Dow Jones News writer Bill Tomson reported recently that, “The Bush administration, in a letter, has offered to allow Congress to go $10 billion over budget in drafting the 2008 farm bill so long as lawmakers agree to make significant subsidy and funding reforms.
“The letter dated Feb. 29, a copy of which was obtained by Dow Jones Newswires, said the offer to allow for the extra spending was contingent upon Congress agreeing to such things as not raising loan rates for farmers and discarding some measures to protect sugar producers.
“Bush administration officials worked out a deal in February with key members of the U.S. House of Representatives that would have allowed for $6 billion in spending above the 10-year baseline budget set by the Congressional Budget Office. This proposal, presented to House and Senate leaders, bumps that up to $10 billion, but also demands tighter reforms in return.”
Deputy Secretary of Agriculture Chuck Conner appeared yesterday on AgriTalk to discuss this administration’s perspective on the Farm Bill in more detail. Host Mike Adams questioned Dep. Sec. Conner about the letter and here is an audio excerpt of their exchange on this issue (MP3-about 2 and a half minutes).
The Dow Jones article noted that, “USDA officials have fought for months to get lawmakers to set a hard subsidy cap, prohibiting payments to any farmers with an annual adjusted gross income of more than $200,000, but in the Feb. 29 letter, the Bush administration offered a compromise.
“Lawmakers continuously either rejected or ignored the $200,000 AGI cap, so the Bush administration has agreed to accept a farm bill with a $500,000 AGI cap.”
In a tele-news conference with reporters yesterday, Senator Charles Grassley (R-Iowa) commented on the administration’s $500,000 AGI cap proposal and reminded listeners that during the Senate Farm Bill debate, he secured a majority of votes on an amendment regarding payment caps that fell short of the 60-vote “supermajority” needed for passage. Sen. Grassley indicated that although the $500,000 limit was greater than what he had originally sought, he nonetheless looks positively on working with the White House on this issue. To listen to Sen. Grassley’s comments on this aspect of the negotiations, just click here (MP3- about 30 seconds).
In a more general assessment of the Bush administration’s overture on a higher budget number for increased reform efforts, the Dow Jones article stated that, “The letter from the Bush administration wasn’t well-received by the Senate Agriculture Committee, said Kate Cyrul, communications director for Chairman Tom Harkin, D-Iowa. ‘At this point, the administration is the biggest sticking point to getting a new farm bill,’ Cyrul said.
“‘With little new information in this paper, it seems the White House is more intent on foreclosing options to getting this bill done, rather than working to create a solution.’”
Meanwhile, DTN writer Chris Clayton reported yesterday (link require subscription) that, “With the Bush administration willing to back a farm bill that would spend up to $607 billion over 10 years — $10 billion above the baseline projections — Congress now needs to come to terms on how to fund that money in a manner acceptable to the administration. As often happens, disputes lie between key lawmakers in the House and Senate disagreeing on who controls the money.
“House Agriculture Committee Chairman Collin Peterson, D-Minn., told members of the National Farmers Union Sunday night that ‘Senate Republicans’ on the Finance Committee were objecting to creating budget offsets for the farm bill, then just turning over the money to the agriculture committees.”
Mr. Clayton explained that, “Sen. Charles Grassley, R-Iowa, ranking member of the Senate Finance Committee, said in a weekly conference call with reporters Tuesday that he needed to clear up misconceptions about what is going on, noting he had heard some criticisms of the Finance Committee. Grassley said he and Finance Committee Chairman Max Baucus, D-Mont., are trying to keep control of funds under the jurisdiction of the Finance Committee. Grassley said the Finance Committee was helping out the agriculture committees with the farm bill more than anyone else, but he and Baucus ‘don’t want to be a banking committee to the other committees’ in the U.S. Senate.
“The Senate Finance Committee last October created a $5-billion permanent disaster program and conservation tax credits that were inserted into the Senate farm bill. If Grassley and Baucus prevail, those programs would remain under their control rather than the Senate and House agriculture committees once the farm bill is done.
“‘That’s something Sen. Baucus and I agree on,’ Grassley said. ‘If we are going to provide the money, we are going to control the programs.’”
The DTN article added that, “Peterson has held steady that programs authorized for agriculture should remain under the jurisdiction of the agriculture committees. House Ways and Means Committee Chairman Charles Rangel, D-N.Y., appears to agree and has no problem with the agriculture committees remaining in control of programs funded through offsets.
“A spokeswoman for Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, stated Tuesday that Harkin agrees with Peterson’s position on this proposal. It makes sense that agriculture, farm and related policy issues should be under the jurisdiction of the agriculture committees, the spokeswoman stated.
“‘We are working better to understand what the views, concerns and objectives are from the Finance Committee perspective,’ stated Senate Agriculture Committee spokeswoman Kate Cyrul in an e-mail. ‘House Ways and Means does not have an interest in taking on farm and agriculture program jurisdiction, and it may well be that the Senate Finance Committee doesn’t really either if we have the chance, as we expect, to talk these issues through further and get into the particulars.’”
For more on this issue, see this audio excerpt (MP3- 30 seconds) from Sen. Grassley’s press conference yesterday.
And Philip Brasher, writing yesterday at The Des Moines Register’s Cash Crops blog, stated that, “Lawmakers continue to report slow progress as they work toward reaching a deal on the farm bill. The current extension expires March 15, but there’s talk of doing another one-month extension.
“Over the weekend, the Bush administration softened its position on the spending limit and offered some ideas for paying for the bill that have largely gotten mixed reviews on Capitol Hill.
“The problem is that the administration’s ideas, which include getting money from the sale of electronic spectrum, involve stepping on the jurisdictions of other committees. You can imagine how eager they are to help pay for a farm bill.
“Sen. Charles Grassley, the top Republican on the Senate Finance Committee, says his panel is insisting that it keep control of any revenue measures that it provides. However, that doesn’t sit well with the House.
“‘Institutional disagreement is one of the reasons we’re having a hard time getting a farm bill,’ says Grassley.”
Secretary of Agriculture Ed Schafer also alluded to the idea of another one-month extension yesterday; to hear his comments, just click here (MP3- one minute).
A news release issued yesterday by the U.S. Trade Representative’s Office stated that, “The Bush Administration Monday delivered to Congress the 2008 Trade Policy Agenda and the 2007 Annual Report of the President of the United States on the Trade Agreements Program. [full report available for download here]
“The report highlights the Administration’s 2007 accomplishments of opening new markets, developing and implementing new policies, and enforcing U.S. trade agreements to ensure trade is free and fair.”
The USTR release also stated that, “Multilaterally, the United States continues to lead efforts towards concluding an ambitious Doha Development Round. Concluding an ambitious Doha Round is President Bush’s top trade negotiating priority and will generate economic growth through new trade flows in agriculture, industrial goods and services – helping to lift millions of people in developing counties out of poverty. The Administration realizes that a window of opportunity exists to conclude the Doha Round this year and looks forward to working with our trading partners to achieve the ambitious and balanced outcome that will be necessary for a successful agreement.”
Prices / Food Inflation
Philip Brasher reported in yesterday’s Des Moines Register that, “The soaring price of wheat is hitting home for bakers like George Formaro.
“A 50-pound bag of flour that Formaro used to pay $9 for now costs him more than $20. For a week’s worth of flour – 10,000 pounds – his bill has risen $2,200.”
The article added that, “Wheat prices have hit unheard-of highs in recent weeks because of a combination of poor global harvests last year and shrinking wheat acreage. Farmers have switched to corn and other commodities for which prices also are strong.”
Javier Blas and Raphael Minder reported in yesterday’s Financial Times that, “Rice prices have surged to a 20-year high in the latest sign of global food inflation, creating policy headaches in Asia, where more than 2.5bn people depend on cheap and abundant supplies of the grain.
“Thai rice prices, a global benchmark, surged last week above the level of $500 a tonne for the first time since at least 1989, according to the United Nations Food and Agriculture Organisation, prompting importing countries to seek assurances on supplies.
“Robert Zeigler, director at the International Rice Research Institute in Manila, said policymakers should be concerned. ‘If history is any indicator, we should be worried because rice shortages have in the past led to civil unrest,’ he said.”
And Joshua Boak reported in today’s Chicago Tribune that, “The United Nations World Food Program budgeted $2.9 billion for its operations in 78 countries this year. But record prices for wheat and corn have unexpectedly left the organization needing an additional $500 million, causing its executive director to appear on ‘The Oprah Winfrey Show’ and tour the Chicago Board of Trade grain pits with actress Drew Barrymore this week.
“‘When people don’t have access to food, it creates instability,’ warned Josette Sheeran. ‘In a way, the World Food Program is the canary in the cave.’
“That canary has been chirping loudly, partially because of an increasingly critical shift in how governments support food-aid programs. In-kind contributions of surplus crops made up the majority of the program’s budget until 2003. But the World Food Program primarily relied on cash donations last year, leaving the organization vulnerable to higher wheat, corn and soybean prices that have slashed its purchasing power by 40 percent since June.”
Food price issues were also the topic of a Farm Foundation Forum yesterday in Washington, D.C.
An audio replay of the event, which was entitled, “Factors and Impacts of U.S. Food Price Increases,” is available at this Farm Foundation webpage.
The discussion was moderated by Charlie Stenholm and presenters included: Ephriam Leibtag, USDA Economic Research Service; Sophie Milam, Bread for the World; Scott Faber, GMA/FPA; and, Jon Doggett, National Corn Growers Association.