage more responsible oil and gas development on public lands and stimulate investment in cleaner fuels. Yet the bill is incomplete. If it truly hopes to address the problems of global warming and energy independence, three vital issues need to be addressed.”

The Times noted that, “[S]omebody has to make sure that the rush to develop ethanol from corn and other sources is done in an environmentally responsible manner. Biofuels could save oil and reduce global warming. But unless the cultivation of crops for biofuels is carefully managed, we could end up destroying valuable lands, polluting water supplies and causing other problems. The Senate energy bill mandates a huge increase in ethanol production but offers only minimal environmental safeguards.”

Keith Good

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