FarmPolicy

June 28, 2017

Senator Lincoln; Climate Legislation; Trade; Ag Economy; H1N1; and House GOP Ag Committee Resources

Senator Lincoln

David Rogers reported yesterday at Politico.com that, “Labor and Southern agriculture, two vested interests important to Democrats in next year’s elections, both stand to gain under Senate committee changes elevating Tom Harkin of Iowa and Blanche Lincoln of Arkansas to new chairmanships.”

Mr. Rogers explained that, “Lincoln’s rapid rise to chair the Senate Agriculture Committee is also historic and a reminder of the enduring power of Southern cotton and rice interests in the politics of the chamber.

“A rice farmer’s daughter, she is the first woman to ever chair the panel. And together with ranking Republican Sen. Saxby Chambliss of Georgia, she will head the first all-South Agriculture leadership team since Sens. Herman Talmadge (D-Ga.) and Jesse Helms (R-N.C.) ruled the roost in the 96th Congress 30 years ago.

“Lincoln denied any lasting imbalance, saying that the committee has always worked across party lines to resolve these differences. But the Lincoln-Chambliss team will pose a real challenge for the White House if the Obama administration persists in trying to reopen last year’s farm bill to achieve greater savings.”

The Politico article indicated that, “Rice and cotton interests, with typically high input costs and large land holdings, have always resisted payment limits on farm subsidies. And Lincoln warned Wednesday against tampering with agreements negotiated last year and blessed by a large Senate vote on passage.

“‘It’s important that we follow through with implementing what we pass,’ she told reporters. ‘I thought it was well-defined in the bill. If [the Agriculture Department is] confused about what our intent was, they should work with us.’”

Mr. Rogers also pointed out that, “With the farm bill in place, Lincoln has fewer immediate legislative challenges, but her agenda will include the reauthorization of child nutrition legislation as well as the role of the Commodity Futures Trading Commission in the larger regulatory reform debate. At home, her new post should help her reelection campaign next year, for which she already faces a bevy of both Republican and Green Party challengers and some restlessness, as well, in the Democratic ranks.”

With respect to CFTC issues, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The incoming chairman of the Senate Agriculture Committee said Wednesday she sees a small place for over-the-counter financial derivatives. That position differs from the position of outgoing Ag Committee Chairman Tom Harkin that the financial services reform bill should require all derivatives to be traded on exchanges.”

Lincoln’s position on derivatives could mean the Senate Agriculture Committee will handle its responsibilities on futures and derivatives in the financial services reform bill differently than if Harkin, D-Iowa, were chairman,” the DTN article said.

In addition, Mr. Hagstrom pointed out that, “In a conference call Thursday, Harkin dismissed the notion that the Midwest would be losing clout in agriculture, noting that there are several Republicans and Democrats on the Agriculture Committee from the Corn Belt.

“‘We got a lot of people from the upper Midwest on that committee,’ he said.”

Climate Legislation

With respect to climate legislation, Reuters writer Charles Abbott reported yesterday that, “The U.S. Senate faces ‘a heavy lift’ if it tries to pass a climate change bill this year, the new leader of the Senate Agriculture Committee, Blanche Lincoln, said on Wednesday.”

Mr. Abbott indicated that, “‘Climate change legislation ‘presents some issues for the farm community,’ said Lincoln.

“American farmers are sure to face higher fuel, fertilizer and pesticide prices because of efforts to control greenhouse gas emissions, she said, but Southern growers would not have the opportunity to earn money for practices, like no-till farming, that lock carbon in the soil.”

And Dan Looker reported yesterday at Agriculture Online that, “Lincoln represents a shift on a committee where regional differences can be stronger than partisan ones. Like Harkin’s Republican predecessor, Saxby Chambliss of Georgia, Lincoln is a Southerner who represents cotton and rice farmers who may be more dependent on commodity programs in the current market than corn and soybean farmers.

And they may have a harder time adapting to carbon credit trading than corn and bean growers, as Frank Rehermann, chairman of USA Rice Producers Group, told the committee during a hearing Wednesday.

“Rice farmers have supported research on better management of rice straw, which contributes to methane emissions from rice fields. But, Reherman told the committee, ‘We have no real evidence we are going to be able to sequester the emissions any more than we do.’

Lincoln said during the hearing that ‘it isn’t necessarily my preference to move cap and trade legislation this year.’”

Yesterday’s article added that, “But Harkin told Agriculture Online Thursday that the Ag Committee isn’t in charge of writing cap and trade legislation in the Senate. Instead, it’s holding hearings on how cap and trade might affect agriculture and will make recommendations to the Environment and Public Works Committee headed by Senator Barbara Boxer of California.”

The “Washington Insider” section of DTN noted yesterday (link requires subscription) that, “Senate Environment and Public Works Chairwoman Sen. Barbara Boxer, D-Calif., says her panel will take up energy reform and climate change legislation by the end of the month. ‘The bill will be introduced this month, and we’re going to be marking it up shortly thereafter,’ Boxer said.

“Six Senate committees have jurisdiction over some parts of the climate change legislation and have been invited to mark up those sections. They include Agriculture; Commerce, Science and Transportation; Energy and Natural Resources; Environment and Public Works; Finance; and Foreign Affairs.”

Yesterday’s DTN item noted that, “But even if Democrats can move the climate bill through the various committees quickly, it is unclear whether they have the 60 votes needed to overcome a Republican filibuster threat and bring it to the floor.”

Lisa Lerer reported earlier this week at Politco.com that, “A significant Senate delay on the climate bill being debated on Capitol Hill would most likely diminish U.S. clout abroad and set back international global warming negotiations scheduled in December, warn environmentalists, Democratic aides and international negotiators.

“‘There’s a real danger that the international deal has less ambition because the U.S. is not able to come to an agreement that convinces countries that we’re serious about solving climate change,’ said John Coequyt, senior Washington representative for the Sierra Club’s global warming and energy program. ‘That’s the biggest risk right now.’

Chances that a bill will pass Congress before the Dec. 7-18 United Nations climate summit in Copenhagen slimmed over the August recess. And already, experts say, U.N. officials have been lowering expectations for the talks, which are aimed at strengthening and continuing the landmark climate change accords approved in 1997 in Kyoto.”

The AP reported yesterday that, “With negotiations on a new international climate treaty proving difficult, the Obama administration’s chief climate negotiator on Thursday called on the Senate to act as soon as possible and pass legislation to control the gases blamed for global warming.

Todd Stern, the State Department’s special envoy for climate change, told a House panel that it was critical for the Senate to pass legislation to give the U.S. the ‘credibility and leverage’ that it needs to convince other countries to reduce their pollution.”

Meanwhile, Siobhan Hughes reported yesterday at The Wall Street Journal Online that, “The Obama administration is expected to begin releasing rules that take small steps toward the regulation of greenhouse gases, in a reminder that regulators have the power to act more broadly if Congress fails to do so.”

The article added that, “The U.S. Environmental Protection Agency’s efforts are expected to begin as early as next week, with a proposal to regulate motor-vehicle greenhouse-gas emissions for the 2012-2016 model years, as called for under an accord between environmentalists and car makers and announced by President Barack Obama earlier this year. The proposal needs to be finalized by March, in time for auto makers to retool factories.

“That will be followed, likely later in the month, by a regulation mandating the reporting of emissions from oil refiners, factories, utilities and other large sources each year. By law, the EPA must develop such a rule. The EPA has been sued by environmentalists for failing to meet a congressionally mandated deadline. Tracking greenhouse-gas emissions is widely seen as necessary for regulation.

“The EPA is also planning a proposal to limit the reach of greenhouse-gas rules to only large emitters, those that spew out 25,000 tons or more of carbon dioxide each year. That would shield small emitters – the churches and Dunkin Donuts’ shops that EPA Administrator Lisa Jackson likes to talk about – from having to find ways to reduce carbon-dioxide emissions.”

Trade

Joshua Hull reported yesterday at the Avalanche-Journal Online (Lubbock, Texas) that, “A week after the World Trade Organization awarded Brazil $296 million over American subsidy disputes, U.S. Rep. Randy Neugebauer met with U.S. Trade Ambassador Ron Kirk to discuss the future of trade positions on cotton and other agriculture resources.

“The Lubbock congressman said he and Kirk spoke for a half hour about pursuing other trade avenues, holding up free trade agreements and taking a strong approach to countries like India that many experts agree have overstepped WTO standards.

“‘If we’re going to get into these trade agreements, we need to make sure everybody is playing by the rules, not just the U.S.,’ Neugebauer said. ‘I think that’s appropriate policy.’”

Mr. Hull added that, “Neugebauer said he strongly encouraged Kirk to give cotton a large seat at the table as those policies are determined to keep the commodity from being a part of separate agreements as it has in the past.

“‘We want to open up more markets for American agriculture,’ he said. ‘What we get concerned about is putting different trade policies in place and people want to cut out cotton and negotiate it separately.’”

Meanwhile, a news release issued yesterday by the International Food & Agricultural Trade Policy Council stated that, “Responding to the announcement that WTO negotiations will resume in Geneva in mid-September with a view to completing the Doha Round in 2010, the International Food & Agricultural Trade Policy Council (IPC) praised the perseverance and foresight of the participants in the Mini Ministerial Meeting in New Delhi. ‘We applaud the dedication of the
Ministers,’ stated IPC Chairman Carlo Trojan, ‘and look forward to genuine progress in the future negotiations.’

“Said Trojan, ‘With protectionist sentiments on the rise and the world facing a global food security crisis, it is more important than ever to maintain and expand access to international markets. Better access to markets will facilitate increased income for developing country farmers and promote food security. An open trading system, including improved disciplines on export restrictions, provides more affordable, reliable access to agricultural inputs and food at more stable prices.’”

Ag Economy

On Wednesday, the U.S. Federal Reserve released its latest Current Economic Conditions report, commonly referred to as the “Beige Book,” which provided an updated snapshot look at economic conditions by Federal Reserve District.

The latest Beige Book report included the following District summaries addressing the agricultural economy:

– The Chicago District noted that, “With agricultural income down a lot from last year, operating budgets were tighter.”

– The Minneapolis District stated that, “Agricultural conditions declined since the last report. Results of the Minneapolis Fed’s second quarter (July) survey of agricultural credit conditions indicated that lenders expect overall agricultural income and spending to decrease in the third quarter.”

– The Kansas City District indicated that, “While agricultural growing conditions remained positive, income projections weakened slightly since the last survey period. Favorable growing conditions and an upward revision to crop estimates contributed to a decline in corn and soybean prices, trimming expected profits for producers. Despite a slight improvement in fed cattle prices, an extended period of negative profit margins coupled with declining cattle inventories prompted some feedlot consolidations. Income losses steepened for hog producers amid sluggish domestic and foreign demand for pork products. Farmland values stabilized at or above year-ago levels. Demand for non-real estate farm loans rose, and the rate of loan repayments declined. Fewer District contacts reported that collateral requirements remained elevated, and farm interest rates were little changed.”

– The Dallas District pointed out that, “Reports on agricultural conditions were mixed. The severe drought in central and south Texas has wiped out large portions of dryland crops. Contacts say ranchers have liquidated as much of their cattle herds as they can and are now looking for ways to save what they have left. Milk prices remain below production costs leading to financial losses for dairy farmers. In contrast, favorable moisture and growing conditions in northern parts of the state have resulted in excellent crop yields. In particular, cotton yields are above year-ago levels.”

Also on Wednesday, University of Illinois Agricultural Economists Gary Schnitkey and Nick Paulson indicated in a brief report (“Corn and Soybean Returns in 2009 and 2010”) that, “Net operator returns for 2009 are projected at -$8 per acre for corn and -$15 per acre for soybeans. Returns have not been projected lower during the 1990s or the 2000s. Low 2009 returns are caused by high costs and declining commodity prices. In 2009, non-land costs for corn are projected at $517 per acre, $89 higher than the 2008 non-land costs for $428 per acre. On the commodity price side, farmers received an average of $4.05 per bushel for corn in 2008. Budgets contain a corn price of $3.25 per bushel for 2009.”

The paper added that, “Net operator returns for 2010 are projected at $94 for corn and $84 for soybeans, above net operator return levels for 2009. Higher 2010 returns are based on lower non-land costs. Non-land costs for corn are projected at $440 per acre in 2010, down by $77 per acre from 2009 non-land costs of $517 per acre. Much of the decline in non-land costs is due to lower fertilizer prices. Fertilizer prices used for 2010 projections are $400 per ton for anhydrous ammonia, $400 per ton for DAP, and $600 per ton for potash. By way of comparison, anhydrous ammonia prices were above $1,000 per ton during the summer of 2008” (See related summary chart).

H1N1

Philip Brasher reported yesterday at the Des Moines Register Online that, “Agriculture Secretary Tom Vilsack today accused the media of worsening the downturn in the pork industry by calling the H1N1 virus the swine flu.

“‘This is not swine flu. Every time that is said consumers get confused,’ Vilsack said on a conference call with news reporters.”

“‘We had a depressed market before’ the flu appeared, Vilsack said. ‘Now it has become a long-term depressed market. It has made it harder to get over the hump.’”

Reuters writers Christopher Doering and Roberta Rampton reported yesterday that, “The U.S. Agriculture Department is trying to speed the development of a H1N1 flu vaccine for hogs by providing two master seed viruses to five veterinary vaccine makers, Agriculture Secretary Tom Vilsack said on Thursday.

“The new pandemic flu strain, a mix of human, avian and swine viruses often referred to as ‘swine flu’, has infected and killed people around the world, but has not yet been found in U.S. hogs, Vilsack said.

“‘Our hope is that (manufacturers) will take this seed virus and they will refine it and work with it and finalize it to the point where they actually get a vaccine which they then can produce,’ Vilsack said.

“‘We’re not there yet.’”

Meanwhile, Reuters news reported yesterday (article posted at DTN, link requires subscription) that, “The U.S. Agriculture Department will buy more pork for government food assistance when Congress replenishes its funding for fiscal year 2010, which begins Oct. 1, Agriculture Secretary Tom Vilsack said on Thursday.

“‘That puts us in the position to begin making purchases again, which I have no doubt we will continue to do,’ Vilsack told reporters on a conference call.”

Yesterday’s article added that, “Vilsack did not say how much pork the USDA would buy in the coming fiscal year.

“The USDA is on track to purchase $151 million of pork in fiscal 2009 to try to help support slumping pork prices for hog farmers, who have been losing money since October 2007. Hog producers had asked Vilsack to made additional purchases for fiscal 2009, but he told reporters on Thursday that his ability to do that was ‘limited.’”

House GOP Ag Committee Resources

A House Agriculture Committee Republican news release from yesterday stated that, “Today, the House Committee on Agriculture Republicans unveiled the redesign of their committee website and announced the launch of their new Facebook and YouTube pages. Ranking Republican Frank Lucas issued the following statement.

“‘I am pleased to announce the redesign of our website and the launch of our Facebook and YouTube pages. It is important that the Agriculture Committee uses the latest technology available to stay connected with its constituents in the countryside. I hope these tools will be an effective way of reaching out to those who live and work in rural America and informing them about the issues that directly impact them such as cap and trade legislation, food safety, and farm bill implementation.’”

Keith Good

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