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Farm Bill: “Progress” and Taxes; Food Price Issues; Doha

Farm Bill

Congressional Quarterly reported on Thursday afternoon that, “The Senate cleared a one-week extension of the current farm law Thursday, but impatient senators made clear they will not agree to further delays in completion of a new five-year farm bill.”

The CQ item noted that, “Sen. Larry Craig, R-Idaho, who held up action on the extension overnight, said he would not agree to another one unless a conference deal was signed… [C]raig said he would block another farm bill extension. ‘I’ll give you another week, but that’s it,’ he said.”

“The administration Wednesday also warned that President Bush is out of patience with the snail-like progress on a farm policy overhaul.”

Deputy Secretary of Agriculture Chuck Conner appeared yesterday on the AgriTalk Radio Program with Mike Adams, and provided a very detailed explanation of the executive branch perspective on the Farm Bill, including Farm Bill negotiating “progress,” and the future possibilities of extending the Farm Bill.

To listen to Deputy Secretary Conner’s exchange yesterday with Mike Adams on the AgriTalk program, just click here (MP3-12:29).

With respect to Dep. Sec. Conner’s perspective, Reuters writer Charles Abbott reported yesterday that, “House and Senate negotiators show ‘very little progress’ for a new U.S. farm law with two days left before a deadline for action, said a senior Agriculture Department official on Thursday.

“‘It’s time to get it done,’ said Deputy Agriculture Secretary Chuck Conner during a radio interview. Conner said ‘significant progress’ was vital for the administration to agree to a one-week extension of agricultural programs.”

Mr. Abbott added that, “‘We don’t believe the farm bill should be paid for with tax increases,’ said Conner on the AgriTalk radio show. He said lawmakers need to reach agreement on how to pay for a $10 billion spending increase and agree to farm program reforms.

“‘They’ve got to show some progress, significant progress,’ said Conner.”

Meanwhile, DTN Political Correspondent Jerry Hagstrom reported yesterday afternoon that, “House Speaker Nancy Pelosi’s opposition to the farm bill’s $2.5 billion tax package has emerged as central to the bill’s fate, but Senate conferees late Wednesday prepared a series of tax-package options that they planned to present to House members before the conference resumes Thursday in hopes that some resolution might be reached quickly.

“The extension of the 2002 farm bill expires Friday, and the House passed a one-week extension Wednesday. The Senate followed Thursday morning and also voted for the one-week extension, sending it to the president. Agriculture Deputy Secretary Chuck Conner said Wednesday that President Bush will sign another short-term extension only if the administration believes there has been enough progress on the bill. Conner said Wednesday he had not seen enough progress to recommend an extension.”

Mr. Hagstrom noted that, “Upon emerging from the meeting of Senate conferees, Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, told reporters, ‘It seems the speaker is adamantly against the tax package. That stymies things.’ Senate Agriculture Committee ranking member Saxby Chambliss, R-Ga., also said that Pelosi’s position had become crucial.”

David Rogers reported last night at Politico.com that, “Farm bill negotiations deadlocked Thursday night despite movement toward a House-Senate package that would include some agriculture tax cuts combined with reductions in direct payment subsidies to help pay for more money for nutrition.

“In response to rising food costs, there appears to be general agreement that another $500 million should be added for government nutrition programs, bringing the total increase to $10 billion. And the proposed cuts from direct payments, albeit modest, move the talks past the threshold of whether lawmakers would be willing even to challenge the commodity lobby on this issue.

“Nonetheless, taxes are a major source of division with the current farm law due to expire Friday. A one-week extension through April 25 passed Congress, but the White House — unhappy with the direction of the talks — was still debating Thursday night if President Bush would sign the measure into law.”

Mr. Rogers added that, “As a practical matter, the administration said it has about 10 days before the lack of an extension has real consequences. But for Democrats, the impasse is a continued sore point and has strained relations between the Senate and both House tax writers and Speaker Nancy Pelosi (D-Calif.).”

With respect to “strained relations,” Senate Finance Committee Ranking Member Chuck Grassley (R-Iowa), in a conference call with reporters yesterday, talked specifically about his recent experience with Speaker Pelosi regarding the Farm Bill negotiations.

In this clip from yesterday’s briefing (MP3-4:31), Sen. Grassley noted that he had been told that Speaker Pelosi had indicated in a meeting with another lawmaker that she did not want one cent of tax changes in this. Sen. Grassley also noted that despite what he perceived as “good will” that had been built between he and Speaker Pelosi over work on previous legislation, he has been unable to schedule a meeting with her. In fact, Sen. Grassley noted that a call from earlier this week to Speaker Pelosi’s scheduler, had still not been returned.

Sen. Grassley indicated that, “Other Senators of the Democratic Party that have tried to talk to her- never get a phone call returned. One Democratic Senator talked to her, and I said to this Democratic Senator, ‘How do you get to talk to her, I called and didn’t get my phone calls returned.’ She says, ‘well I went over on the floor of the [House] and just confronted her with it.’”

Sen. Grassley noted that Speaker Pelosi was central to the Farm Bill and “getting her to understand that you can’t get a Farm Bill through the Senate without some tax provisions in it- we may not get a Farm Bill.”

Mr. Rogers also reported in his Politico.com article from yesterday that, “In its offer last night, the Senate continued to press for about $2.4 billion in tax cuts but agreed to cover the costs by various revenue raisers under the title of reform. ‘It was the first time we started talking about the reform provisions,’ said [Senate Finance Committee Chairman Max Baucus (D-Mont.)]. ‘That’s new to the table.’”

“The House countered by offering for the first time to make room for some tax cuts but at a level of just $1 billion — less than half the Senate’s. And House tax writers said the true cost of the Senate proposal is understated since key provisions will quickly expire — leaving a future Congress to debate over extending them further,” Mr. Rogers reported.

Concluding, the Politico.com article stated that, “The full details of the House offer weren’t made available on paper, but persons familiar with the proposal said it totaled near $9.5 billion. The first $6 billion has already been largely agreed to last week. The added $3.5 billion would include $1 billion for tax cuts, $500 million for nutrition and $2 billion for a Senate-backed disaster aid program.

“To help cover these costs, direct payments would be cut by $1 billion, compared with a $250 million cut in the Senate offer, which also uses customs user fees to help offset the cost of a larger disaster program of $3.8 billion.”

Associated Press writer Mary Clare Jalonick reported last night that, “Negotiations are in disarray as lawmakers from the House and Senate are squabbling over how to pay for the legislation. House and Senate negotiators have suggested a number of different ways to come up with an extra $10 billion needed for the bill, including some ideas the White House has backed previously. But administration officials have rejected most of their ideas, saying they would rather use the money for other priorities.

“House members have also objected to several tax breaks in the Senate bill, including provisions to help owners of race horses, landowners who find endangered species on their property and those involved in litigation over the Exxon Valdez oil spill.

“House Agriculture Committee Chairman Collin Peterson, D-Minn., and House Ways and Means Committee Chairman Charles Rangel, D-N.Y., have said that many of those tax provisions are not acceptable. The tax package, which also includes a $5 billion program for farmers who lose crops to bad weather, was drawn up by the Senate Finance Committee and helped win 79 votes for the farm bill in that chamber last year.”

Also yesterday, the Congressional Budget Office (CBO) issued a letter dated April 15 from CBO Director Peter R. Orszag to House Ag Comm. Chairman Collin Peterson, which noted in part that, “Public Law 110-196 extended various agricultural programs through April 18, 2008. If no further legislation is enacted, upon expiration of those programs, a number of permanent provisions of law, enacted in 1938 and 1949, would again take effect. Your letter of April 15, 2008, asked how CBO’s baseline for agriculture spending would change without further Congressional action before April 18.

“CBO would not change its baseline spending estimates for agricultural programs in the absence of any Congressional action. For the remainder of this Congressional session, CBO would continue to provide cost estimates for subsequent legislation relative to the March 2008 baseline (or, under certain circumstances, to the March 2007 baseline). If the U.S. Department of Agriculture were to implement the provisions of permanent law (known as the 1938 and 1949 Acts), CBO would reflect those actions in the baseline outlook to be published in January 2009.”

As for the next public Conference Committee Meeting on the Farm Bill, as of the time of this writing, the House Ag Committtee webpage indicated that, “The Farm Bill conference meeting scheduled for Thursday, April 17 has been cancelled. Check back for updates for future meetings. Live audio meetings taking place in Senate office buildings will be available by accessing the Senate Agriculture, Nutrition and Forestry website.”

Food Price Issues

Marc Lacey reported in today’s New York Times that, “The food crisis is not only being felt among the poor but is also eroding the gains of the working and middle classes, sowing volatile levels of discontent and putting new pressures on fragile governments.

“In Cairo, the military is being put to work baking bread as rising food prices threaten to become the spark that ignites wider anger at a repressive government. In Burkina Faso and other parts of sub-Saharan Africa, food riots are breaking out as never before. In reasonably prosperous Malaysia, the ruling coalition was nearly ousted by voters who cited food and fuel price increases as their main concerns.

“‘It’s the worst crisis of its kind in more than 30 years,’ said Jeffrey D. Sachs, the economist and special adviser to the United Nations secretary general, Ban Ki-moon. ‘It’s a big deal and it’s obviously threatening a lot of governments. There are a number of governments on the ropes, and I think there’s more political fallout to come.’”

Reuters news reported yesterday that, “Developing countries risk causing a ‘spiral of protectionism’ and aggravating food shortages when they try to combat soaring food prices by blocking their own exports, Europe’s trade chief said on Thursday.

“Several developing countries have introduced measures such as export duties to keep more of their agricultural production in national markets and cool strong food price inflation.

“‘By chasing an illusion of food security these policies throttle domestic production, choke off supplies to others and risk leading to a spiral of protectionism and dwindling production,’ European Union Trade Commissioner Peter Mandelson said.”

New York Times writer Keith Bradsher reported yesterday that, “The collapse of Australia’s rice production is one of several factors contributing to a doubling of rice prices in the last three months — increases that have led the world’s largest exporters to restrict exports severely, spurred panicked hoarding in Hong Kong and the Philippines, and set off violent protests in countries including Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Italy, Ivory Coast, Mauritania, the Philippines, Thailand, Uzbekistan and Yemen.

“Drought affects every agricultural industry based here, not just rice — from sheepherding, the other mainstay in this dusty land, to the cultivation of wine grapes, the fastest-growing crop here, with that expansion often coming at the expense of rice.

“The drought’s effect on rice has produced the greatest impact on the rest of the world, so far. It is one factor contributing to skyrocketing prices, and many scientists believe it is among the earliest signs that a warming planet is starting to affect food production.”

Tom Polansek reported in today’s Wall Street Journal that, “Chicago Board of Trade rice futures climbed to records in a bid to ration demand and catch up with surging Asian prices.

“Nearby May rice soared the expanded daily exchange-imposed limit of 75 cents to $23.30 per hundredweight, up from $10.11 a year earlier.

“Demand for U.S. rice is strong, despite the record-breaking rally in futures, because domestic prices are cheaper than Asian prices, analysts said. Weekly U.S. export sales, announced Thursday, were 175,700 tons, up 98% from the previous week, according to the Agriculture Department.

“Asian prices exploded recently as major producers, including Egypt, India and Vietnam, curbed export sales to ensure adequate domestic supplies. That left the U.S. as one of the last remaining reliable suppliers in the world.”

And Andrew Martin and Kim Severson reported in today’s New York Times that, “Shoppers have long been willing to pay a premium for organic food. But how much is too much?

“Rising prices for organic groceries are prompting some consumers to question their devotion to food produced without pesticides, chemical fertilizers or antibiotics. In some parts of the country, a loaf of organic bread can cost $4.50, a pound of pasta has hit $3, and organic milk is closing in on $7 a gallon.”

The Times added that, “Food prices in general have been rising, but organic food lagged somewhat behind last year because of a temporary glut of organic milk and other factors. Some grocery chains adopted private-label organic products, which are cheaper than brand products, while others hesitated to raise already high organic prices.

“In recent months, however, these factors have been giving way to cost pressures in the industry. On grocery shelves across the nation, sharp price increases are taking hold.”

Doha

The Associated Press reported on Wednesday that, “A substantial global trade deal would stand a better chance of passing through the U.S. Congress than the Colombia free trade agreement that Democrats all but killed this week, a group of U.S. lobbyists said Wednesday.

“Representatives of 19 major American companies and industry bodies — including farm equipment maker John Deere and the National Foreign Trade Council — said the political concerns surrounding an FTA with Colombia would not hamper discussion on the so-called Doha round of world trade talks in the same way.

“‘Colombia is a setback … but I don’t think it should be seen by anyone to mean that the United States cannot complete a deal here in Geneva,’ said Marietta Bernot, of chocolate and pet food maker Mars Inc.”

An update posted yesterday at the WTO Online noted that, “Director-General Pascal Lamy, on 17 April 2008, said at an informal meeting of the Trade Negotiations Committee that ‘time is coming soon to take our work to a higher level and to begin drawing together the threads both within and across the two modalities issues (agriculture and industrial tariffs) as mandated in Hong Kong’. He said the ‘horizontal process will start at Senior Official level, in order to prepare properly for the Ministerial involvement which is likely to be needed at a later stage’”.

Reuters writer Jonathan Lynn reported yesterday that, “Long-running talks to open up world trade are closer than ever to conclusion, the head of the WTO said on Thursday, but the timing of the crucial meeting of ministers to clinch an outline deal remains uncertain;” while Reuters writer Doug Palmer noted yesterday that, “Negotiators must make a breakthrough in world trade talks in the next few weeks to reach a final deal by the end of the year, the top U.S. trade official said on Thursday.

“‘Concluding the round in 2008 is not beyond reach,’ U.S. Trade Representative Susan Schwab said in a speech at the U.S. Export-Import Bank’s annual meeting.”

Keith Good