FarmPolicy

November 22, 2019

“Analysis from Washington”- By Dan Morgan- Farm Bill

Farm Bill

By Dan Morgan- Dan is a special correspondent of The Washington Post and a Transatlantic Fellow at the German Marshall Fund of the United States. “Analysis from Washington” is posted exclusively at FarmPolicy.com.

The House and Senate batted farm bill proposals back and forth last week, squabbling over such familiar sticking points as payment limits, disaster aid and faster depreciation for farm equipment.

The quarreling, though, seems increasingly detached from the monumental changes that are sweeping through American agriculture—from corn replacing cotton in parts of Mississippi, spring wheat contracts hitting $20 a bushel on the Minneapolis Grain Exchange, and empty grain elevators in the Dakotas.

It isn’t entirely the lawmakers’ fault that their labor has been overtaken by events. When they began work on a new farm bill two years ago, the problems were the traditional ones: stagnant commodity prices and flat farm income. Key farm state lawmakers girded themselves for a traditional battle defending traditional subsidies. They’re still waging that fight, but everything has changed, creating a new set of issues and choices.

What’s the best policy for a world in which food and fuel are competing for acres? With corn prices at or near $6 a bushel, should the U.S. be subsidizing both the ethanol industry and corn growers? Does it make sense for Congress to allocate 85 percent of the U.S. sugar market to beet and cane growers when those acres may be needed for corn and wheat? Is it possible to meet global demands for crops without sacrificing habitat, soil and even the climate?

These are big questions, but they haven’t much entered the farm bill debate, now mired in parochial battling.

The impasse has led some to suggest the unthinkable: This could be the last farm bill of its kind, and perhaps even the last farm bill.

That possibility was advanced privately last week by several serious policy analysts and former senior government officials attending Informa Economics, Inc.’s annual conference on food and agriculture policy in Arlington, Va.

Imagine, they suggested, that the current high prices are not just a blip but a permanent new condition, much like high oil prices. In that case, the commodity title of the farm bill will look increasingly irrelevant. Government price guarantees will no longer be operative at their current levels, and the billions of dollars in direct payments to farmers will become politically unsupportable. In place of the 70-year old system of supports and guarantees, Congress will impose a new safety net operated by private crop insurance companies, though still subsidized by the government.

The House Agriculture Committee’s new farm bill version unveiled last week includes an optional program for farmers providing for scaled-back government payments and other benefits, in return for insurance against both low prices and bad weather. Though backed by corn grower organizations, it gets little respect from farm bloc members.

Committee Chairman Collin Peterson told reporters last week he couldn’t imagine why many farmers would sign up for it.

Still, this year’s impasse over the farm bill may be a sign that fundamental change can’t be postponed much longer.

The agriculture committees are beginning to lose control of the debate. By refusing to consider shifting some $50 billion in direct farm payments to other priorities, the agriculture committees have had to beg money from Congress’s powerful tax and revenue committees in order to fund other priorities. Those committees are now extracting their pound of flesh.

House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) wants a $9 billion increase in food stamp spending as a condition of his help. Senate Finance Committee Chairman Max Baucus (D-Mont.) is unyielding in his demand for a $4.1 billion disaster program. He is also proposing a tax change that would give his committee jurisdiction over the nation’s principal soil and habitat conservation program.

The “aggies” may yet get the money, but only at the price of relinquishing some power.

Already, energy, environmental and agriculture policy are merging, so that the agriculture committees alone no longer control the destiny of American farmers. The newly-enacted energy bill gives the administrator of the Environmental Protection Agency huge new sway over the farm economy, including authority to waive biofuel requirements deemed to be hurting the environment or consumers.

In the new crops-for-energy economy of the Midwest, oil prices are as significant as wheat futures. And EPA’s global climate model, now in the works, could determine whether future ethanol and biodiesel plants qualify for tax credits and loan guarantees.

At the same time, the environmental policies the government chooses over the next months may have more of an impact on farm revenues than the fate of direct payments and traditional subsidies.

Pressure is increasing from many sides to fight shortages and food inflation by plowing virgin prairie and land now enrolled in the Conservation Reserve.

In the House, Congresswoman Stephanie Herseth Sandlin (D-S.D.) favors a “sod saver” program that would deny crop insurance for four years to farmers expanding into native prairie–prime habitat for pheasant and duck, and a natural grass bank for ranchers.

A bigger question is the fate of the 36 million acre Conservation Reserve, one of the premier environmental success stories of the last two decades.

Authorized acreage would shrink by more than 10 percent under Peterson’s proposal, and could fall even more unless the government raises payments to participating landowners to compete with the rents they can now get from farmers.

Pressure is mounting – from farmers, the baking industry, and agribusiness groups – to allow early withdrawal of land from the Reserve. Agriculture Secretary Ed Schaefer says he sees no need for such drastic action. But contracts on 4.5 million acres will expire next year, and many landowners are expected to return the land to commercial farming without higher payments from the government. (About a quarter of the land in the reserve now was formerly used to grow wheat, and prices of wheat are now at record levels.)

The public is entitled to a debate on the implications of the sweeping changes underway in U.S. and world agriculture. At this point, it looks as if it will have to wait.

***

Clarification: An earlier version of Dan’s article reported that the “sod saver” provision favored by Congresswoman Herseth Sandlin was not included in the new farm bill outline offered last week by Rep. Peterson. A committee spokeswoman said Monday that sod saver had been included in both the House and Senate versions of the legislation and Peterson’s proposal “makes no policy assumptions.” She added that the chairman’s “framework document contains a level of savings that presumes savings that would be achieved by the inclusion of a sod saver provision in the final conference agreement.”

Dan Morgan

Reuters: Food Prices & Doha; Wash. Post- “Harvesting Cash” Revisited

Commodity / Food Prices in the News

A news release issued on Friday by the United Nations Food and Agriculture Organisation (FAO) stated that, “The cereal import bill of the world’s poorest countries is forecast to rise by 56 percent in 2007/2008. This comes after a significant increase of 37 percent in 2006/2007, FAO said today.

“For low-income food-deficit countries in Africa, the cereal bill is projected to increase by 74 percent, according to the UN agency’s latest Crop Prospects and Food Situation report. The increase is due to the sharp rise in international cereal prices, freight rates and oil prices.

“International cereal prices have continued to rise sharply over the past two months, reflecting steady demand and depleted world reserves, the report said. Prices of rice increased the most following the imposition of new export restrictions by major exporting countries. By the end of March prices of wheat and rice were about double their levels of a year earlier, while those of maize were more than one-third higher, according to the report.”

(more…)

Farm Bill Funding: Where Negotiators Are in the Context of Where They Have Been

Categories: Farm Bill

For a better perspective on current Farm Bill negotiations regarding funding issues, a brief and very general snapshot overview of how lawmakers have moved over the past two months into the current circumstances is provided below.

At the conclusion of the funding background is a summary of more recent developments.

(more…)

Farm Bill: Conferees Meet

Categories: Audio /Farm Bill

On Wednesday night, an update posted at the Senate Agriculture Committee Online indicated that, “Senator Tom Harkin (D-IA) issued the following statement after the U.S. House of Representatives tonight appointed conferees to merge the Senate farm bill with the House of Representatives’ version. The next step in the conference process will be formal conference meetings, which have yet to be announced. Senator Harkin is Chairman of the Senate Committee on Agriculture, Nutrition and Forestry and chair of the conference committee.

“‘The House appointment of farm bill conferees brings together a diverse group of Representatives with strong leadership qualities and expertise across the full farm bill spectrum,’ said Harkin. ‘They will complement the existing list of Senate conferees and will work well to identify a final bill that fits our country’s needs, with strong farm income protection as well as investments in nutrition, conservation and renewable energy.’”

Yesterday morning, DTN Political Correspondent Jerry Hagstrom reported that, “Senate Agriculture Chairman Tom Harkin has scheduled a conference on the farm bill Thursday morning, less than 24 hours after appointment of House conferees on the bill and an extraordinary Wednesday evening meeting of key negotiators.

(more…)

House Names Conferees; WASDE Update- Food Issues; Doha

Farm Bill

Chris Clayton, writing yesterday at the DTN Ag Policy Blog, noted that, “The challenges with this farm bill right now come down to Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Chairman Charles Rangel, D-N.Y., coming to some terms on how to provide the $10 billion in offsets that congressional leaders agreed to give the farm bill.”

(more…)

Farm Bill; High Prices and Conservation (New York Times); Trade Developments

Philip Brasher reported yesterday at The Des Moines Register Online that, “Crop insurance agents could see their commissions cut to help pay for a new farm bill.

(more…)

Farm Bill: Sec. Schafer Elaborates on Possible Extension

Reuters writer Charles Abbott reported yesterday that, “If Congress is close to wrapping up work on the new U.S. farm law, the Bush administration may allow some leeway on an April 18 deadline for the new law, Agriculture Secretary Ed Schafer said on Monday.

(more…)

Doha, Global Commodity Issues, Biofuels and the Farm Bill

Doha

Reuters news reported on Thursday that, “Ministers may not meet until May to hammer out a Doha trade deal, the head of the World Trade Organisation said on Thursday.

(more…)

Commodities and Food: Prices and Supply- Farm Bill

Associated Press writer Stevenson Jacobs reported late last week that, “Wheat prices shot up Friday as investors bet that a mix of wet and dry weather in wheat-growing U.S. states will damage crops and tighten supplies of the grain used to make bread, pasta and other foods.”

“Excessive dryness in parts of Oklahoma, Texas and Kansas is threatening to severely damage the hard-red winter wheat crop [historic geographical depiction, traded on the Kansas City Board of Trade], which could push prices for the grain back over the $10 a bushel mark for the first time since last month, analysts say. Meanwhile, heavy rain in Kentucky, Missouri and southern Illinois has flooded soft-red winter wheat crops [historic geographical depiction, traded on the Chicago Board of Trade], further driving prices up,” the AP article said. (Note: hard red spring wheat is traded on the Minneapolis Grain Exchange; for more background on the different classes of wheat, click here.)

(more…)

Farm Bill Funding Still an Issue: Nutrition, Disaster Aid and Conservation Noted

Reuters writer Charles Abbott reported yesterday that, “The chances to enact a new U.S. farm law before an informal April 18 deadline hinge on providing ‘very solid’ funding for anti-hunger programs, the Senate Agriculture Committee chairman said on Thursday.

“Chairman Tom Harkin told reporters he hoped for agreement within two days on how to pay for a $10 billion spending increase for the farm bill. With that in hand, House and Senate negotiators could then write a final version of the law, which is six months overdue.

(more…)

Rangel on the Farm Bill; Zoellick on Food Prices and Doha

Reuters writer Charles Abbott reported on Tuesday evening that, “Lawmakers need to put more reforms into the new U.S. farm law, the chairman of the House tax committee said on Tuesday, suggesting more money for federal anti-hunger programs.

(more…)

Farm Bill Debate Continues, Acreage Intentions Raises Policy Considerations

David Rogers, writing today at Politico.com, reported that, “Could ‘pay-go’ mean ‘no-go’ for a new farm bill this spring?

“That’s the question that tortures rural Democrats who pressed hardest in Congress last year for the tougher anti-deficit rules but now find themselves tied in knots, trying to write a plan for producers at home.”

(more…)

Farm Bill, Commodity (Acreage)- Food Price Issues

Farm Bill

Reuters news reported yesterday that, “Senators are looking for ways to pay for a $10 billion spending increase in the new U.S. farm law, Senate Majority Leader Harry Reid said on Monday, asking for more assistance from the White House.

“‘We need to have the White House more engaged in this, more so than they have been,’ Reid said while outlining the Senate agenda for the next few weeks.”

(more…)


Recent Entries »