FarmPolicy

June 26, 2019

Budget; Climate Issues; Ag Economy; Trade; Biofuels; and Crop Insurance

Budget

A news release issued yesterday by Senate Agriculture Committee Ranking Member Saxby Chambliss (R-Georgia) indicated that, “U.S. Senator Saxby Chambliss (R-GA), Ranking Member of the Senate Agriculture Committee, and U.S. Senator Pat Roberts (R-KS), a senior member of the Committee, today announced they sent a letter to the President opposing budget cuts to farm programs in a tough economy. The letter was also signed by Senators Thad Cochran (R-MS), John Thune (R-SD), James Risch (R-ID), Lindsey Graham (R-SC), Mike Crapo (R-ID), Kay Bailey Hutchison (R-TX) and David Vitter (R-LA).”

In part, the letter stated that, “As Congress directs its attention to the fiscal year 2011 budget, we write to voice our opposition to cuts in the farm safety net. Cutting farm programs in the midst of an economic downturn sends the wrong signal to rural America. While we agree that fiscal restraint is necessary and spending in the Federal budget should be reduced, doing so in this manner places a disproportionate burden on the backs of farmers, ranchers and rural communities and fails to recognize the recent sacrifices these constituencies made to expand nutrition programs during the reauthorization of the 2008 farm bill.

“In 2008, the Congress passed a fiscally responsible farm bill that did not add to the deficit and included more than $7 billion worth of cuts to farm and the crop insurance programs to increase spending in nutrition assistance for needy Americans. The farm bill represents a commitment to our rural communities, and we have an obligation to fulfill our obligations to our farmers and ranchers who depend on this legislation to make business decisions. Reducing our level of commitment with the proposed budget cuts to the farm safety net jeopardizes their economic sustainability and would cost jobs in rural America.”

Also yesterday, some farm 35 organizations sent a letter to Senate and Budget Committee leaders expressing opposition to the President’s proposed farm safety net cuts.

In part, the letter noted that, “While we agree that reducing the deficit is necessary, we do not believe America’s farmers and ranchers should have to bear a disproportionate burden of the cuts. Notably, the farm safety net cuts included in the President’s budget appear to be proposed not for the purpose of deficit reduction but, rather, to offset the cost of spending increases contained elsewhere in the USDA budget. All told, the President’s budget proposal for USDA actually increases total outlays by more than $4 billion.

“The budget cuts to the farm safety net also appear to disregard the fact that the 2008 farm bill, which contains the farm safety net provisions cut in the President’s budget, was fiscally-responsible and completely offset so as not to add to our country’s deficit. In fact, these provisions were already cut by $7.4 billion in 2008, the only core provisions to experience a cut, bringing their share of the total federal budget down to less than one quarter of one percent and just 17% of the USDA budget. Yet the President’s budget proposal breaks a five year commitment made to America’s farmers and ranchers by seeking to further cut the farm safety net.”

Meanwhile, an update posted earlier this week at the Ag Mag Blog (Environmental Working Group) noted that, “[I]t’s so disturbing that for the second year in a row, President Obama’s budget is falling short in funding Department of Agriculture programs designed to curb the erosion of precious soil and reduce the damage caused by nutrient and chemical runoff from agriculture. To date, USDA’s Environmental Quality Incentives Program (EQIP) has been the most important program providing money and technical assistance to help farmers and ranchers reduce their environmental impact.

“The administration is saying we should be happy because its proposed $1.208 billion EQIP budget for 2011 would be an increase over the 2010 figure. But that argument completely misses the big picture. In fact, the 2011 request is $380 million below what was mandated in the laboriously negotiated 2008 farm bill, and it barely brings the program back to the neighborhood where it was supposed to be in 2005. In inflation-adjusted real dollars, the 2011 request is actually $123 million less than the promised — but never delivered — 2005 allocation.”

And a news release issued this week by the California Roundtable Alliance stated that, “Proposed budget cuts threaten half a billion dollars in federal grants to help U.S. farmers protect the environment, but an alliance of California agriculture, labor, and conservation groups are fighting to keep the programs alive.

“Twenty-four organizations – members of the California Roundtable on Agriculture and the Environment – are united around the need to continue funding programs to protect soil, water and air quality, preserve wildlife habitat, and conserve energy and water.

Roundtable members are urging Sen. Dianne Feinstein and Rep. Sam Farr of Monterey, members of the Senate and House agricultural appropriations subcommittees, to reject the Obama Administration’s proposal to cut $500 million from conservation programs approved in the 2008 Farm Bill. The cuts would mean a loss of at least $30 million in California from what was promised in the Farm Bill [see related letter here].”

Climate Issues

Yesterday’s AgriTalk Radio Program with Mike Adams featured a panel discussion on agricultural issues with three GOP lawmakers: House Ag Committee Ranking Member Frank Lucas (Oklahoma), Rep. Jerry Moran (Kansas), and Sen. Mike Johanns (Nebraska).

In part, AgriTalk host Mike Adams asked the three lawmakers about the climate change legislative debate and its potential impact on the agricultural sector. To listen to this interesting discussion, which included remarks from all three legislators, just click here (MP3-about six minutes).

(Note that today’s AgriTalk show will include a similar discussion with Democratic lawmakers).

Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “Senate Majority Leader Harry Reid (D-Nev.) said Tuesday that he wants to move forward on energy and climate legislation but that the procedural pathway for the measure is uncertain.”

The update indicated that, “Reid noted that the Energy and Natural Resources Committee has already approved a broad energy measure.

“The bill the committee passed last June includes a host of energy efficiency measures, a national renewable electricity mandate, and wider oil-and-gas drilling in the Gulf of Mexico, among many other provisions. But it does not impose limits on greenhouse gas emissions.

“‘The question is, do we amend that with the climate change stuff, or do we come up with a new bill to take care of all that?’ Reid said.”

Mr. Geman explained that, “The main action in the Senate right now is the effort by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) to craft a compromise climate and energy measure outside of the committee process.

Lieberman told reporters Tuesday that they hope to have draft legislative language by the end of next week to provide to EPA for modeling.”

Meanwhile, Jessica Brady reported yesterday at Roll Call Online that, “Former President Bill Clinton told Senate Democrats on Tuesday that tackling climate change is the key to growing the nation’s economy and its stature in the global marketplace.”

Ms. Brady added that, “Foreign Relations Chairman John Kerry (D-Mass.), who is leading the effort to craft a comprehensive climate change bill this year, invited Clinton to address the Conference. Sens. Lindsey Graham (R-S.C.), Joe Lieberman (ID-Conn.) and Kerry have been negotiating for months on the issue and are expected to unveil an outline proposal before the Senate adjourns for the two-week Easter recess. Reid said Tuesday he plans to meet with committee chairmen soon to discuss a path forward.”

Bloomberg writer Kim Chipman reported yesterday that, “Former President Bill Clinton told lawmakers the U.S. may fall behind China in the race to dominate the global market for clean energy unless Congress passes climate-change legislation, two senators said.”

And Lisa Lerer reported yesterday at Politico that, “Clinton aimed his remarks at moderate Democrats, who fear taking up another controversial bill in the midst of an economic recession and just months before the midterm elections. To reassure them, Clinton distributed polling data showing support for a comprehensive climate bill.”

However, Amy Harder reported yesterday at the National Journal Online that, “Americans are worrying less and less about environmental problems, such as clean water and air pollution, and global warming seems to be the very least of their concerns, according to a new Gallup poll.”

On the issue of potential Environmental Protection Agency regulation of greenhouse gases, a news release issued yesterday by Sen. John Thune (R-SD) stated that, “Senator John Thune today sent a letter to Environmental Protection Agency (EPA) Administrator Lisa Jackson urging the agency to not move forward with proposed regulations on the emission of carbon dioxide and other greenhouse gasses that would amount to a national energy tax. The tax would increase energy rates paid by consumers and could jeopardize jobs in South Dakota.”

And with respect to executive branch perspective on the climate legislative debate, an update posted yesterday at the Real Time Economics Blog (The Wall Street Journal) reported that, “Senior Obama administration officials say the nation’s economic recovery could stall if Congress doesn’t pass a climate bill this year.

“The officials warn that investors are so uncertain about the future cost of emitting greenhouse gases that they are sitting on capital rather than pouring it into ‘clean’ technology, new power plants or energy-intensive manufacturing.

The administration has for months been moving away from advocating climate legislation primarily as an environmental issue and toward a jobs-creation argument. But the comments are a marked shift to a stronger rhetoric: fears of prolonging the recession. The White House says spurring ‘clean,’ or low-greenhouse-gas-emitting energy, can help lay the foundation for the 21st-century U.S. economy.”

Ag Economy Issues

Douglas Belkin and Scott Kilman reported in today’s Wall Street Journal that, “A massive snowpack in the Upper Midwest and along parts of the East Coast have set the stage for potential record floods in the coming weeks, possibly pushing back the planting season in the Farm Belt and prompting intense preparations to reinforce levees and draw down reservoirs.

“‘We are looking at potentially historic flooding in some parts of the country this spring,’ National Oceanic and Atmospheric Administration administrator Jane Lubchenco said Tuesday as she released the agency’s seasonal flood forecast.”

The Journal noted that, “The outlook is most dire in the Dakotas, Minnesota and Iowa, which together endured four times the average amount of precipitation in December [see related map]. The region also suffered heavy flooding last year. The Red River, which runs north between Fargo, N.D., and Moorhead, Minn., crested about 23 feet above its ‘flood stage’—the point at which rivers rise above their normal banks—breaking a century-old record. The river is expected to crest 20 feet above flood stage on Saturday.”

The Journal writers explained that, “The forecast is creating anxiety across the Farm Belt as growers try to recover from last year’s unusually wet growing season. Although farmers managed to harvest bumper corn and soybean crops despite spring planting delays and a rainy fall harvest, hundreds of thousands of acres of cropland went unpicked, and the quality of the corn and sugar beet crops suffered.

“This spring is off to an even worse start because the flooding season is starting earlier. Grain traders already have added about 25 cents—about a 3% increase—to the price of a bushel of soybeans since February to reflect their worries of a delayed planting season.”

On the other hand, additional moisture has been a positive development in California. Jim Carlton reported in today’s Wall Street Journal that, “Interior Secretary Ken Salazar announced a sharp increase in federal water supplies for California’s agricultural Central Valley, further easing drought concerns in a state where El Niño rains have raised the mountain snowpack after three severely dry years.

“Mr. Salazar said water allocations from the Central Valley Project in California, a system of aqueducts and reservoirs managed by the federal Bureau of Reclamation primarily for farmers in the region, would be increased this year to between 25% and 50% of the maximum amount allowed under ideal circumstances, based on conservative forecasts by his agency. That’s up from a previous estimate of just 5% for the system’s junior users.

“The increase is made possible, Mr. Salazar said, in part because winter rains have helped replenish the state’s biggest reservoir, Lake Shasta, which now stands at 81% of capacity, compared with 55% a year ago. A former Colorado farmer, Mr. Salazar said he moved up the announcement by a week or so ‘because people on the ground and farming need to have certainty.’”

Tom Steever reported yesterday at Brownfield that, “There may be slightly greater income from the farm this year [a]ccording to [Pat Westhoff, co-director of the Food and Agriculture Policy Research Institute].

“‘We built our projections on the assumption that we’re going to get at least a little bit of recovery in the general economy. That lets us have a bit stronger demand for livestock around the world; that gives us some support for demand for crops as well that will be used to feed that livestock,’ said Westhoff, ‘so we do look for a little bit better farm income picture in 2010, but contingent on that recovery in the general economy.’

“Westhoff says farm income could recover by $10 billion this year, which is about a third of the last year’s drop in farm income. He says that $30 billion decline is consistent with 2009’s weakening general economy.”

The Brownfield link included an audio replay of the discussion between Tom Steever and Dr. Westhoff, which runs about three minutes.

Trade

A news release from USDA stated yesterday that, “Agriculture Secretary Tom Vilsack will be in Japan April 5 thru 9 to promote U.S. agricultural exports, as part of President Obama’s efforts to expand U.S. exports. While he is in Japan, Vilsack will meet with Japanese Minister of Agriculture, Forestry and Fisheries, Hirotaka Akamatsu, as well as U.S. exporters and Japanese importers.”

Iowa GOP Senator Chuck Grassley noted in a news release from yesterday that, “Sen. Chuck Grassley, ranking member of the Committee on Finance, with Sen. Max Baucus, chairman, today urged the Japanese government to remove scientifically unfounded barriers to U.S. beef and bovine-origin gelatin imports and the preferential treatment that Japan Post entities have received in Japan’s insurance, banking, and express delivery markets at the expense of private sector competitors.”

The release added that, “Grassley and Baucus sent a letter to the Japanese ambassador to the United States. Click here to view the letter. The Committee on Finance has jurisdiction over international trade.”

In other trade news, Bloomberg writer Iuri Dantas reported on Monday that, “Brazil will seek to break intellectual property rights on U.S.-made prescription drugs, music, books, software and movies in a bid to force the U.S. government to end cotton subsidies that violate global trade rules.”

“Brazil and U.S. still have room to negotiate an agreement to avoid the application of the sanctions, Foreign Minister Celso Amorim said last week. President Lula Inacio Lula da Silva blamed the ‘fighting’ over the agricultural subsidies on the U.S.’s refusal to sign an accord during the Doha round of global trade talks.”

The article added that, “No ‘concrete offer’ was made by U.S. trade officials during meetings with their Brazilian counterpart, [Carlos Marcio Cosendey, head of Foreign Ministry’s economic department] said. The U.S. government asked for more time before engaging in talks as coordination with the Congress is needed on agricultural subsidies, Cosendey said.”

With respect to the Doha talks, a recent update posted at the WTO Online stated that, “Wrapping up almost two weeks of agriculture negotiations from 3 to 12 March 2010, New Zealand Ambassador David Walker, who chairs the talks, said he expects to prepare a progress report for ‘stock taking’ meetings at the end of the month.”

Biofuels

Jenny Mandel of Greenwire reported this week at The New York Times Online that, “The use of corn ethanol in place of gasoline causes enough carbon emissions from land-use changes to cancel immediate tailpipe benefits, according to research published last week that confirms a controversial earlier study.

“The analysis examines a hypothesis by Timothy Searchinger and his co-authors published in 2008 in Science magazine that says using U.S.-grown corn for fuel triggers commodity price changes that ultimately lead to native ecosystems being destroyed, with a high carbon price tag.

“The new study, published in the March issue of BioScience, finds much lower emissions from indirect land-use change than the Searchinger paper calculated but still enough to tip the balance away from corn ethanol.”

The article noted that, “The analysis by Thomas Hertel of Purdue University found that the indirect greenhouse gas releases associated with corn ethanol are 800 grams of carbon dioxide per megajoule, or 27 grams of carbon dioxide per megajoule per year over 30 years of production.

“That amount is about a quarter of what Searchinger estimated. ‘Nonetheless, 800 grams are enough to cancel out the benefits that corn ethanol has on global warming,’ Hertel wrote.”

Dow Jones reported yesterday (article posted at DTN, link requires subscription) that, “Ethanol made from cellulose, the biofuel hoped to replace corn-based ethanol, is still a long way from being commercially viable, hindered by the cost and difficulty of gathering large amounts of cellulose feedstock, the U.S. Department of Agriculture’s top economist said Tuesday.

“‘It’s still a few years off before it can become competitive,’ said Joseph Glauber, on the sidelines of a conference here [Brussels]. ‘The challenges are the distribution and storage of feedstocks. With cellulosic ethanol, it’s hard to get the large scale without drawing on a large area of feedstocks.’”

Crop Insurance

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Michael Scuse, deputy undersecretary for Farm and Foreign Agricultural Service, spoke Monday to the National Farmers Union convention in Rapid City, S.D., explaining that USDA is expected to release its third contract offer to the crop-insurance industry on the Standard Reinsurance Agreement within the next couple of weeks. Insurers rejected the first two proposals that would have cut $8.4 billion in the first proposal or $6.9 billion in the second proposal, over 10 years. Scuse said he expects a contract to be signed by June so it would be in effect in 2011.

“‘We have negotiated in good faith,’ Scuse said. ‘We have listened to the concerns. We have met with producers, companies, agents, and other stakeholders to make sure we have an SRA that benefits the taxpayers, the farmers and the companies alike.’

“Scuse said there were ‘numerous meetings’ just last week about the contract talks. ‘We will have a new SRA in the not-too-distant future.’”

Keith Good

Comments are closed.