FarmPolicy

October 18, 2017

Food Security Issues Percolate- Bifouels Noted; Doha Talks

Food Security Issues

Andrew Martin reported in today’s New York Times that, “Agriculture Secretary Edward T. Schafer is preparing to walk into a buzzsaw of criticism over American biofuels policy when he meets with world leaders to discuss the global food crisis next week.

“Mr. Schafer took the offensive at a press conference on Thursday that discussed the food summit, planned for Rome. He said an analysis by the Agriculture Department had determined that biofuel production was responsible for only 2 to 3 percent of the increase in global food prices, while biofuels had reduced consumption of crude oil by a million barrels a day.”

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Food Security Issues; Doha Talks

Food Security

Andrew Martin reported in today’s New York Times that, “In anticipation of a global summit on the food crisis, the United Nations called on world leaders Wednesday to agree to urgent measures to ease demand for grains and alleviate high food prices.

The report, by the Food and Agriculture Organization of the United Nations, suggests that countries might need to reconsider policies that encourage the production of ethanol and other biofuels. The report also suggests that the food summit in Rome, which will run June 3 to 5, will give world leaders a chance to renew a war on hunger.”

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Doha; Price Volatility- Crop Progress- CRP; Climate Change Report

Doha

An update posted yesterday at the WTO Online indicated that, “WTO agriculture negotiations resumed on Monday 26 May 2008 with a new round of talks on the latest revised draft ‘modalities’ circulated a week earlier. In this meeting of the full membership, the talks’ chairperson, Ambassador Crawford Falconer of New Zealand, said a smaller group of 37 delegations representing all coalitions and major players would continue to negotiate during the week as members try to narrow their differences further.

“In the next meeting of the full membership, on Friday 30 May, they would decide whether to continue into the week of 2 June, he said.”

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Food Security; Doha Trade Talks & The Farm Bill; Ag Production Costs

Food Security

Emily Wax reported in Saturday’s Washington Post from Dhaka, Bangladesh that, “Bangladesh is among at least 33 countries, many with shaky governments and destitute populations, that are at risk of serious political unrest if food prices keep rising, according to a recent World Bank study. In some countries, the consequences of the food crisis are already playing out. Haiti’s prime minister, for example, was forced to step down last month after riots in Port-au-Prince.

“In this country, the crisis is compounded by natural disasters that have destroyed wide swaths of farmland. Many Bangladeshis have migrated from rural areas to the capital as ‘climate refugees,’ driven out by floods and cyclones that some scientists believe have intensified because of rising global temperatures. Now, in the relative safety of Dhaka, illiterate, often unskilled laborers are being hit by economic calamity as high inflation and surging food prices make their lives more difficult.

“Although poverty had started to slowly recede over the past decade in this nation of 150 million, there are renewed fears that inflation could undo its decades of progress and once again make it the ‘basket case’ of the world, as it was once dubbed by U.S. Secretary of State Henry Kissinger.”

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Awkwardly, The 2008 Farm Bill Debate Wraps Up

Farm Bill

Mike Soraghan reported yesterday at The Hill Online that, “A clerical error caused widespread confusion on Capitol Hill Thursday, stealing the spotlight from Democrats hoping to tout the second veto override of President Bush’s reign.

“Democrats in the House and Senate won enough votes to override Bush’s veto, but one of the farm bill’s 15 titles was omitted from the official ‘parchment’ copy sent to the White House.”

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Farm Bill Veto Issue; Recent Hearings on Food, Commodity Prices; Oil

Farm Bill

Jonathan Weisman and Dan Morgan reported in today’s Washington Post that, “The House easily overrode President Bush’s veto of a $307 billion farm bill last night in what appeared to be the most significant legislative rebuff of Bush’s presidency. But a legislative glitch is likely to force embarrassed Democratic leaders to pass the bill all over again today — and prompt a second showdown with Bush next month.

“The problem came when a House clerk mistakenly dropped a whole section dealing with trade policy from the 673-page bill before it was sent to the White House. Republican leaders argued last night that the House had overriden a veto on legislation that had never actually passed the House and Senate. For the sake of legislative integrity, Democratic aides said, Congress is likely to start the whole process again.

“Republican leadership aides last night called it a ‘monumental Democrat screw-up,’ but it was Republican disarray that was on display for much of the evening. The bill pitted Republican leader against Republican leader as they argued publicly over another lapse in their commitment to fiscal discipline. As with the first veto override of the Bush presidency, which saved the Water Resources Development Act last year, lawmakers of both parties stepped in to save a law that promised to shower billions of dollars on key constituents and home-district programs.”

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“Analysis From Brussels” –By Roger Waite – What is the CAP Health Check?

Editor’s Note: On Tuesday, the European Commission published its proposals for the so-called Health Check of the Common Agricultural Policy (CAP).

Following is an outline of the main issues associated with the Health Check, which was prepared by Roger Waite. Roger is editor of AGRA FACTS, the Brussels-based newsletter on EU agriculture policy, and is a Journalism Fellow at the German Marshall Fund of the United States.

In addition, supplemental news coverage regarding yesterday’s Health Check developments has been posted at this FarmPolicy.com page; and an update from today regarding U.S. farm policy is available here: “Farm Bill: Average Crop Revenue Election (ACRE) Could Be Expensive; Commodity Prices- Hearings on Volatility; Food Prices- Biofuels.”

What is the CAP Health Check?

By Roger WaiteRoger is editor of AGRA FACTS, the Brussels-based newsletter on EU agriculture policy, and is a Journalism Fellow at the German Marshall Fund of the United States. “Analysis from Brussels” is posted exclusively at FarmPolicy.com.

What is the Health Check?
In the June 2003 and April 2004 CAP reforms, it was agreed that the various policy changes agreed for CAP direct payments would have to be reviewed 2 years after the last [Old] EU Member State had implemented its model of the Single Farm Payment. The EU budget for agriculture has been fixed until 2013, but it was still felt necessary to review the policy for the period until then. Nine Member States introduced their version of the Single Farm Payment in 2005, but the remaining six waited until 2006. Hence the need for the review to happen this year.

Why “Health Check”?
The 2003 “Fischler” reforms were originally billed as the “Mid-Term Review” and intended as a basic review of the 1999 policy reforms. However, with the impending accession of 10-12 New Member States – and an early political agreement by EU leaders on the levels of CAP spending for 2007-2013 – it turned out to be a much more radical reform. The forthcoming exercise is basically the same thing that was originally intended for 2003. However, because of the radical connotation of the phrase “Mid-Term Review”, the Commission decided that there had to be a different name for this exercise and came up with “Health Check” in order to underline that it was a necessary examination, but not a further reform (in order to reassure farmers).

Process & Timing
The decision-making process in the EU requires the European Commission to come forward with legislative proposals for changing existing CAP rules. These are published today. The proposals then pass to the Council and the European Parliament, and the political intention is that everything can be agreed in November, with almost all sides absolutely adamant that the ink will be dry before the end of the year. The changes would then start to apply from 2009/10. Because the EU budget has only been agreed until 2013, the policy cannot make any [budgetary] commitments for what will happen thereafter.

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News Updates on the CAP “Health Check”

Categories: Audio /EU /Food Prices

The European Commission (EC) issued a press release yesterday which noted that, “The European Commission today proposed to further modernise, simplify and streamline the Common Agricultural Policy and remove remaining restrictions on farmers to help them respond to growing demand for food. The so-called CAP Health Check will further break the link between direct payments and production and thus allow farmers to follow market signals to the greatest possible extent. Among a range of measures, the proposals call for the abolition of arable set-aside and a gradual increase in milk quotas before they are abolished in 2015, and a reduction in market intervention. These changes will free farmers from unnecessary restrictions and let them maximise their production potential. The Commission also proposes an increase in modulation, whereby direct payments to farmers are reduced and the money is transferred to the Rural Development Fund. This will allow a better response to the new challenges and opportunities faced by European agriculture, including climate change, the need for better water management, and the protection of biodiversity.”

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Farm Bill: Average Crop Revenue Election (ACRE) Could Be Expensive; Commodity Prices- Hearings on Volatility; Food Prices- Biofuels

Farm Bill

Dan Morgan reported in today’s Washington Post that, “A major new program in the recently enacted farm bill could increase taxpayer-financed payments to farmers by billions of dollars if high commodity prices decline to more typical levels, administration and congressional budget officials said yesterday.

“The potential costs came to light as administration officials pored over details of the 673-page, $307 billion legislation. President Bush has promised to veto the measure, which he called ‘bloated.’ The House and Senate passed the bill by bipartisan margins large enough to override him unless dozens of lawmakers switch sides.”

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Farm Bill Cost Still a Concern; Food Prices; CAP; Doha; Crop Progress

Farm Bill

Philip Brasher reported in Friday’s Des Moines Register that, “The new farm bill that got final congressional approval Thursday could result in large subsidies for Iowa’s farmers and wind up costing taxpayers billions of dollars more than lawmakers are estimating, according to a U.S. Agriculture Department analysis.

“Under a new program created by the bill, subsidies for corn alone could reach $10 billion a year nationwide if market prices dropped to $3.25 a bushel, a historically high level. Another $4 billion could be paid to soybean growers at a market price of $7 a bushel.

“This would push the price tag for the farm bill well over the $300 billion mark over the next five years. It was estimated by Congress to cost $289 billion over five years.

“The potential payments ‘are just off the charts here,’ Charles Conner, the deputy agriculture secretary, told The Des Moines Register.”

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“Analysis From Washington”- By Dan Morgan- Farm Bill Review

Farm Bill Review

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.

I lost count of the times lawmakers used the word “reform” during this week’s final debate on the farm bill in the House and Senate.

It took House Agriculture Committee Chairman Collin Peterson (D-Minn.)–a Midwesterner with a seemingly incurable tendency to speak the honest truth–to give away the game. Except for some “minor changes,” the new farm program is “very much like the current law that we have been operating under,” he told the House on Wednesday.

That’s disappointing to those who thought the time was ripe for a new kind of farm safety net more aligned with the realities of 21st century American agriculture. What emerged instead was a farm program that invites another storm of negative editorials. The new program, like the old one, will continue to automatically channel $5 billion a year to a few hundred thousand farm households even if prices stay at record level. Such a policy won’t win broad public support and probably isn’t sustainable politically in the long run.

Even so, buried deep in this monster bill are what could be the seeds of change. A new program with the earthy acronym ACRE (for Average Crop Revenue Election) could represent the wave of the future. Starting in 2009, farmers will have an option of relinquishing some of the automatic payments and other supports in return for guarantees from the government. If their income from growing certain crops falls below what could normally be expected (state yields time the average national price for the crop), the government will make up the difference.

The provision is a pale shadow of what had been proposed by the National Corn Growers Association. In a globalized economy in which American workers increasingly have to fend for themselves, the notion of giving one privileged group a guaranteed revenue may not be an easy sell.

But ACRE is a breakthrough in several respects. It is a real safety that provides risk protection (along with crop insurance) for people who are actually farming. The current system of automatic payments is not a safety net. The checks arrive twice a year, regardless of whether weather is good or prices are high.

Some believe ACRE could be the start of a farm program overhaul that would eventually transform the current balkanized system of supports, subsidized crop insurance, price guarantees and free money into a “single payer” insurance system tailored to helping farmers manage legitimate risks.

Farm state politicians don’t have much good to say about ACRE, probably because it represents a threat to the status quo. Peterson has repeatedly disparaged it, questioning why anyone would sign up for it. But on the House floor Wednesday, he gave it a surprising, grudging nod.

“That may be the new future direction of the farm bill, depending on how it works out,” he said.

His comment was a sign of just how much Peterson has been worn down by the hard line taken by farm organizations and a few powerful senators who fought against even token cuts in the automatic cash payments to farmers.

Farmers in Peterson’s own northwest Minnesota congressional district will take home nearly $691 million in direct payments during the course of the new farm bill, according to the Environmental Work Group. Yet amid all the celebrating about the new farm bill, Peterson issued a warning to the farm bloc: “These direct payments are not a good way to do a safety net. It’s very hard to explain to our urban colleagues.”

Another section of the bill, long championed by Sen. Tom Harkin (D-Iowa) points the way to a new kind of farm policy that links federal payments to environmental improvements. In Europe, “single farm payments” that are the equivalent of the direct payments here come with environmental strings attached. The newly-named Conservation Stewardship Program edges toward that.

It creates a sizable pool of federal money –$1.1 billion to be disbursed over 10 years—that working farms could use to adopt or improve environmental practices. Thousands of farms will qualify, not just those growing staple crops. By 2018, 115 million acres – nearly a third of all farming acres — will be enrolled.

Any farm would be eligible, not just those growing staple crops. The World Trade Organization has ruled that these conservation payments don’t count against a country’s subsidy limits and can’t be challenged by trading partners. But the biggest plus may be political: the American public will support paying farmers generously if the nation is getting an environmental return.

None of that is much solace right now to critics of the current farm program.

The reformers turned out to be no match for a few powerful senators and Peterson, who protected—and added to–the hugely controversial subsidy system that Congress approved and the president ratified in 2002.

Although three quarters of the $300 billion in the bill go to nutrition, conservation, and energy programs, the politics of writing the bill is still driven by the farm program.

Under House rules, the Agriculture panel is a “minor” committee that is not required to be geographically representative. (There are six members from North Carolina and Georgia, none from New England.) The result is a panel unified behind the interests of farmers growing staple crops that collect the bulk of subsidies. This year, dairy interests did particularly well, snagging an extra $410 million to help cover rising feed costs, and imposing a 7.5 cents a pound fee on all imported dairy products to help finance domestic dairy promotion activities. The poultry industry in Virginia and Georgia beat back an attempt to deny crop insurance to Prairie Pothole farmers who plow virgin prairie lands to plant corn.

In effect, the aggies held a clinic on how to use the power of the purse to silence opposition to current farm subsidies. They heaped new money on anti-hunger groups, certain conservation programs, the biofuels industry, West Coast salmon fishermen, and even a few hundred farmers in Alaska.

Of more than 500 grass roots and advocacy groups lining up behind the farm bill, a majority were anti-hunger groups and food banks thrilled with the $10.4 billion in new money for nutrition programs. When the Bush administration sought to split the agriculture community by urging that growers of fruits and vegetables get a larger share of the pie, farm state lawmakers countered with more than $1 billion in new funds for research and marketing. In effect, the administration inadvertently created yet another lobby for the farm bill.

The bill took care of key Democratic constituencies such as low-income families on food stamps and fruit and vegetable growers in the home state of Speaker Nancy Pelosi (D-Calif.).

Pelosi’s performance came with an eye to shoring up the party’s support in rural America before the congressional elections. She disappointed those who thought she could have done more to pare back subsidies at a time of soaring farm incomes and rising food prices.

But a larger share of the blame may go to the White House. For all the Bush administration’s rhetoric about the need for more subsidy reform, it insisted on keeping or expanding the biggest subsidy of all—the $5 billion in automatic payments. That stand cost it the high ground in the end game of negotiations over the farm bill.

Had the administration agreed to a significant cut in the automatic payments—say $1 billion a year—it might have come to the table with a farm bill that used those savings for all the things the nutrition, conservation and fruits and vegetables lobbies wanted.

It could have advanced an alternative farm bill that moved in the direction of serious structural reform and still offered the interest groups what they wanted. Such an alliance might have given pause to the farm bloc. Instead, the administration chose an approach little different from what Congress was advocating.

Once it became clear the administration’s call for “reform” was hollow, Congress felt free to follow its own instincts.

By Dan Morgan

Reader Comment-

By Ferd Hoefner, Policy Director at the Sustainable Agriculture Coalition, Washington D.C.

I enjoyed reading Dan’s piece this morning. I do have profound doubts about ACRE amounting to any kind of major transformation of commodity politics and policy, but I guess time will tell. I do very much agree with the point at the end that much blame for the lack of reform (notwithstanding lots of editorials and more than a few news articles) lies at the foot of the Administration, both because, as you point out, their proposal called for increasing direct payments and they refused to ever concede on that, but also because, having gained significant leverage to influence the outcome of the bill, they never used it. At every key point in the final months they refused to negotiate, hanging payment reformers out to dry.

I wanted to point out two factual problems on the CSP comments. First, the $1.1 billion is the net increase in CSP dollars over the next 10 years. The total CSP funding over that time period is just over $12 billion. Second, while 115 million acres is about a third of cropland acres, pasture and rangeland acres are also eligible for CSP. From that perspective, it is closer to an eighth rather than a third of all eligible acres which can be enrolled given current funding levels.

It is probably reasonable to assume a higher sign-up rate in percentage terms for cropland relative to pasture and range, but it won’t get close to a third. From our perspective that is not necessarily a bad thing. The environmental standards for CSP are much higher than for conservation programs historically and much higher than EQIP today. Over time, if standards stay high and the funding remains with the program, there will be a very strong, lasting signal for positive conservation improvement. But it needs to build steadily over time. If too many acres could get in from the get go, it would mean accepting lower environmental standards in order to fill out the card.

By the way, the criteria by which USDA will determine who gets into the program in any given year is specified in the statute. There are five factors:

1. The farmer’s current level of conservation achievement related to the priority resource concerns in the area;
2. The degree to which the farmer’s proposal calls increasing conservation performance with respect to those priority resource concerns;
3. The number of priority resource concerns the farmer is willing to address to meet or exceed high standards set by USDA;
4. The extent to which the farmer is willing to address other resource concerns, in addition to the priority concerns, to meet or exceed high standards set by USDA;
5. The extent to which all of these environmental benefits are provided at least cost relative to other similarly beneficial bids.

(Note: with respect to #3 – to be eligible, the farmer must already be meeting or exceeding the high standards set by USDA for one priority resource of concern and also must agree to address a second priority resource of concern to that high standard by the end of the first 5 year contract – however, ranking criteria #3 will tend to favor farmers doing comprehensive conservation, sometimes referred to as total resource management systems).

(Also note that the farmer must enroll the entire farming operation; there is no opportunity to “cherry pick” particular fields that may have fewer problems and therefore would be easier to qualify).

I have many thoughts about how CSP in combination with other commodity and conservation program changes (and WTO green box improvements) could yield a workable long-term green payments alternative to the current hodge-podge of program and market distortions, but that is for another time….

By Ferd Hoefner
Policy Director
Sustainable Agriculture Coalition
Washington, D.C.

Inflation, Biofuels and Commodity Prices

Categories: Audio /Ethanol /EU /Food Prices

Reuters writers Richard Valdmanis and Timothy Gardner reported on Tuesday that, “A backlash against biofuels that are widely blamed for contributing to a staggering spike in global food prices could have the unintended consequence of intensifying a rally in the cost of energy.

“Biofuels use has surged among countries seeking ways to reduce costly petroleum imports. But the redirection of food into vehicle tanks instead of grocery stores has triggered a pushback, particularly against U.S. corn-based ethanol.”

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81-15, Senate Passes Farm Bill Conference Agreement

Congressional Quarterly reported yesterday that, “Brushing aside a presidential veto threat, the Senate on Thursday cleared a $289 billion, five-year farm bill that significantly increases nutrition spending while preserving crop subsidies.

“By 81-15, the Senate adopted the conference report on the bill. The House had taken the same step a day earlier, by 318-106.

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318-106, House Passes Farm Bill Conference Agreement

Dan Morgan reported in today’s Washington Post that, “The House yesterday passed a final version of a new five-year farm bill by a vote of 318 to 106, a margin large enough to override President Bush’s promised veto of the nearly $300 billion measure.

“The bipartisan show of support came after intense lobbying by a coalition that included farm groups, anti-hunger advocates, environmental organizations and the biofuels industry. While continuing traditional farm subsidy programs, the bill increases spending on nutrition programs such as food stamps by $10.4 billion.

“Agriculture Secretary Ed Schafer released a statement saying the vote ‘sends the wrong message to the rest of the country who are not experiencing the boom of the agriculture sector,’ and, ‘This bill is loaded with taxpayer funded pet projects at a time when Americans are struggling to buy groceries and afford gas to get to work.’”

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House Vote on Farm Bill Conference Report Expected Today

Categories: Farm Bill

Congressional Quarterly reported yesterday that, “Despite some last minute budgeting complications, the conference report on a massive new five-year farm bill will be filed Tuesday, setting up votes as early as Wednesday in both chambers.”

The CQ article explained that, “After almost a year and a half of negotiations, Agriculture Committee members agreed to impose some new limits on crop subsidies that they hoped would win votes and satisfy the White House. The most dramatic changes are meant to prevent wealthy farmers from collecting government dollars. People with more than $500,000 in non-farm related income would not be able to collect any subsidies, while those making more than $750,000 in farm-related income would no longer be eligible for direct payments, subsidies that farmers get no matter what.”

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Farm Bill; Crop Progress / Production; Doha

Farm Bill

Jim Snyder reported yesterday at The Hill Online that, “The long-overdue farm bill has set up a crucial election-year face-off that will have consequences for farm-state members up for reelection, and has kept busy an army of lobbyists who represent everything from chick pea growers to ethanol refiners.

“After bill negotiators announced the outlines of an agreement last week, the Bush administration vowed to veto it.

“The measure is scheduled for a floor vote in the House as early as Wednesday, although as of press time the bill had yet to be officially filed and lobbyists said a vote could slip to Thursday or later.”

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