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Farm Bill Re-Cap; Commodity Outlook

Farm Bill Re-Cap

Congressional Quarterly writer Catharine Richert reported on Friday that, “Earlier this week, Congress enacted a 30-day extension of the current farm bill, and Bush signed that measure Friday. Lawmakers are hoping to finish up negotiations on the $280 billion five-year farm policy reauthorization before mid-April, when that law will lapse.”

Ms. Richert explained that, “Conference negotiations have been stymied by a stalemate between the White House and Congress over how to pay for about $10 billion in new spending over the bill’s $280 billion baseline. Lawmakers must offset that new spending with cuts to other programs or tax revenue.”

And the CQ article added that, “A squabble brewing between the Senate Agriculture and Finance committees is complicating matters. The Finance panel is responsible for coming up with offsets to support the extra $10 billion in spending, but Agriculture Committee Chairman Tom Harkin, D-Iowa, says those efforts are infringing on his jurisdiction.”

“Fed up with feuds in the Senate, House negotiators say they are poised to write a new farm bill that includes no new spending above the baseline,” Ms. Richert said.

However, the article concluded by saying that, “If the Senate Finance and Agriculture committee leaders are still at loggerheads when negotiators talk again sometime the week of March 17, the House Agriculture Committee will start writing a baseline bill, an aide to the committee said.”

Meanwhile, Reuters writer Charles Abbott indicated on Friday that, “Leaders of the House and Senate agriculture committees said on Friday they will write the new U.S. farm law with a $10-billion spending increase, though they don’t have the money yet and time is running out.

“Iowa Democrat Tom Harkin, chairman of the Senate committee, said a draft could be complete by the end of next week.”

Mr. Abbott reported that, “Harkin said he was assured by senior Senate Democrats the $10-billion spending increase will be delivered, despite a two-week deadlock with congressional tax committees over assembling the package.

“House agriculture leaders said if the $10 billion is not provided within a week, they want to switch to a ‘baseline’ bill with no spending increase. House committee chairman Collin Peterson, Minnesota Democrat, said senators resisted that idea.”

With respect to a potential baseline bill, the Reuters article stated that, “A farm lobbyist said there would be no cuts in crop spending in a baseline bill. A House aide said a baseline bill could jettison the Senate proposal for a $5 billion disaster fund but increase some crop subsidy rates modestly.

“Peterson said on Thursday there would be additional farm program reforms in a baseline bill, mostly so hobby farms and small acreages would not be counted as a farm.

“The House voted last year to deny crop and stewardship payments to people with an adjusted gross income of more than $1 million and a $500,000 AGI cutoff for part-time farmers.”

To listen to an audio summary of recent Farm Bill activity regarding the latest extension and the possibility of how a baseline Farm Bill might be funded, see this FarmPolicy.com audio podcast from yesterday (MP3- 7:52)

The podcast includes audio clips from U.S. Representative Adrian Smith (R-Neb.), House Agriculture Committee Chairman Collin Peterson (D-Minn.), and American Farm Bureau Policy Specialist Tara Smith.

(Note: The audio from Chairman Peterson came from a file that was posted by Andy Vance of the Buckeye Ag Radio Network. Andy posted remarks made by Chairman Peterson that were delivered to members of the Ohio Farm Bureau who were visiting Capitol Hill last week.)

Commodity Outlook

The U.S. Department of Agriculture’s Economic Research Service (ERS) noted on Thursday in their Feed Outlook report that, “Total supplies of corn in 2007/08 are expected to be 14.4 billion bushels, unchanged from last month and up from 12.5 billion bushels in 2006/07. Beginning stocks were lower than those of last year, but production was much higher, accounting for the increase in supplies. Planted and harvested area in 2007 increased sharply, and yields were also higher at 151.1 bushels per acre, compared with 149.1 bushels per acre in 2006.

“Total use is expected to be a record high in 2007/08, as strong demand for ethanol and exports push up use. Total use is forecast at 13.0 billion bushels, unchanged from last month but up from 11.2 billion bushels in 2006/07. Feed and residual use of corn in 2007/08 is expected to be nearly 6 billion bushels, unchanged from last month, and up from 5.6 billion in 2006/07, even as feeders use more grain coproducts from the distilling of ethanol. As a result of the record supplies and use in 2007/08, ending stocks are expected to total 1.4 billion bushels, unchanged from last month but up from 1.3 billion bushels in 2006/07.”

The report added that, “Given the strong demand for corn, prices received by farmers in 2007/08 are expected to average $1 per bushel higher than in 2006/07. The projected price range for 2007/08 is unchanged this month at $3.75-$4.25 per bushel, up from $3.04 per bushel in 2006/07.”

On Wednesday, in the Rice Outlook report, ERS indicated that, “U.S. and global rice prices continue to soar. The February mid-month U.S. rough-rice cash price was reported at $12.20 per cwt, up 40 cents from January and the highest since July 1981. Prices have risen every month since September. This month, the 2007/08 U.S. season-average farm price was raised 55 cents on both the low and high end to $11.85-$12.15 per cwt, the highest since 1980/81. Export price quotes for U.S. long-grain milled rice continue to soar as well, largely due to strong sales, very high prices for other commodities, escalating global rice prices, and a weaker dollar.”

The ERS Crop Outlook reports are published 11 times per year; the Oil Crops Outlook and Wheat Outlook were not published in March.

Keith Good