FarmPolicy

November 17, 2019

Senate Farm Bill- Reaction to Comm. Markup Continues

Philip Brasher reported in yesterday’s Des Moines Register that, “The Senate Agriculture Committee approved a farm bill Thursday that offers growers a new subsidy program designed to protect farm revenue in an era of higher crop prices.

“The optional program is a top priority for Midwest corn growers, who stand to get little from traditional crop subsidies that pay farmers when commodity prices fall but not when crops fail. The ethanol boom has kept commodity prices well above subsidy levels.”

(The Associated Press reported yesterday that, “Agriculture futures mostly rose Friday on the Chicago Board of Trade, as corn and soybean prices advanced. [W]heat for December delivery dipped 2 cents to close at $8 a bushel; December corn rose 5.75 cents to $3.72 a bushel; January soybeans rose 0.75 cent to $10.1325 a bushel.”)

Mr. Brasher explained in the Register article that, “Plains-state senators – led by Pat Roberts, R-Kan., and Kent Conrad, D-N.D. – forced [Committee Chairman Tom Harkin (D-Iowa)] to agree to changes in the revenue-protection program. The changes would make it more appealing to wheat growers – and less so to corn growers – and protect crop insurance companies and their agents from a cut in premiums.”

The article added that, “With the new subsidy program, the Senate bill is better for Iowa growers than the farm bill that passed the House in July, said Ron Litterer, a Greene farmer who is president of the National Corn Growers Association. ‘It’s still not good enough,’ he said.

“The House bill includes a stripped-down version of the revenue-protection plan that economists say would attract few if any farmers in Iowa.

“The Senate bill faces major challenges when it reaches the Senate floor, either next week or the following week,” the Register article said.

In a related piece, an item posted yesterday at the National Association of Wheat Growers (NAWG) webpage noted in part that, “The revenue proposal was changed by an amendment from Sen. Pat Roberts (R-Kan.) to fix concerns raised by many groups, including NAWG, about the potential for increases in crop insurance rates for some growers.”

Peter Shinn of Brownfield reported yesterday that, “The revenue-based counter cyclical program that emerged from the Senate Ag Committee Thursday [i]sn’t linked to the crop insurance program, thanks to an amendment by GOP Senator Pat Roberts of Kansas. And that effectively guts the program.

“So said National Corn Growers Association (NCGA) President Ron Litterer, who farms near Greene, Iowa. NCGA played a key role in developing the ACR program. And Litterer told Brownfield ACR simply isn’t as attractive without discounted crop insurance. That’s why he’s telling corn growers to call their senators and tell them to keep the original version of ACR in the farm bill, even if those NCGA members don’t fully understand the ACR program yet.

“‘This is a little more complex,’ Litterer conceded. ‘There’s no question about that, but I do think if they would just think about reducing their crop insurance premiums and allowing them to buy-up additional coverage, that’s what this option would allow them and the numbers would be there for them to look at before they signed up.’

“Litterer said NCGA believes restoring ACR will come up during Senate floor debate.”

Meanwhile, Michael Doyle reported yesterday at the Modesto Bee Online that, “But the Senate’s farm bill, spanning some 1,300 pages, also reflects competition between its agricultural and its social welfare priorities. The bill’s nutrition and rural development sections total 275 pages. The crop subsidy section totals 278 pages.

“The trade-offs matter in such places as the San Joaquin Valley, where poverty and unemployment force reliance on federal programs funded through the farm bill. The programs will be changing a bit.

“The Senate bill, for instance, increases the deductions families use when determining food stamp eligibility. It allows low-income families to save more and still remain eligible. It doubles from three months to six the length of time an unemployed person can receive food stamps during a three-year period.”

Mr. Doyle also pointed out that, “Approved on a voice vote Thursday by the Senate Agriculture, Nutrition and Forestry Committee, the farm bill costs about $286 billion over five years. Nutrition programs account for more than two-thirds of the total.

“Traditional crop subsidies, by contrast, claim about 12 percent of the bill’s spending.

“The crop subsidies for cotton, rice, wheat and corn growers remain largely unchanged under the Senate bill. Specialty crop spending would approach $2 billion, a record for fruit and vegetable growers.”

Later, the Bee article stated that, “On Wednesday, nonetheless, Lugar lost 17-4 when he tried to steer crop subsidy money into better food stamp benefits. The vote reflected traditional agribusiness strength in the Agriculture Committee… Consequently, the Senate bill does not raise general food stamp payments. In the Central Valley, these can be as much as $518 a month for a family of four. The bill does nudge minimum benefits to $12 a month, up from the current $10 minimum… Current food stamp recipients, for instance, can’t have assets exceeding $2,000. This limit has remained stagnant for several decades. The Senate bill would index this limit to inflation and exclude retirement and education accounts.”

And, a press release issued earlier this week from the Organic Trade Association indicated that, “The Senate Agriculture Committee today approved its version of the Farm Bill that included funding and direction for key organic priorities, according to Caren Wilcox, executive director of the Organic Trade Association.

“‘The Senate Agriculture Committee took important steps today to help strengthen the safety net for organic producers and manufacturers,’ Wilcox said. ‘These measures include funding for organic research, data collection, and transition to organic production. In addition, the committee took steps to eliminate the crop insurance premium for organic producers. Currently, organic producers must pay a 5% surcharge for crop insurance; yet, in times of loss, the producers receive not the usually higher organic crop price, but the lower conventional price.”

Brownfield’s Dave Russell highlighted issues in the Senate Farm Bill impacting Rural Development in an update from Friday.

Mr. Russell reported that, “USDA Under Secretary for Rural Development Tom Dorr says when it comes to the Rural Development and Energy titles of the Senate Ag Committee’s Farm Bill, both were treated quite well.

“‘There is a recognition I think that there are a lot of things going on in rural America that merits support and continued commitment,’ said Dorr. ‘We’re very pleased with what we got out of the markup.’”

The Brownfield update also included audio with Under-Sec. Dorr, to listen just click here (MP3- 1:40).

DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “Senate Majority Leader Harry Reid, D-Nev., announced Friday that he plans to bring the 2007 farm bill to the floor on Nov. 5.”

And an update posted on Thursday at the DTN Ag Policy Blog stated that, “Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, made it clear Thursday the floor debate might be a free-for-all.

“For instance, any deals that were made in committee to move the farm bill forward go out the window.

“‘People are free to go what they want to on the floor,’ Harkin said.”

The DTN update added that, “Amendments such as the one offered by Sen. Richard Lugar, R-Ind., to trim direct payments and shift the money to nutrition may find more support. Harkin said supporters of increased spending for nutrition, conservation and rural development will push for more money.

“‘There will be efforts on the floor to increase those,’ Harkin said.”

In addition, the piece noted that, “Harkin said his priority will be to continue working on the Average Crop Revenue plan.

“‘I want to make sure this ACR program works,’ he said.”

***

In House Ag Committee news, a Committee press release from Thursday stated that, “Today, the House Committee on Agriculture heard about drought, flood, fire and other weather-related disaster conditions that are affecting agriculture producers in many parts of the United States.

“‘Each year, farmers invest a great deal of time and resources into their crop, but all the hard work and money in the world can’t guarantee a good harvest and one of the most unpredictable and important factors is weather,’ Agriculture Committee Chairman Collin Peterson said. ‘Particularly with the drought in the Southeast, floods in the Midwest and wildfires in the Western states, agriculture producers have faced difficult conditions this year, and many are struggling as a result.’”

Statements from Thursday’s House Ag Committee hearing can be viewed by clicking here.

Doha

Reuters writers David Lawder and Glenn Somerville reported on Wednesday that, “U.S. Treasury Secretary Henry Paulson said on Wednesday India could play a key role in reaching a deal in the Doha round of international trade talks if it were willing to open up non-agricultural sectors of its economy.

“‘I think Doha is within reach and I think India can play a leadership role in helping us get there,’ Paulson told Reuters Television ahead of a four-day trip to India.”

However, on Friday, Reuters writer Jonathan Lynn indicated that, “With few concrete results to show after two months of intense negotiations on the Doha round to liberalise trade, a basic deal looks increasingly unlikely by the end of the year, diplomats said on Friday.

“Despite a frenetic series of meetings, consultations and talks in large and small groups since the start of September, negotiators at the World Trade Organisation’s (WTO) Geneva headquarters have not made any dramatic progress.”

Biofuels

Reuters writer Timothy Gardner reported on Friday that, “Weekly average U.S. ethanol profits have inched higher on stronger gasoline prices, but some ethanol biorefiners are still making almost no profit.

“Oil prices have been setting records in recent weeks — and briefly surged past $92 a barrel on Friday — which has given ethanol producers hope of better profits. ‘Ninety-dollars-and-higher oil certainly helps. Gasoline has moved up on stronger crude and that does pull up ethanol prices,’ said Pavel Mulchanov, an energy analyst at Raymond James in Houston.

“When gasoline prices rise, some blenders look to add more ethanol to gasoline grades that do not require it by law, boosting prices for the renewable fuel.”

The article added that, “Stronger fuel prices helped push the ethanol crush spread up about 4 cents since early last week to 45 cents per gallon, Mulchanov said. Stronger prices for U.S. ethanol feedstock corn helped cap the profits. Corn was up about 14 cents since early last week to about $3.74 a bushel.

“Molchanov said even though the crush spread had inched higher, countrywide blending capacity bottlenecks have kept ethanol prices so low that many biorefiners are not making any profits.

“Blending backlogs have led to gluts of the renewable fuel in many markets, particularly in the Midwest. That puts downward pressure on the fuel’s price for all producers, Mulchanov said.”

With respect to bifuels production in Brazil, Reuters writer Inae Riveras reported on Friday that, “Tight profit margins in Brazil’s ethanol and sugar industry this year have led to delays in the projected startup of new plants that were scheduled to come on line in the next few years, specialists said.”

In broader news coverage of biofuels issues, Associated Press writer Edith M. Lederer reported yesterday that, “-A U.N. expert on Friday called the growing practice of converting food crops into biofuel ‘a crime against humanity,’ saying it is creating food shortages and price jumps that cause millions of poor people to go hungry.

“Jean Ziegler, who has been the United Nations’ independent expert on the right to food since the position was established in 2000, called for a five-year moratorium on biofuel production to halt what he called a growing ‘catastrophe’ for the poor.

“Scientific research is progressing very quickly, he said, ‘and in five years it will be possible to make biofuel and biodiesel from agricultural waste’ rather than wheat, corn, sugar cane and other food crops.’”


Production Agriculture – Wheat

Bill Hord reported in today’s Omaha World-Herald that, “A shortage of quality wheat seed in Kansas, Oklahoma and much of the United States – the result of an Easter freeze – may cut into an expected increase in wheat acres.

“Seed suppliers shipped seed hundreds of miles, and across two or three states, to get varieties to wheat farmers in areas most affected by the April freeze.

“Now that planting of winter wheat has nearly ended, industry experts believe acreage expectations of the U.S. Department of Agriculture may be overly optimistic.

“‘With market prices being high, it would normally prompt farmers to plant more wheat,’ said Daryl Strouts of the Kansas Crop Improvement Association, ‘but our educated guess is that wheat acres will be about the same as last year.’”

The World-Herald article added that, “A reduction in wheat acres could prolong high market prices, which are expected to average $6.10 a bushel for this year’s crop, an all-time high.

“If so, the price of bread could rise, said Paul Burgener, an agriculture economist in Scottsbluff for the University of Nebraska-Lincoln.

“Strouts said central Kansas was hit worst by the freeze that sent temperatures tumbling to 14 degrees last Easter weekend. That was followed by unusually cool, wet weather before harvest time, which made plants more susceptible to disease.

“‘We got low yields and low quality,’ Strouts said.

“Kansas seed suppliers began looking elsewhere for seed.

“In some cases, farmers who commonly save some of their own wheat for planting in the next season decided their seed was too poor to plant.”

Keith Good

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