Carolyn Lochhead reported in Thursday’s San Francisco Chronicle that, “As Sens. Barack Obama and Hillary Rodham Clinton toured the land denouncing special interests, giveaways to the rich, home foreclosures, job losses and a middle-class squeeze, back in Washington House Speaker Nancy Pelosi and other top Democrats met behind closed doors on a plan to raise taxes and cut food stamp money to protect billions of dollars for agribusiness, a sector of the economy that is booming.
“The negotiators agreed Tuesday to find $10 billion in extra money in a last-ditch effort to save the farm bill, once seen as an opportunity to reform commodity programs and divert scarce funds to conservation, nutrition, organic research and California fruit and vegetable growers who are locked out of the Depression-era programs. The money is needed to appease these interests while still maintaining the commodity subsidies. Yet in proposals so far, those areas get trimmed to keep the subsidies flowing.”
The Chronicle noted that, “The Bush administration promised to veto the House and Senate farm bills passed last year if they raised taxes, used budget gimmicks and continued sending aid to wealthy farmers. Both bills needed extra money to increase spending on conservation, food stamps and fruit and vegetables while still maintaining grain subsidies.
“If anything gets cut, support for the bill could collapse. To figure out how much extra money is needed, Democratic negotiators met privately in Pelosi’s office Tuesday night, just before the Democratic presidential primary debate in Ohio.”
Later, Ms. Lochhead explained that, “Off the table are the $5 billion in automatic payments sent to commodity farmers and landowners every year, whether the crops are grown or not. Other farmers do not get these payments. Married commodity farmers could get up to $120,000 a year in government checks if they earn less than $1.8 million a year.
“Negotiators also need money for a new $5 billion ‘permanent disaster’ fund that would benefit a handful of Plains states whose farmers plow arid land, routinely see their crops fail, and continue planting anyway, assured of federal aid.
“Even budget gimmicks such as pretending the automatic payments will disappear in 2016, only to reappear in 2017, don’t make the numbers work.
“So the negotiators are looking to cut money that was added for food stamps and food banks. They may trim conservation funding, and ditch some research and marketing money for fruits and vegetables. They are scouring the tax code for ways to raise funds, such as squeezing more taxes from consumers’ credit card and debit card transactions.”
Also on Thursday, Congressional Quarterly reported that, “Despite regular meetings between key congressional negotiators and the administration, there is little sign that a deal is near on a new five-year farm bill.”
The CQ item stated that, “While negotiators for the Senate and House have tossed out all manner of funding proposals – including one that would impose new taxes on foreign companies working on American soil and another that would close loopholes in corporate tax shelters — Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said Thursday that the White House refuses to accept any of those ideas — or put forth other options.
“‘They muse about this, they muse about that, but they don’t put anything on the table,’ he said.
“‘They say they want a farm bill, but they won’t negotiate,’ Harkin added, saying the White House doesn’t seem to want to spend any new money on agriculture programs. That attitude won’t hold up against farmers, nutrition advocates and environmental groups clamoring for more money in the reauthorization, lawmakers say.”
An audio reply of some of Sen. Harkin’s thoughts on the Farm Bill process were posted on Thursday at the Senate Ag Committee Online, to listen, just click here.
Congressional Quarterly writer Catharine Richert reported on Thursday that, “Senate Agriculture Chairman Tom Harkin, D-Iowa, called recent talks with the White House ‘frustrating.’ The panel’s ranking Republican, Charles E. Grassley of Iowa, likewise frowned and said negotiators ‘still have a long way to go’ after he left a meeting with Agriculture Department officials.
“The mood is quite different from a few weeks ago, when farm-state lawmakers were hopeful a breakthrough was close at hand. Since then, members of the tax and farm panels in both chambers have been trying to come up with a new funding mechanism for the measure. Under pay-as-you-go rules, any new spending must be offset by new tax revenue or funding cuts.”
Meanwhile, Peter Shinn reported on Thursday at Brownfield that, “There’s no deal on farm bill funding yet, but the chairmen and ranking members of the House Ways and Means Committee and Senate Finance Committee have been meeting on the matter. That’s according to Senate Agriculture Committee Chairman Tom Harkin, who suggested his Finance Committee colleagues and will let simply him know when they’ve reached a funding agreement.
“‘Stay tuned for Friday,’ Harkin told reporters Thursday. ‘Tomorrow we’re supposed to have a number. Well, we’ll see.’”
And DTN Political Correspondent Jerry Hagstrom reported on Thursday (link requires subscription) that, “The Senate Agriculture Committee and Senate Budget Committee chairman are ready for Congress to finish the farm bill conference report with a budget increase and offsets and then challenge the Bush administration to support it.”
Later, Mr. Hagstrom pointed out that, “Moving ahead on the farm bill without White House involvement would require agreement from House Speaker Nancy Pelosi, D-Calif., because Pelosi has said she will not appoint conferees until a deal on financing is reached. Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Committee Chairman Charles Rangel, D-NY., are supposed to release a budget number and a list of offsets by Friday…”
Philip Brasher noted on Friday at The Des Moines Register’s Cash Crops blog that, “Some Democrats, primarily Collin Peterson, were talking about allowing the current programs to lapse, which would trigger the 1949 farm law and its Depression-era system of price supports and controls.
“Now, USDA has come out with its analysis of what that would mean…”
A USDA press release from yesterday stated that, “At the request of senior House and Senate agriculture committee staff, the U.S. Department of Agriculture today provided a detailed document developed from Administration analysis of impacts to current USDA programs – in the absence of enactment of a new farm bill or an extension of the 2002 farm bill past March 15, 2008.
“As stated in the USDA analysis, the provisions of the Agricultural Adjustment Act of 1938 and the Agricultural Act of 1949, which have been repeatedly suspended by several farm bills, would again become legally effective if a new farm bill is not enacted or Congress fails to extend the 2002 farm bill by March 15, 2008. Often described as a reversion to ‘permanent law,’ such a result would ‘dramatically narrow the universe of producers who receive support, and would do so in a way that most producers will view as irrational,’ according to the 14 page paper prepared by USDA and approved by the Office of Management and Budget.”
The 14-page USDA paper can be downloaded here (Word Document).
Dave Russell and Peter Shinn of Brownfield reported yesterday that, “Friday was to have been the day leaders of the House Ways and Means Committee and the Senate Finance Committee unveiled a new revenue and funding package for the pending farm bill. But on a day when U.S. Ag Secretary Ed Schafer reiterated the Bush administration’s hard-line position against the current House and Senate versions of the farm bill, no new deal on the measure appeared to be forthcoming.
“According to Congressional Quarterly, one reason congressional leaders are having an unexpectedly difficult time coming up with the broad strokes of plan to fund the farm bill is that lawmakers have gotten mixed messages from Bush administration officials on what exactly they would accept in terms of a total price tag and how to pay for it. Lawmakers from both sides of the aisle have suggested the final farm bill will likely cost between $9 and $10 billion over the Congressional Budget Office baseline for farm programs. The Bush administration has publicly endorsed spending just $6 billion over baseline, though both U.S. Ag Secretary Ed Schafer and his deputy Chuck Conner both suggested at USDA’s Ag Outlook Forum last week that they might be able to accept a higher figure.”
The Brownfield item added that, “[Sec.] Schafer said during an appearance at Commodity Classic in Nashville Friday that the Bush administration had, in fact, suggested ways to fund the next farm bill during negotiations with Congress. Schafer’s comment came in response to remarks from Senate Agriculture Committee Chairman Tom Harkin, who told reporters Thursday that the Bush administration had tabled no farm bill funding suggestions whatsoever.
“‘The reason Senator Harkin says that we haven’t provided funding sources, he’s saying we haven’t provided funding sources that are acceptable to him,’ Schafer said.”
An audio reply of Sec. Schafer’s comments made at the Commodity Classic has been posted at AgWired.com; also, Sec. Schafer held a press conference after his formal remarks, to listen to his interaction with the media, see this update from AgWired.com.
With respect to the USDA analysis paper on permanent law, Brownfield’s Russell and Shinn indicated that, “‘The ’49 law, while it might be a negotiating tactic, will not be implemented,’ Schafer said during a press conference following his remarks at the Cattle Industry Convention in Reno on February 8th. ‘It has too huge a ramifications on, you know, the price of milk and other commodities, on systems, on nutrition food stamps, Women, Infants and Children,’ he added. ‘It’s not going to happen.’”
DTN Editor-in-Chief Urban C. Lehner reported yesterday that, “USDA Secretary of Agriculture Ed Schafer sounded an optimistic note on the farm-bill negotiations, saying ‘a better farm bill is in reach’ if Congressional and administration negotiators can ‘bring enough common sense to the bargaining table.’
“Addressing the Commodity Classic meeting of several major farm-commodity groups here, Schafer said he is ‘optimistic’ Congress will pass a law President Bush can sign. Rejecting criticism from Congress, he said the administration has offered suggestions for paying for increased farm spending.
“Schafer said extending the 2002 farm legislation is ‘not a good option’ because it would not provide needed increases in spending on conservation and nutrition programs, among others.”
Mr. Lehner added that, “Talking to reporters following his address, Schafer said USDA is not making preparations to revert to 1949 farm law, something House Agriculture Committee Chairman Collin Peterson, D-Minn., has threatened should a new farm bill not go through. Schafer said, ‘We are not going to implement ’49 law’ so USDA is not preparing for it. ‘Elected officials are not going to let us’ implement it because it could lead to higher food prices, he said.”
Later, the DTN article noted that, “Contrary to suggestions by Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, that the administration has been unhelpful, Schafer said the administration proposed ‘billions and billions’ of funding sources for increased farm spending in its budget proposal. What Harkin is really saying, Schafer said, is that ‘we haven’t provided funding sources acceptable to him.’ He declined to give examples of possible funding sources the administration favors.”
DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Key lawmakers said Friday they would not fulfill a promise to release by the end of the week the size of the budget increase for the farm bill or the proposed offsets that would be used to pay for it.
“‘Announcements are not likely today, but Senator (Max) Baucus (Senate Finance Committee chairman) certainly hasn’t given up,’ a Baucus aide said. ‘He is fully exploring the possibility of an agreement that will be good for farmers and that can become law, and discussions are ongoing today toward that end.’”
Mr. Hagstrom went on to explain that, “Rising commodity prices have sparked a debate over whether crop farmers should still get the $5.2 billion in direct payments they get annually whether prices are high or low. Reps. Ron Kind, D-Wis., and Jeff Flake, R-Ariz., who favored a radically different farm bill earlier last year, said Wednesday they had put the direct payments on a list of proposed cuts they sent to House Speaker Pelosi, D-Calif. Kind and Flake said the money could be better spent on other programs.”
(For more on direct payments and the perspective of Reps. Kind and Flake, see this FarmPolicy.com audio podcast (MP3- about six minutes) from Wednesday).
Mr. Hagstrom added that, “Harkin told reporters Thursday that he would cut the direct payments to pay for other programs, but that when he made that proposal to Conner recently, Conner rejected it. The Bush administration proposed an increase in the direct payments [see administration’s farm bill proposal pages 14 and 15] a program that free trade advocates favor because those payments do not encourage farmers to grow one crop or another.
“Cutting direct payments ‘has been on my table, but I don’t think the administration will do that,’ Harkin said. He also admitted that he does not have the votes within his committee to cut the direct payments in conference.”
Reuters writer Jonathan Lynn reported yesterday that, “Talks on agriculture, crucial to the success of the Doha round to open up world trade, are not moving fast enough, and the whole timetable is close to unravelling, the mediator for the talks said on Friday.
“Trade ministers hope to meet in March or April to agree the outlines of a trade deal to be finished by the end of this year.
“‘If that’s your timeframe it’s getting more and more knife-edge as each hour goes by,’ New Zealand’s ambassador to the World Trade Organisation (WTO), Crawford Falconer, who chairs the farm negotiations, told Reuters.”
Mr. Lynn indicated that, “Falconer’s comments followed a warning by EU trade chief Peter Mandelson that the whole Doha round, launched in late 2001, faced a big risk of failure.”
Prices / Food Aid
Associated Press writer Stevenson Jacobs reported on Friday that, “Soybean futures rose to their highest levels ever Friday because of strong demand from China and the dollar’s decline to an all-time low. Other agricultural futures fell.”
The AP article noted that, “Soybeans for May delivery gained 24 cents to settle at $15.365 a bushel on the Chicago Board of Trade, after earlier rising to an all-time high of $15.39 a bushel.
“Other agriculture futures traded mixed. Wheat for May delivery plummeted 79 cents to settle at $10.86 a bushel, while March corn gained 2.75 cent to settle at $5.46 a bushel.”
These historically higher prices are impacting food aid programs.
Anthony Faiola reported in today’s Washington Post that, “The U.S. government’s humanitarian relief agency will significantly scale back emergency food aid to some of the world’s poorest countries this year because of soaring global food prices, and the U.S. Agency for International Development is drafting plans to reduce the number of recipient nations, the amount of food provided to them, or both, officials at the agency said.
“USAID officials said that a 41 percent surge in prices for wheat, corn, rice and other cereals over the past six months has generated a $120 million budget shortfall that will force the agency to reduce emergency operations. That deficit is projected to rise to $200 million by year’s end. Prices have skyrocketed as more grains go to biofuel production or are consumed by such fast-emerging markets as China and India.”
And Reuters writer Missy Ryan reported on Friday that, “A lawmaker who has championed using U.S. food aid donations to fund development projects is rethinking his support of proposed legislation as soaring commodity prices eat into aid available for crises.
“Rep. Jerry Moran, a Kansas Republican, sponsored an amendment to U.S. farm legislation last year that would guarantee a minimum of $450 million from the largest U.S. food aid program, Food for Peace, for non-emergency programs that aim to break the cycle of famine and poverty in poor nations.
“‘I’m not backing off on my belief in developmental aid, but I do recognize that this dramatic increase in commodity prices in a very short time suggests that we’ve got to find a solution to the immediate crisis,’ said Moran.”
Ms. Ryan added that, “The Senate passed a similar set-aside of $600 million in its version of the legislation, the 2008 farm bill, worth about half of the program’s overall regular yearly funding.
“Now, as lawmakers prepare to broker a House-Senate compromise, Moran said record crop prices have prompted him to reevaluate.
“‘What that amendment is designed to do is make it more difficult to raid non-emergency money, but we are in an extraordinary time,’ Moran said in an interview.
“Advocates of greater non-emergency aid argue such programs, in which private aid groups often sell U.S.-donated commodities in developing countries to finance nutrition, farming or other projects, say they help avert future food emergencies.
“Yet the set-aside is opposed by the Bush administration, which says it sharply reduces money available for emergencies in countries reeling from drought, famine or war.”
And in a related article, Philip Brasher reported in today’s Des Moines Register that, “The rising price of crops like corn and soybeans is a boon to Iowa’s economy, but some of the world’s poorest people are paying a steep cost.”