FarmPolicy

October 18, 2019

Pres. Bush: If no Farm Bill by April 18, Then One Year Extension

Reuters writer Charles Abbott reported yesterday that, “President Bush urged Congress on Thursday to break a deadlock on the new U.S. farm law by April 18 and warned he will veto a bill that raises taxes or lacks more stringent crop subsidy rules.

“Lawmakers have been stymied for weeks over how to pay for an increase of $10 billion over 10 years. Leaders of the House Agriculture Committee said they will draft a ‘baseline’ bill without new money if there is no breakthrough by Friday.

“‘If a final agreement is not reached by April 18, I call on Congress to extend current law for at least one year,’ Bush said in a statement.”

Mr. Abbott also explained that, “A key dispute is whether the Senate Finance Committee will gain some jurisdiction over stewardship programs if it provides $3.8 billion in tax credits for use in lieu of rental payments for land in the Conservation, Wetland and Grassland reserves.

“There would not be enough money in a baseline bill to include a $5 billion stand-by disaster program sought by senators from the northern Plains, said a House aide.

“‘Baseline means there’s going to be tough sledding,’ said Tom Buis, president of the National Farmers Union. He said spending cuts could be avoided if lawmakers compromise on the bill.”

DTN writer Chris Clayton noted yesterday (link requires subscription) that, “A one-year extension would essentially mean no new programs for specialty crop producers, no changes in adjusted gross income caps and no new funding or programs for nutrition programs, conservation or energy in rural development. All of those changes are proposed in the bills passed by the House and Senate that lawmakers are struggling to reconcile without more funding.”

Mr. Clayton added that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., said the committee will proceed in writing a bill assuming there will not be $10 billion in extra funding available. Peterson said he still believed the committee could boost funding for nutrition, specialty crops and rural development with a bill that does not include spending above the $280 billion baseline over five years, or $597 billion over 10 years.”

“Peterson wants to rebalance the loan rates and target prices for some commodity crops, which the White House opposes in the commodity title. Still, Peterson said he thinks there could be changes in commodity programs if more is done to redefine a farmer. Peterson thinks USDA overestimates who is exactly a farmer with the projection of 2.1 million producers. Peterson said there are really only about 350,000 ‘commercial farmers.’ Adjusting these people on the low end of acreage and farm income could exclude them from commodity programs such as direct payments,” the DTN article said.

Mr. Clayton indicated that, “‘We don’t know what a baseline bill would look like, but it will not be an extension,’ Goodlatte said.”

Congressional Quarterly writer Catharine Richert reported yesterday that, “A jurisdictional fight in the Senate over farm bill funding has House lawmakers threatening to write a measure that includes no new spending.”

The CQ article explained that, “But a baseline farm bill could be a tough sell in the House with Democrats who do not serve on the Agriculture Committee, who want to see substantially more spending on land conservation, alternative energy and nutrition programs.

“Interest groups that have fought for a bigger share of agriculture spending may also object to a bill that would further limit available spending.

“A baseline farm bill probably would address Bush administration concerns about higher spending on agriculture programs. But it might not be enough to avoid a presidential veto without a fundamental overhaul of the farm subsidy system.”

Ms. Richert also pointed out that, “‘If they try doing a baseline bill without significant changes to commodity programs, they’re going to have trouble on the House floor,’ said Rep. Ron Kind, D-Wis., who lost a bid last year to cut subsidies and invest the savings in conservation, nutrition, rural development and deficit reduction.”

Dow Jones writer Bill Tomson reported yesterday that, “The delays in crafting a new five-year farm bill, which prompted the U.S. House of Representatives and Senate Wednesday night to approve another extension of current farm law for a month, are disappointing, critics said. ‘There has been more than enough time to finish a new farm bill,’ Tom Buis, president of the National Farmers Union said. ‘The House passed a farm bill in July and the Senate in December. It’s time for negotiators to get down to business and work out an agreement so a new farm bill can be signed into law.’”

Mr. Tomson noted that, “Senate Agriculture Chairman Tom Harkin, D-Iowa, said Thursday the extension should give lawmakers the time they need to complete a unified farm bill that Bush would agree to sign into law.

“‘A deal on a new farm bill is within reach, but we need additional time,’ Harkin said.”

To listen to comments Sen. Harkin made yesterday regarding the Farm Bill, just click here (MP3- 1:30)

Peter Shinn reported yesterday at Brownfield that, “Senate Agriculture Committee Chairman Tom Harkin delivered something of a mixed message on the pending farm bill during a teleconference with ag journalists Thursday, expressing optimism about prospects for the legislation, then detailing a long list of outstanding issues that are preventing progress toward passage of a new law. Harkin started with a simple enough premise, that the one-month extension of the current farm law Congress approved Wednesday happened because he is confident a deal will be struck soon on a new farm measure.

“‘I would not have introduced this extension unless I believed that an agreement is within reach and that it was achievable within a few extra weeks,’ Harkin declared.

“But Harkin’s remarks got a lot more complicated from there. According to Harkin, Senate Finance Committee Chairman Max Baucus of Montana is already suggesting that another extension of the current farm bill until May 1st may be necessary, given that Congress is set to adjourn Friday for two weeks.”

“Perhaps more significantly, Harkin admitted there’s still no agreement on whether the Finance Committee will have jurisdiction over some parts of the next farm bill, a prospect Harkin continues to violently oppose. On that subject, Harkin continued to insist the ‘four principals’ in the farm bill negotiations, the chairmen and ranking Republicans of the House and Senate Ag Committees, along with the leadership of the House Ways and Means Committee, all agree the Senate Finance Committee should provide funds for the farm bill without assuming jurisdiction for the programs the money would pay for,” the Brownfield article said.

Mr. Shinn also indicated that, “What’s more, Harkin said House Ag Committee Chairman Collin Peterson and ranking Republican Bob Goodlatte have both decided to begin work on a farm bill that conforms to the Congressional Budget Office spending baseline for farm programs established last year, instead of a farm bill that spends $10 billion over the budget baseline, a figure which all major farm bill players, including the Bush administration, have agreed to. Harkin himself didn’t rule out the idea of a cheaper and shorter-term farm bill.

“‘There is one other possibility, and that is that we do a baseline bill, but we only do it for a couple years – three years, like a three-year farm bill,’ Harkin mused.”

EU

In an update posted on Wednesday at the Environmental Capital Blog (The Wall Street Journal), John W. Miller reported that, “Just like the U.S., the European Union has for years thrown tax breaks and subsidies at its transport biofuels sector. Unlike the U.S., though, EU leaders are rethinking that approach.

“Germany, France, and other countries recently eliminated tax breaks after biodiesel companies built too many plants. Now, with crop prices soaring and concerns mounting over the total environmental impacts of biofuels, the EU is ready to do the unthinkable: cut farmers’ subsidies.

“In its latest farm package, totaling some $75 billion a year in payouts to European farmers, the EU included a $26 per acre subsidy for biofuel feedstock crops, like canola and sugar beets. Crop prices are now so high, EU officials figure farmers don’t need the extra money. They plan to roll-back the payouts at a meeting in May.”

And a news release issued yesterday by the European Commission stated that, “For the second year running, EU citizens have given a strong endorsement to recent changes to EU farm policy. This is one of the main findings of a poll examining the attitudes of citizens to agriculture and the Common Agricultural Policy. This survey, following on from a similar one conducted in 2006, confirms a predominantly favourable reaction to key elements of the 2003 agreement on CAP reform.”

The release added that, “The EU public is largely favourable towards a key element of the reformed CAP, involving the way in which farmers receive support. A clear majority think that giving more funding to rural development, as well as paying farmers directly instead of subsidising their products are positive developments (52%). Moreover, this viewpoint is more prevalent than it was in the previous year (by +3 points) and considerably outweighs the opinion that this change is a bad development (12%).

“Furthermore, an overwhelming majority of European citizens support the ‘cross-compliance’ principle, whereby farmers face a reduction in payments if they fail to meet environmental, animal welfare or food safety standards. Between 85% and 88% support these measures, depending on the specific standards in question.

“The survey also shows that food prices have become a key issue over the last year, with 43% mentioning ensuring reasonable food prices as a policy priority. This represents an increase of +8 percentage points from the previous survey and reflects the reality of rising global prices during the intervening period.”

Food Prices

With respect to food prices, The Washington Post editorial board noted today that, “The skyrocketing commodity prices that have made the Farm Belt one of the most prosperous regions of the United States have had a rather different impact on large areas of the developing world. Foodstuffs have gone up 41 percent in price since October 2007, pushing many people over the line from poverty into privation or even hunger. The Food and Agriculture Organization, a branch of the United Nations, has identified 36 ‘crisis’ countries, 21 of which are in Africa. The World Food Program, another U.N. agency, estimates that it will need $500 million on top of what donor nations have already pledged to fill what the WFP calls a global ‘food gap.’

“The United States must do its part. Even before the spike in commodity prices, the fiscal 2008 food aid budget of $1.2 billion was proving inadequate. President Bush asked for a $350 million supplemental appropriation in October, to cover help for Darfur and other critically needy areas. But Congress has not yet approved that request. Meanwhile, the U.S. Agency for International Development, which administers U.S. food aid, has accumulated a $120 million food budget deficit, which could grow to $200 million by the end of the fiscal year. Congress should swiftly approve the president’s supplemental request, adding as much money as possible to offset recent price increases — as Sen. Robert P. Casey Jr. (Pa.) and six other Democratic senators, including Foreign Relations Committee Chairman Joseph R. Biden Jr. (Del.), have proposed. The alternative is selective cutbacks in aid to hungry regions, a kind of nutritional triage unworthy of the richest agricultural nation in human history.”

The Post opinion piece indicated that, “One cost-cutting measure, supported by many economists and by relief organizations such as CARE, would be to permit the U.S. government to buy at least some of the grain it donates from farmers nearer to famine zones — to buy, say, South African or Ethiopian wheat and ship it to the hungry elsewhere in Africa. Both the European Union and Canada have recently authorized such ‘local and regional purchases,’ with broadly successful results. President Bush has called for allowing as much as 25 percent of the U.S. food aid budget to be used this way.

“Lawmakers in the House and Senate rejected his proposal, refusing to include it in their respective versions of the farm bill, which are pending before a House-Senate conference committee. The Senate Agriculture Committee did substitute a $25 million pilot program; even that tepid measure didn’t make it into the final Senate bill. With food prices and food needs on the rise, Congress cannot afford business as usual. House and Senate conferees should adopt the president’s proposal in the farm bill.”

Doha

A news release issued yesterday by the International Food & Agricultural Trade Policy Council (IPC), the International Center for Trade and Sustainable Development (ICTSD) and the International Food Policy Research Institute (IFPRI), stated that, “At a March 12 meeting, academics, former and present trade negotiators, and private sector representatives agreed that the 8 February draft text released by the chair of the agriculture negotiations at the World Trade Organization (WTO) demonstrates the clear progress that has been made in the talks and forms an excellent basis for reaching agreement.”

The meeting, which was hosted by the IPC, ICTSD and IFPRI, “aimed to take stock of the trade and development implications of the text for certain countries. Research findings presented by experts were complemented by comments from WTO member representatives.”

The release added that, “Although some participants expressed concerns about a range of flexibilities for both domestic subsidies and market access, others emphasized that the overall results of a Doha deal would lead to a significant increase in agricultural trade liberalization as compared to the Uruguay Round Agreement on Agriculture. The deal now within reach would create real new market access opportunities as a result of significant tariff reductions, the elimination of export subsidies, and substantial reductions in trade-distorting support.”

And with respect to commodity and food prices, the release noted that, “The rise in commodity prices should facilitate the conclusion of the negotiations, as reforms can be carried out more easily in an environment of high prices. At the same time, however, IPC member Raul Montemayor, President of the Federation of Free Farmers Cooperatives, Inc., pointed out that concerns about high food prices and food security can trigger increased protectionism, emphasizing that ‘trade liberalization now is important to counter these tendencies.’”

Drafts of the papers presented at the roundtable can be accessed at http://www.agritrade.org/ and http://www.ictsd.ch.

Meanwhile, Reuters writer Jonathan Lynn reported yesterday that, “Top trade talks nations agreed the mechanics of how to seal a deal in the long-running Doha round on Thursday, a key advance if ministers are to meet next month to approve an outline deal, a senior trade official said.

“Much work remains on negotiating the substantive issues, where some big divisions remain, but countries are now much clearer on what is required for a successful meeting of trade ministers in the coming weeks.

“‘It’s clear that there’s a convergence of views on how to move forward in some areas, and that agreement in agriculture and industrial goods is a prerequisite for progress elsewhere,’ said the official, who asked not be identified.”

Mr. Lynn added that, “He was talking after WTO Director-General Pascal Lamy met ambassadors from the major players such as the United States, European Union, South Africa, India, Japan and Australia, and those representing various groups of developing nations.

“Ministers hope to meet in the next few weeks to agree the basics of a deal to be concluded by the end of the year.”

The Reuters article also stated that, “In agriculture all countries — but in practice mainly developed ones — will have the right to shield some products from the full tariff cut in return for letting in a quota at a lower tariff, possibly even zero.

“The size of this quota will be determined by domestic consumption, but not all countries have consumption data, especially if the quotas are based on detailed food categories, say soft cheese rather than cheese in general.

“As a result, farm exporters such as Argentina, Uruguay and Australia, for whom this opening is one of main potential gains of the deal, do not know what they will get from food importers such as the EU or Japan. The United States is in both camps as a big food exporter but one with some sensitive products.”

The article then stated that, “The main food importers have provided data on how this would work and the exporters are looking at it. Once they have agreed, and persuaded the rest of the WTO’s 151 members, New Zealand’s WTO ambassador Crawford Falconer, who chairs the farm talks, can issue a revised negotiating text.

“That could be as soon as next week if there is speedy agreement on the data.”

Keith Good

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