FarmPolicy

April 17, 2014

Farm Bill Update

Categories: Doha / Trade /Farm Bill

DTN writer Chris Clayton reported on Friday that, “As the revenue gridlock over the 2008 farm bill continues, key Democratic members of Congress are talking about letting agricultural policy revert to 1949 law while the Republican Bush administration cautions people about the effects of such a change.

“This song and dance has played out before, sort of, over and over. Under farm-program law, every five years Congress reauthorizes the permanent agricultural policies, while making all of the necessary changes to update those policies for the modern era. Throughout the history of the farm-bill debate, when talks stall, people start revisiting 1949 with nostalgia.”

After an interesting look back at some other Farm Bill debates when the threat of returning to permanent law was utilized, Mr. Clayton stated that, “Right now, the farm bill is locked up in a battle over revenue with President Bush telling Congress he will accept no legislation in his last year of office that increases taxes. The farm bills passed by the House and Senate both have tax measures and need about $10 billion in increased revenue to balance.

“Barring any compromise before the latest extension of the 2002 bill runs out on March 15, Senate Agriculture Committee Chairman Sen. Tom Harkin, D-Iowa, said Thursday that reverting to permanent law is a possibility and it could make the budget baseline ‘extremely high’ for finishing the current farm bill.

“‘I guess the White House should think about that and what the downside would be if we went to the 1949 law,’ Harkin said. ‘There are some problems to be sure, but that could happen … I don’t think it’s the best solution at all. I would not be in favor of that, but it could happen.’”

While discussing some more specific aspects of the 1949 permanent authorizing statute, the DTN article noted that, “Advocates for tighter commodity payment limits might also appreciate permanent law. Under permanent law, payment limits also revert back to the 1985 law. Marketing loan gains, loan-deficiency payments and ‘emergency compensation’ are capped at $75,000 and total payments would be capped at $250,000.

“The 1949 law had no counter-cyclical program and no direct payments. At least 19 commodities now covered under farm programs also would not have those protections under permanent law. That includes rice, soybeans, sugar cane and sugar beets.”

Philip Brasher, writing yesterday at The Des Moines Register Online, indicated that, “Here’s a good way to lose an election: Raise the cost of food in the middle of an economic downturn. But key Democrats won’t rule out doing that if they are at an impasse with President Bush on a new farm bill.

“Congress has until March 15 to send Bush a farm bill that he will sign into law or else lawmakers will have to pass another extension to the 2002 farm bill. Without that extension, a permanent 1949 law takes effect that will require the U.S. Department of Agriculture to increase price supports for several commodities, including milk, corn and wheat.”

Mr. Brasher added that, “The biggest impact on consumers would likely be in the dairy case. Under the 1949 law, farmers would be guaranteed at least $28 per hundred pounds for milk, a 40 percent increase over current market prices.”

With respect to House Agriculture Committee Chairman Collin Peterson, the Register article noted that, “The chairman of the House Agriculture Committee, Minnesota Democrat Collin Peterson, said the 1949 law would be so unpalatable to the Bush administration that he’s considering allowing it to take effect if the president insists on vetoing whatever farm bill Congress sends him.”

And on the Senate side, Mr. Brasher reported that, “His Senate counterpart, Iowa Democrat Tom Harkin, said activating the 1949 law ‘is a real possibility’ though he doesn’t support the idea.

“Harkin suggested Congress could adjust the subsidy rates in the 1949 law and wait for Bush to leave office. But he didn’t explain how Congress could get changes to the 1949 law enacted if lawmakers can’t get a new farm bill past Bush.”

The Register article also pointed out that, “Mary Kay Thatcher, a lobbyist for the American Farm Bureau Federation, is pessimistic about the chances of finishing the farm bill by March 15, given that there is no agreement on how to fund the bill. The administration has threatened to veto any bill that is funded through new tax revenue.

“‘It will be very difficult to get done by March 15, very difficult,’ she said.”

DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “After Agriculture Secretary Ed Schafer said Wednesday there is the possibility of a compromise on the payment limits issue, Harkin suggested that perhaps Congress and the administration could agree to ban subsidies for people with adjusted gross incomes somewhere ‘in the middle’ between the administration proposal of a $200,000 income cap, the Senate cap of $750,000 and the House cap of $1 million.

“If Congress does not pass a new farm bill there is a ‘real possibility’ the 1949 permanent agriculture law would go into effect, Harkin said. Passing an extension of the 2002 farm bill would be difficult, Harkin noted, because it would not contain the increases in the nutrition, conservation and energy programs that are in the new bill. The baseline under the 1949 act might be ‘extremely high,’ Harkin said, and could be used for writing a new bill after the presidential elections. Congress could make ‘adjustments’ in the 1949 bill to avoid increases in milk prices, Harkin said, and could put off any of the referendums on farm programs required under that law. For decades, Congress has suspended the 1938 and 1949 laws each time a new farm bill is written. But a Congressional Budget Office spokeswoman said she did not have an immediate answer about how CBO would handle the baseline if the permanent farm laws went back into effect.”

And a news item posted on Thursday at RadioIowa.com stated that, “Later this afternoon, Senator Tom Harkin will meet with former Congressman Jim Nussle who now is the president’s budget chief. Harkin, who is chairman of the Senate Ag Committee, has talked with Nussle by phone but will review the [Farm Bill] legislation with Nussle face-to-face this afternoon in Harkin’s senate office.

“‘I said, ‘Let’s sit down and kind of go through this and see where we are and what’s out there that we might probe and find where we can reach some agreement,’’ Harkin said. ‘You know, where can we give, where can they give to try to get this thing through.’”

The update added that, “Harkin says he intends to press Nussle, who is head of Bush’s Office of Management and the Budget, for some answers as to what the president will accept.”

Meanwhile, with respect to food stamp funding, DTN writer Chris Clayton reported on Thursday that, “Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, wants to use the economic stimulus bill to expand food-stamp provisions. Any time there is a downturn in the economy, the effects move downhill, Harkin said.

“‘How about those people at the bottom of the heap?’ Harkin asked. ‘The people at the bottom always get hurt the hardest and those are the people with food stamps. That’s why we are going to fight so hard to get food stamps into the stimulus bill. I think the House really missed the market on it.’

“Harkin said his preference would be to take some of the actions done in the farm bill for nutrition spending and shift that money to the stimulus package. The problem with tying an expansion in nutrition spending to the stimulus package is that the President has also said he does not want to see any spending on permanent programs in the bill.”

Other lawmakers have weighed in with perspectives on Farm Bill progress.

Faith Bremner reported last week at the Argus Leader (South Dakota) that, “On the new farm bill, [South Dakota Senator John Thune (R)] said, congressional leaders are dragging their feel. The House approved the bill last summer and the Senate approved it in December. However, House and Senate leaders have yet to appoint members to a negotiating committee to resolve differences between the two versions. A temporary extension of the 2002 farm bill, which expired in September, runs out on March 15.

“To date, all that’s happening with the new farm bill is that House and Senate leaders have been negotiating separately with the White House to come up with a compromise bill that President Bush will sign, Thune said.

“‘They’re not talking to each other,’ Thune said. ‘This process doesn’t move forward until the House and Senate begin to talk with each other and of course that starts with the naming of conferees.’”

And Representative Jack Kingston of Georgia was featured in a podcast interview last week that was posted at AgNetOnline.com. To listen to this interview, which included discussions on the Farm Bill, just click here (MP3).

Opinion items regarding Farm Bill progress have also appeared recently.

The editorial board at The Rapid City Journal (South Dakota) opined on Friday that, “No doubt, farm-state Republicans like Sen. John Thune will have their work cut out for them in getting Bush to sign what he sees as a bloated farm bill. Thune is hopeful that the newly- appointed Secretary of Agriculture Ed Schafer, himself a North Dakotan who had supported a permanent disaster title in the bill, will be helpful in that process.

“But no one can take the farm bill fight to the White House until Congress produces a final bill in a conference committee.

“More than a month into 2008, that has yet to happen. Thune calls it ‘inexcusable’ and blames the Democratic leadership in both houses for the farm bill standstill. Rep. Stephanie Herseth Sandlin and Sen. Tim Johnson have also expressed frustration at the lack of progress.”

The editorial concluded by saying, “There is no excuse for not having tackled the farm bill conference committee, working out the few differences that exist between the House and Senate versions and, at the very least, giving Secretary Schafer something he can at least try to sell to his new boss.

“There is, after all, no chance of convincing President Bush to sign a bill that has not even gotten out of conference committee.”

In an Op-Ed posted on Saturday at The Billings Gazette Online (Montana), American Farm Bureau President Bob Stallman stated that, “After a great amount of deliberation, both bodies of Congress – representing the wishes of the American populace – have passed Farm Bill legislation. Immediate conference and passage of an agreement continues to be the highest legislative priority for Farm Bureau members.”

Later, Mr. Stallman noted that, “The word ‘extension’ continues to roll off the tongues of some folks who don’t understand the severity of the situation. It’s a little too late in the game and nonsensical to chuck all that’s been done in crafting both pieces of farm legislation and go off on a new path.

“A one- or two-year extension of the current Farm Bill will not provide important, long-term certainty that is critical to farm and ranch families. It would only further erode the budget for farm programs, making it even more difficult in the future to write a bill with a meaningful safety net for America’s farmers and ranchers.”

“Extension is not the answer. Nor is it a solution to continue to sit on viable, well-thought-out, already crafted legislation. America’s farmers and ranchers are urging the House and Senate to come to agreement on a final piece of legislation and the president to sign it into law. We can’t afford to play politics any longer.”

Other news items have provided a bit more focus on the role that the new Secretary of Agriculture is playing in the Farm bill process.

Ted Shelsby noted yesterday at the Baltimore Sun Online that, “[Secretary of Agriculture Ed Schafer] says he learned firsthand about agriculture by helping out with farm chores and tinkering with engines.

“His new job thrusts him into the deadlocked negotiations with Congress over a new farm bill that will set federal agriculture policy for the next five years.”

And Jerry Hagstrom, writing today at AgWeek.com, reported that, “When Agriculture Secretary Ed Schafer, a former Republican governor of North Dakota, met with reporters for the first time after making an introductory speech to Agriculture Department staff, he said that another former governor who had served as a Cabinet officer had told him, ‘One of the things that will be difficult is to remember that you have a boss.’

“Schafer already has learned the other former governor was right.”

The article noted that, “During the same session with reporters, Schafer said he was planning to meet with sugar growers willing to listen to a proposal to add a provision to the farm bill to change U.S. law so that U.S. and Mexican sugar growers could proceed with their joint plan to limit sugar trade between the United States and Mexico and keep prices high. Under the rules of the North American Free Trade Agreement, the movement of sugar between the two countries was supposed to become totally free Jan. 1.

“‘If producers in two countries can agree on an approach, that’s better than two governments’ trying to manage the situation, Schafer said. He added, ‘Trade is all about the producer and providing opportunities and opening markets. Producers have a strong say and hand in that.’”

Mr. Hagstrom indicated that, “Early on Jan. 31, Informa Economics, which publishes an agricultural newsletter, reported that Schafer had said his earlier comments were ‘personal opinion.’

“‘I now have a boss,’ Schafer told Informa. ‘I have learned that in Washington, D.C., every word you say is important.’

“Schafer went ahead with a meeting that Sen. Norm Coleman, R-Minn., had set up for the American Sugar Alliance, which represents beet and cane growers, to explain the proposal to Bush administration officials. Deputy Secretary Chuck Conner, who had served as acting secretary before Schafer was confirmed, and Trade Representative Susan Schwab also attended the meeting in Coleman’s office.”

The article then stated that, “After the meeting, USDA officials whisked Schafer and Schwab past two waiting reporters and said Conner would be the administration’s official spokesman.

“Conner indicated the administration has not taken a formal position on the proposal and that the officials had listened to a detailed presentation of it and to the industry’s concerns about sugar trade. But Conner added, ‘We are always skeptical of anything that would represent management of trade between the two countries.’”

The article also pointed out that, “Coleman did not meet with reporters because he had to catch a plane, a spokesman said. But Coleman, who is facing a tough re-election battle, issued a statement. ‘The sugar industries in both Minnesota and Mexico have a lot to lose should the NAFTA transition go wrong, which is why I brought USDA and USTR together today with the U.S. sugar industry. In today’s meeting, it was clear the Administration has concerns, but I believe the door has been left open to take advantage of this opportunity, and I will continue working for a solution.’”

Jack Roney, the Director of Economics and Policy Analysis for the American Sugar Alliance, penned a Letter to the Editor on the sugar / trade issue that was published in Saturday’s Wall Street Journal.

In part, the letter noted that, “In regard to your Jan. 22 editorial ‘Sweet and Sour’: When describing recommendations for better facilitating Nafta’s sweetener trade, you ignore the fact that these are joint recommendations made by the Mexican and U.S. sugar industries to their respective governments. They are not ‘unilateral,’ and can only take effect if implemented by our two governments. Mexico’s sugar industry is very supportive of the plan because it will help maximize sugar trade and ensure the economic success of Nafta for both Mexican and U.S. sugar producers.

“The Mexican sugar industry realizes that sugar-growing communities on both sides of the border will face economic hardships if the governments do not implement these recommendations. And under such conditions, food manufacturers run a risk of losing reliable domestic sugar suppliers.”

In an update posted last week at the Cato@Liberty blog, Sallie James provided a bit more background on this issue, reminding readers that, “Two weeks ago, the Sugar Alliance circulated a proposal to lawmakers that would effectively divide up the United States and Mexico’s (combined) market into a protected cartel. That would significantly impede what was planned to be free trade in sugar between the two countries and downward pressures on the U.S. price of sugar: currently the U.S. price is about double the world price, although it has been up to triple the world price in previous years because of trade barriers to cheaper sugar (see more here).”

Doha

Reuters writer Jonathan Lynn reported last week that, “Big differences are emerging on what ministers should cover when they meet in the next few weeks to discuss an outline deal to open up world trade, a meeting of trade negotiators heard on Thursday.”

The article noted that, “A group of key ministers gave the Doha talks new impetus last week when they agreed at the World Economic Forum in Davos, against a background of concern about the global economy, to meet in March or April with a view to reaching a final trade deal that would add confidence by the end of this year.

“Ministers are also keen to wrap up a deal while President George W. Bush is still in the White House, as the new U.S. administration taking office next year will need at least 6 months to settle in and not be able to focus on a trade pact.

“All WTO members agree the meeting of ministers at Easter must focus on the key sectors of agriculture and industry.

“But many countries want the meeting to lay down firm guidelines on other sensitive issues, such as the liberalisation of the services sector, or rules on unfairly priced imports.”

And Reuters writer Doug Palmer reported on Friday that, “A breakthrough soon in world trade talks would give the global economy a much-needed boost at a time when many are worried about a possible downturn, top U.S. and Australian trade officials said on Friday.

“A deal ‘would be a show of confidence in the global economy and investing in economic growth and development,’ U.S. Trade Representative Susan Schwab told reporters after meeting with her Australian counterpart.”

Keith Good

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