FarmPolicy

June 26, 2019

Chairman Harkin Provides Additional Farm Bill Analysis

Categories: Ethanol /Farm Bill

Julie Harker of Brownfield reported yesterday that, “Senate Ag Committee Chairman Tom Harkin says he’s concerned about changes to the Average Crop Revenue program in the farm bill passed out of committee last week.

“‘I was not prepared for Senator Roberts’ proposals on that. But I wanted to get the bill moved and I thought, you know, maybe you can live to fight another day and perhaps we can address some of this on the floor.’”

The article added that, “Harkin says he’s been in touch, almost daily, with Senate Majority Leader Reid and the farm bill will likely come up for debate on the Senate floor early next week, Monday or Tuesday. He says his focus is maintaining ‘the strong bill that emerged from the committee moving it forward in a way that benefits rural areas and the country as a whole.’ Harkin says points of order will be raised if there are efforts to ‘try and go over the budget.’”

The Brownfield item included a link to the complete audio of a press conference Sen. Harkin held with reporters yesterday, to listen, just click here (MP3- about 20 minutes).

DTN writer Chris Clayton reported yesterday (link requires subscription) that, “Farmers should expect more challenges to direct payments during Senate floor debate next week, Senate Agriculture Committee Chairman Tom Harkin said Tuesday.

“‘It’s on the table,’ Harkin said. ‘It’s on the table. As you know, I’ve never been a big fan of direct payments and I will have more to say about that when we get on the floor and I present the bill.’”

Mr. Clayton added that, “Harkin said he expects amendments on the floor similar to one that Sen. Dick Lugar, R-Ind., offered in committee that would take money from direct payments to increase spending on nutrition programs.

“‘We may have a coalition of forces who want to do that on the floor of the Senate,’ he said.”

Later, Mr. Clayton pointed out that, “The ACR [Average Crop Revenue Program], which was controversial in the committee, will also likely face amendments on the floor. The program allows farmers the option, starting in 2010, to choose the ACR over the current commodity programs. Harkin said budget figures on the ACR also now would allow the program’s $15 per-acre fixed payment to be used for 100 percent of acres planted rather than the current 85 percent of base acres used for calculating direct payments. That would have the effect of increasing the fixed payments for farmers who enroll in the ACR.”

Along these Dan Looker, writing yesterday at AgricultureOnline, reported that, “And Harkin said he may have some amendments as well. One could be an attempt to strengthen the bill’s new revenue-based safety net, Average Crop Revenue (ACR), which Senator Pat Roberts (R-KS) and other ag committee members may have weakened with a last minute change in committee. The National Corn Growers Association said last week that the committee’s action makes the ACR much less attractive.

“‘I’m a little concerned about the final result of what happened to ACR in committee,’ Harkin said today. He said he thought the committee had agreed to support the ACR until Roberts unveiled a last-minute change. It was aimed partly at lessening the impact of ACR on the crop insurance industry.

“Harkin said today that the Congressional Budget Office, which determines the cost of the program to the government, hasn’t finished its work completely.

“The ACR originally was estimated to save $3 to $3.5 billion over five years. It would start in 2010. Farmers will have the chance to choose to stay in the current safety net program of direct payments, marketing loans and counter-cyclical payments. Or they could opt for ACR, which will include a $15 an acre direct payment regardless of the crop grown, ACR will pay farmers when revenue drops below a state-level trigger.

“Farmers enrolled in the ACR would give up marketing loans but Harkin said he believes those with good market and yield prospects will like ACR. ‘They’re protecting themselves on the downside,’ he said.”

Later, Mr. Looker explained that, “Harkin said there will be amendments on the floor to reduce direct payments for the old safety net in the farm bill in order to use that money for rural economic development, energy programs and nutrition programs.

“‘It’s on the table,’ he said. ‘As you know, I’ve never been a fan of direct payments.’

“On that issue, Harkin’s Iowa colleague on the agriculture committee, Republican Chuck Grassley, disagrees.

“Because direct payments go to landowners regardless of the crop grown, they are not considered trade distorting under World Trade Organization rules, Grassley said Tuesday.

“‘I think it’s wrong to obliterate direct payments,’ he said.”

To listen to Sen. Grassley’s press conference from yesterday on this and a variety of other agricultural issues, just click here (MP3- about 20 minutes).

Also yesterday, Reuters writer Charles Abbott reported that, “The new U.S. farm law could bring ‘a lot of WTO challenges’ because of higher crop support rates, said the chairman of the Senate Agriculture Committee on Tuesday.”

(Note: target prices- view current versus proposed here; loan rates- view current versus proposed here).

Mr. Abbott added that, “Chairman Tom Harkin, who has touted green payments as a wiser investment, also said amendments may be offered during Senate debate next week to increase food stamp benefits. ‘That costs a lot of money,’ said the Iowa Democrat, but it is overdue.

“‘There may be some amendment, I know it’s being worked on right now,’ he said, to cut the $5.2 billion a year in so-called direct payments and put the money into land stewardship, rural development, energy and public nutrition.”

Mr. Abbott indicated that, “Acting Agriculture Secretary Chuck Conner says the Senate bill wrongly boosts some crop supports, such as wheat, barley and canola, at peril of complaints to the World Trade Organization. ‘This loan rate situation is a problem for us,’ Conner said on Monday.

“‘I think we’re going to have a lot of WTO challenges on this. I agree with Chuck Conner on that,’ said Harkin during a telephone news conference.

“A better approach, he said, would be to expand green payments that reward soil, water and wildlife stewardship. ‘But there’s just not the support in committee to do that.’”

With respect to potential amendments regarding direct payments, an update posted yesterday at the DTN Ag Policy Blog stated that, “That wily old fellow, Sen. Dick Lugar, R-Ind., will have a news conference on Thursday to criticize direct payments. His non-profit partner in this media event will be Ken Cook, president of the Environmental Working Group.”

The update noted that, “Lugar and EWG are both raising a lot of questions about paying farmers $5.2 billion a year in direct payments even though commodity prices are strong.” [Note: corn prices- graph here; soybean prices- graph here; wheat prices- graph here] “Lugar, as mentioned repeatedly in the past few weeks, has a bill he plans to introduce to completely reform the commodity title next week on the Senate floor.”

Concluding, the DTN Blog post noted that, “While Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, doesn’t want to see Lugar totally overhaul his farm bill, Harkin also said Tuesday he too is willing to look at direct payment cuts and has no problem seeing that money go to other titles.”

DTN Political Correspondent Jerry Hagstrom flushed out more detail on this issue in an article from yesterday (link requires subscription); “The tensions became public last week when Sen. Richard Lugar, R-Ind., offered an amendment to boost the nutrition budget by cutting $1.7 billion of the $26 billion budgeted for the direct payments that farmers get over 5 years whether prices are high or low. Lugar said he wanted a roll call vote that would be publicized so that constituents would ask senators about it. Senators, Lugar said, will say, ‘I have corn growers in my state that are counting on those payments and they count more for me than food stamp recipients.’”

Mr. Hagstrom also explained that, “Lugar has pledged to offer his amendment again, but he won’t have the support of the Bush administration. Acting Agriculture Secretary Chuck Conner is a former Lugar aide, but he said at a news conference last week that, while the Bush administration favors increasing food stamp benefits, it does not favor cutting the direct payments.

“‘We believe direct payments are predictable for the producers,’ Conner said. ‘It’s something they can count on, they are green box so they’re not under challenge from the international side of the equation.’”

Regarding Farm Bill financing, and potential issues that could be of concern in an eventual House-Senate conference on the 2007 Farm Bill, Philip Brasher noted yesterday at the Des Moines Register’s Cash Crops Blog that, “The Bush administration has been silent to this point about the tax measure the Senate is using to fund its farm bill.”

Mr. Brasher stated that, “The administration threatened to veto the House-passed farm bill because of a provision intended to raise tax revenue from foreign-owned corporations.

“[President] Bush this morning, as reported by The Associated Press, said Democratic congressional leaders haven’t ‘seen a bill they could not solve without shoving a tax hike into it.’

“Just having the tax measures in the farm bill means that Charles Rangel, the New York Democrat who chairs the House Ways and Means Committee, is likely to be a major player in the final negotiations.”

Biofuels

A press release issued yesterday by the Renewable Fuels Association contained updated ethanol production and demand estimates.

In part, the news item stated that, “Currently, 131 ethanol biorefineries nationwide have a capacity to produce more than 7 billion gallons annually.

“Additionally, 73 biorefineries are under construction and 10 are expanding which will add more than 6.5 billion gallons of new production capacity by 2010.”

The news release also included this summary chart.

Nancy Gaarder reported in today’s Omaha World-Herald that, “U.S. Energy Secretary Samuel Bodman said the federal government is working with the private sector to make it possible for consumers to use blends of gasoline with a higher percentage of ethanol.

“Such blends are necessary if the nation is to replace significant amounts of imported oil with the plant-based renewable fuel.

“Based on current blends, the market cannot meet President Bush’s goal of using about 35 billion gallons of biofuels annually. If all gasoline sold were a 10 percent blend of ethanol, the market could use only about 15 billion gallons of ethanol a year.”

The article noted that, “Concentrations that have been discussed fall in the 12 percent to 20 percent range. Bodman said it’s not clear what the amount will be.

“The Department of Energy is working with the Environmental Protection Agency, automotive companies and gas retailers to make higher-ethanol blends possible.”

Reuters writer Matt Daily reported yesterday that, “Slumping ethanol prices have tarnished the stock prices of biofuel producers, but with oil prices hovering near record highs, the alternative fuel has turned attractive to gasoline suppliers.

“Ethanol prices had tumbled by about $1 per gallon over the past seven months — hitting a low of about $1.65 in mid-October and pushing margins for producers near break-even or worse, although prices have since rebounded to about $1.75.

“Still, the weak prices have benefited the refiners and fuel blenders that mix the corn-based fuel with gasoline, and who also get the added incentive of the 51 cent per gallon federal tax break, putting the price of ethanol well below that of gasoline.”

Recall that Saturday’s FarmPolicy update included a link to an Associated Press article which reported 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.”

For a one-minute audio clip on this issue from the UN, just click here.

Philip Brasher, writing in today’s Des Moines Register, reported that, “The ethanol industry has been taking heat for months over higher food prices. But is it a ‘crime against humanity’ to make fuel from food crops?

“A United Nations official said it is, and that’s too much for the National Corn Growers Association.

“‘Genocide is a crime against humanity. War crimes are a crime against humanity. Any act of persecution to a large scale of people is a crime against humanity. Finding solutions to a global energy problem while continuing to provide food to the world is not a crime against humanity,’ Rick Tolman, the farm group’s chief executive, said in a statement Tuesday.”

Keith Good

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