FarmPolicy

October 31, 2014

Farm Bill; Trade; Animal Agriculture; Ag Economy; Climate Issues; and Financial Regulation

Farm Bill: House Ag Committee Field Hearing- Fresno, California

Robert Rodriguez reported yesterday at the Fresno Bee Online that, “Help for struggling dairies, incentives for reducing air pollution and support for a legal farm work force are among the items on California agriculture’s wish list for the 2012 Farm Bill.

“Nearly a dozen farmers testified to members of the House Agriculture Committee during a hearing Monday at the Fresno City Council Chambers.”

The article noted that, “Jamie Bledsoe, a Riverdale dairy operator and president of Western United Dairymen, detailed how high production costs and low dairy prices have put many California dairymen in a financial tailspin for at least the last 18 months. Bledsoe urged the committee members to create a farm safety net program that looks not just at low milk prices, but also the high costs of grain, forage and energy.

“Also gaining attention during the May 3 hearing was a non-traditional farm bill issue — the call for immigration reform.”

As lawmakers heard opening statements and perspectives on farm policy issues from the witnesses at yesterday’s hearing, Frank Rehermann, a rice producer from Live Oak, California provided some details on the state’s rice production and how some safety net provisions have impacted producers. To listen to a portion of Mr. Rehermann’s comments, in which he addresses crop insurance, marketing loans, counter-cyclical payments, direct payments and the new Average Crop Revenue Election program, just click here (MP3-5:20).

House Ag Committee Chairman Collin Peterson (D-Minn.) also provided insight into his perspective on crop insurance and the future direction of the Farm Bill safety net; a portion of his comments from yesterday can be heard here (MP3-6:00).

The House Ag Committee continues its field hearings on the next Farm Bill this morning in Cheyenne, Wyoming; a complete schedule of upcoming Farm Bill hearings is available here.

Farm Bill: Focus on Dairy

James Haggerty reported yesterday at The Times-Tribune Online (Scranton, Penn.) that, “[Brian Smith], 47, a Wayne County commissioner who operated dairy farms for 27 years, sold his 45 milking cows April 21 in Lancaster County. He is among the latest casualties in the ranks of dairy farmers trampled by a cost-payment imbalance devastating the industry.

“‘I lost at least $2,000 a month last year,’ said Mr. Smith, whose 123-acre farm is about 16 miles northeast of Honesdale. ‘Dairy farmers need more money to stay in business. If they don’t, they’ll be gone like me.’”

The article noted that, “After 11 straight months in 2008 and 2009 when production costs exceeded average milk payments, dairy farmers face spring planting expenses with scant hope of a financial bloom.

“‘I lost $50,000 to $60,000 in the last 18 months,’ said Joe Davitt, who milks about 35 cows among a herd of more than 50 cattle on his farm near Waymart.”

The Washington Insider section of DTN noted in part yesterday (link requires subscription) that, “In his recent remarks, [House Ag Committee Chairman Peterson] commented that dairy producers were at work on some new ideas, and last week, one of those made its way before the Congress the form of a bill by Representatives Jim Costa, D, Calif., and Peter Welch, D, Vt. It defines a ‘stabilization’ approach that would define and enforce production targets set by a producer board appointed by USDA, the Dairy Price Stabilization Program.

DPSP looks to be a self-help approach, with national, mandatory coverage but applied on a farm-by-farm basis. Any dairy that boosts year-over-year production beyond the national target rate for as long as a quarter would be penalized on all that output, with larger penalties applied for larger increases. Revenue from assessments would be redistributed to farms that comply with the quota.”

Yesterday’s DTN item noted that, “Critics point out that the proposal is a return to supply management approaches that proved unworkable in the past, that it would be complex and difficult to manage, and could encourage competition from imports and discourage exports. They argue there would be strong political pressure to create exceptions — for example, organic producers or those in milk-deficit regions — and thus require tougher restrictions on the rest of the industry. And, they suspect that in addition to milk price stability, program managers might be tempted to artificially increase prices to the detriment of consumers.

“The DPSP is not the only dairy policy effort under way. The National Milk Producers Federation has recently outlined a new, very different policy approach of its own in discussions with farm groups and producers. NMPF Vice President Chris Galen told the Minnesota-Wisconsin Dairy Policy Conference recently that his group is discussing a plan that would end several long-time aspects of U.S. dairy policy, change others and shift the policy focus from prices to producer margins.”

Mr. Galen was a guest on Thursday’s AgriTalk Radio Program with Mike Adams where he outlined the NMPF dairy proposal in some detail. To listen to a portion of this discussion on dairy policy with Chris Galen and Mike Adams from last week, just click here (MP3-7:00).

Farm Bill: Trade Compliance Issue

Philip Brasher reported yesterday at The Green Fields Blog (The Des Moines Register) that, “An influential Senate Republican is raising objections to a key part of the Obama administration’s deal to avert retaliation by Brazil over U.S. cotton subsidies – a $147 million payment to Brazilian cotton industry. In a letter to the White House, Sen. Richard Lugar, R-Ind., said the money should come out of the U.S. cotton program, since that was the source of the trade dispute. Brazil prevailed at the World Trade Organization with a complaint that U.S. cotton subsidies were encouraging over production by American farmers and unfairly driving down world prices for the commodity.

“Lugar is the senior Republican on the Senate Foreign Relations Committee and a former chairman of the agriculture committee.”

Yesterday’s update noted that, “Lugar went on to say that Congress should overhaul the U.S. cotton program now rather than waiting for the next farm bill, due to be written in 2012. ‘I am prepared to introduce legislation to achieve these immediate reforms. But absent that direct approach, our government must tailor our trade and agriculture policies…in a way to protect the American taxpayer and our domestic export opportunities,’ he said.”

Trade

In a separate update posted yesterday at The Green Fields Blog, Philip Brasher reported that, “Several commodity groups [including the National Corn Growers Association and U.S. Wheat Associates] and the American Farm Bureau Federation are trying to step up pressure on the White House and Congress to move stalled three trade agreements that were negotiated by the Bush administration.

“Beef and pork groups are particularly concerned about sealing a trade agreement with South Korea, that has been stalled because of opposition from U.S. auto interests. Deals also are pending with Colombia and Panama.”

The update indicated that, “The White House must send the trade deals to Congress and then they must win votes in both the House and Senate. The farm groups argue that U.S. farmers stand to lose market share to competitors in Europe, Australia and elsewhere, if the agreements are not approved. There’s no sign that any of them are headed for votes any time soon.

“Pork producers are looking to make the inaction an issue in congressional elections this year, said Don Butler, a former president of the National Pork Producers Council. Butler is director of government relations and public affairs at Murphy Brown LLC, the hog-production arm of Smithfield Foods.”

A related news release issued yesterday by the National Pork Producers Council stated that, “The failure of the United States to approve free trade agreements with Colombia, Panama and South Korea would result in the U.S. pork industry being out of those markets within 10 years at a cost to producers of more than $11.50 per pig and to the U.S. economy of thousands of jobs, according to analyses released today by the National Pork Producers Council.

“Conducted by Iowa State University economist Dermot Hayes, the analyses take into account the trade agreements the three countries have concluded with other nations. Colombia and Panama recently finalized FTAs with Canada, and South Korea is nearing completion on a deal with the European Union.”

In other trade developments, Rep. Mike Honda (D-California) penned an opinion item that was posted today at Roll Call Online, in which he stated that, “Although it’s infamous for socialism, cigars and salsa, few people know that Cuba was recently the United States’ largest rice export market, is the fifth-largest export market in Latin America for U.S. farm exports and holds $20 billion in trade with America over a three-year term. Our economy could benefit mightily from better relations, yet we alienate this potential ally.

“When I traveled to Cuba on a Congressional delegation recently, it became clear that the embargo is imprudent politically, economically and socially. Everyone we met with — U.S. and Cuban government officials, trade organizations, journalists, cultural attachés, foreign diplomats and rural farmers — confirmed this point.”

Rep. Honda added that, “Economically, the case for cooperation is even clearer. Despite the trade embargo, there is some engagement. Cuba continues to rely on U.S. agriculture. Since 2002, we have been Cuba’s largest supplier of food and agricultural products, with Cuba purchasing more than $3.2 billion in products since 2001.

“This agricultural reliance is in jeopardy, which puts American farmers at risk. In 2008, U.S. food imports to Cuba totaled $712 million, declined to $533 million last year and are declining this year. Cuba, having witnessed strong economic growth in the early 2000s at 11 percent and 13 percent, is now struggling to make ends meet, slipping below 2 percent growth in 2009.”

And a news release posted yesterday at the WTO Online stated that, “Chairperson David Walker told negotiators on 3 May 2010 that he would adapt his plans for the farm talks later this month, to take into account their suggestions. The 3 May meeting was the first time agriculture negotiators had met since the end-of-March ‘stocktaking’ sessions in the Doha Round, and was intended as an opportunity to discuss how the farm talks should proceed.”

Animal Agriculture

Ken Anderson reported yesterday Brownfield that, “When HSUS released its undercover egg barn video in Des Moines last month, the animal rights organization claimed some of the footage was shot at Iowa barns owned by Rose Acre Farms, one of the nation’s largest egg producers.

“However, a recently-completed third-party audit of the Rose Acre facilities indicated the company is meeting the standards established by the United Egg Producers UEP Certified program. Gene Gregory is the president and CEO of United Egg Producers.

“‘We did observe a couple little things as far as handling that we made some recommendations to change,’ Gregory says, ‘but we’re not sure everything that was shown on the videos could be validated at the Rose Acre Farms.’”

The Brownfield link includes an audio interview with Gene Gregory.

Ag Economy

DTN’s Susanne Stahl and Anthony Greder reported yesterday that, “Sixty-eight percent of the U.S. corn crop is in the ground, according to USDA’s latest Crop Progress report.”

Soybean plantings are 15-percent complete, well ahead of both last year’s pace of 5-percent seeded and the five-year average of 8 percent,” the DTN article said.

Dow Jones writer Holly Henschen reported yesterday that, “U.S. cotton plantings are accelerating, reinforcing expectations for a bumper crop following a wet winter in the big producing states.

The U.S. cotton crop was 26% planted in the week to May 2, up from 16% the week before and slightly higher than the five-year average of 25% for this time of year, according to the latest data from the U.S. Department of Agriculture.”

Meanwhile, Reuters writer Carey Gillam reported yesterday that, “Hancock, a unit of Manulife Financial Corp, has so far plowed more than $1 billion into actual farmland, mostly in the United States. It is among many large and small private equity firms, hedge funds, asset managers and other investment groups hoping to harvest long-term profits from the soil.

“In Wall Street terms, the heartland is hot. Increasingly, big-city investors emerging from a bruising economic downturn sparked by the collapse of esoteric financial products are putting money into Illinois corn fields, California cranberry bogs and Brazilian sugarcane. Overseas, African farms, as well as ones in Australia and Eastern Europe, have emerged as financial opportunities.”

The article added that, “The World Bank and the United Nations Food and Agriculture Organization (FAO) cited the trend in a report in January, noting a ‘sharp increase’ in agricultural investments the world over. Such private investment could offer significant benefits to the sector — not to mention the human race — by helping modernize farming tools and techniques, the agencies said.

“Not everybody is thrilled by Wall Street’s hay ride, however. At a World Bank gathering in Washington last month critics addressed the implications of the trend, calling it a modern-day land rush. They worry in particular about what they label an unfair transfer of valuable land and water resources from the poor to the wealthy.”

In other news, William Neuman and Andrew Pollack reported yesterday at The New York Times Online that, “Just as the heavy use of antibiotics contributed to the rise of drug-resistant supergerms, American farmers’ near-ubiquitous use of the weedkiller Roundup has led to the rapid growth of tenacious new superweeds.

“To fight them, [farmer Eddie Anderson] and farmers throughout the East, Midwest and South are being forced to spray fields with more toxic herbicides, pull weeds by hand and return to more labor-intensive methods like regular plowing.”

The article noted that, “‘We’re back to where we were 20 years ago,’ said Mr. Anderson, who will plow about one-third of his 3,000 acres of soybean fields this spring, more than he has in years. ‘We’re trying to find out what works.’

Farm experts say that such efforts could lead to higher food prices, lower crop yields, rising farm costs and more pollution of land and water.”

Climate Issues

An update posted yesterday at CQPolitics reported that, “Prospects for enacting a climate change bill have faded for this year and possibly for good, setting the stage for political repercussions both at home and abroad.

With prospects for Senate passage of climate legislation now dim, President Obama’s credibility on the world stage could be damaged, and his ability to implement a signature domestic policy initiative is in doubt.”

The AP reported yesterday that, “Outgoing U.N. climate chief Yvo de Boer shot down expectations of a comprehensive climate treaty this year, saying Monday that a major U.N. conference in December would yield only a first answer on curbing greenhouse gases.”

And John M. Broder reported yesterday at the Green Inc. Blog (The New York Times) that, “Harold T. Shapiro, a former president of Princeton University and the University of Michigan, will lead a 12-member panel that will review the practices of the United Nations Intergovernmental Panel on Climate Change, which has been criticized for errors.

“Dr. Shapiro, an economist, will lead a group that was assembled by the InterAcademy Council, an organization of the world’s leading scientific academies, at the request of the United Nations secretary general, Ban Ki-moon. It will look into the management and review policies of the I.P.C.C. that led to errors in the panel’s most recent report, including a faulty estimate of the rate of melting of the Himalayan glaciers and several smaller mistakes.”

Meanwhile, a Department of Agriculture news release from yesterday indicated that, “U.S. Department of Agriculture Secretary Tom Vilsack and U.S. Environmental Protection Agency Administrator Lisa P. Jackson today announced a new interagency agreement promoting renewable energy generation and slashing greenhouse gas emissions from livestock operations. The agreement expands the work of the AgSTAR program, a joint EPA-USDA effort that helps livestock producers reduce methane emissions from their operations.”

Financial Regulation

Brady Dennis reported in today’s Washington Post that, “A dramatic proposal that could force banks to spin off their derivatives businesses, potentially costing them billions of dollars in revenue, has run into opposition on multiple fronts as the Senate prepares to take up legislation to remake financial regulations.

“Obama administration officials, industry groups, banking regulators and lawmakers from both sides of the aisle have taken aim at the measure proposed by Sen. Blanche Lincoln (D-Ark.), chairman of the Senate agriculture committee.

“Their main objection: If a central goal of regulatory overhaul is to make financial markets more transparent and accountable, Lincoln’s provision would have the opposite effect. Barring banks from trading in derivatives would force those lucrative business into corners of the market where there’s even less oversight, critics warn.”

The Post article added that, “Lincoln has stood by her proposal, which has garnered support from consumer advocates, saying she wants to protect bank depositors from risky trading activities. ‘It ensures banks get back to the business of banking,’ said Courtney Rowe, Lincoln’s spokeswoman.”

Keith Good

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