Farm Bill: Payment Limits
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.”
Recall also that at the House Ag Committee Farm Bill field hearing in Alabama on May 15, Chairman Peterson noted that, “Well, I’m not in favor of the payment limits. And I think that if we could re-jigger what we’re doing here, we might be able to eliminate this whole payment limit discussion, which we should, because it’s not what the issue is about. We’re off on a tangent with these payment limits.”
In more specifics with respect to the ACRE program, Ron Smith reported on Tuesday at the Southeast Farm Press Online that, “Committee chairman Collin Peterson conceded that problems exist. ‘ACRE does not work for the entire country,’ he said. ‘We will need differences in the program between different crops. This is why we’re starting field hearings early.’”
The article noted that, “Panelists representing the major Southwest commodities explained the problems.
“‘The ACRE program has not been very attractive for cotton producers as evidenced by the signup,’ said Doyle Schniers, a cotton producer from San Angelo. ‘If a revenue-based approach is to gain support from cotton producers, it will need a more realistic revenue target.’
“‘From available data on the ACRE program it is clear that in its current form the program is not an attractive alternative for cotton farmers and many other crop producers across the nation,’ said Brad Heffington, a Lamb County, Texas, farmer. He said the program does not provide an adequate safety net for cotton farmers compared to the marketing loan [related graph] and DCP programs. He agrees that the target is too low to attract participation.”
Carey Frick, a South Carolina peach grower, recently penned an opinion item in The State newspaper (South Carolina) regarding crop insurance issues.
In part, Mr. Frick indicated that, “With 27,000 farms selling roughly $2.4 billion worth of goods, South Carolina depends on agriculture to thrive. In fact, agriculture is our largest economic engine, and S.C. farmers depend on crop insurance to survive.
“Take peaches, for example. South Carolina is America’s second-largest peach-producing state, with orchards spread across the state. Many of these orchards would not be around today if not for insurance policies that help growers hedge against uncontrollable weather events such as late-season freezes and hailstorms.
“Unfortunately, the U.S. Department of Agriculture has been quietly working to slash crop insurance by about $7 billion, a cut that could force many of the state’s crop insurers to reduce essential services to producers.”
The opinion item noted that, “This would be particularly catastrophic for the state’s fruit and vegetable farmers. Peach, pecan, tomato and other specialty crop growers don’t receive price supports or counter-cyclical payments from the federal government like program crop producers do.
“We depend solely on crop insurance for a safety net to make it through tough times. Without proper coverage, orchards would go under every time a deep freeze set in or strong winds blew through. Not to mention that obtaining operating funds to farm would be next to impossible.”
Mr. Frick added that, “Now the USDA wants to deflate this successful public-private partnership, in a move that has been met with tremendous backlash in agricultural circles.
“Last month, the American Farm Bureau Federation spearheaded a letter to the Agriculture Department from numerous farming organizations asking the agency to leave crop insurance the way it is. Congress, it said, should decide the future of crop insurance during the upcoming farm bill debate.
“Many leading lawmakers have urged the same.”
In related developments, Chairman Peterson was a guest on yesterday’s AgriTalk Radio Program with Mike Adams and the two discussed several variables regarding crop insurance, including the ongoing negotiations between USDA and the crop insurance industry over the Standard Reinsurance Agreement (SRA).
In part, Chairman Peterson noted that, “We have this SRA that is being negotiated and in that SRA there is significant shifting around, if you will, of some of the A and O reimbursements based on these different regions of the country and the profitability of different regions. There is concern that I have and a lot of our Members that if this goes through there will be a significant reduction in the baseline which might tie our hands in the next Farm Bill.”
More specifically with respect to budget baseline issues, Chairman Peterson went on to say that, “We are not exactly sure how all of this is going to work, so I have suggested that maybe they should look at doing this for a two-year period and see what happens. And then, have the thing snap back to where it is now, or was, so the baseline is preserved and we can address some of these issues in the Farm Bill.
“But clearly the one thing we heard in the [2012 Farm Bill hearings] was the most important part of the safety net for farmers is crop insurance.”
To listen to this entire segment on crop insurance issues with Chairman Peterson and Mike Adams, just click here (MP3-4:49).
Executive Branch, Legislation Branch Focus
Also on yesterday’s AgriTalk show, Chairman Peterson provided a general overview of the House Ag Committee’s 2012 Farm Bill hearings, to listen to this portion of yesterday’s AgriTalk program, just click here (MP3-5:40).
During this segment, Chairman Peterson indicated in response to a question about executive branch perspective on U.S. farm policy that, “There has been some of this dust up about concerns on some people’s part that they are focusing too much on organic or local food- I don’t agree with that. I think that the administration has been supportive of the farm programs, the Farm Bill that we passed; I think they are very much behind production agriculture and maintaining a safety net for production agriculture.
“What they are saying is something that I have been saying for a long time, and that is there is a market for local food, there is a market for organic, there is a market for grass-fed beef and that is good. We want to encourage people to take opportunities in those market places…[t]here is room for all of these folks that take advantage of the market places where they exist and we want to support all of them, it is not one versus the other, its supporting agriculture that makes economic sense and that feeds the country.”
Local Food Issues
In related news regarding “local foods,” Carolyn Lochhead reported earlier this week at the San Francisco Chronicle Online that, “Chris Johansen works the line in the tiny Glenn County slaughterhouse that his grandfather opened in 1914. He is one of a dozen small butchers left in California who can turn a local farmer’s live cow, sheep or goat into packaged meat.
“Johansen has no pretty farm story to tell. Slaughterhouses are not a pretty business. He doesn’t own a cow or a goat. But he provides a vital link between farmers who raise niche livestock – antibiotic free, grass-fed, humanely raised and the like – for a growing number of people seeking alternatives to factory meat.”
The article noted that, “But farmers like Johansen, from California to Virginia, fear that food safety guidelines proposed by the Obama administration could put them out of business. They accuse the administration of taking a one-size-fits-all approach to food safety. The administration is furiously backpedaling.
“The U.S. Department of Agriculture’s Food Safety and Inspection Service served notice in March that all meat plants should validate their existing safety plans to ensure they are preventing E. coli, salmonella and other contaminations. The draft document, part of a raft of new food safety actions stemming from the President’s Food Safety Working Group, calls for microbial testing.”
Ms. Lochhead went on to explain that, “Top USDA officials acknowledge that a shortage of small slaughterhouses is a key bottleneck for local foods. They are promoting ‘mobile slaughterhouses’ to fill the gap and are seeking ways to retain existing plants and open new ones. On Friday, the USDA issued maps showing vast areas, especially in the West, where small livestock growers have few small butchers to turn to. Wyoming has no slaughterhouse at all.
“The project is integral to the administration’s Know Your Farmer, Know Your Food initiative, part of a push for more healthful foods by first lady Michelle Obama. Agriculture Secretary Tom Vilsack and Deputy Secretary Kathleen Merrigan said the seeming conflict between that effort and the proposed safety guidelines is the result of misperceptions.
“‘There is a misunderstanding this somehow creates new requirements or new responsibilities,’ Vilsack said. Merrigan, who oversees Know Your Farmer, said the agency did a poor job communicating and is clarifying things ‘so that the hysteria will tamp down on this.’
“But the proposed safety rules explicitly call for microbial testing, and Obama officials have often said there are no exceptions when it comes to food safety. Consumer groups agree.”
A related article on local processing (“How high-tech butchers, niche operations differ”) has also been posted at the San Francisco Chronicle Online; and the AP ran a story on a related topic yesterday (“Local food movement boost local butchers’ business”).
Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “Corn growers are mounting a $1 million ad campaign in Washington this summer to try to shore up their image.
“The ad campaign echoes the Know Your Farmer, Know Your Campaign initiative being run by the U.S. Agriculture Department. But the corn growers aren’t trying to promote local foods, but are instead trying to make the case that their industry is dominated by family farms that are taking care of the environment and benefiting the economy.
“A series of ads featuring such farmers as Kurt Hora of Washington, Iowa, will be running during June and July in the Washington Metro system, in Capitol Hill publications, on radio, at Reagan National Airport and in the programs for Washington Nationals baseball games.”
Mr. Brasher noted that, “Corn growers have plenty of reason to be advertising. They have been battered in recent years by criticism in the best-selling books of Michael Pollan and in several films, including the Oscar-nominated Food Inc. that link corn and corn-containing foods to obesity and environmental problems. At the same time, some food and beverage companies are replacing high fructose corn syrup in their products with sugar. Corn growers also want Congress to extend two major benefits to the ethanol industry, the 45-cent-gallon tax credit that subsidizes producers and a 54-cent-per-gallon tariff on imported ethanol. Both expire this year. The Environmental Protection Agency, meanwhile, is considering whether to raise the limit on the amount of ethanol that can be blended with gasoline and used in conventional cars and trucks.”
Executive Branch Policy Issues
Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “The Obama Administration today released more details about the National Rural Summit that will be held on Thursday, June 3, in Hillsboro, Mo. Agriculture Secretary Tom Vilsack, Agriculture Deputy Secretary Kathleen Merrigan, and the full USDA sub-cabinet will be there to continue the conversation about ways to rebuild and revitalize rural America with agricultural leaders, farmers, ranchers and community leaders who attend the day-long event. The full agenda is [available here].
“Unfortunately, general registration for the event is already closed.”
Meanwhile, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Agriculture Secretary Tom Vilsack urged agricultural lobbyists on Tuesday to promote the issue of immigration reform among American farmers and consumers.
“In a luncheon speech to the Agribusiness Club of Washington, Vilsack noted that California and Florida farmers are complaining about the uncertainty of the available of farm labor. ‘The agriculture world has to do a better job of explaining to ordinary Americans why they have a stake in immigration reform. About half the food you are consuming was touched at one point by immigrant hands.’”
With respect to the EPA and agriculture, the AP reported yesterday that, “The U.S. Environmental Protection Agency will gather information about factory farms to determine whether more should be regulated as part of a settlement with environmental groups concerned about water pollution.
“The EPA reached the settlement Tuesday with the Natural Resources Defense Council, Sierra Club and Waterkeeper Alliance.”
The article stated that, “The groups filed a federal lawsuit in the 5th Circuit Court of Appeals in New Orleans in early 2009, claiming the EPA gave too much discretion to farm operators in determining which farms needed permits to discharge waste into waterways.
“The settlement requires the EPA to gather information about factory farms that don’t have discharge permits and determine whether they should be regulated.”
“Michael Formica, chief environmental counsel for the National Pork Producers Council, criticized the EPA for making the deal without talking to farmers.”
Jonathan Weisman reported yesterday at the Washington Wire Blog (Wall Street Journal) that, “President Barack Obama, speaking at the Solyndra Inc. solar plant in Fremont, Calif., used the oil spill to press to forward with his efforts to cap greenhouse gases and promote renewable energy.
“‘Climate change poses a threat to our way of life. In fact, we’re already beginning to see its profound and costly impact,’ he said. ‘And the spill in the Gulf, which is just heartbreaking, only underscores the necessity of seeking alternative fuel sources.’”
Dianna Heitz reported yesterday at Politico that, “A bipartisan group of senators will move after the Memorial Day recess on a resolution to block the Environmental Protection Agency’s regulation of greenhouse gases.
“It is uncertain whether the group will have the votes by the time the resolution comes to the Senate floor June 10, but it has stirred concern among environmentalists and the EPA.”
The article noted that, “But with the vote just two weeks away, the debate has reached a new level — with green groups pushing for the Senate to reject the measure. Adding to the pressure is this month’s EPA ruling on greenhouse gases.
“The regulatory agency said that, beginning July 2011, existing plants that increase greenhouse gas emissions by 75,000 tons annually will be required to get a permit, along with new sources that emit at least 100,000 tons per year.”
Ms. Heitz indicated that, “But Murkowski spokesman Robert Dillon told POLITICO that it is a slippery slope toward having the EPA start imposing emissions limits on smaller businesses. ‘Once you start regulating at the lower level, you’re going to require every business to retrofit’ to comply with EPA, Dillon said. ‘In many cases, there isn’t a best option available or a cost-effective option, either.’ It’s a ‘question mark of how the EPA would enforce this.’
“‘If you do it under regulation … you can deal with some of the economic problems. The EPA doesn’t take any of that into account,’ Dillon said.”
Bloomberg writer Simon Lomax reported yesterday that, “Lawmakers should try this year to delay the U.S. Environmental Protection Agency from enforcing greenhouse gas regulations instead of repealing them, Senator Jay Rockefeller said today.
“‘We cannot wait any longer to send the message that relying on EPA is the wrong way to go,’ Rockefeller said in an e-mail. Rockefeller, a West Virginia Democrat, has proposed a two-year suspension of EPA rules for power plants and factories, a delay that he says will give Congress time to pass laws dealing with carbon dioxide and other greenhouse gases scientists have linked to climate change.
“A two-year suspension ‘has a better chance of becoming law’ than a plan from Senator Lisa Murkowski, an Alaska Republican, to overturn the agency’s Dec. 7 finding that greenhouse gases are a danger to the public and should be regulated, Rockefeller said.”
Amy Harder reported yesterday at the National Journal Online that, “The arduous health care debate and looming midterm elections could jeopardize the chances of the Senate considering climate and energy legislation this year, Sen. John Kerry, D-Mass., said today.
“‘Health care pushed us back. We’ve been dealt a difficult hand,’ Kerry said in a breakfast roundtable with reporters. Noting the countdown to November and naming other issues Congress needs to address, such as the budget, he conceded that ‘I can’t tell you for certain what’s going to happen.’
“‘We may not get enough people to get out of the election fear factor this year,’ Kerry said later. ‘But this isn’t going away, so we’re going to stay on it, keep pushing.’”
More specifically with respect to agriculture, a Daily Radio Newsline item from USDA yesterday noted that, “Agriculture Secretary Tom Vilsack says farmers around the world are particularly vulnerable to the threat posed by climate change.”
And in other climate related news, a news release issued yesterday by the National Farmers Union stated that, “Today, National Farmers Union (NFU) and other leading U.S. farm, forest products and labor groups called on Congress and the administration to help end tropical deforestation. The groups cited a new report entitled, ‘Farms Here, Forests There: Tropical Deforestation and U.S. Competitiveness in Agriculture and Timber,’ showing overseas agriculture and logging operations are expanding production by cutting down the world’s rainforests, allowing them to flood the world market with cheap commodities that undercut American goods.
“During a teleconference releasing the report, NFU, the American Forest & Paper Association, United Steelworkers (representing forest products workers), and the Ohio Corn Growers Association called for the protection of tropical forests as part of comprehensive energy and climate legislation and other policies.”