House Passes The American Jobs and Closing Tax Loopholes Act: Background
DTN Ag Policy Editor Chris Clayton reported on Friday (link requires subscription) that, “A jobs and tax-extenders bill that resuscitates the biodiesel tax credit passed the House of Representatives on Friday, but biodiesel producers will still go into June waiting for final action on the credit.
“The American Jobs and Closing Tax Loopholes Act has several provisions directly related to agriculture beyond biodiesel, including more than $1.5 billion in disaster aid, the settlement of a long-running USDA discrimination case and the extension of a subsidy for American cotton shirt manufacturers.
“The bill extends the $1 biodiesel and renewable fuel credit to the end of 2010, and makes it retroactive to the beginning of this year. The credit expired last December, and industry officials have said the loss of the credit has caused biodiesel plants to idle across the nation and has led to as many as 20,000 people losing their jobs. The tax credit is expected to cost about $624 million this year and another $231 million in 2011, according to Congress’ Joint Committee on Taxation.”
Noel E. Oman reported earlier this week at the Arkansas Democrat Gazette Online that, “To some, the United States didn’t have much leeway when it reached an interim solution last month with Brazil in a long-running dispute over American government subsidies to U.S. cotton growers.
“‘We had a limited number of things we could do,’ said Rose Marie Watkins, director of the international policy team for the American Farm Bureau Federation. ‘There wasn’t a lot of choice.’ The World Trade Organization ruled last August that the subsidies violated global fair-trade rules and decided to allow Brazil to impose import tariffs valued at $820 million on American goods and intellectual properties. After that ruling, Brazil and the United States negotiated a $147.3 million temporary solution until Congress can address the larger issue of American farm subsidies in the 2012 farm bill.
“The solution, announced April 6, calls for the United States to provide Brazil with $147.3 million per year to provide ‘technical assistance and capacity building’ for Brazilian cotton farmers.”
The Washington Insider section of DTN noted yesterday (link requires subscription) that, “Shifting away from direct payments [related graph] would go a long way toward resolving the problem of farm payment limits, which Ag panel Chairman Peterson sees as the main reason for opposition to federal farm program. ‘A lot of the huge payment issues would go away if you don’t have direct payments,’ Peterson said. Direct payments, he says, are what generates ‘all the opposition because we make payments to people who aren’t farming [such as] people who own land [but] who live in New York City.’
“However, Peterson is a realist who knows that if farmers are asked to give up $5.2 billion in annual direct payments, they will demand something in return. That ‘something’ could be a revamped average crop revenue election (ACRE) program [related graph] that is less complicated to explain and that provides better protection for farmers by being based on economic conditions at the county rather than the state level.”
“The Republican effort, which enjoys the support of at least three Democrats [Blanche Lincoln (Arkansas), Ben Nelson (Nebraska) and Mary Landrieu (Louisiana)], is unlikely to become law. But a strong vote for the measure could further undermine chances for separate legislation to control emissions of carbon dioxide and other greenhouse gases that President Barack Obama wants.
“The vote on EPA regulation could come just as federal agencies wrap up their economic analysis of climate change legislation by Democratic Senator John Kerry and independent Senator Joseph Lieberman, which already faces an uphill fight.”
The article added that, “Murkowski spokesman Robert Dillon said the senator reached an agreement with Senate Majority Leader Harry Reid to hold a vote on her measure on June 10.”
Recall that back on April 30, the House Agriculture Committee held a field hearing in Des Moines, Iowa to review U.S. agriculture policy as the Committee begins the process of considering the 2012 Farm Bill.
An UNOFFICIAL transcript of this hearing has been posted at FarmPolicy.com and is available here.
Likewise, last Tuesday, the House Ag Committee held a field hearing in Sioux Falls, South Dakota in preparation for the 2012 Farm Bill.
An UNOFFICIAL transcript of this hearing has been posted at FarmPolicy.com and is available here.
Meanwhile, a brief FarmPolicy.com recap of all of the House Ag Committee Farm Bill hearings is available here.
Ron Smith reported yesterday at the Southwest Farm Press Online that, “Brazil and the World Trade Organization are dealing with a situation that bears little resemblance to real world conditions in the cotton market, Collin Peterson, chairman of the House Ag Committee, said during a farm bill field hearing Monday in Lubbock.
“Peterson, commenting on the negotiations currently underway with Brazil to prevent retaliatory measures allowed by the WTO ruling against the U.S. Cotton program, said the issue is based on situations that existed under previous farm bills. ‘It’s about past history,’ he said. ‘Brazil is suing you over past history.’”
“South Dakota Farmers Union president Doug Somke, who raises grain and beef near Conde, asked the panel to keep crop insurance supported at current levels when Congress writes the next farm bill in 2012.
“‘Farmers have grown to use it as a marketing tool,’ Somke said. ‘And bankers have come to use it as well.’”
Farm Bill: House Ag Committee Field Hearing- Lubbock, Texas
With respect to Monday’s House Ag Committee field hearing in Texas, DTN Political Correspondent Jerry Hagstrom (link requires subscription) reported that, “Texas farm leaders on Monday told the House Agriculture Committee that the traditional farm commodity programs including direct and counter-cyclical payments and marketing loans that are in the 2008 farm bill should be continued in the 2012 rewrite. But House Agriculture Chairman Collin Peterson said they might want changes if crop prices go down and the safety net proves it cannot cover rising production costs.
“After the hearing, Peterson told reporters that the 2008 bill has been popular because crop prices have been ‘pretty good.’ He added, ‘If we get down to $2 (per bushel) corn, you’d have different testimony than what we had here today.’ He said no matter how the 2012 program is constructed, it will have to be designed so that banks can use it as collateral for loans and so that it is based not just on revenue losses but also on cost of production.”
The article noted that, “‘I thought we had good testimony from a very broad range of agricultural interests,’ said U.S. Rep. Randy Neugebauer, R-Texas. ‘It’s important to come out here where agriculture is actually happening.’
“The select 13 witnesses submitted written testimonies to the committee and gave five-minute presentations regarding what has and has not been effective for their industries in the current farm bill. The most popular issues mentioned were crop insurance, international trade, environmental challenges and conservation programs.”
“Most favored the USDA direct and counter-cyclical programs and marketing loan programs under the 2008 bill, which assisted in increasing production input costs and financial stability. Those same individuals cited problems with payment limitations, eligibility standards and complex application processes for some of USDA’s farm and conservation programs.”
Today’s article added that, “‘My intention is to get this bill out of the house by December of 2011 and try to get this bill done on time,’ [Chairman Collin Peterson, D-Minn] said.”
The Washington Insider section of DTN reported on Friday (link requires subscription) that, “[A] new challenge for ag policy may be emerging. Earlier this week, the White House released a report on childhood obesity with the extremely ambitious title, ‘Solving the Problem of Childhood Obesity in a Generation.’ It observes that neither children nor adults are eating fruits and vegetables at levels recommended by the 2005 Dietary Guidelines. Its solution is to increase consumption of these foods by 70 percent by 2020.
“The analysis focuses mainly on supply. For example, it observes that Americans ate 643.6 pounds of fruit and vegetables per person in 2008. That may sound like a lot, but the report’s authors think it is far too little and that the key problem is to find ways to boost the supply of these foods — and they expect to boost consumption by 453 pounds per person.
“In spite of all these numbers, the report does not focus much on how these shifts would be accomplished. If the current markets are anywhere near equilibrium, economists say, new incentives would be needed across the board if a big change is to be expected.”
“Wellesley College professor and food expert Rob Paarlberg suggested the ban during a hearing to review the 2008 farm law, which includes food stamps as well as crop subsidies. Food stamps help low-income people buy food. One in eight Americans receives food stamps.”
A news release issued yesterday by Rep. Jim Costa (D-California) stated that, “[Jim Costa] today introduced legislation to protect American jobs and strengthen our nation’s dairy industry. The Dairy Price Stabilization Act promotes market stability and individual dairy farmers’ ability to grow their own business.
“‘While periods of boom and bust are not new to the dairy industry, our dairy families cannot afford another year of low milk checks that don’t even cover the cost of production,’ said Costa. ‘The dairy price crisis is devastating our local economy and ability to create and sustain jobs. This bill will help the dairy industry get back on track and curb the milk price volatility that is driving dairy farmers in the Valley and our nation out of business.’”
Christine Souza reported today at the California Farm Bureau Online that, “Don’t get too comfortable with the policies and programs contained in the current federal farm bill: That was the message that the chairman of the House Agriculture Committee brought to farmers and ranchers attending a field hearing in Fresno last week.
“Rep. Collin Peterson, D-Minn., said farmers should expect ‘fundamental changes’ in farm policy and said there will be ‘little room for the status quo’ in the next farm bill, because of budgetary pressures and a public increasingly skeptical of traditional farm programs.”
Bloomberg writer Simon Lomax reported yesterday that, “Legislation to cap greenhouse gas emissions from industrial polluters may be set aside this year in favor of a measure that ramps up electricity production from renewable sources such as wind farms, Senate Majority Leader Harry Reid said.
“The ‘smaller energy bill,’ which includes a national renewable electricity standard, has the support of ‘a couple of Republicans,’ the Nevada Democrat said in an interview on Univision network’s ‘Al Punto’ program. He didn’t name them.
“A ‘big’ energy bill limiting the greenhouse gases from burning fossil fuels such as coal and oil doesn’t have Republican support, Reid said in yesterday’s interview. The 57 Democratic senators and the two independents who caucus with them usually need the support of at least one Republican to pass major legislation.”
DTN Ag Policy Editor Chris Clayton reported on Friday that, “Congress has largely ignored proposals from the Obama administration to cut program payments to some of the nation’s larger farms. But, Secretary of Agriculture Tom Vilsack’s push to spend more money on rural development and spend less on farm programs is drawing some ire from lawmakers who want to preserve the current safety net for commercial farmers.
“Vilsack has been accused of promoting ‘bedroom communities’ and wasting precious budget resources to prop up the urban locavore movement at the expense of production agriculture. Last week, Sens. Saxby Chambliss, R-Ga., Pat Roberts, R-Kan., and John McCain, R-Ariz., wrote a letter complaining that USDA spent $65 million last year on the ‘Know Your Farmer, Know Your Food’ program and is expanding the program this year.”