July 16, 2019

Procedural Negotiations on Farm Bill Amendments Moving Forward

Categories: Ethanol /EU /Farm Bill

Congressional Quarterly reported yesterday that, “Senate leaders are zeroing in on a deal to limit amendments to the 2007 farm bill, meaning the measure could be back on the floor as early as next week, aides said Monday.

“Democrats would be able to offer at least five amendments to the legislation, and Republicans would be given time for 10 amendments, aides said. Majority Leader Harry Reid, D-Nev., may allow consideration of a few non-germane proposals dealing with the estate tax and the alternative minimum tax, aides added.”

The CQ article noted that, “If Reid and Minority Leader Mitch McConnell, R-Ky., succeed in reaching an agreement on amendments, the Senate could complete work on the bill in as little as two days, one aide said.

“Nevertheless, chances are bleak that House-Senate negotiators could reconcile the two chambers’ very different versions by year’s end, let alone get the measure cleared for President Bush in the short pre-Christmas session.”

Chris Clayton, writing yesterday at DTN (link requires subscription), reported that, “Leaders in the U.S. Senate appear close to an agreement on how to handle amendments for the farm bill debate.

“When the Senate returns to session next week, it will have only a short, two-week window to deal with uncertainty over the farm bill, and to complete work on other outstanding matters such as spending bills and a potential conference report on the energy bill.

“Senate staffers on Monday declined to provide terms on any agreement, but acknowledged a deal was close. Republicans and Democrats were continuing to hash out details on how to handle amendments not considered germane to the actual farm bill.”

The DTN article added that, “A spokeswoman for Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said in an e-mail that an ‘agreement to limit amendments to between five and 10 per side should allow passage of the farm bill within a few days’ of debate. Party leaders still need to determine which non-relevant amendments can be debated and voted on, but Harkin ‘will do everything in his power’ to work closely with the Sen. Saxby Chambliss, R-Ga., the committee’s ranking member.”

Bill Lambrecht, writing in yesterday’s St. Louis Post-Dispatch, reported that, “But with negotiations proceeding during the recess, some lobbyists and legislative aides believe that the logjam can be broken. They point to the farm bill’s broad political appeal and the desire by farmers to have programs in place when they plant next spring. The current, something-for-everybody farm bill expired in September, but many of its provisions would continue automatically next year if no accord were reached.

“‘It was only Round One,’ said Kate Cyrul, spokeswoman for Sen. Tom Harkin, D-Iowa, chairman of the Senate Agriculture Committee. ‘He (Harkin) is certainly realistic that we have a lot of work to do, but he’s optimistic.’

“Sen. Claire McCaskill, D-Mo., is among those who believe that senators will reach agreement on the farm bill because of political demands back home.

“‘We’re stuck for no good reason,’ she said. ‘I have to believe that the politics of an election year are going to knock this thing loose and get it to the floor for consideration.’”

Mr. Lambrecht indicated that, “Would-be reformers in a diverse alliance that includes budget hawks and environmental advocates began the year with high hopes of scrapping a multi-billion-dollar subsidy system that was devised in the Depression era to save the family farm. Even in times of record prices for their crops, farmers still are getting healthy payments from taxpayers.

“With farm state senators and House members running the Agriculture committees, neither the House bill nor the Senate proposal would make broad subsidy changes, which is why the White House has threatened a veto.

“Nor would either version of the farm bill make the sort of progress that could head off charges of unfair trade practices being leveled by global competitors in the World Trade Organization, which adjudicates trade disputes.

“The United States already has lost one costly case in the WTO because of cotton subsidies and stands to lose more without cutting subsidies, critics warn. The Senate proposal would spend an additional $10 billion this year in new subsidies, price guarantees and disaster assistance. Included in this year’s farm support proposals is a $5.1 billion permanent disaster fund to offset potential crop losses. Skeptics note that disasters are typically of temporary scope.”

The St. Louis Post-Dispatch article concluded with this note: “Meanwhile, McCaskill is preparing to make the case for changing a system in which 40 cents of every dollar for crop insurance goes to insurance companies — including $4 billion over the last five years just for administrative costs. The system paid companies $2.8 billion in underwriting profit during the last five years on top of other receipts — three times what is normal in the insurance industry.

“‘My concern is that way too much is going into the pockets of the insurance companies courtesy of the American taxpayer,’ McCaskill said.”

Reuters writer Doug Palmer reported yesterday that, “Congress will not pass a new U.S. farm law until ‘the first part of next year,’ said the president of the largest U.S. farm group on Monday, referring to the $288 billion bill that has been deadlocked in the Senate.

“It would be the third time in a row that enactment of a farm law comes months later than targeted. The 1996 and 2002 farm laws originally were expected in 1995 and 2001.”

Meanwhile, a related Reuters article from yesterday (via DTN) reported that, “A long-awaited world trade deal will remain out of reach until developing countries agree to open their markets to more U.S. farm goods, the head of the largest U.S. farm organization said on Monday.

“Bob Stallman, president of the American Farm Bureau Federation, said the talks are stuck because many developing countries want the United States to reduce its farm subsidies without cutting their tariffs in return.”

The Reuters article added that, “‘But too many developing countries decided ‘Oh, this is a free ride for us. We’re going to get something and we’re not going to have to give up anything in return.’ That’s problem number one’ with the negotiations, Stallman said in a speech to the Virginia Farm Bureau Federation.

“The United States is under pressure from developing countries like Brazil and India in the World Trade Organization talks to cap its annual spending on trade-distorting farm subsidies at $13 billion.

“Washington spent $18.9 billion on those programs in 2005, although the exact level varies from year to year.” (Note: related graph regarding federal expenditure levels available here).

EU Farm Policy

Leo Cendrowicz reported last week at Time Magazine Online that, “Cheap foreign food can change appetites, and attitudes. As Europeans develop a taste for other peoples’ cuisine, they are asking why billions of euros should be funneled to their own farmers, particularly when the biggest recipients of Europe’s largesse are not honest yeomen toiling to make ends meet, but rich landowners like Queen Elizabeth and Prince Charles.

The European Commission on Tuesday addressed the issue head-on when it proposed reforms to the European Union’s Common Agricultural Policy (CAP), the skein of price supports, export subsidies, and environmental payments that gobbles up 44% of the E.U.’s $187 billion annual budget.

“Dubbed a ‘health check’ for the CAP, [Note: additional background available here] the policy review suggests revamping the Union’s single biggest policy domain to better address modern challenges like climate change, the boom in biofuels, water management and protecting biodiversity. The Commission floats once heretical ideas such as phasing out milk quotas, scrapping rules on keeping land fallow and guaranteeing minimum cereal prices.

“The proposed reforms aim, too, to tackle what many consider the CAP’s most egregious element: the generous flow of aid to the largest farms and the wealthiest landowners. While most of the CAP budget is dispersed as direct aid to farmers, most of that goes to the largest farmers. Another large chunk goes toward other CAP schemes such as export refunds to large companies, storage outlays and payments to slaughterhouses to offset costs of measures to eradicate BSE, or Mad Cow Disease.”

With respect to the idea of capping subsidy payments to wealthy recipients, an AFP item from yesterday reported that, “The European Commission said Monday it was open to reconsidering controversial plans to cap the biggest handouts to farmers under recently unveiled plans to shake up Europe’s generous agriculture aid.

“After the proposal came under fire from the U.K. and Germany, European Union Farm Commissioner Mariann Fischer Boel said she could revise the proposal so it doesn’t encourage farmers to break up their farms to avoid aid caps.

“‘If the only result of a reduction of the direct payment for the big farms is that we generate quite a lot of income for the local lawyers I will reconsider,’ she said.”

The article stated that, “London and Berlin have led opposition to the cap proposal, which would in particular hit aristocratic landowners in Britain and former communist cooperatives in eastern Germany.

“German Farm Minister Horst Seehofer said: ‘East German farms should not have to bear the burden of farm policy reform.’”

After explaining that, “Under the proposal, farmers who receive handouts of over EUR100,000 would see their subsidies reduced,” the AFP article stated that, “Based on the findings of its review, the Commission is to come forward with reform proposals towards the end of March that would both modernize and simplify Europe’s support of its farms.

“It would then be up to member states and the European Parliament to decide on any reforms in the second half of 2008, when France – the biggest recipient of E.U. farm subsidies – holds the bloc’s rotating presidency.

“French Agriculture Minister Michel Barnier said: ‘The important thing is that we keep a robust food policy for Europe.’”

In other EU developments, Andrew Bounds reported today at the Financial Times Online that, “The European Union is poised to drop import tariffs on all cereals except oats in an attempt to contain food inflation after another poor European harvest.

“‘I hope this proposal will help facilitate cereals imports from outside the EU and reduce tensions on European grains markets,’ Mariann Fischer Boel, farm commissioner, said on Monday. ‘We have seen a modest harvest in Europe and high prices both at home and on world markets. Border protection for cereals is relatively low but import duties still apply to certain cereals which are key to assuring EU market balance.’

“With the price of wheat in the EU having risen to €300 ($446, £215) a tonne from €179 a tonne in the past year, the EU is following in the footsteps of mainly developing countries such as Morocco and Bangladesh in trying to contain pressure on food prices.”

And on the issue of biotechnology and agriculture in the EU, the Associated Press reported yesterday that, “Germany’s agriculture minister called on the European Union on Monday to suspend its approval procedure for new biotech crops and seeds, demanding governments undertake a wide-scale review of how genetically modified products can be used in Europe.

“‘This (system) should be stopped and we should check: can the procedures stay as they are,’ Horst Seehofer said before EU farm ministers talks which were discussing the contentious issue on the use of biotech crops in Europe.

“He said that the current system in place, which has already received criticism from several EU nations, is ‘highly unsatisfactory.’”

The AP article indicated that, “EU Agriculture Commissioner Mariann Fischer Boel warned Seehofer and other EU ministers to ‘know what are the consequences’ national biotech bans have on the supply of cereals.

“She said that limiting the import of new crops for cultivation or use threatened the supply of animal feed for Europe’s pork, beef and chicken sectors.

“Fischer Boel reminded them not to forget the current global historic shortages of such staples as wheat, corn and barley, the costs of which are at record highs, and are leading to higher costs for farmers and consumers.”

Energy / Biofuels

Philip Brasher noted in Sunday’s Des Moines Register that, “Democrats hope Republican senators will get an earful from farmers about the Senate’s gridlocked farm bill. Democrats would probably prefer that farmers not notice the stalled energy bill.

“But that energy bill could have a bigger impact on the agricultural economy. Prices for corn, soybeans and even wheat and cotton have risen sharply since Congress passed the last energy bill in 2005, which set the first mandate for ethanol usage.

“The demand for corn to make ethanol drove up corn prices to the highest levels in a decade. And that, in turn, led farmers to plant more corn this year and less wheat, soybeans and cotton, helping to push up prices for all three of those commodities. Net farm income is expected to top $87 billion this year, a 48 percent increase from 2006.

“Farmers and ethanol and biodiesel producers worry the good times won’t continue unless Congress acts soon to raise the mandate and guarantee a growing demand for both products.”

Mr. Brasher added that, “Congress has no choice but to do something about the farm bill – the old one has expired – but that’s not the case on energy. There’s no deadline to enact new energy legislation. In a presidential election year, with all the politicking that entails, it’s tough to pass anything as far-reaching as a new energy bill.”

In a related item, the Congressional Research Service issued a report earlier this month (“Biofuels in the 2007 Energy and Farm Bills: A Side-by-Side Comparison,” by Brent D. Yacobucci and Randy Schnepf (Nov. 6)), which stated that, “This report provides a side-by-side comparison of biofuels-related provisions of current law with comparable provisions in the House and Senate energy and farm bills. The House energy bill, H.R. 3221 (the combined New Direction for Energy Independence, National Security, and Consumer Protection Act and Renewable Energy and Energy Conservation Tax Act of 2007) was approved by the House on August 4, 2007. The Senate approved its energy bill, H.R. 6 (the Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007) on June 21, 2007. The House passed its Farm Bill, H.R. 2419 (the Farm, Nutrition, and Bioenergy Act of 2007) on July 27, 2007. The Senate Agriculture Committee approved its Farm Bill, S. 2302 (the Food and Energy Security Act of 2007), on October 25, 2007. The Senate began floor consideration of the bill November 5, 2007.

“These bills cover a wide range of energy and agricultural topics with extensive attention to biofuels, including ethanol and biodiesel.”

Keith Good

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