FarmPolicy

April 23, 2019

Farm Bill Issues; Ag Labor Issues; Climate Developments; and Ag Economy

2012 Farm Bill: Trade

Alan Beattie reported on Friday at the Financial Times Online that, “Brazil said on Thursday that it would suspend sanctions on US imports in retaliation for illegal American cotton subsidies, temporarily defusing one of the most contentious disputes in international trade.

“The deal will extend until 2012 a holding arrangement in which the US pays Brazilian farmers $147.3m a year and promises to cut subsidies in future. In return, Brazil will hold off imposing blocks on imports or ignoring patents and copyrights, which it is entitled to do after a World Trade Organisation panel declared the US cotton support programme illegal.

Brazilian officials said they expected permanent reforms to be introduced when US agricultural support was revised in the five-yearly ‘farm bill,’ which is next renewed in 2012. ‘This is not a final solution, but it lays out elements that will allow for consultations and reforms to the farm bill that will take place by the end of 2012,’ Roberto Azevedo, Brazil’s ambassador to the WTO, said. ‘Brazil doesn’t rule out taking countermeasures at any moment.’”

The National Cotton Council issued a statement on Friday regarding this development, which noted in part that; “The National Cotton Council today expressed appreciation for the efforts of the Administration to conclude a framework agreement with Brazil in the WTO dispute involving the export credit guarantee programs and certain provisions of the cotton program.”

“‘It is not our intent to distort world cotton prices,’ [Eddie Smith, chairman of the National Cotton Council] said, ‘and, in fact, our program is not suppressing world prices. We will work with Congress and the Administration on the 2012 farm bill in order to develop cotton policy that will continue to provide the safety net needed by U.S. farmers while helping assure our trading partners that U.S. cotton programs do not cause unfair trade distortions in the world cotton market.’”

2012 Farm Bill: Crop Insurance (SRA)

DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “As USDA officials and crop insurance executives prepared to meet in Kansas City Friday to discuss USDA’s final offer of a new crop insurance contract, Agriculture Undersecretary for Farm and Foreign Agricultural Services Jim Miller and Rep. Jerry Moran sparred Thursday over whether CBO will credit the farm bill baseline with $2 billion the Obama administration intends to repurpose from crop insurance to other programs.

“At a House Agriculture General Farm Commodities and Risk Management Subcommittee hearing on implementation of the 2008 farm bill [unofficial FarmPolicy.com transcript available here], Moran, R-Kan., the ranking member on the subcommittee, said that, while the Office of Management and Budget (OMB) might maintain the $2 billion in its farm bill baseline, he worries that CBO (Congressional Budget Office) will not include the money in its calculations. But Miller said that, because outlays will increase, ‘CBO should reflect that in the baseline.’

“USDA’s Risk Management Agency, which runs the crop insurance program, has announced it plans to cut payments to crop insurance companies by $6 billion over 10 years, sending $4 billion to the Treasury for deficit reduction and using $2 billion to make some improvements to crop insurance programs to increase acreage in the Conservation Reserve Program. How the $2 billion will be apportioned has not been determined. None of these numbers are set in stone, and may change as the dickering on the next farm bill progresses.”

Mr. Hagstrom noted that, “Members of Congress have expressed concern that the cuts in crop insurance will reduce the baseline for the 2012 farm bill, and Agriculture Secretary Tom Vilsack has said he would attempt to avoid a reduction in the baseline.”

(FarmPolicy.com Note: At an April 21 House Ag Committee hearing, Sec. Vilsack indicated in a response to a question regarding crop insurance and the baseline that, “As it relates to the baseline, just simply let me say that our hope is that we can work with the chairman and others on this committee and conserve and preserve these savings so that you all have the flexibility to do what you need to do as you begin to address the 2012 Farm Bill and Rural Development Bill with as much flexibility as you possibly need.” (Unofficial Farmpolicy.com transcript, at page 27)).

2008 Farm Bill: Livestock Rules

William Neuman reported on Friday at The New York Times Online that, “The Obama administration proposed new rules on Friday seeking to increase competition and rein in potentially unfair practices by large meatpackers and poultry processors. The move is aimed at helping small livestock and poultry farmers survive in an industry dominated by corporate giants.

The rules could give farmers and ranchers new leverage in suing meat companies that they believe have treated them unfairly. They would end practices among cattle and hog buyers that may lower prices paid to farmers and feedlot owners. And they would set new protections for poultry farmers, who often must go deeply into debt to build the chicken houses needed to win contracts from processors.

“‘As this market has become more consolidated and vertically integrated for efficiency’s sake it lends itself to unfair practices and practices that are not particularly transparent,’ the agriculture secretary, Tom Vilsack, said in an interview.”

The Times article noted that, “The regulatory move comes as the Agriculture and Justice Departments have been holding a series of public workshops to discuss allegations of anticompetitive behavior in agriculture.

“The rules apply largely to how the Agriculture Department enforces the Packers and Stockyards Act, a 1921 law governing the livestock and poultry industry. The U.S.D.A. will evaluate public comment before issuing a final set of rules, which could take many months.”

Friday’s article added that, “Groups representing the meat industry criticized the proposed rules.

“‘These rules would require a packer to treat everybody the same regardless of capability, regardless of quality of product,’ said Mark Dopp, a senior vice president and the general counsel of the American Meat Institute, which represents the meatpacking industry. ‘We’re afraid this is going to stifle the progress and innovation we’ve seen over the last 20 or 30 years.’

Richard Lobb, a spokesman for the National Chicken Council, which represents poultry processors, said the new rules would ‘open the floodgates to litigation.’”

The AP reported on Friday that, “Perhaps the most significant provision in the new rules is one that makes it easier for farmers to file suits under the Packers and Stockyards Act, said Peter Carstensen, a law professor at the University of Wisconsin who has studied agriculture competition law for decades.

“Farmers who now sue under the act must show a company has not only harmed them but that it has hurt competition in the overall meat industry, Carstensen said.

“The new law would change that, making it clear that the law only requires a farmer to show a company has engaged in ‘unfair’ or ‘discriminatory’ acts against the farmer. That sole provision could unleash a wave of litigation, and prompt courts to overturn earlier rulings, Carstensen said.”

Bob Keefe reported on Friday at the Atlanta Journal-Constitution that, “The rules could have a significant impact on farmers in Georgia — the nation’s biggest poultry producer — and potentially affect how much consumers pay for chicken in the future.

“The proposal would change the pricing system used by many farmers and big chicken companies such as Tyson Foods, Pilgrim’s Pride and Perdue and require other changes to contracts between farmers and the big companies.”

The AJC article noted too that, “The proposed rule changes also raised a red flag at the Senate Agriculture Committee, where Republican Sen. Saxby Chambliss of Georgia is the ranking member.

Erin Hamm, spokeswoman for Chambliss, said the rules proposal ‘appears to go well beyond congressional intent under the 2008 Farm Bill … and contradicts established legal precedent.’ She said committee staff was reviewing the USDA proposal.”

Reuters news reported on Friday that, “Small-farm groups applauded the proposed rule. ‘As long as the companies can arbitrarily cut off deliveries of birds to contract growers or cancel growers’ contracts at any time, we will always be at the mercy of the companies’ whims,’ said Mike Weaver, president of the Contract Poultry Growers Association of the Virginias.

“The rule is scheduled to appear in the Federal Register on Tuesday to open a 30-day comment period that is one of the last steps to issuing a new regulation.”

In other reactions, Sen. Russ Feingold, D-Wis., noted that, “[This] proposed rule, combined with the joint USDA/DOJ agriculture competition workshops and other actions, are putting us back on the path of ensuring farmers, small businesses and consumers are treated fairly.”

Sen. Tom Harkin, D-Iowa, stated that, “I am especially gratified that these proposed regulations will carry out provisions we wrote into the Food, Conservation and Energy Act of 2008 specifically to ensure fairness, nondiscriminatory treatment and open competitive markets for livestock and poultry producers.”

A news release from Friday stated that, “Congressman Earl Pomeroy, D-ND, and Senators Byron Dorgan, D-ND, and Kent Conrad, D-ND, today praised the U.S. Department of Agriculture for a proposed rule that will level the playing field and restore fairness for American livestock producers.”

Sen. Chuck Grassley, R-Iowa, indicated that, “The Department of Agriculture has made a concerted effort to address some of the unprecedented levels of concentration in the agriculture industry. There’s still more work to be done, but these proposed rules are a step in the right direction.”

And Bob Stallman, president of the American Farm Bureau Federation (AFBF), noted that, “The [AFBF] is pleased with the proposed rule issued today by the Agriculture Department’s Grain Inspection, Packers and Stockyards Administration (GIPSA) dealing with competition in the livestock and poultry industries.”

In other livestock related Farm Bill issues, Lyndsey Layton reported in yesterday’s Washington Post that, “Under the Obama administration and the 2008 farm bill passed by Congress, the USDA is shifting attention to small and mid-size farms, encouraging organic and sustainable agriculture, and investing in projects to bring locally grown meat and produce to consumers.

“‘There is unbelievable consumer interest in local agriculture that we haven’t seen in decades,’ said Deputy Agriculture Secretary Kathleen Merrigan. She is overseeing the agency’s ‘Know Your Farmer, Know Your Food’ program, designed to revive the processing, marketing and distribution networks that once made small farming viable but disintegrated in the last 30 years as U.S. agriculture went through a dramatic consolidation.”

The Post article stated that, “‘There are farming operations that are really big and do huge volumes of food and that’s part of American agriculture and that’s good,’ Merrigan said. ‘But there are a lot of people who want to do alternative markets, and we want to find a way to help them find a living and stay in rural America and help those towns and villages thrive. This really is a rural development strategy.’

The agency is promoting small meat producers in part by funding and approving more mobile slaughter units, staffing each one with a federal inspector, educating farmers and USDA employees about the units, and setting clear guidelines for farmers who want to build one. In December, the department set up a toll-free help line dedicated to small producers.

“Most people in this country are not likely to eat meat processed in a mobile slaughterhouse, but the USDA’s promotion of the units marks a significant cultural shift at the agency, especially since Earl Butz, the agriculture secretary from 1971 to 1976, famously admonished farmers to ‘get big or get out.’

“The change coincides with a backlash against factory farms, fueled by concerns about animal welfare, impact on the environment and quality and safety of meat. Consumers are increasingly demanding grass-fed beef, pork and lamb raised on local pastures by farmers who can vouch for the animals’ diet and treatment. The USDA estimates that the market for locally grown food will be about $7 billion by 2012, up steeply from $4 billion in 2002.”

Farm Bill: Nutrition

Alexandra Zavis reported on Saturday at the Los Angeles Times Online that, “With concern growing in Sacramento about the millions of Californians struggling to get sufficient nutrition, advocates for the poor had hoped for progress this year on recommendations to improve access to federal food stamps.

“Gov. Arnold Schwarzenegger and legislators in both major parties have shown interest in cutting red tape that has California lagging far behind most of the nation in obtaining the benefit. But hopes that this would translate into speedy legislative action have dimmed as reform efforts have become caught up in horse-trading to close a $19.1-billion budget gap.”

The article explained that, “Only 48% of eligible Californians — about 2 million people — were enrolled in the food stamp program in 2007, the most recent year for which federal estimates are available. That was well below the national average of 66%. The number of recipients has since increased to more than 3 million, but eligibility for the program has soared because of the recession, so it is not clear whether the participation rate has improved.”

Energy: Biomass

Tom Zeller Jr. reported on Friday at The New York Times Online that, “[P]ower generated by burning wood, plants and other organic material, which makes up 50 percent of all renewable energy produced in the United States, according to federal statistics, is facing increased scrutiny and opposition.

That, critics say, is because it is not as climate-friendly as once thought, and the pollution it causes in the short run may outweigh its long-term benefits.

The opposition to biomass power threatens its viability as a renewable energy source when the country is looking to diversify its energy portfolio, urged on by President Obama in an address to the nation Tuesday. It also underscores the difficult and complex choices state and local governments face in pursuing clean-energy goals.”

Mr. Zeller noted that, “Biomass proponents say it is a simple and proved renewable technology based on natural cycles. They acknowledge that burning wood and other organic matter releases carbon dioxide into the atmosphere just as coal does, but point out that trees and plants also absorb the gas. If done carefully, and without overharvesting, they say, the damage to the climate can be offset.

But opponents say achieving that sort of balance is almost impossible, and carbon-absorbing forests will ultimately be destroyed to feed a voracious biomass industry fueled inappropriately by clean-energy subsidies. They also argue that, like any incinerating operation, biomass plants generate all sorts of other pollution, including particulate matter. State and federal regulators are now puzzling over these arguments.

Last month, in outlining its plans to regulate greenhouse gases, the Environmental Protection Agency declined to exempt emissions from ‘biogenic’ sources like biomass power plants. That dismayed the biomass and forest products industries, which typically describe biomass as ‘carbon neutral.’”

Ag Labor Issues

Erik Eckolm reported on Friday at The New York Times Online that, “The Obama administration has opened a broad campaign of enforcement against farmers who employ children and underpay workers, hiring hundreds of investigators and raising fines for labor and wage violators.

“A flurry of fines and mounting public pressure on blueberry farmers is only the opening salvo, Labor Secretary Hilda L. Solis said in an interview. Ms. Solis, the daughter of an immigrant farm worker, said she was making enforcement of farm-labor rules a priority. At the same time, Congress is considering whether to rewrite the law that still allows 12-year-olds to work on farms during the summer with almost no limits.”

The Times article said that, “In an interview, Ms. Solis said she had added more than 250 workplace investigators, bringing the department’s total to near 1,000, and started a campaign to educate workers about their rights. Acknowledging that officials had sometimes ignored child farm violations in the past, she added, ‘I am totally changing the direction of this department.’

“But to make deep inroads, Congress would first have to change the law. A proposal to ban the hiring of 12- and 13-year-olds, cap working hours by 14- and 15-year-olds and keep teenagers out of hazardous jobs is gaining support in Congress. Some 91 representatives have co-sponsored the Care Act, put forth by Lucille Roybal-Allard, Democrat of California.

Senator Tom Harkin, Democrat of Iowa, said he planned to introduce a similar bill in the Senate. The American Farm Bureau, the nation’s largest farm lobbying organization, has opposed it, saying it could imperil the tradition of children working in farm communities.”

And Robert Rodriguez reported on Saturday at the Fresno Bee Online that, “Overtime pay after eight hours is the law for wage earners across California — except for those who do some of the hardest work, harvesting fruit and vegetables in the state’s fields and orchards.

“Now Sen. Dean Florez, D-Shafter, is trying to change that.

Florez is pushing for a law that would give farmworkers the same overtime benefits as other hourly employees.”

Climate Developments

Jonathan Weisman reported on Friday at the Washington Wire Blog (The Wall Street Journal) that, “President Barack Obama’s meeting next Wednesday with senators to get energy legislation back on track will likely include discussing a climate change component that caps carbon emissions only from electric utilities, White House Chief of Staff Rahm Emanuel said today in an interview.

“‘The idea of a ‘utilities only’ [approach] will also be welcomed,’ he said, emphasizing that ‘a wide range of ideas will be discussed.’

“The meeting will bring Sen. Lindsey Graham (R, S.C.) back into the discussion, where he has been absent since pulling away from energy independence and climate change talks with Sens. John Kerry (D, Mass.) and Joseph Lieberman (I, Conn.).”

Mr. Weisman added that, “Sen. Lamar Alexander (R, Tenn.), who has expressed some support for controlling utility carbon emissions, coupled with expanded nuclear power, is also expected to attend, along with Sens. Kerry, Lieberman, Jeff Bingaman (D, N.M.) and Richard Lugar (R, Ind.).

“‘The president’s view is for inviting a wide range of people who have ideas.’ Emanuel said.

The utilities-only idea is anathema to many environmentalists, who see it as an inconsequential half measure. But to pragmatists, it may be the best the Senate can do on climate change – and even then, it would be a heavy lift.”

Ben Geman reported yesterday at The Hill’s Energy Blog that, “Sen. Joe Lieberman (I-Conn.) said Sunday that he sees 20 swing votes in play for including greenhouse gas limits in energy legislation that the White House and Senate Democratic leaders hope to advance this summer.

“Lieberman and Sen. John Kerry (D-Mass.) are struggling to win political traction for their sweeping climate change and energy bill.”

“Lieberman, appearing on CNN’s ‘State of the Union,’ [transcript] said there are 50 senators that want to put a price on emitting carbon, 30 against it and 20 members who are undecided.

“‘We need half of the undecided and we can do it,’ Lieberman said, adding that President Barack Obama’s effort to win passage of a sweeping energy bill this summer has given a lift to the effort.”

Mr. Geman added that, “But Sen. Lisa Murkowski (R-Alaska), speaking on the same program, said advocates of carbon mandates don’t have 60 votes. She cited concerns that cap-and-trade plans would harm the economy.”

“Murkowski instead touted bipartisan energy legislation that the Energy and Natural Resources Committee approved a year ago. It contains a suite of provisions to boost energy efficiency and alternative energy development but lacks carbon provisions,” The Hill update said.

The New York Times editorial board noted in today’s paper that, “To anyone watching the oil spew into the Gulf of Mexico, the argument for curbing this country’s appetite for fossil fuels could not be clearer. President Obama was right last week when he called on America to unify behind a ‘national mission’ to find alternative energy sources, sharply reduce its dependence on oil and cut its greenhouse gas emissions.

We were disappointed, however, that Mr. Obama’s address failed to insist that the best way to do all of these things is to establish a broadly based, economywide cap-and-trade system that would put a price on carbon emissions. He opened the door far too wide to alternative policies that aren’t real alternatives — and to more stalling.”

Ag Economy

Scott Kilman repoted in today’s Wall Street Journal that, “Two years after the global food crisis peaked, grain shortages are turning into surpluses that could create their own problems.

Some traders and economists are speculating that if the U.S. and world economies don’t heat up soon, surpluses could turn into price-depressing gluts. While cheap grain is good news for consumers and livestock producers, excessive supplies increase a government’s cost for farm subsidies and tend to ignite trade fights between the big farming powers.

“This tension is growing partly because many of the farmers in the U.S. Midwest who were plagued by rainy growing seasons in recent years are having few problems so far this year.”

The Journal article stated that, “With world grain production this year expected to exceed demand for a third consecutive year, many grain traders and farm economists are beginning to debate the prospects for two starkly different outlooks.

“If an economic recovery doesn’t gather steam soon, says one group, price-depressing grain gluts could materialize in a few years, dragging down farmers’ profits and chilling farmers’ demand for everything from tractors to genetically modified seed.”

Others, however, worry that the world’s farmers won’t be able to keep up with demand again once the economy does recover, which would increase costs for food manufacturers and create the environment for another food crisis. China’s and India’s appetites are expected to grow strongly.”

Keith Good

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