FarmPolicy

August 21, 2019

Farm Bill: “Showdown is Brewing”

Categories: Doha / Trade /EU /Farm Bill

Congressional Quarterly writer Catharine Richert reported on Friday that, “A showdown is brewing between Congress and the White House over the farm bill, as lawmakers try to sell their reauthorization legislation to a president who wants deeper cuts in agricultural supports.

“The White House has threatened to veto both the House and Senate versions of the $286 billion reauthorization, and a veto is likely if the House-Senate conference that began work over the recess is unable to cut farm supports.

“The administration says farm programs are too expensive and antagonize foreign trading partners.”

The CQ item noted that, “In addition to the cost of subsidies, revenue-raisers in both versions are at issue. They’re meant to pay for new spending in disaster relief for farmers, land conservation and nutrition programs, but the White House has said it will not approve new taxes.

“Conferees may ultimately have to concede more subsidy cuts in return for the administration’s support for one of the new tax plans, aides say.”

Ms. Richert stated that, “Conferees also will have a hard time wooing a large group of House Republicans — who objected to new taxes on the farm bill— to swallow a larger package, especially if it ends up paying for Senate, rather than House, priorities.”

In a related item, a press release issued yesterday by the American Farm Bureau Federation (AFBF) stated that, “With the nation’s farm bill successfully passing in both houses of Congress and awaiting action by a congressional conference committee, American Farm Bureau Federation President Bob Stallman told reporters today that the nation’s farmers and ranchers have already compromised on this vital legislation, and ‘are not really interested in going any further.’”

The AFBF press release stated that, “The administration, Stallman said, “has issued guidelines about what would constitute an acceptable bill the president could sign. Some of those guidelines include changing the funding structure of the legislation. Stallman called the administration’s talk of a veto ‘disappointing.’

“‘I have talked to a lot of farmers and I can tell you they don’t really care whether something is a budget gimmick, or closing a loophole, or providing a tax credit,’ Stallman said. ‘They don’t really care about all the back and forth from Democrats and Republicans on those issues. What our members care about is: Are we going to have a farm bill and when are we going to know what the rules are so we can plan our planting operation?’”

A separate AFBF press release from Friday outlined important Farm Bill priorities for the organization; in part, the release stated that, “Although neither the House nor Senate versions of the farm bill call for cuts in direct payments, Farm Bureau continues to express strong opposition to this.

“‘Some opponents of farm policy look at current high prices for most agricultural commodities and assume this is a ‘good time’ to lower government supports. It is critical to remember farm bills are written for the long-term rather than the short-term. While we certainly hope the good prices we are now enjoying for most commodities continue, there is certainly no assurance this will be the case,’ wrote [AFBF President Bob Stallman].”

Interestingly, an editorial on the Farm Bill written last week by William Bailey (chairman of the Western Illinois University department of agriculture), which was posted at the Illinois Farm Bureau webpage, stated that, “Against a backdrop of unprecedented high prices and dramatic changes in agricultural markets, there were high expectations for substantive changes to farm policies contained in the current farm bill.

“The reality, however, is that changes have been extremely timid. There was even considerable support for a simple extension of the current farm bill.

“When the last farm bill was written, wheat was priced at $2.78, corn at $1.97, soybeans at $4.38. The U.S. government bought nearly 1 billion pounds of dairy products to support milk prices, and ethanol use was so small it did not rate a separate line in government supply and demand estimates.

“Today, wheat, corn, and soybean prices have doubled, the U.S. has become an important exporter of dairy products, and ethanol demand has dramatically changed the feed grain landscape.”

Mr. Bailey went on to note that, “These changes apparently have gone unnoticed by Congress because [the Farm Bill] as recently passed by Congress is, in the words of the current secretary of agriculture, ‘fundamentally flawed’ and contains policy directives that ‘haven’t been done since 1993.’

“The secretary’s comments were made, in large part, I believe, because [the Farm Bill] currently under consideration ignores the dramatic changes that have taken place in agriculture.

“For a number of years, the outcome of a farm bill greatly influenced the lives of Illinois farmers. That is not the case today, but agricultural policy experts in Washington, D.C., don’t seem to be aware that things have changed over the years.”

In a related item regarding the potential longevity of the recent price surge for some program crops, a Bloomberg news article from today stated that, “Agricultural commodity prices will advance for at least three more years, bolstered by demand that’s expanding faster than supply, Goldman Sachs’ Jeffrey Currie said.

“‘We’re already in the longest sustained agricultural rally since the early 1970s,’ said Currie, head of commodities research at Goldman Sachs. ‘You have a robust demand story that is likely to remain strong even under economic duress.’”

Meanwhile, Philip Brasher, writing in yesterday’s Des Moines Register, stated that, “It’s a pretty safe bet the average voter doesn’t care what the marketing loan rate is for soybeans or lentils. Or which conservation program gets the biggest increase in the new farm bill.

“But try to find someone who doesn’t have an opinion on whether landowners with seven-figure incomes should get federal farm subsidies.”

Mr. Brasher explained that, “The Bush administration knows that, which is why the acting agriculture secretary, Chuck Conner, brings up the issue every chance he gets.

“The administration proposed to lower the income eligibility limit for farm subsidies from $2.5 million a year to $200,000 a year.

“The Democrat who chairs the House Agriculture Committee, Minnesota Rep. Collin Peterson, has said the administration’s proposal goes too far and that the House farm bill represents significant reform.”

Later, the Register item stated that, “Democrats could defy the White House and dare President Bush to veto the farm bill that he doesn’t like. But who’s going to win the public relations battle if Bush says he’s vetoing the bill because it lets the richest landholders keep getting taxpayer subsidies? Not the Democrats.”

And in conclusion, Mr. Brasher stated that, “As far as the politics of the farm bill goes, it doesn’t really matter what impact a tighter means test would have. The administration has an issue the public can understand and every intention of using it.”

With respect to Farm Bill spending levels and conservation, Andrew Martin reported in yesterday’s New York Times that, “It may not surprise you to learn that much of the pork and chicken and beef and milk that you buy at the grocery store comes from huge, industrial-size operations that bear little resemblance to the quaint family farms that adorn many food packages.

“But you may be surprised to learn that your tax dollars have helped pave the way for the growth of these livestock megafarms by paying farmers to deal with the mountains of excrement that their farms generate. All of this is carried out under the rubric of ‘conservation.’ Congress is about to renew the program — and possibly even expand it — as part of a new farm bill wending its way through the Capitol.

“It’s called the Environmental Quality Incentives Program, also known as EQIP — a name that suggests an initiative to encourage farmers to improve environmental standards.”

The Times explained that, “And, in fact, when the program was created as part of the 1996 farm bill, that’s exactly what it was. At the time, the government agreed to pay a share — up to 75 percent — of a conservation project, and the payments were limited to $10,000 a year. Farmers used the money for small-scale projects that had environmental benefits, like planting cover crops to prevent erosion and soak up excess nitrogen or installing fencing to better manage grazing cattle.

“But in the 2002 farm bill, the program was changed at the livestock industry’s behest, and funding for the program was raised from $200 million a year to, eventually, $1.3 billion. Yearly payment limits were scratched, replaced by a provision that farmers could get no more than $450,000 during the bill’s life.

“Another change: large-scale livestock facilities that once were not eligible for EQIP money were encouraged to participate under the 2002 bill.

“As a result, many farmers are using their EQIP money for animal waste management practices, which include helping to pay for lagoons to store manure.”

In greater detail, Mr. Martin indicated that, “For the 2006 fiscal year, for instance, the Department of Agriculture paid farmers about $179 million for animal waste management practices, with Iowa, Wisconsin and North Carolina getting the most money. More recent data was not available, nor were individual payments.

“That compares with $125 million for soil erosion and sediment control, $139 million for irrigation water management and $74 million for grazing land practices, according to Department of Agriculture records.

“Livestock industry officials argue that farmers should be allowed to use EQIP money for animal waste to help comply with environmental regulations for air and water quality.”

“Much criticism of the proposed farm bill has focused on subsidy payments to farmers, particularly when they are receiving sky-high prices for corn, soybeans and wheat. EQIP doesn’t get nearly the same level of scrutiny, in part because environmentalists are split on the merits of using EQIP money to manage manure on big farms,” Mr. Martin noted.

Doha

Reuters writer Jonathan Lynn reported on Friday that, “Members of the World Trade Organisation (WTO) are narrowing their differences over farming so as to clinch a deal to open up world trade but they want more talks, the head of the agriculture negotiations said on Friday.

“Sorting out the farming issue would be a milestone in the Doha trade round, launched 6 years ago.”

The article stated that, “Crawford Falconer told reporters after a meeting of the WTO’s 151 members he had enough material after just over four months of talks to produce a keenly awaited revised text to serve as the basis of an agreement on agriculture.

“Falconer said the vast majority of members wanted more negotiations once the document has been produced, before moving to the next stage of the long-running Doha trade round – ‘horizontal’ negotiations.”

Mr. Lynn explained that, “Falconer, who is New Zealand’s ambassador at the WTO, plans to draft the new text in the week of Jan. 21 with a view to presenting it around the end of January.

“Falconer said his revised text would help advance the talks but would aim to be acceptable by reflecting recent meetings.”

The Reuters article added that, “The EU’s WTO ambassador agreed that negotiations had moved far enough for Falconer to produce a comprehensive text. ‘There are still areas where there’s not a consensus, but he has enough elements to make a proposal that bridges the gaps,’ Eckard Guth told reporters.”

And an AFP article from Friday indicated that, “The World Trade Organization’s chief agriculture negotiator said Friday that members have made ‘a lot of progress’ in recent talks but more still needs to be done before an agreement is reached.

“‘We’ve made a lot of progress,’ ambassador Crawford Falconer told reporters. ‘I’ve got greater clarity than I had before but by no means is everything resolved.’”

Steve Hargreaves reported on Friday at CNNMoney.com that, “In global trade agreements, [Commerce Secretary Carlos Gutierrez] indicated he’s unwilling to cut U.S. agricultural subsidies in order to jumpstart the current Doha Round of trade talks and seemed to blame much of the impasse on developing nations.

“‘I’m not going to negotiate with ourselves here,’ said Gutierrez, when asked if he’s willing to cut U.S. farm subsidies as a concession to get the talks started again. ‘We’d like to see our counterparts come to the table.’

“The trade talks have been held up over battles between developed and developing nations over issues like agricultural subsidies for rich-world farmers, which developing nations say are hurting their main export industries.

“Developed nations – like the United States and the European Union countries – say developing countries need to further reduce tariffs on industrial goods.

“But Gutierrez remained hopeful the trade talks will succeed in the long run, calling removing barriers to trade ‘the single biggest idea out there to spark global growth.’”

Biotech

An AFP article from Thursday stated that, “French President Nicolas Sarkozy on Thursday was facing a decision whether to bar a strain of genetically modified corn after a watchdog authority said it had ‘serious doubts’ about the product.

“Sarkozy told a press conference Thursday he was working with Prime Minister Francois Fillon toward a decision on suspending the Monsanto 810 maize, and would make an announcement in the ‘coming few days.’

“On Wednesday, France’s Provisional High Authority on GM Organisms said it had ‘serious doubts’ as to the safety of Mon 810. It pointed to what it described as ‘a certain number of new scientific facts relating to a negative impact on flora and fauna.’”

Meanwhile, Andrew Bounds, Jeremy Grant and Clive Cookson reported on Friday at The Financial Times Online that, “Europe is set for a rerun of the heated debate over genetically modified ‘Frankenfoods’, after regulators declared on Friday that meat and milk from cloned pigs and cows and their offspring were safe to eat.

“The finding comes as GM foods are about to reignite trade friction between the US and European Union, with a deadline set to expire on Friday night by which the EU must comply with a World Trade Organisation ruling to allow imports of GM seeds.”

The FT article stated that, “Europe is already sharply divided over GM food, dubbed ‘Frankenfood’ by opponents, with just one product – a pest-resistant maize – approved for cultivation. Austria and Hungary have banned even that and France is set to follow suit.”

Concluding, the article indicated that, “The gulf between attitudes across the Atlantic on GM crops has already led to a trade spat with Washington, which won a WTO ruling in 2004 that the EU was illegally blocking GM produce.

“European farmers said they were not seeking to use cloning but feared a loss of competitiveness if the US went ahead and imports were allowed. ‘It is essential to inform the consumers and citizens about the state of play already and not wait until this new technology is on the shelves,’ said Pekka Pesonen, secretary-general of Copa-Cogeca, which represents them.

“Friends of the Earth said the Efsa ruling was ‘unsatisfactory’ because there was a shortage of scientific evidence.”

Keith Good

Comments are closed.