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Budget Issues (Nutrition); Climate Developments; Credit; and CFTC Issues

Budget Issues (Nutrition)

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The Senate Agriculture Committee on Wednesday passed the Healthy, Hunger-Free Kids Act, a bill to reauthorize the child-nutrition programs, with a $4.5 billion increase in funding over 10 years to increase funding for school, after-school and summer meal programs and to improve the nutritional quality of the meals.

“The committee unanimously supported the bill by a bipartisan voice vote, but it defeated a Republican amendment to change the bill’s funding offsets. There were also signs of battles to come on the Senate floor over amendments.”

(Note: Opening statements at yesterday’s meeting by Chairman Lincoln and Ranking Member Saxby Chambliss (R-GA) can be viewed here and here).

Mr. Hagstrom noted that, “The bill falls short of President Barack Obama’s fiscal year 2011 budget proposal for a $10 billion increase over 10 years to meet his goal of ending childhood hunger by 2015.”

With respect to budgetary funding, the DTN article explained that, “The increases in funding would be offset by a $1 billion decrease in school food purchases, a $1.2 billion decrease in grants to states to teach food stamp recipients healthier eating habits and a $2.2 billion decrease in the authorization levels for the Environmental Quality Incentives Program (EQIP), which is used by farmers and ranchers to address environmental problems.

“Lincoln noted that appropriators have been cutting EQIP and maintained that the bill would ‘lock in’ EQIP funding by assuring a slow rate of growth in the program, but other senators said there was nothing to prevent appropriators from continuing to make cuts.”

Yesterday’s article stated that, “Senate Agriculture Committee ranking member Saxby Chambliss, R-Ga., offered an amendment to shift the offset to the Conservation Stewardship Program, another USDA environmental program, and to provide an additional $100 million for the Emergency Food Assistance Program, which distributes commodities, and $275 million over five years for summer feeding programs.

Chambliss argued that demand was higher for EQIP than for CSP, but Lincoln and Senate Health, Education, Pensions and Labor Chairman Tom Harkin, D-Iowa, who created CSP when he chaired the Agriculture Committee, opposed the amendment.”

With respect to potential action in the future, the DTN article indicated that, “At a joint news conference with Lincoln after the markup, Chambliss said he supports the bill, but will offer his amendment to change offsets on the floor.

“Sen. Richard Lugar, R-Ind., said he would offer a floor amendment to cut direct payments to farmers to provide more money for the summer feeding program and for transportation for rural children to summer feeding program sites.”

AP writer Mary Clare Jalonick noted in an article from yesterday on the Senate Ag Committee action that, “When New York Sen. Kirsten Gillibrand offered an amendment to ban artery-clogging trans fats from schools, for example, Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., said Congress should let the Agriculture Department tackle the issue.

“‘We provide the broad outline, and the department is going to fill in those details,’ she said. ‘Once we open the door to trying to dictate trans fats, we are opening the door to try and micromanage other things.’

Gillibrand withdrew her amendment and said she would try again on the Senate floor.”

(Note: Senators Lugar, Gillibrand and John Thune (R-S.D.) did offer additions that were included in the child nutrition reauthorization bill; a description of Sen. Lugar’s addition is available here, a description of Sen. Gillibrand’s addition is available here, and an overview of Sen. Thune’s addition is available here. Also yesterday, former Ag Committee Chairman Tom Harkin (D-Iowa) released a statement on the passage of the bill.)

An update posted yesterday at the National Sustainable Agriculture Coalition Blog noted that, “[T]he draft bill from Ag Committee Chair Blanche Lincoln (R-AR) also included $25 million in mandatory funding for the Farm to School program. In Lincoln’s ‘manager’s amendment’ that was approved today, she lifted that amount up to $40 million. In addition, the manager’s amendment included the improved Farm to School program language from Senator Patrick Leahy’s (D-VT) Farm to School bill. The Leahy bill would provide $50 million, and work is ongoing to try to achieve that funding level by the time the bill goes to the Senate floor.”

Yesterday’s update added that, “Senator [Debbie Stabenow (D-MI)] filed two amendments to improve the farm bill conservation program technical assistance budgets for the Natural Resources Conservation Service. The amendments do not require additional funding, but attempt to make the best possible use out of existing funding. The amendments did not come to a vote, but the Chair indicated she would continue to work with Senator Stabenow to try to reach an accommodation before the bill reaches the Senate floor.

“An amendment by Senator Sherrod Brown (D-OH) was accepted by voice vote with no opposition to authorize an organic food pilot program that would provide competitively-awarded grants to school authorities to create pilot efforts to buy more organic foods for the school meal programs. The measure would still need to be funded by Agricultural Appropriations for the program to get off the ground.”

In more detail regarding the budgetary implications of yesterday’s bill on EQIP, Bronwfield’s Julier Harker reported that, “Lincoln assured committee members that her bill would not mean any less EQIP money to producers. She says it slows the growth of the conservation program which never reaches authorizing funding levels anyway, ‘What we do in this bill, however, is lock in a steady increase to the producers.’

“But several Senators including Mike Johanns of Nebraska and Pat Roberts of Kansas supported an amendment by Ranking Member Saxby Chambliss of Georgia that would have added nearly 13 million acres to EQIP in the current fiscal year and 9-and-a-half million acres for 2011 and ’12.

“Senator Johanns says Nebraska has four times as many requests for EQIP than it has to fill. And while EQIP and Child Nutrition Programs are equally important, he says EQIP does not deserve another bite taken out.”

The Brownfield link included audio comments from yesterday’s hearing, in this clip (MP3-2:00), Chairman Lincoln explains in more detail the nature of the EQIP budget issue and the potential impact for farmers.

And in a related news item on this issue, in his latest “Open Mic” interview, Agri-Pulse Senior Editor Stewart Doan interviewed Dave White the chief of USDA’s Natural Resources Conservation Service.

As part of the discussion, Mr. Doan asked Dave White about the EQIP funding issue and got his perspective on how this budgetary development could potentially impact agricultural producers. To listen to this portion of the interview, just click here (MP3-2:00). The entire Agri-Pulse “Open Mic” interview is available here.

Meanwhile, House Ag Committee Ranking Member Frank Lucas (R-OK) issued a statement yesterday regarding the Senate Ag Committee vote, which noted that, “I am disappointed that the Senate Agriculture Committee passed the child nutrition measure at the expense of the Environmental Quality Incentives Program (EQIP). I would hope that those charged with representing American agriculture would understand the importance of EQIP and how our farmers and ranchers depend on it for survival. This vote undermines the commitment we all made to our producers in the 2008 farm bill.

“No one disputes the importance of child nutrition, but we cannot continue to use programs that benefit our agricultural producers as a funding source for other programs.”

Secretary of Agriculture Tom Vilsack also released a statement yesterday on the Sen. Ag Committee vote, to view his comments, just click here.

In related news regarding school nutrition, Monica Eng reported earlier this week at the Chicago Tribune Online that, “Chicago public schools plan to ditch their daily nacho service in high school and get rid of doughnuts and Pop-Tarts for breakfast as part of a major nutritional overhaul of menus, according to interviews and documents examined by the Chicago Tribune.

“New standards from the Chicago Public Schools Nutrition Support Services address many of the concerns raised in Tribune articles describing the daily serving of nachos, doughnuts and desserts in a district with an inordinate number of overweight and obese children.”

And The New York Times editorial board included a piece in today’s paper regarding the efforts of First Lady Michelle Obama on the nutrition and childhood obesity issue.

Climate Developments

Alexander Bolton reported yesterday at The Hill Online that, “Democrats are debating whether to spend political capital earned by passing healthcare reform or hoard it so it pays dividends in the midterm elections.

Liberals argue the new momentum offers a rare opportunity to pass top priorities, such as immigration reform and climate change legislation, and warn that the party is likely to see its large majorities in the Senate and House diminished next year.”

“‘It shows us that when we put our mind to something and we tackle it, we can get it done,’ said Sen. Barbara Boxer (D-Calif.), chairwoman of the Environment and Public Works Committee, which passed a climate change bill last year.”

However, the article added that, “But conservative Democrats, many facing tough reelection fights, say the time has come to rein in the ambitious agenda and focus on creating jobs and spurring the economy.”

With this background on mind, Ben Geman reported earlier this week at The Hill’s Energy and Environment Blog that, “The Senate trio – John Kerry (D-Mass.), Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) – trying to salvage a big climate change and energy bill this year treated 19 colleagues to a PowerPoint presentation about their upcoming plan Tuesday afternoon.”

Washington Post writer Juliet Eilperin reported on Tuesday at the Post Carbon Blog that, “Sens. John F. Kerry (D-Mass.), Lindsey O. Graham (R-S.C.) and Joseph I. Lieberman (I-Conn.) brought in a group of their colleagues to discuss their compromise climate proposal Tuesday, but one of the most positive signs might have come from a senator who didn’t even attend the session.

“Sen. Judd Gregg (R-N.H.) didn’t have a chance to stop by the session, but in an interview, Gregg said he was talking with the troika and other key senators about the prospects for a bill.”

Lisa Lerer reported yesterday at Politico that, “Details are beginning to leak out about the climate bill, after weeks of closed-door negotiations among key Senate lawmakers and staff.”

Ms. Lerer explained that, “But the bill provides a weaker cap on greenhouse gas emissions than many environmentalists had hoped. And it’s chock-full of sweeteners for coal, oil, offshore drilling and nuclear power — energy sources viewed with some skepticism in the environmental community but seen as key to picking up the votes of a handful of moderate Republicans.

“‘We’re not restricting our pool of potential votes to only Democrats,’ said Kerry.

“Those types of trade-offs, lawmakers said, are necessary to build the political support to move the bill through the Senate.”

The Politico article went on to discuss some of the details of the trio’s proposal at greater length.

However, Darren Goode pointed out yesterday that some lawmakers may be skeptical of the trio’s approach: “While a trio of senators this week is still piecing together a potential deal on climate and energy that could begin to be drafted over the upcoming two-week spring break, one bipartisan Senate duo is not yet convinced and may siphon off much-needed support for that effort.

“Sens. Maria Cantwell, D-Wash., and Susan Collins, R-Maine, are still pushing for their alternative ‘cap-and-dividend’ idea that would avoid setting up a new carbon trading market. They say their plan, which has been well-received by some energy experts, avoids the volatility and speculation that has skewed oil and other commodity markets, while including a direct refund for consumers based on revenue generated from charging businesses for emissions. It is also, they say, far simpler than the cap-and-trade plan the House passed last year.

“‘I think that the public is tired of 2,000-page-plus bills and wants a bill that is more straightforward in its approach,’ Collins told a gathering hosted by the Bipartisan Policy Center today.”

And Bloomberg writer Simon Lomax reported yesterday that, “A group of U.S. senators trying to revive stalled climate-change legislation should abandon a European-style carbon market to win more support, Senator Maria Cantwell, a Washington Democrat, said today.

“‘Let’s not make the same mistakes Europe made,’ Cantwell told reporters today. Instead of participating in a market for pollution rights created by a cap-and-trade program, fossil-fuel producers should pay a ‘clear price’ for carbon dioxide and other greenhouse gases ‘without volatility,’ she said.”

Meanwhile, Juliet Eilperin reported yesterday at the Post Carbon Blog that, “Senate Majority Leader Harry Reid met Wednesday afternoon with several key committee chairs and White House staff to discuss how to proceed with climate legislation–and the plan is there’s still no definite plan, beyond more closed-door negotiations.

“Senate Foreign Relations Committee Chairman John Kerry (D-Mass.) gave an overview of the draft climate and energy bill he’s been sketching out along with Sens. Lindsey O. Graham (R-S.C.) and Joseph I. Lieberman, according to sources familiar with the meeting, and said he could share more when a final draft text is done in early to mid-April. Obama climate czar Carol Browner and White House congressional liaison Phil Schiliro, who attended the session, said they would be happy to work with all the relevant chairs, including those from the Agriculture; Commerce, Science and Transportation; Energy and Natural Resources; Environment and Public Works; and Finance committees.”

Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “White House climate czar Carol Browner on Wednesday said the Obama administration is working hard to advance Senate climate and energy legislation, but declined to weigh in on a brewing Senate proposal to impose a carbon tax on motor fuels.

“‘It is our hope the Senate will act this year and we will do everything in our power to support that,’ she told an energy forum hosted by U.S. News & World Report.

“Browner’s comments, however, follow recent White House signals that while the administration wants to see action on energy this year, it is not mounting an all-out push and has bigger priorities.”

And the “Washington Insider” section of DTN noted in part yesterday (link requires subscription) that, “If Democrats find themselves with a weaker majority — or, no majority at all — this fall, prospects for both new legislation and executive regulation of GHG emissions likely will look very different. Thus, while the climate change debate has receded somewhat this spring it is still on many agendas and should be watched very closely as it proceeds.”

Credit

Reuters news
reported yesterday that, “U.S. commercial banks are keeping credit standards elevated for farmers wanting loans to grow crops and raise livestock this year after loan repayment worsened in 2009 and delinquency rates rose, the Kansas City Federal Reserve said on Wednesday.”

“‘Those facing the most difficulty in getting credit are livestock producers, whose thin profit margins and high debt levels are likely to continue in 2010,’ economists Jason Henderson and Maria Akers said in Kansas City Fed’s latest newsletter.”

Bob Meyer reported yesterday at Brownfield that, “A lot of dairy producers are wondering just where they stand credit-wise this spring. Gary Sipiorski serves on the Advisory Council for Agriculture and Industry for the Federal Reserve Bank of Chicago, he says lenders do have money to lend but bank examiners are causing them to be tighter with credit.”

And a news release issued yesterday by the National Farmers Union stated in part that, “National Farmers Union (NFU) sent a letter today on behalf of its dairy producer members pleading for an increase in the Dairy Product Price Support Program (DPPSP) and help with credit issues the industry is facing.

“‘The dairy crisis has taken a heavy toll on dairy farm families nationwide,’ said NFU President Roger Johnson. ‘More than 2,000 dairies have gone out of business due to low producer prices.’

“The letter outlined producer support opportunities U.S. Department of Agriculture (USDA) Secretary Tom Vilsack may implement without legislative action. One option is a temporary increase in the DPPSP, an action Vilsack took in 2009.”

CFTC Issues

Reuters writer Charles Abbott reported yesterday that, “U.S. financial reform should require the reporting of all trades in the $450 trillion swaps market and mandatory clearing for some but not all swaps, a key Senate committee chairman said on Wednesday.

“Fleshing out details of the Agriculture Committee’s approach on over-the-counter derivatives reform for the first time, Blanche Lincoln said she believed some swaps should be exempt from central clearing.

“One of the major debates among lawmakers is who will be exempt from clearing, a decision that could determine the scope of reform and potential earnings for some dealers.”

Yesterday’s article noted that, “‘I want my bill to incentivize market participants to clear,’ said Lincoln, an Arkansas Democrat, at a U.S. Chamber of Commerce conference.

Under her plan, clearing would be mandatory for some standardized swaps and voluntary for others.

“Lincoln, whose committee oversees futures markets, said she wanted to be ‘a pragmatic voice’ as lawmakers try to finish financial regulatory reform before midterm elections in November.”

Keith Good