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Farm Bill- Chairman Harkin: “I’m convinced a deal is within our reach”

Philip Brasher, writing yesterday at the Des Moines Register Online, reported that, “Congressional negotiators are nearing a deal on funding a new farm bill, but agricultural programs may have to be extended another month, says Sen. Tom Harkin, D-Iowa.

“‘I’m convinced a deal is within our reach,’ Harkin said Thursday.”

Mr. Brasher noted that, “Harkin said the final deal is likely to increase overall spending by $10 billion over 10 years. The bill also will use some budgeting maneuvers, such as changing the timing of payments, to expand programs without violating congressional pay-as-you-go rules.”

To listen to comments made yesterday by Sen. Harkin regarding the Farm Bill, see this audio clip that was posted yesterday at the Senate Agriculture Committee webpage. In the clip, which lasts about a minute and a half, Sen. Harkin indicated that, “We need a little bit more from the White House. To enact a new Farm Bill we need true cooperation and partnership from the administration rather than veto threats and funding sources that are non-starters.”

Dow Jones writer Bill Tomson reported yesterday that, “Both the Senate and House attached revenue-raising tax measures to their respective farm bill proposals and U.S. President George W. Bush said he would veto any legislation with such measures.

“Instead, a letter from the White House to Congress laid out a list of funding offsets it hoped lawmakers would choose from to divert money to the farm bill.”

Dan Looker, writing yesterday at Agriculture.com, reported that, “Harkin was planning to meet this afternoon with House Agriculture Committee Chairman Collin Peterson (D-MN) and the ranking Republicans on both ag committees, Senator Saxby Chambliss of Georgia and Bob Goodlatte of Virginia. He said the four would begin discussing how the money for the next farm bill will be divided up among titles in the bill, such as commodities, energy, conservation and nutrition.

“When asked about whether he supported extending the current farm bill until April 15, he said, ‘That’s a possibility,’ but that he’d be more likely to support it if the committee leadership can at least agree on how the money would be divided up among commodity titles.”

Meanwhile, in a press conference with two Iowa reporters yesterday, Sen. Charles Grassley (R-Iowa) also discussed the issue of a Farm Bill extension and offered his perspective on the posture of the executive branch.

In this audio clip (MP3-about one minute), Sen. Grassley stated, “Well, the big unknown is whether or not the White House is negotiating in good faith or whether they just want to kind of string us along and not really help us get to finality and maybe just have an extension of the existing Farm Bill.”

After noting that Senators and Representatives of both political parties needed to come to together to work out a bill that tries to satisfy the White House as much as possible, Sen. Grassley indicated that, “If we don’t get that done, we will have a one-year extension. If the president vetoes the bill, I imagine we will have a one-year extension of what we have right now.”

Also on the extension issue, Congressional Quarterly writers Catharine Richert and Adrianne Kroepsch reported yesterday that, “House Speaker Nancy Pelosi wants the next farm bill finished before the current one expires for a second time March 15, and is opposed to even the shortest of extensions, Senate Majority Leader Harry Reid said Thursday.

“‘When it expires, it’s going to be extended for a week or a month, and that’s about it,’ the Nevada Democrat said. ‘A month is really too long for her. She would go along with a month, if that’s what I wanted, but that’s too long for her.’”

The CQ article stated that, “Senate Agriculture, Nutrition and Forestry Chairman Tom Harkin, D-Iowa, said he also would like to avoid a lengthy extension of the current farm bill. He said he hopes for an agreement on a final funding number and offsets, along with a good idea of what farm programs the money will be spent on, before the Easter recess.

“‘If you extend it another month, people just kick the ball down the field,’ he said. ‘Unless we have a deadline, people just don’t make decisions around here.’”

Richert and Kroepsch also noted that, “Senate leaders have been working on finding offsets for an extra $10 billion in spending over the farm bill baseline. Reid demurred when asked for details, but said ‘we have a number.’ The heads of the Senate Finance and House Ways and Means panels ‘have the offsets.’

“About $8 billion of the $10 billion in offsets would come from spending cuts on the administration’s list, aides said.

“Congressional aides say Agriculture Department officials have put their stamp of approval on those spending cuts, but are not likely to support an additional $4 billion in spending that would require new taxes. About half of that $4 billion would be used for agriculture items unrelated to the farm bill, though aides were mum on what the offsets would fund.”

Also on the funding issue, a Reuters article from yesterday (posted at DTN, link requires subscription) stated that, “Leaders of the House and Senate Agriculture committees said on Thursday they will not surrender jurisdiction over some land stewardship work in a squabble with another panel over the new U.S. farm law.”

The article noted that, “After an hour-long meeting, committee leaders said they were determined to maintain authority over their programs. They said they hoped to agree by the middle of next week on how to divide funding among major segments of the farm bill.”

More specifically, the article stated that, “Iowa Republican Charles Grassley, a former chairman of the Senate Finance Committee, said the panel expects jurisdiction over parts of the Conservation and Wetland reserves if, as expected, it provides funding. A staff worker said seven panel members who also sit on the Agriculture Committee agree.

“But Agriculture Committee chairman Tom Harkin, Iowa Democrat, said the idea is ‘a nonstarter. It’s not going to happen.’ Other key lawmakers agreed with Harkin.”

A memorandum to reporters and editors issued yesterday from Sen. Grassley’s office stated that, “Farm bill conferees belonging to both the Finance and Agriculture Committees have participated in several meetings since January to discuss the Finance Committee provisions included in the farm bill.

“These conferees are Finance Chairman Baucus, Budget Chairman Conrad, Ranking Member Grassley, and Senators Lincoln, Stabenow, and Roberts. They have all expressed their support for Chairman Baucus to keep Finance Committee jurisdiction over the funding provided by the Finance Committee to the Agriculture Committee. Senators Crapo and Salazar, who are members of both the Finance and Agriculture Committees, but not conferees, also support the chairman and ranking member in this effort.”

And DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Farm leaders in Congress hope to come up with a plan to allocate money within the bill by the middle of next week, Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said Thursday after meeting for more than one hour with Senate Agriculture Committee ranking member Saxby Chambliss, R-Ga., House Agriculture Committee Chairman Collin Peterson, D-Minn., and ranking member Bob Goodlatte, R-Va.”

Mr. Hagstrom noted that, “Harkin also said he does not consider the $5.2 billion in annual direct payments that farmers get whether prices are high or low to be ‘sacrosanct,’ although other members and farm groups have said they oppose cutting them. Harkin added that the programs that have gotten the highest increases in the House and Senate bills are most likely to experience cuts in those increases in the final bill. Food stamps have gotten the single biggest increase in both bills.”

In a separate matter regarding farm subsidy payment limits, a press release issued yesterday from Sen. Grassley stated that, “An amendment to allow a hard cap of $250,000 on the amount of farm payments an individual can receive passed the Senate Budget Committee today. Grassley introduced the amendment with Senator Wayne Allard of Colorado.

“‘The farm bills that passed the House and Senate have loopholes that make the farm payment system worse than what we operate under now. So, despite the fact that we’re in the middle of conference negotiations, I’m looking for ways to address the problems that weren’t taken care of,’ Grassley said. ‘The majority of the Senate gave its support to payment limits during the farm bill, so it seems only right to keep pushing for passage.’

“The amendment would save $641 million over five years and $1.401 billion over 10 years. The amendment also specifies that the savings be applied to nutrition.”

Food Costs

An AFP article from yesterday stated that, “The UN agency in charge of alleviating world hunger warned the European Union on Thursday that the fast-growing use of biofuels is driving up food prices for the world’s poor.

“‘The shift to biofuels production has diverted lands out of the food chain,’ World Food Programme executive director Josette Sheeran told lawmakers at the European Parliament in Brussels.”

The article added that, “Sheeran warned that booming food prices were hurting the WFP’s ‘capacity to respond to hunger’ by increasing its operating costs, which have risen by 40 percent since June 2007 alone.

“The price of many food commodities has soared worldwide to record levels over the last year due to booming demand in fast-growing Asian countries as well as the increased use of biofuels.”

And, a short news item published in today’s Washington Post reported that, “Seven Senate Democrats requested that the Appropriations Committee allocate an additional $200 million to the U.S. Agency for International Development to cover a shortfall in emergency food aid to the poorest nations. USAID officials said last week that the shortfall, caused by rising prices, is forcing the agency to significantly scale back international food aid this year.

“The request, in a letter from Sen. Robert P. Casey Jr. (Pa.), was also signed by Sens. Christopher J. Dodd (Conn.), Richard J. Durbin (Ill.), John F. Kerry (Mass.), Joseph R. Biden Jr. (Del.), Barbara Boxer (Calif.) and Bill Nelson (Fla.).”

Market Prices

Associated Press writer Roxana Hegeman reported today that, “Record-high grain prices are fueling a rural economic boom in farm states such as Kansas.

“Farm equipment dealers have a backlog of several months in orders for new machinery. Cropland rents are rising, along with agricultural land prices. And with spring planting just weeks away, farmers are watching the volatile commodities markets as they decide which crops to grow in the coming season.

“While their city neighbors are struggling with foreclosures and fears of a recession, a lot more money is circulating in rural Kansas today, said Jere White, executive director of the Kansas Corn Growers Association.”

The AP article noted that, “Perhaps one of the most telling barometers of the farm economy is the rising numbers of orders for new farm machinery. [Terry Kastens, a part-time agricultural economy professor at Kansas State University], who farms in northwest Kansas near Atwood, bought a new planter in August so he’d have it for spring planting.

“New combine sales were up 15.4 percent nationwide in 2007, sales of four-wheel-drive tractors were up 22.7 percent and sales of large-scale, two-wheel-drive tractors were up 25.7 percent, Kastens said.”

Doha / Trade

Some agricultural and trade policy observers have noted that the current price environment could be an important variable in the Doha Round of WTO trade talks.

Elizabeth Rodway
, writing today at ABC Rural Online (Australia), reported that, “Australia is in it’s best position yet to convince northern hemisphere countries to cut their farm subsidies because of strong commodity prices.”

The article stated that, “Professor of Economic at Adelaide University Kim Anderson says the time is right to reach a deal:

“‘We have to get people together in Geneva, not just bureaucrats but politicians have to be willing to come back to the negotiation table and that’s a bit difficult when there is a US presidential election’ he says.

“‘[I]f we can get them there there’s no doubt that we would have our best chance ever of trying to get reductions in market price supports in northern hemisphere countries while these world commodity prices are so high.’”

(Note: see related graph on the projections of decreased price-triggered subsidy payments in the U.S. that was in FAPRI’s recent baseline projections).

U.S. Trade Representative Susan Schwab, in prepared remarks that were delivered yesterday to the Senate Finance Committee, stated that, “[O]ur trade agenda is clear – we need to help move this economy forward by opening markets to for American businesses.

“To do this, we will work to:
1. Approve our pending free trade agreements with Colombia, Panama and South Korea, and
2. Reach a successful conclusion of the Doha Development Round of multilateral trade negotiations.”

In more detail regarding Doha, which began on page six of the prepared remarks, Ambassador Schwab stated that, “The Doha Round is the President’s highest trade negotiating priority. He is committed to concluding an ambitious Doha Round this year that will increase economic growth and development, and alleviate poverty by generating new trade flows in agriculture, manufactured goods, and services.”

Amb. Schwab also stated that, “We seek an agreement that will create real market openings. We know we need to do our share when it comes to tariff peaks and trade distorting subsidies. We also know that there can be no successful Doha Round unless our developed and advanced developing country trading partners also make meaningful contributions.”

Associated Press writer Jim Abrams reported yesterday that, “The administration’s top trade official urged Congress on Thursday to act on free trade agreements this year, but Senate lawmakers made clear that won’t happen until displaced workers are better protected.

“Renewing and expanding the Trade Adjustment Assistance program ‘is number one,’ Senate Finance Committee Chairman Max Baucus, D-Mont., told U.S. Trade Representative Susan Schwab at a hearing on trade policy. ‘Get that done and we can talk.’”

Biofuels- Impact on Rural America

An update posted yesterday at the Corn Commentary Blog stated that, “The Renewable Fuels Association last week released the results of an economic analysis conducted by John Urbanchuk of LECG, LLC, a global expert services consulting firm. The report focused on the impact of the U.S. ethanol industry in 2007.”

“The analysis determined that the ‘increase in economic activity resulting from ongoing production and construction of new capacity supported the creation of 238,541 jobs in all sectors of the economy during 2007.’”

A related press release regarding the report can be viewed here; and, the Corn Commentary link also includes an audio interview with the author of the report.

National Public Radio’s Jason Beaubien also filed a recent segment on biofuels and Rural America (“Ethanol Demand, Prices Boost Farm Communities”). This piece aired earlier this week on NPR’s Morning Edition program and is available here.

Keith Good