FarmPolicy

October 19, 2019

Senate Markup Set for Wednesday- Background Developments

Categories: Doha / Trade /Farm Bill

According to the Senate Agriculture Committee’s webpage, the 2007 Farm Bill markup is scheduled for Wednesday, October 24, at 9:30 a.m. EDT in 328A Russell Senate Office Building.

Summaries of the Senate Farm Bill’s proposed sections have also been posted at the Committee’s webpage, just click here and then click on the large, green “2007 Farm Bill” icon for complete details.

Reuters news reported on Friday that, “U.S. Senate Agriculture Committee leaders would adjust two key elements of U.S. crop subsidies, loan rates and target prices, as part of a farm bill that would create a revenue protection option, the panel said on Friday.

“A committee summary of the proposed commodity section of the farm bill said the loan rate for raw cane sugar would be raised by 1 cent a lb and a program would be authorized to convert surplus sugar into fuel ethanol.”

The Reuters article added that, “Although the summary said loan rates and target prices will be ‘rebalanced,’ the figures were ‘one of the issues still under negotiation’ and not yet available, a committee spokeswoman said. On Wednesday, a senator said wheat, soybeans, barley and oats would get higher target prices.

“Leaders said they would eliminate the ‘three-entity’ rule that allows producers to collect subsidies indirectly and would require payments to be tracked to individuals. They also would require producers to sell their crop on the same day they claim a loan deficiency payment, a change from current law.” [A graphic illustration of the importance of this issue and why the current law might be changed is available here; while a more detailed explanation of this issue with other examples is available here].

DTN Political Correspondent Jerry Hagstrom also highlighted provisions relating to sugar in an article from Friday, where he noted in part (link requires subscription) that, “The Senate draft version of the 2007 farm bill would raise the government’s cane and sugar beet loan rate one cent per pound over the life of the bill, double the increase in the House-passed bill, Senate Budget Chairman Kent Conrad, D-N.D., said late Thursday.”

Mr. Hagstrom added that, “Conrad said the bill would also contain provisions to increase storage payments and permit the government to buy excess sugar at the loan rate and sell it to ethanol plants at prices the ethanol plants are willing to pay.

“‘The importance of the sugar industry to North Dakota cannot be underestimated. I’ve proposed a number of programs to enhance our nation’s sugar industry,’ Conrad said in an email to DTN.”

Meanwhile, Congressional Quarterly writer Catharine Richert reported on Thursday that, “When Tom Harkin unveiled his farm bill earlier this week, he expected America’s largest farming organization to support the measure, including a provision that would free up some money for use elsewhere in the legislation.

“But the Senate Agriculture Committee chairman found himself at odds with the American Farm Bureau Federation [AFBF]. The organization offered a less-than-enthusiastic response to a proposal that would create a new form of ‘countercyclical’ payments.

“The Farm Bureau has no problem with creating the subsidy. It just doesn’t like what Harkin, D-Iowa, would do with the money that would be saved under the proposal.”

The CQ article indicated that, “Some Southern lawmakers on the committee, including Thad Cochran, R-Miss., who represents a significant cotton-growing industry, are not ready to throw their weight behind Harkin’s bill. ‘It’s a starting point for negotiations,’ Cochran said. ‘We need to make sure the Southern guys are treated well before I can sign on.’

“Cochran indicated he’s working with the committee’s ranking Republican, Saxby Chambliss of Georgia, to straighten out the kinks in Harkin’s plan.”

(As a side note with respect to Sen. Chambliss, Philip Brasher reported on Friday that, “Aides to Georgia Sen. Saxby Chambliss, the Senate Agriculture Committee’s senior Republican, provided the following statement today regarding the deal Harkin announced this week on the farm bill:

“‘Sen. Chambliss has made a tentative agreement with Sen. Harkin and Sen. Conrad and staff members from all three offices continue to be engaged in negotiations. Sen. Chambliss views the compromise as a means of moving the farm bill reauthorization process forward in a bipartisan manner. We have been working with all of the members of the Senate Agriculture Committee throughout the process and hope to gain broad support from them during markup.’”)

Ms. Richert’s CQ article from last week also included this explanation of the AFBF’s perspective on the Farm Bill proposal: “Farmers currently get countercyclical payments when the price of a crop falls below a government-set national target. Harkin’s bill would maintain that program but create another system that would be based on state price targets. Farmers could choose between the new subsidy or the traditional mix of farm supports.

“Harkin said it would free up about $3.5 billion to spend in other parts of the legislation, which is under tight budget constraints.

“Bob Stallman, president of the Farm Bureau, expressed support in April for such a program, knowing that it might be cheaper for the government. But the organization also made it clear that any savings should be used to strengthen other farm subsidies.

“Harkin has different plans for the extra cash. He says it will be used to support nutrition, energy, conservation and fruit and vegetable programs.”

In other developments, a National Cotton Council (NCC) press release from Thursday stated that, “The National Cotton Council joined with other commodity organizations on a letter today to Senate Agriculture, Nutrition and Forestry Committee Chairman Tom Harkin (D-IA) and that panel’s ranking member, Saxby Chambliss (R-GA) — urging their prompt action on 2007 farm legislation.

“Among other organizations signed onto the letter were those representing rice, wheat, peanuts, grain sorghum, soybeans, minor oilseeds, dairy and sugar” [the AFBF also signed the letter].

The NCC release also stated that, “The organizations stated they are encouraged by the announcement that the Senate Committee on Agriculture, Nutrition and Forestry has reached agreement on a framework on budget and policy options. The letter urged the panel’s leaders to schedule a committee mark-up and floor consideration using that panel’s framework agreement as the basis.

“‘While each of our organizations may have concerns and questions about details of the framework agreement, particularly the relatively new version of a revenue option … we believe it is imperative that the Senate complete work on its version of new farm legislation so a conference committee can be appointed,’ the letter stated.”

With respect to executive branch perspective on the Senate Farm Bill framework, Brownfield’s Peter Shinn reported on Friday that, “Acting U.S. Ag Secretary Chuck Conner used both confrontational and conciliatory rhetoric in discussing the Senate version of the farm bill during a Thursday press conference. But he also made clear the Bush administration wants a new farm bill completed.

“Conner keynoted the World Food Prize Borlaug Dialogue on Biofood and Biofuels Thursday in Des Moines. During his luncheon speech, Conner said ‘anxieties’ about ethanol are ‘running ahead of reality.’ And to widespread applause, Conner also reaffirmed the Bush administration’s position that up to 25% of U.S. food aid should be provided on a cash basis for local food purchases.

“At the press conference following his remarks, Conner expressed cautious support for the version of the farm bill unveiled Wednesday by Senate Ag Committee Chairman Tom Harkin. But Conner stopped well short of a full endorsement.”

Mr. Shinn added that, “‘The land owners who happen to live along Park Avenue, New York, who are collecting massive payments from the federal government,’ Conner described, ‘you know, any bill that sort of leaves those payments in place and continues to under fund these important priorities that we’ve laid out is going to be bill we’re going to have some difficulties with.’

“Indeed, Conner backed down when specifically asked about a veto threat. And Conner then predicted Congress and the Bush administration would reach a deal on the next farm bill, noting his long-standing relationship with both Senate Ag Committee Chairman Tom Harkin and House Ag Committee Chairman Collin Peterson.

“‘Frankly, I just believe that we can work with these committed people to develop a bill that the President is not only going to sign, but sign with a great deal of enthusiasm associated with it,’ Conner said.”

And Jerry Perkins, writing on Friday at the Des Moines Register Online, added that, “[Sec. of Agriculture] Conner expects many of the Agriculture Department’s proposals to be included in farm bill legislation eventually sent to President Bush.

“Those Department of Agriculture proposals include strong conservation and rural development programs, bioenergy research for cellulosic and biomass crops and limits on program payments made to farmers.”

With respect to other views on U.S. farm policy, The New York Times editorial board opined in Saturday’s paper that, “Last summer, the House approved a deeply disappointing farm bill that would perpetuate a lavish, outdated system of price supports that disproportionately rewards big farmers, complicates American trade policy and does little to help consumers. Unless the Democratic leadership shows some unaccustomed gumption, the Senate could wind up making the same mistakes.

“President Bush, who has generally been on the right side of the farm issue, should think seriously about a veto if nothing better arrives on his desk. Otherwise, the country is in for another five years of bad farm policy.”

Concluding, The Times stated that, “The Senate bill does have some positives. It would increase payments for the food stamp program and for an array of important conservation programs aimed at preserving wetlands and open space. It also provides money for biofuels. Yet this isn’t the 21st-century farm program that reformers had hoped for. Mr. Harkin plans to make his case again when the bill arrives on the Senate floor, while Mr. Lugar and Frank Lautenberg of New Jersey may offer alternative bills. We wish them well. We also hope that Harry Reid, the Senate majority leader, gives them more support than Democratic leaders gave to similar efforts in the House three months ago.”

***

In news regarding development, trade and agriculture, Celia W. Dugger reported in Saturday’s New York Times that, “For the first time in a quarter century, the World Bank’s flagship annual report on development puts agriculture and the productivity of small farmers at the heart of a global agenda to reduce poverty. Three-quarters of the world’s poor still live in the countryside.”

Complete multi-media coverage of the World Bank’s annual report can be viewed at this webpage.

The Times article indicated that, “The World Development Report, released yesterday, is the first on agriculture since 1982. Just a week ago, an internal evaluation unit chided the bank for its neglect of agriculture in Africa and its plummeting financial support for that sector over the past 15 years — support that did not begin to grow significantly until last year. [complete details on this issue available here].

“More broadly, the report crystallizes an emerging consensus among wealthy countries, philanthropists and African governments: Increased public investment in scientific research, rural roads, irrigation, credit, fertilizer and seeds — the basics of an agricultural economy — is crucial to helping Africa’s poor farmers grow more sorghum, corn, millet, cassava and rice on their miniature plots.

“Foreign aid for agriculture has plunged as support for global health and primary education has surged. The fight against AIDS and other diseases is keeping millions of people alive, and rising elementary school attendance is lifting literacy rates. But most poor Africans make their living in agriculture and need to grow more to feed themselves and earn their way out of destitution, many analysts say.”

Ms. Dugger stated at the conclusion of her Times article that, “The report notes that agricultural subsidies have a way of becoming deeply entrenched politically long after their original purpose has been served.

“The report found, for example, that if European countries, the United States and other wealthy nations removed all tariffs and subsidies for cotton, soybeans and other oilseeds — practices that reduce the world price of those commodities and make it harder for unsubsidized farmers in poor countries to compete — developing countries’ share of world trade in cotton and oilseeds would be more than 80 percent in 2015 instead of only about half.

“Derek Byerlee, an agricultural economist with the bank who wrote the report with Professor de Janvry, said at a panel discussion yesterday that the United States’ subsidies to cotton growers were ‘directly and negatively impacting African farmers.’

“Professor de Janvry said the report was not meant to settle the complicated and difficult policy questions, but ‘to change the conversation.’”

And Associated Press writer Harry Dunphy reported on Friday that, “Last week in a speech outlining his strategy for the bank after 100 days in office, [World Bank President Robert Zoellick] said economic growth from agriculture benefits the poorest countries four times more than growth in other sectors of an economy.

“‘We need a 21st Century Green Revolution designed for the special and diverse needs of Africa,’ he said, ‘sparked by greater investment in technological research and dissemination, sustainable land management, agricultural supply chains and policies that strengthen market opportunities.’

“The report, titled ‘Agriculture for Development,’ said the rich countries need to reform policies that harm the poor.

“For example, it is vital that the United States reduce cotton subsidies, which depress prices for African farmers.”

In a related article regarding the WTO Doha round of trade negotiations, a National Cotton Council press release from Thursday stated that, “A group of House Members has sent a letter to U.S. Trade Representative Susan Schwab citing their serious concerns with the cotton language in the draft text released by World Trade Organization (WTO) Agriculture Negotiating Chairman Crawford Falconer.

“‘While Ambassador Falconer’ s text is subject to ongoing negotiations, the treatment of cotton is unique and assumes a consensus opinion where there is none,’ the letter stated. ‘Furthermore, the language ignores how best to address the underlying issues and help producers in four West African countries.’

“The lawmakers say they believed Ambassador Falconer erred by failing to bracket the ‘cotton language.’ Nowhere in the draft, they say, is there mention of the underlying distortions in the international cotton market and the efforts the United States has made, and continues to make, with initiatives such as the West Africa Cotton Improvement Program and the African Growth and Opportunity Act. Finally, given the agreement in the Hong Kong Declaration that any further cotton domestic support adjustments would be negotiated after an overall agriculture agreement is reached, the letter points out, ‘we are concerned the draft text creates added pressure for a separate cotton agreement in advance of an agriculture agreement.’”

An item posted on Friday at Forbes.com stated that, “The chief negotiator guiding key talks on reducing barriers to global agricultural trade, Crawford Falconer, today gave the 151 member states two weeks to narrow their differences.

“Falconer told a meeting at the World Trade Organisation (WTO) that a negotiating drive launched last month had not bridged the gap enough in ‘a number of areas’ after six years of troubled talks in the Doha Round, trade sources said.

“‘I am looking for progress to be made,’ Falconer was quoted as saying, giving member states until Nov 2.”

On Sunday, The New York Times editorial board weighed in with an opinion in the Doha talks, stating that, “The global trade talks that began in 2001 in Doha, Qatar, were sold as the ‘development round,’ a chance to give the poorest countries a leg up by making it easier for them to sell their goods around the world. Six years later the development round looks like every other trade round — with the rules being written to benefit the rich nations and now also the big developing countries.

“After their umpteenth seizure, the negotiations seem to have revived now, with Brazil, South Africa and India insisting that they are committed to a deal and the United States and Europe sounding positive. We would not bet on it, but there could be an agreement before the end of 2008.”

The Times stated that, “The poorest countries would gain mainly from having the rich countries reduce or eliminate subsidies and drop import barriers to a few key agricultural products. That would allow them to sell their cotton at competitive rates around the world. They would also gain if the rich countries followed through on their pledge to provide duty- and quota-free access for 97 percent of all their exports. But, as ever, there are caveats.

“Rich countries have tentatively agreed to cut export and domestic subsidies for agriculture, but how deep and with what exceptions has yet to be defined.”

Meanwhile, DTN Political Correspondent Jerry Hagstrom noted on Friday (link requires subscription) that, “The World Trade Organization is ‘dysfunctional,’ House Agriculture Committee Chairman Collin Peterson, D-Minn., declared Thursday, because its dispute resolution panels make decisions on trade violation cases based on outdated market conditions and subsidy outlays.

“Referring to the Brazilian cotton case and the Canadian corn case, both of which were filed against the United States, Peterson said the WTO panels ‘use timeframes that are completely irrelevant to what is going on.’”

Mr. Hagstrom added that, “Agriculture Department Chief Economist Keith Collins, who testified before Peterson’s committee Thursday, said countries file cases based on historical data. The WTO ‘is not a prospective institution,’ he said.

“Collins added that despite the problems he considers the WTO to be ‘an indispensable affiliation’ for the United States because WTO rules on international trade have led to unprecedented growth in the world economy.”

Keith Good

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