FarmPolicy

August 21, 2019

Farm Bill; Climate Issues; Clean Water Act; Food Security; Biofuels; and Financial Regulation

Farm Bill

A news release issued yesterday by the House Ag Committee stated that, “Today, House Agriculture Committee Chairman Collin Peterson held a hearing to discuss U.S. agriculture policy in advance of the 2012 Farm Bill with U.S. Secretary of Agriculture Tom Vilsack.”

A prepared transcript of Sec. Vilsack’s opening remarks from yesterday’s hearing can be viewed here, while a shorten version of excerpts from his testimony can be viewed here; in addition, a power point presentation Sec. Vilsack referenced in his testimony is available here.

An audio replay of the entire Ag Committee hearing was posted yesterday on the FarmPolicy.com twitter page.

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “The Obama administration will leave the writing of the 2012 farm bill largely up to the congressional agriculture committees, but the administration believes the bill should contain a safety net for farmers as well as provisions to help create better off-farm jobs in rural America, Agriculture Secretary Tom Vilsack told the House Agriculture Committee on Wednesday.

“At the committee’s first hearing on the 2012 farm bill, Vilsack said USDA ‘would provide an outline or framework on the farm bill, but there is no intention to provide you with a complete farm bill.’ Previous administrations have varied in the scope of farm bill proposals they have made to Congress. The agriculture committees have often ignored or pushed back against administration proposals.”

Mr. Hagstrom indicated that, “House Agriculture ranking member Frank Lucas, R-Okla., told Vilsack he did not talk enough about the farm safety net and said he fears the administration believes increasing high-speed Internet service and other nonfarm programs are ‘the primary issues.’ Lucas asked Vilsack if the administration’s proposals in the fiscal year 2011 budget to cut direct payments, crop insurance and conservation programs would be an indication of its farm-bill proposals.

“Vilsack replied that there may be opportunities to use those resources in an efficient way, but he also pledged to handle the negotiations with crop insurance companies over their subsidy levels in a way to protect the baseline for the farm bill.

Lucas said he was afraid the Obama administration will turn rural America into ‘a bedroom community where people drive to work every day and drive back,’ but Vilsack said that is not his goal. He said that jobs in biorefineries and firms using broadband Internet service would help people stay in rural America.”

To listen to the entire spirited exchange between Ranking Member Lucas and Sec. Vilsack from yesterday’s hearing, just click here (MP3-9:08).

Philip Brasher noted yesterday at the Green Fields Blog (The Des Moines Register) that, “Some conventional growers have bridled at the USDA’s emphasis under Vilsack on subsidizing and providing other assistance to small-scale farms and processors.

“But Vilsack argues that promoting local food production will not only keep people on the land but also build public for farm programs in general.”

Reuters writer Charles Abbott reported yesterday that, “U.S. farm groups and lawmakers must consider whether fundamental change is needed in farm subsidies that date from the Depression, said the head of the House Agriculture Committee on Wednesday after the opening work on the new farm bill, due in two years.

“Chairman Collin Peterson told reporters the Average Crop Revenue Election, an option created in 2008, has ‘elements we need to look at for the future.’ ACRE is the first program to shield farmer revenue from poor yields as well as low prices.”

Mr. Abbott added that, “‘I think it will be very difficult to pass a status-quo farm bill in 2012,’ said Peterson, a Minnesota Democrat. ‘I think it’s inadequate.’

“For one thing, he said, there will not be enough money to increase crop subsidy rates as high as some backers want.

“The committee has scheduled four field hearings through May 4, with more possible. ‘I’m trying to get people to look ahead here,’ said Peterson.”

The Reuters article added that, “Besides mentioning ACRE as a possible model, Peterson said attention also was being given to a ‘whole-farm revenue’ concept. It could allow more cropping flexibility than ACRE, which is tied to growing a specific crop. In the long run, he said, the United States could move to an insurance-like support system.”

In a separate update posted yesterday at the Green Fields Blog, Des Moines Register writer Philip Brasher indicated that, “The chairman of the House Agriculture Committee is looking to make fundamental changes in the way that corn and other crops are subsidized when Congress writes the next farm bill in 2012.

“Rep. Collin Peterson said the current subsidy programs overlap with each other and with crop insurance. And there will be no money available to increase the subsidy rates under existing programs and some commodity groups want, he said.”

Mr. Brasher added that, “One idea is to link subsidies more to swings in farm revenue as opposed to commodity prices. ‘Let’s come up with the best risk management system that we can,’ he said.

The Minnesota Democrat, who lingered to talk to a few reporters after a hearing today, also sees the current subsidies being integrated in some way with crop insurance. In fact, in 20 years, crop insurance is likely to be the single way that the government subsidizes farmers, he said. The concept of crop insurance is easier to sell to urban voters than the conventional subsidy programs.”

With respect to yesterday’s hearing, an audio replay of a portion of Chairman Peterson’s opening statement is available here (MP3-4:01).

Meanwhile, Dow Jones news reported yesterday (article posted at DTN, link requires subscription) that, “It’s been over three months since the U.S. Congress allowed the government tax incentive on soybean oil-based biodiesel production to expire and the damage to the idled industry is becoming irreparable, U.S. lawmakers said Wednesday.

“Reps. Steve King, R-Iowa, and Steve Kagen, D-Md., voiced frustration over the loss of the $1-per-gallon government tax incentive that expired on Dec. 31. King said, in one instance, a biodiesel plant in Iowa was being dismantled and shipped to India.”

The article stated that, “It is up to Congress to renew the biodiesel tax incentive, but it was U.S. Department of Agriculture Secretary Tom Vilsack that King and Kagen voiced their frustrations to during a House Agriculture Committee hearing.

“Vilsack said he sympathized with their despair. He told King that he has had discussions about the situation with President Barack Obama and the president supports renewing the tax incentive.”

To listen to a portion of the exchange between Rep. King and Sec. Vilsack on this issue from yesterday’s hearing, just click here (MP3-1:33).

Also at yesterday’s House Ag Committee hearing, Rep. Earl Pomeroy (D-North Dakota) questioned Sec. Vilsack on the implementation of the 2008 Farm Bill’s disaster relief programs; Rep. Leonard Boswell (D-Iowa) posed questions to Sec. Vilsack on the child nutrition programs; Rep. Jerry Moran (R-Kansas) asked Sec. Vilsack for more details about the standard reinsurance agreement negotiations for crop insurance (audio replay, MP3-1:09); and Rep. Adrian Smith (R-Nebraska) asked Sec. Vilsack about trade issues (audio replay, MP3-1:04).

A University of Missouri Extension news item from earlier this week (“Wheat growers will receive ACRE payments, says MU-FAPRI analysis of USDA safety net”) stated in part that, “Crop farmers facing a June 1 deadline to sign up for ACRE, a federal farm safety net, may want to study the benefits received by wheat producers who signed up last year, said University of Missouri economists.

“MU Food and Agricultural Policy Research Institute (FAPRI) estimates that wheat growers will receive $245 million of the $294 million to be paid on 12 major commodities during the 2009-2010 crop year.”

The news update noted that, “Payments from the Average Crop Revenue Election (ACRE) are an alternative risk management program, based on revenue, in the 2008 Farm Bill. To enroll in ACRE, growers must forgo some benefits in traditional farm programs of direct and countercyclical payments, said Peter Zimmel, MU-FAPRI economist.

“The study of the current crop year shows participants drawing an average net benefit of $5.38 per base acre enrolled. That estimate will not be confirmed until the close of the current marketing year, Zimmel added.”

Climate Issues

As background to the debate regarding climate legislation, Reuters writers Richard Cowan and Thomas Ferraro reported yesterday that, “Democratic leaders in the Congress may try to win passage of contentious immigration reform legislation this year in a move that could further harm prospects for a climate-change bill, congressional aides said on Wednesday.”

Recall that the AP reported yesterday that, “White House energy adviser Carol Browner said Tuesday she thinks Congress still has time to approve a climate and energy bill this year.

“Browner called action on the long-delayed legislation ‘doable,’ because members of Congress increasingly understand the need to develop clean energy that does not emit carbon dioxide and other pollutants blamed for global warming.”

Meanwhile, Reuters writer Timothy Gardner reported yesterday that, “U.S. senators crafting a compromise climate change bill have held months of meetings with oil, coal and manufacturing interests, but so far have failed to gain the ironclad words of support many think will be necessary for passing legislation.”

Clean Water Act

Stephen Dinan reported in today’s Washington Times that, “House Democrats pushed forward Wednesday with an effort to delete the word ‘navigable’ from the Clean Water Act – a change that would give the government greater ability to enforce clean-water rules but that opponents said amounts to a federal power grab.

“Rep. James L. Oberstar, chairman of the Transportation and Infrastructure Committee, said he’s trying to return the law to where it was before 2001, when the Supreme Court issued the first of two rulings that said the Clean Water Act’s use of ‘navigable’ limits the government’s oversight to major rivers, lakes and similar waterways.”

The Washington Times article added that, “‘If this bill were to become law, there’d be no body of water in America that wouldn’t be at risk of job-killing federal regulation – from farmers’ irrigation canals to backyard ponds and streams to mud puddles left by rainstorms,’ said Rep. Doc Hastings of Washington, the ranking Republican on the House Natural Resources Committee.”

A related update posted yesterday at CQPolitics stated that, “The revised bill would codify exemptions from the law for converted croplands and waste treatment systems and clarify that groundwater supplies are considered separately from ‘waters of the United States.’”

Food Security

Treasury Secretary Tim Geithner and Bill Gates penned an opinion item that was published in today’s Wall Street Journal titled, “A New Initiative to Feed the World.”

In part, the authors stated that, “Today, the United States, Canada, Spain, South Korea and the Bill & Melinda Gates Foundation are making a commitment to fight the threat of global food insecurity. Together we are launching the Global Agriculture and Food Security Program, a new fund to help the world’s poorest farmers grow more food and earn more than they do now so they can lift themselves out of hunger and poverty.

“A steep rise in food prices in 2008 and the recent global economic crisis have pushed the number of hungry people in the world to more than one billion. As the world’s population increases in the coming years and as changes in the climate create water shortages that destroy crops, the number of people without adequate access to food is likely to increase. As that happens, small farmers and people living in poverty will need the most help. They are the ones who cannot afford to grow crops or buy food when seed prices double. They are also the ones who face shortages when rainfall patterns change and reduce the amount of available water.”

The piece noted that, “Proposed last year by the G-8 and G-20, the new Global Agriculture and Food Security Program hosted by the World Bank will provide financing to low-income countries with high levels of food insecurity. It will partner with countries that have developed sound agricultural plans and that are already using their own resources to invest in the most effective ways to boost crop production. The fund’s public-sector account will invest in infrastructure that will link farmers to markets, promote sustainable water-use management, and increase access to better seeds and technologies.

“But aid alone cannot unleash the potential of agriculture. Small farms need greater private-sector investments than they get now. That is why this fund will have a private-sector account that provides financing to increase the commercial potential of small and medium size farms and other agribusinesses.”

Also today, the Senate Foreign Relations Committee will be holding a hearing titled, “Promoting Global Food Security: Next Steps for Congress and the Administration.”

Biofuels

A news release issued yesterday by POET stated that, “POET plans to have a hand in producing 3.5 billion gallons of cellulosic ethanol per year by 2022, POET CEO Jeff Broin said today at the National Press Club in Washington, D.C.

“POET, the largest producer of ethanol in the world, has made enough progress on technology and feedstock development to break ground on its first plant in Emmetsburg, Iowa later this year, Broin said. He is confident it will be the first of many.”

“Broin said there is a role for policy-makers to play in overcoming the remaining hurdles to commercializing the cellulosic ethanol production process. ‘In order for this vision to become a reality, policy makers must provide access to the market and the stability needed to attract the large amount of capital that will be required to finance its construction,’ Broin said.”

Financial Regulation

Reuters writers Andy Sullivan and Roberta Rampton reported today that, “A Senate panel on Wednesday voted to ban banks from the lucrative swaps market, one of the strictest measures in a planned financial reform that is heading into the home stretch.

“One Republican [Chuck Grassley, Iowa- related news release] joined Democrats on the Senate Agriculture Committee to advance a measure that would introduce oversight to the unregulated $450 trillion derivatives market, the source of the worst financial turmoil in 70 years.”

A replay of yesterday’s hearing is available here, while opening statements from Chairman Blanche Lincoln (D-Arkansas) and Ranking Member Saxby Chambliss (R-Georgia) can be viewed here and here.

Brady Dennis and Paul Kane reported in today’s Washington Post that, “Key members of both parties said Wednesday that they are close to agreeing on the main elements of a bill to overhaul the nation’s financial regulations, raising the prospect that the Senate could begin formal discussion of the landmark legislation early next week.”

The Post article indicated that, “Lincoln’s legislation bans big Wall Street banks from trading derivatives, contracts that allow financial traders to make side bets on the direction of stocks, commodities and other assets. Derivatives trading, which aggravated the financial crisis, has roots in the trading of certain farm commodities, which is why the agriculture committees in the Senate and House have some jurisdiction over it. Treasury Department officials and some Democrats on the Senate banking committee, which is also interested in derivatives, do not support the ban.

“Lincoln’s measure could prove more favorable to food manufacturers and other commercial firms than to banks, even though her staff made some late adjustments, at the request of Treasury officials, to limit derivative trading by nonfinancial companies. The bill that emerged out of the banking committee is tougher on these companies. Lawmakers must resolve the differences between the proposals.

After Grassley’s vote, some lawmakers said passage of a sweeping regulatory bill is more likely than ever.”

Keith Good

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