Farm Bill (Budget Issues, CRP)
The Washington Insider section of DTN reported yesterday (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., made a bold political move to use what observers suggest was bitter medicine for some of his constituents as a political bargaining point.”
“At issue is USDA’s Crop Insurance program. The agency uses private insurance companies and agents to offer the federal programs under a Standard Reinsurance Agreement.”
The DTN item explained that, “USDA began the renegotiation process late last year, and now has finally determined that payments for administrative and operating costs subsidized by the government would be capped at $1.3 billion next year, with the limit rising to $1.37 billion in 2015. Recently, USDA announced that all 16 companies signed the new SRA that will cut costs about $6 billion over 10 years.
“As the negotiation process wound down, its effect on the ‘agriculture baseline,’ became controversial, especially a decision by the Office of Management and Budget that $4 billion of the reduction would be used to reduce the deficit rather than support other agricultural programs as many agricultural supporters proposed.
“The remaining $2 billion in ‘baseline credit’ is to be allocated for several programs, including expansion of the pasture, rangeland, and forage program; providing a performance discount or refund to reduce the cost of crop insurance for certain producers; increasing conservation reserve program acreage; and, investing in new and amended conservation reserve enhancement program initiatives and CRP monitoring.”
Yesterday’s update added that, “In his recent discussions in his district, Chairman Peterson embraced the administration’s decision, telling constituents that, ‘This is the only government program in the last 20 years that’s actually been targeted to reduce the deficit.’ He pointed out that $4 billion ‘over 10 years in a $12 trillion deficit doesn’t sound like a lot of money, but if everybody took the same percentage of reduction that we just took with this SRA, the federal deficit would be reduced $2.3 trillion over the next 10 years.’”
After additional analysis, the DTN item pointed out that, “Thus, Chairman Peterson is making the case that his committee has taken a significant hit in its agricultural commodity baseline in hopes that this will inoculate agriculture from the next wave of cuts. The committee has succeeded in making similar arguments for years, but will face new, greater pressure in the future and it is far from certain that Chairman Peterson’s strategy will keep the baseline whole, Washington Insider believes.”
Meanwhile, a separate budget issue within the context of the $6 billion SRA cut has emerged.
As yesterday’s DTN item pointed out, OMB indicated that, “$4 billion of the reduction would be used to reduce the deficit,” and that, “The remaining $2 billion in ‘baseline credit’ is to be allocated for several programs.”
The additional budget issue has to do with the $2 billion allocation for “several programs,” including the Conservation Reserve Program.
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Landowners and farmers will have a little less than a month starting next Monday to apply for enrollment in the general signup period for the Conservation Reserve Program.
“USDA is looking to enroll more than 5 million acres, partially to push enrollment to the 32 million acres allowed under the 2008 Farm Bill while also making up for 4.5 million acres expected to expire from the program in September.
“USDA announced on Monday details for the first general enrollment signup for the Conservation Reserve Program since 2006. Enrollment at local Farm Service Agency offices starts Monday, Aug. 2, and will end Friday, Aug. 27. Contracts will begin on Oct. 1, but USDA will give some allowances for farmers to complete harvest on enrolled tracts.”
And DTN Political Correspondent Jerry Hagstrom tied together the budgetary issue and the CRP announcement in an article from yesterday titled, “Ag Chair Questions Money Shift: CRP Signup Tied to Convoluted Fiscal Policies.”
The DTN article (link requires subscription) explained that, “Behind the long-anticipated USDA announcement of a general signup for the Conservation Reserve Program on Monday lies a convoluted tale of Washington budgetary politics going back to the Bush administration that has infuriated House Agriculture Committee Chairman Collin Peterson, D-Minn.
“At a June 17 hearing [unofficial transcript], Agriculture Undersecretary for Farm and Foreign Agricultural Services Jim Miller said that USDA needed part of the $6 billion in savings from the agency’s recent negotiations with crop insurance companies to pay for the CRP signup even though Congress had provided the money in the farm bill.”
Mr. Hagstrom pointed out that, “At the hearing, Peterson learned that OMB had allowed the Bush administration in October 2008 to use $65 million in USDA mandatory Conservation Reserve Program money that was supposed to idle land for soil restoration and wildlife habitat purposes for an initiative to pay landowners to allow hunters on their land.
“When the Bush administration abandoned the idea of a hunters’ initiative, OMB assigned the budget authority to deficit reduction rather than give it back to USDA for its original purpose. When the Obama administration came into office and wanted to extend CRP contracts and hold a signup to put more land in the CRP, USDA found itself financially strapped.
“Peterson is so incensed that he has ordered a Government Accountability Office investigation and is considering holding a hearing to figure out if OMB is engaging in the same practice in other parts of the government.”
Yesterday’s article added that, “‘We are not going to stand for them changing mandatory programs,’ Peterson said in an interview. He added that he is also opposing Agriculture Secretary Vilsack’s recent request to the White House that USDA be allowed to propose cuts in mandatory programs in the fiscal year 2012 budget rather than comply with President Obama’s order that Cabinet agencies cut 5 percent of discretionary programs.”
The article added that, “Miller testified that the Obama administration planned to use some of the money being saved in a renegotiation of the standard reinsurance agreement with crop insurance companies to pay for a new signup for the CRP, which idles land for conservation and wildlife habitat purposes.
“Rep. Jerry Moran, R-Kan., the subcommittee ranking member, told Miller that he could not understand why it was necessary to use the savings for a program that Congress had given mandatory funding.
“Miller explained that USDA wanted to hold a general signup so that the number of acres in the CRP would be as close as possible to the 32 million acres allowed by Congress in the 2008 farm bill, but found that it did not have the budget authority to undertake it even though Congress had mandated it. When the Bush administration did not follow through with its hunters’ initiative and OMB assigned the money to budget reduction, ‘We lost it,’ Miller said.” [See pages 16 and 17 of this unofficial transcript of the hearing].
Mr. Hagstrom noted in yesterday’s DTN article that, “By using the savings from the crop insurance negotiations, USDA will be able to sign up enough land to bring the CRP up to the full 32 million acres allowed under the 2008 farm bill. The exact number of acres to be signed up and the exact costs are impossible to determine before the signup is complete, a USDA spokesman said. At present, there are 31 million acres enrolled in the program, but contracts on about 4.5 million acres will expire this fall.”
Meanwhile, an update posted on Friday at the Western Farm Press Online reported that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., questioned [U.S. Department of Agriculture Risk Management Agency (RMA) Administrator William J. Murphy] about the administration’s decision to use $2 billion of crop insurance funds for the Conservation Reserve Program, money which Peterson said had been included in the 2008 farm bill. Murphy said that he was unfamiliar with the decision. Peterson said he was waiting for an answer from the Office of Management and Budget about the issue.”
To listen to an audio replay of the exchange between Chairman Peterson and Administrator Murphy on this issue, just click here (MP3- 3:50).
An update posted yesterday at CQPolitics reported that, “Sen. Blanche Lincoln ’s effort to advance long-stalled disaster assistance for farmers fell short last week, but she and other Democrats pledge to continue to fight for social safety-net spending they say is being shortchanged.
“But just as other lawmakers’ demands for domestic spending fall on deaf ears amid concern over the budget deficit, a sluggish economy and an angry electorate, Lincoln, of Arkansas, won no guarantee she will get what she wants this week or next.”
Recall that a Senate Ag. Comm. news release from Friday stated that, “U.S. Senate Agriculture, Nutrition and Forestry Committee Chairman Blanche Lincoln (D-Ark.) and Ranking Member Saxby Chambliss (R-Ga.), along with 15 Senate colleagues, today sent a letter to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack requesting a 120-day extension in the public comment period regarding new rules proposed by the Grain Inspection Packers and Stockyards Administration (GIPSA). The Senators said the proposed regulations, which affect enforcement of the Packers and Stockyards Act, require additional time for stakeholders to adequately analyze all aspects of the proposed rule.”
The Senator’s request came after the proposed GIPSA rule became a hot topic of discussion at a House Ag Subcommittee hearing last Tuesday (July 20).
Yesterday, USDA announced that, “The USDA Grain Inspection, Packers and Stockyards Administration is extending the comment period for the regulations required by Title XI of the Food, Conservation and Energy Act of 2008 and regarding conduct in violation of the Packers and Stockyards Act until November 22, 2010.
“GIPSA published the proposed rule in the Federal Register on June 22, 2010 (75 FR 35338). The Agency proposed adding several new sections to the regulations under the Packers and Stockyards Act of 1921, as amended and supplemented.
“GIPSA will consider comments received by November 22, 2010.”
Chris Clayton reported yesterday at DTN (link requires subscription) that, “Agricultural and livestock groups generally went to their respective corners after USDA announced Monday the department will extend the comment period for a proposed livestock competition rule.” [Note: see press releases from American Farm Bureau, National Cattlemen’s Beef Association, National Pork Producers Council, and the National Farmers Union.]
“The comment period for the proposed rule was expected to end Aug. 23, just days before a USDA-Department of Justice workshop in Colorado on cattle-industry competition issues. USDA’s Grain Inspection, Packers and Stockyards Administration announced the agency would extend the comment period until Nov. 22.”
An update posted yesterday at the Renewable Fuels Association Blog indicated that, “Three major farmer and ethanol groups today called on Environmental Protection Agency (EPA) Administrator Lisa Jackson to formally approve the use of E12 (12% ethanol) in the nation’s gasoline supply. The groups – American Coalition for Ethanol (ACE), National Corn Growers Association (NCGA) and the Renewable Fuels Association (RFA) – in a formal letter to the EPA Administrator wrote, ‘based on the EPA’s delay in acting upon the full E15 waiver and on our concerns that the Agency will restrict the use of E15 to cars made in 2001 and thereafter, we encourage the EPA to formally approve the use of E12 for all motor vehicles as an immediate interim step pending any ongoing additional testing on E15.’”
Growth Energy indicated in a news release from yesterday that, “Growth Energy, the coalition of U.S. ethanol supporters, released the following statement after industry groups called for approval of the use of E12 (12 percent ethanol) in the nation’s gasoline supply:
“‘Growth Energy’s Green Jobs Waiver follows the statutory requirements of the law and contained more science supporting E15 than any waiver in the history of the Clean Air Act,’ said Growth Energy CEO Tom Buis. ‘In that waiver, which was filed more than a year ago, we said that the EPA was free to use the data assembled in the waiver ‘to support an immediate increase to E12 or E13 while studying the merits and data relative to the 211(f)(4) waiver up to E15.’
“‘Despite the unnecessary delays from EPA thus far, we expect that the EPA will approve E15 later this year and Growth Energy will continue to advocate solutions like E15 that create a market large enough for the ethanol industry’s continued expansion,’ added Buis.”
A news release Friday from Senator James M. Inhofe (R-OK) indicated that, “Senator James M. Inhofe (R – OK), Ranking Member of the Senate Committee on Environment and Public Works, along with his fellow Republican Committee members, sent a letter today to EPA Administrator Lisa Jackson regarding impending EPA regulation of pesticides under the Clean Water Act (CWA).
“A rule exempting pesticides from regulation under the CWA was recently overturned by the U.S. Court of Appeals for the Sixth Circuit. In response, EPA issued a proposal to manage pesticides through a National Pollution Discharge Elimination System (NPDES) General Permit. This means that some pesticide users must comply not only with the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), but also with the CWA. On June 4, 2010, EPA issued its draft Pesticide General Permit (PGP) under the CWA. EPA is currently reviewing comments on the draft PGP.
“The Senators’ letter expresses their opposition to the Court’s decision and addresses concerns that EPA will move forward with the final permit.”
A news release Friday from Nebraska GOP Sen. Mike Johanns noted that, “Sen. Mike Johanns and a bipartisan group of Senators today sent a letter to Environmental Protection Agency (EPA) Administrator Lisa Jackson, urging her to abandon strict new dust regulation recommendations. A policy document recently released by the EPA indicates it could consider regulating dust at levels twice as stringent as the current standard.”
“The measure, which Reid plans to bring to the floor this week, had been expected to surface Monday.”
And Paul Kane and Shailagh Murray reported in today’s Washington Post that, “But 13 months after that tough [House] vote [on climate legislation], [Rep. John Boccieri (D-OH)] and dozens of other House Democrats along the Rust Belt are not at all happy with the way things have turned out. The White House and House Speaker Nancy Pelosi (D-Calif.) had assured reluctant members that the Senate would take up the measure. Although Senate passage wasn’t a sure thing, House Democrats hoped to go back home to voters with a great story to tell — about reducing dependence on foreign oil, slowing climate change and creating jobs.
“That didn’t happen. Senate leaders, sensing political danger, repeatedly put off energy legislation, and the White House didn’t lean on them very hard to make it a priority. In the aftermath of the gulf oil spill, the Senate is set to take up a stripped-down bill next week, but the controversial carbon-emissions cap is conspicuously missing.
“This has left some House Democrats feeling badly served by their leaders. Although lawmakers are reluctant to say so publicly, their aides and campaign advisers privately complain that the speaker and the president left Democrats exposed on an unpopular issue that has little hope of being signed into law.”
A news release yesterday from American Farm Bureau stated that, “The American Farm Bureau Federation (AFBF), the Coalition of Service Industries (CSI) and the National Association of Manufacturers (NAM) put forth a comprehensive approach today to double U.S. exports in five years – a key goal of President Obama’s. Under this approach, the three organizations outline policy changes needed to improve market access and level the playing field in a competitive global market. Doubling exports in five years is an ambitious but achievable goal if major changes are enacted.”
And an opinion item from AFBF President Bob Stallman regarding trade with Cuba was also posted on Sunday at the Houston Chronicle Online, “For sake of farmers, lift Cuba ban.”
USDA’s Economic Research Service (ERS) released two interesting and related reports yesterday.
The first, “Structure and Finances of U.S. Farms: Family Farm Report, 2010 Edition,” noted that, “Most U.S. farms—98 percent in 2007—are family operations, and even the largest farms are predominantly family run. Large-scale family farms and nonfamily farms account for 12 percent of U.S farms but 84 percent of the value of production. In contrast, small family farms make up most of the U.S. farm count but produce a modest share of farm output. Small farms are less profitable than large-scale farms, on average, and their operator households tend to rely on off-farm income for their livelihood. Generally speaking, farm operator households cannot be characterized as low-income when both farm and off-farm income are considered. Nevertheless, limited-resource farms still exist and account for 3 to 12 percent of family farms, depending on how ‘limited-resource’ is defined.”
The second, a companion brochure, “America’s Diverse Family Farms, 2010 Edition,” stated that, “American farms vary widely in size and other characteristics, but farming is still an industry of family businesses. Ninety-eight percent of farms are family farms, and they account for 82 percent of farm production. Small family farms make up most of the U.S. farm count and hold the majority of farm assets, but they produce a modest share of U.S. farm output. In contrast, large-scale family farms and nonfamily farms—only 12 percent of all farms—account for 84 percent of farm production. Small farms are less profitable than large-scale farms, on average, and the households operating them tend to rely on off-farm income for their livelihood. Because small-farm households receive most of their income from off-farm work, general economic policies—such as tax policy or economic development policy—can be as important to them as traditional farm policy.”