FarmPolicy

July 25, 2014

Farm Bill Hearings; Ag Economy; and Environmental Issues

House Ag Committee Farm Bill Field Hearings

(Editor’s Note: Friday’s update mistakenly referred to Jerry Hagstrom as DTN’s Ag Policy Editor. Mr. Hagstrom is DTN’s Political Correspondent.)

Friday, Des Moines, Iowa

DTN Ag Policy Editor Chris Clayton reported on Friday that, “Farmers in Iowa told congressmen changes are needed in the farm safety net’s new revenue program as lawmakers cautioned about the fiscal challenges they will face trying to write the next farm bill.

“The House Agriculture Committee is starting work on the farm bill early and is raising questions regarding what should be changed in the farm safety net and crop insurance. On Friday, six members of the committee listened to testimony all afternoon at an Iowa field hearing. They heard from crop producers, livestock producers, a dairy farmer, a representative of the crop insurance industry and dairy and biodiesel processors.”

(FarmPolicy.com Note: An audio replay of Friday’s hearing is available here. To listen to opening remarks from Ranking Member Frank Lucas (R-Oklahoma) regarding some of the Farm Bill’s goals, as well as a perspective on Sec. Vilsack’s earlier testimony to the Committee, just click here (MP3-2:03). To listen to a portion of the closing statement from Rep. Lucas, in which he notes that, “Sometimes we work with administration and sometimes we educative administrations,” just click here (MP3-0:52).

Mr. Clayton explained that, “One theme running through the first panel of farmers who testified is that the crop producers don’t see a benefit in signing up for the Average Crop Revenue Election program created in the 2008 farm bill.”

(FarmPolicy.com Note: To listen to a detailed discussion from Friday’s hearing regarding ACRE, which features a question from Rep. Leonard Boswell (D-Iowa), as well as comments from Chairman Peterson, just click here (MP3-6:06) and here (MP3-0:39)).

The DTN article stated that, “Richard Bayliss, a crop farmer from southeast Iowa, said some form of revenue protection is needed, particularly for new and beginning farmers. But ACRE has been too complicated and ‘challenging to accurately determine its usefulness.’ Bayliss had a list of complaints about ACRE, including the statewide yield trigger, the four-year commitment and the 30 percent cut in the loan rate. Then there is the difficulty explaining ACRE to elderly landlords who understand the traditional program and benefit from direct payments.”

Friday’s DTN article added that, “Peterson said Congress made ACRE too complicated and that the only reason the program made it into the farm bill was an estimated cost savings of roughly $1 billion over the life of the bill. Still, Peterson said he thinks ACRE could be retooled. Peterson has recently indicated ACRE may work better with county triggers instead of state triggers.

“‘There is some potential with the revenue program, but it’s got to be reworked quite a bit,’ Peterson said.”

Mr. Clayton pointed out that, “Bayliss suggested raising the crop loan rate to a more realistic level would be a better benefit for farmers than ACRE. Yet, that would raise the costs of farm programs.

“Peterson shot down the notion that the safety net could be improved by raising the loan rates, largely citing the challenges ahead in dealing with the federal budget.

“‘It ain’t going to happen,’ Peterson said. ‘The money it costs to raise the loan rate, it ain’t going to happen.’” (Related audio from hearing available here (MP3- 0:54)).

Dan Piller reported in Saturday’s Des Moines Register that, “Insurance agent Bob Skow said proposals in Obama’s 2011 budget to overhaul federal aid for crop insurance would result in price cuts of 30 percent.” (Related audio from hearing available here (MP3-1:42).

Also at Friday’s hearing, Rep. Boswell asked about the impacts of the expiration of the biodiesel tax credit, and in part, Chairman Peterson indicated that some have noted that the issue could be resolved by Memorial Day. To listen to this discussion, just click here (MP3-2:33).

Saturday, Nampa, Idaho

An update posted on Friday at AgWeekly Online (Twin Falls, ID) reported that, “The House Agriculture Committee will hold a hearing in the heart of sugarbeet country [Saturday], and local sugar growers are expected to applaud members for the way they’ve designed the farm safety net.

“‘Congress, in its wisdom, designed a sugar policy that is working to the considerable benefit to consumers and at zero cost to taxpayers, and is giving the remaining American sugar farmers a chance to survive,’ said Galen Lee, a local beet farmer from New Plymouth and president of the Nyssa-Nampa Beet Growers Association, who is scheduled to testify.

“‘And, it fully complies with the rules of the World Trade Organization,’ he added.

“Lee, speaking on behalf of the 1,100 grower-owners of the Snake River Sugar Company, will urge Congress to continue this successful sugar policy as it designs the next Farm Bill.”

Brad Iverson-Long reported on Saturday at the IdahoReporter Online that, “Leaders of several Idaho agricultural associations told a congressional panel in Nampa on Saturday that they want to see changes to federal immigration law, including a more robust guest worker program, as well as some tweaks to the country’s food production policy.

“‘We are pleased that you are here today in Idaho to listen to our concerns,’ Fred Brossy, an organic farmer from Shoshone told members of the House Agriculture Committee, which met to discuss the next federal Farm Bill, scheduled to be finished in two years. ‘Farm Bill programs often appear focused primarily on the Midwestern region of the country,’ Brossy said.”

“Republican Rep. Mike Simpson (R-ID) also attended the meeting,” the article said.

Mr. Long indicated that, “Producers in different sectors offered different ways that the next Farm Bill could help agriculture in Idaho. Charles Lyons with the Idaho Cattle Association said he wants to get rid of ethanol subsidies, which drive up food costs for cattle. ‘It jerked the guts out of the feeder industry here in Idaho,’ he told members of Congress. He also said conservation and environmental regulations that are part of the federal plan are extremely burdensome.”

The article added that, “Scott Brown, president of the Idaho Grain Producers Association, said that Idaho farmers support the direct payments they can receive from the federal government. ‘The direct payment has served as a stimulus program for Idaho’s many rural families and communities,’ he said. ‘Direct payments translate into farmers purchasing equipment, seed, chemicals, parts, and fuel.’ The chairman of the House committee, Rep. Collin Peterson, D-Minnesota, has said that traditional farm subsidies may need to change in the next Farm Bill due to federal budget issues. ‘Your decisions could have a profound ripple effect on the rural fabric of our country,’ Brown said.”

(FarmPolicy.com Note: An audio replay of Saturday’s hearing is available here. To listen to extended comments from Mr. Brown regarding Title I commodity programs and crop insurance, just click here (MP3-3:33). To listen to a portion of Chairman Peterson’s comments on some Title I issues, including direct payments, just click here (MP3-2:40). And to listen to remarks on issues associated with the baseline, payment limits and title I safety net allocations from Rep. Simpson, just click here (MP3-2:37)).

Anna Webb reported on Sunday at the Idaho Statesman Online that, “[Rep. Walt Minnick (D-ID) said he believes the current bill punishes efficient producers and discriminates against large producers of commodities and specialty items like organic crops - an expanding field.

“‘Compliance with existing programs is too paper-intensive,’ Minnick said. ‘We need to help people spend less time farming the government, and more time farming the land.’”

(FarmPolicy.com Note: To listen to a portion of Rep. Minnick’s opening statement from Saturday’s hearing, just click here (MP3-3:23)).

For a recap of all of the House Ag Committee Hearings on the 2012 Farm Bill, just click here. The House Agriculture Committee will hold a hearing on the farm bill again today in California, and tomorrow in Wyoming- a schedule of House Farm Bill Hearings is available here. For a more general summary of Farm Bill developments, see this FarmPolicy.com page, "2012 Farm Bill: FarmPolicy.com Chronology."

Meanwhile, Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “The question after initial farm bill meetings is whether producers would give direct payments, loan rates, counter-cyclical rates, crop insurance and the permanent disaster program for a single safety net that offers a higher revenue protection.

“‘Part of what we are trying to do is provide some risk-management safety net with the money that we have,’ House Agriculture Committee Chairman Collin Peterson, D-Minn., told reporters after the Iowa hearing on Friday. ‘I'm not sure we are going to be able to do it the way we have been doing it. We may have to do look at doing things a little differently and that's what we're trying to figure out.’”

Yesterday’s update indicated that, “Further, can Congress create different programs for each commodity without causing some major market distortions?

“‘We've always done this thing where the programs have been the same across all of the commodities,’ he said. ‘I'm not sure that needs to be. That's kind of the way we have done things I think because they feel like if everybody has the same program they kind of stick together.’

“Already, several groups have formed committees and plans for reshaping their own farm-bill programs. ‘Dairy has decided their program is not working for them anymore and they would like to try something different,’ he said.”

In other policy related news, Philip Brasher reported on Friday at the Green Fields Blog (The Des Moines Register) that, “Milk producers want the government to stop allowing soy milk to be called that. Milk comes from cows, not from soybeans, according to the National Milk Producers Federation. The group has petitioned the Food and Drug Administration to stop soy milk and other items, such as yogurt, from being labeled using names borrowed from dairy products.

“In a letter to the industry, the group says, ‘The filtered extract of a homogenized plant substance does not meet the standard of identity for milk, does not provide the source for any ingredients that may collectively be called milk, and is not an optional ingredient that may be added to milk. Therefore, these foods should not be permitted to be labeled as such …’”

In a separate update at the Green Fields Blog, Mr. Brasher noted on Saturday that, “Farmers have found a new four-letter word: HSUS, as in the Humane Society of the United States.

“The organization, with a budget of $130 million this year, has the livestock industry on its heels by winning ballot measures restricting how animals can be housed and through a series of undercover investigations of packinghouses and farms, most recently at a series of Iowa egg operations.

“What the industry's response should be occupied much of an annual two-day conference held this week by the Animal Agriculture Alliance, a coalition of industry groups, including producers, meatpackers and feed companies.”

Mr. Brasher noted that, “But one message that was popular at the conference was that raising animal-handling standards will increase food prices and hurt the poor. The 170 industry representatives were warned repeatedly that the industry needs to stick together against HSUS. If one sector is attacked, such as egg producers, the pork and beef producers ought to speak out in defense of them.

“‘I love the idea of a mutual defense pact,’ said David Martosko, who developed the website HumaneWatch.org, whose goal is to constantly hound the Humane Society and drag down its poll numbers via advertising and social media networks such as Twitter and Facebook.”

Ag Economy

Bloomberg writer Jeff Wilson reported on Friday that, “Corn rose, capping the biggest three-day gain since February, on signs that U.S. ethanol refiners are using more of the grain to make fuel as an improving economy boosts energy prices.

Ethanol output climbed 1.8 percent to an average of 833,000 barrels a day in February from 818,000 in January, the Energy Department said in a report yesterday. Production was 32 percent higher than a year ago. Crude oil rose to a three-week high after a report showed the U.S. economy grew in the first quarter, signaling rising fuel demand.”

“Corn also rallied today on speculation that China, the world’s second-largest consumer of the grain, may increase imports because demand is outpacing domestic production,” the Bloomberg article said.

And a Daily Radio News item from USDA on Friday rhetorically asked, “New figures show the U.S. economy is growing again. Could this help farmers?

Similarly, Dan Piller noted in yesterday’s Des Moines Register that, “After a two years of low prices, high feed costs and losses, the cattle business is enjoying a resurgence because of stronger demand as the economy improves.”

On Friday, the USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report, highlighting prices received by farmers. In part, the NASS report stated that, “The corn price, at $3.51 per bushel, is down 4 cents from last month and 34 cents below April 2009 [related graph]; The soybean price, at $9.48 per bushel, increased 9 cents from March but is 31 cents below April 2009 [related graph]; The April all wheat price, at $4.69 per bushel, is down 1 cent from March and $1.06 below April 2009 [related graph]; and, The April all milk price of $14.60 per cwt is down 20 cents from last month but $2.70 higher than April 2009 [related graph].”

In other news, Melanie Warner reported on Friday at The New York Times Online that, “Early this year, she [a devoted ConAgra customer] got her wish when ConAgra decided to reformulate one of its biggest brands, replacing the high-fructose corn syrup in Hunt’s ketchup with old-fashioned sugar. This month, new bottles featuring a banner proclaiming ‘No high fructose corn syrup’ arrive in stores.

Hunt’s ketchup is among the latest in a string of major-brand products that have replaced the vilified sweetener. Gatorade, several Kraft salad dressings, Wheat Thins, Ocean Spray cranberry juice, Pepsi Throwback, Mountain Dew Throwback and the baked goods at Starbucks, to name a few, are all now made with regular sugar.”

The lengthy Times article added that, “As a result, sales of the ingredient have fallen in the United States. Charlie Mills, an analyst at Credit Suisse, says that the combined United States sales of high-fructose corn syrup for Archer Daniels Midland, Tate & Lyle and Corn Products International were down 9 percent in 2009, compared with 2007. A further decline is expected this year, he says.

This is happening even though many scientists say that high-fructose corn syrup is no worse for people than sugar, which costs some 40 percent more.”

Meanwhile, Tim Craig reported in yesterday’s Washington Post that, “The D.C. Council plans to give final approval Tuesday to school nutrition and physical education standards that would be among the strictest in the country, mandating that low-calorie and low-fat meals be served to about 71,000 students and eventually tripling the time they are required to spend exercising.”

The Post article explained that, “Officials said the program, estimated to cost as much as $23 million over four years, could be paid for through a citywide soda tax.

“Council member Mary M. Cheh (D-Ward 3), who sponsored the legislation, said she will propose a penny-per-ounce tax on soda, an idea that appears to have broad council support.”

In a separate variable involving the agricultural economy, the AP reported today that, “The federal government is conducting its first investigation into whether the handful of large meatpackers that slaughter most of the nation’s cattle are illegally or unfairly driving down cattle prices, according to an official representing independent beef producers nationwide.

“The investigation is under way as the Justice and Agriculture Departments hold a series of antitrust hearings on competition in agriculture, and the USDA is expected to release sweeping antitrust rules covering the meat industry this spring.”

The AP article noted that, “Bill Bullard, chief executive officer of R-CALF USA, said the federal Grain Inspection, Packers and Stockyards Administration has been speaking with his group’s members for months and is ‘clearly asking questions in the context of an investigation.’”

“The administrator of GIPSA wouldn’t say whether the agency was investigating the so-called ‘Big Four’ meatpackers — Tyson Foods, JBS, Cargill and National Beef — who together slaughter about 80 percent of U.S. beef.

But administrator J. Dudley Butler said GIPSA is being more aggressive in enforcing the Packers and Stockyards Act and investigations are part of that.

“‘I will acknowledge that what we’re doing at GIPSA now is trying to … enforce the Packers and Stockyards Act, and it’s done in many ways, it’s done through investigations, it’s done through oversight, it’s done through interagency working relationships,’ such as with the U.S. Department of Justice, Butler said.”

Environmental Issues

The Wall Street Journal editorial board indicated in today’s paper that, “With the headlines full of oil spills and immigration, the Obama Administration’s regulatory agenda is getting little attention. That’s a mistake. Consider the Environmental Protection Agency’s effort to revive an assault on atrazine, one of the oldest, most well-established agricultural chemicals on the market. Just this past week, the EPA held its third ‘re-evaluation’ hearing on atrazine.”

The Journal opinion item stated that, “There is an agenda here far more ambitious than getting one chemical. The environmental lobby wants more farmland retired to ‘nature,’ and one way to do that is to make farming more expensive. The EPA notes that eliminating atrazine would cost $2 billion annually in lost crop yields and substituting more expensive herbicides. Some farmers would go out of business or ask the federal government for more subsidies.

“The environmental lobby also figures that if it can take down atrazine with its long record of clean health, it can get the EPA to prohibit anything. Sounds plausible. Between this and its determination to regulate greenhouse gases, the Obama EPA is proving itself a regulatory fundamentalist, with scant regard for good science or economics.”

Margaret Kriz Hobson reported on Saturday at the NationalJournal Online that, “Climate change will be the dominant environmental issue in Washington for the rest of 2010, whether or not Congress adopts legislation to control green-house-gas emissions.”

The article explained that, “If a climate bill does reach President Obama’s desk, it would probably strip the Environmental Protection Agency of its authority to regulate carbon dioxide emissions and would also block state action. EPA is already working toward issuing regulations next year to curb greenhouse-gas emissions from cars and trucks, and it is planning to limit emissions from the nation’s largest corporate polluters as well.

Should the current legislative standoff continue, Republican senators and their conservative Democratic counterparts will attempt to block EPA in other ways. The Supreme Court ruled in 2007 that EPA has the power under the Clean Air Act to regulate global-warming pollution — provided that the agency finds that such pollution endangers human health and the environment. In December, EPA Administrator Lisa Jackson formally issued the required ‘endangerment finding.’ Sen. Lisa Murkowski, R-Alaska, has introduced a bill to override that decision. On the other side of the aisle, Sen. Jay Rockefeller, D-W.Va., has introduced legislation to impose a two-year moratorium on EPA’s power to control greenhouse-gas pollution from manufacturers or power companies.”

Keith Good

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