FarmPolicy

October 18, 2017

Farm Policy Issues; Ag Economy; Biofuels; Trade; and Climate Issues

Policy Issues: Disaster Aid

Chris Clayton and Jerry Hagstrom reported yesterday at DTN (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson said Tuesday he doesn’t see how the Obama administration can administratively approve and come up with $1.5 billion to take care of his Senate counterpart’s disaster aid proposal.

“‘I don’t see how they can do it,’ Peterson said.”

The DTN article explained that, “Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark., announced last week that White House officials told her they could find an administrative fix to fund the disaster package, which she has pushed because of massive crop losses last year in Arkansas. Producers in that state say they didn’t want to wait more than a year for payments under the permanent Supplemental Revenue Assistance Program (SURE).”

Clayton and Hagstrom noted that, “Peterson said staff from the House Agriculture Committee called USDA officials ‘and they can’t give us any answer’ as to how such a disaster package could be implemented or distributed. Peterson said he doesn’t think his committee needs to necessarily send a letter opposing the move. ‘I don’t think they can do it,’ he said. ‘They don’t have any framework to make disaster payments.’

“In an interview on the sidelines of the American Sugar Alliance meeting in Vail, Colorado, on Monday Agriculture Undersecretary for Farm and Foreign Agricultural Services Jim Miller said he is ‘in process of conversation with the White House to gain a further elaboration’ of what was promised to Lincoln and is also ‘in conversation with Lincoln in order to have a better [understanding] of what her interest was.’”

Yesterday’s article added that, “Miller said the SURE program is not working in the South as it is requires farmers to buy crop insurance at a higher level to qualify for disaster benefits. Southern farmers do not buy as much crop insurance as northern farmers do. Arkansas rice farmers also asked for help with unexpectedly high production costs, which SURE does not cover. Miller said Congress should consider making the program more national in the 2012 farm bill, but he also noted that SURE’s baseline will expire before the new bill is written.

And USDA has been cutting both discretionary and mandatory spending to show budget cuts. A $1.5 billion spike in discretionary spending for disaster aid would wreck a lot of those efforts.”

Policy Issues: Nutrition

Denise Grady reported in today’s New York Times that, “Americans are continuing to get fatter and fatter, with obesity rates reaching 30 percent or more in nine states last year, as opposed to only three states in 2007, health officials reported on Tuesday.

“The increases mean that 2.4 million more people became obese from 2007 to 2009, bringing the total to 72.5 million, or 26.7 percent of the population. The numbers are part of a continuing and ominous trend.”

Meanwhile, the AP reported yesterday that, “More Illinois families are receiving food stamps than ever before as a result of the deepest recession in decades, state officials said Monday.

“More than 780,000 Illinois families got food stamps in June, up 11.9 percent from a year earlier, the Illinois Department of Human Services reported. Nationally, 40 million Americans — 18.7 million households — use food stamps.”

Policy Issues- Farmers Markets

Jane Black reported yesterday at the All We Can Eat section of The Washington Post Online that, “The number of farmers markets jumped 16 percent in 2010, according to figures to be released [today] by Department of Agriculture. There are 6,132 farmers markets in operation, up from 5,247 in 2009 [related graph].

“The National Farmers Market Directory reported the greatest surges in the Midwest. Missouri saw the number of markets skyrocket 77 percent; Minnesota’s growth was 61 percent; Idaho and Michigan each saw a 60 percent jump. Locally, Virginia counted 152 markets, up 28 percent from 118 in 2009. Maryland has 107, up 18 percent from 91 in 2009. The District had 28 markets in 2010, a 12 percent increase from 25 in 2009.

“There are 886 farmers market open during the off-season. This is the first year the USDA has tracked winter markets.”

The update stated that, “Growing interest in farmers markets is driven by consumer concerns about food safety and a renewed focus on healthful eating;” but added that, “Not everyone agrees, however, that the growth in farmers markets is proof of strong local food systems. Researchers at Franklin and Marshall College’s Local Economy recently released a study that suggested that it is largely wealthier urbanites who benefit from farmers markets.”

Policy Issues: International Perspectives

Kyodo News reported today that, “The Democratic Party of Japan plans to expand the range of farmers entitled to a new agricultural subsidy program to growers of crops other than rice in fiscal 2011, DPJ officials said.

Wheat, soybean, beets and buckwheat are among the crops mentioned in recommendations the ruling party’s agriculture policy task force has drafted for an expanded subsidy program to take effect next April. The subsidies covered rice growers this year.”

And Reuters writer Alfred Kueppers reported this week that, “The drought that has decimated the wheat harvest from the Black Earth belt, stretching from Romania to Siberia, has put sowing for next year’s crop in jeopardy too.

“Russia, the world’s third largest wheat exporter last year, is in the midst of its worst drought in 130 years, causing forecasters to sharply reduce their export estimates, sending futures soaring in Chicago and Paris.”

The article stated that, “The problem is exacerbated by the lack of crop insurance, with Zurich-based insurer Swiss Re estimating that 25 percent of Russian crops have some coverage.

As a result, farmers such as Kryukov have no means to pay off loans taken out to purchase seed and new equipment in expectation of a bumper crop this year.

“‘It’s practically impossible,’ Kryukov said, adding that his company borrowed more than 10 million roubles ($330,700) from Moscow Industrial Bank.”

The article added that, “Farmers in the Vorobovskiy district want the government to step in.

“‘We hope that the government compensates us for 10 percent of our losses,’ Prodimeks Holding’s local General Director Alexander Fedyayev said, adding that he has heard the government may subsidise seed purchases for the upcoming sowing season.”

Ag Economy

In related news, Terence Roth and William Mauldin reported in today’s Wall Street Journal that, “The scorching temperatures and dry skies threatening Russia’s wheat harvests have also been beating down on Western Europe, which is forecasting lower output of crops from French wheat to Italian tomatoes.”

Western Europeans also expect their own markedly dry summer to cut a swath through the production of grain, fruit and vegetables this year. Economists forecast a boost in seasonal food prices, with the German government reporting a 12% to 15% rise in July.”

The Journal article indicated that, “The impact on foodstuffs stretches beyond grain. An Italian farmers association expects Italy’s tomato crop to come up 10% to 15% short this year because of the intense heat. Dutch growers of tulip bulbs could see production fall by 10% or more, and Belgian potato growers forecast a drop in yields.”

Meanwhile, Bloomberg news reported yesterday that, “China’s worst flooding in more than a decade may cut production of rice, cotton and pork in the largest producer, boosting prices and hampering government efforts to keep inflation under 3 percent, analysts said.

“‘The disastrous weather will reduce rice output by 5 percent to 7 percent and cotton by 5 percent to 10 percent in our initial assessment,’ said Li Qiang, managing director at Shanghai JC Intelligence Co. The drop may ‘lead to inflationary pressure should the government fail to take action,’ he said in an interview yesterday.

The world’s most populous country grows almost a third of the globe’s rice and cotton and produces about half its pork. An output decline may support global prices. Rice has climbed 15 percent in Chicago since June 30, while cotton in New York has advanced 26 percent in the past year. The floods have boosted food prices in China, the largest consumer.”

Domestically, USDA’s National Agricultural Statistics Service (NASS) noted in a news release yesterday that, “After setting a record high in 2008, U.S. farm production expenditures decreased by nearly $20 billion in 2009– the first major decline in nearly a quarter century, according to the Farm Production Expenditures 2009 summary released today by [NASS].

“The average production expenditures per farm fell 6.4 percent in 2009, from $140,075 to $131,137. Total U.S. expenditures totaled $287 billion, down from $307 billion in 2008 [related graph].

Falling petroleum prices were a major factor behind the decline in overall farm expenses, leading to decreases in the costs of fuels, fertilizer and agricultural chemicals. The report shows that farmers and ranchers spent $12.4 billion on fuels in 2009, down 22.5 percent from the previous year. The average U.S. farm operation spent $5,658 on fuel in 2009, $1,642 less than in 2008 [related graph].”

Biofuels

Javier Blas reported yesterday at the Financial Times Online that, “Archer Daniels Midland, the US-based agricultural trading house, said it expected strong demand from emerging markets to continue as it reported a 15 per cent increase in annual profits.”

The improved results also reflected better margins for corn-based ethanol. The trading house invested heavily in corn-based bio-fuels, a sector which was affected last year by weak demand for gasoline and low oil prices, making the alternative fuel less attractive. The rise in oil prices this year has helped to boost demand for ethanol. Oil prices on Tuesday were at a three-month high, more than $82 a barrel.”

And a news release earlier this week from Sen. Tom Harkin (D-Iowa) indicated that, “[Sen. Harkin] released the following statement after leading a meeting of bipartisan senators with EPA Administrator Lisa Jackson and Department of Energy Deputy Secretary Daniel Poneman to discuss delays in the approval of E15 ethanol blend for vehicles. Harkin has been a Senate leader in promoting the production and use of biofuels and has introduced legislation to promote expansion of biofuels markets.”

“‘I was very clear at the meeting that I am frustrated that the testing is not complete on E15 and that the timeline has been extended twice. This process seems so much more difficult that it was when E10 was approved. While I had hoped that E15 would be available by now to consumers, Secretary Jackson and Deputy Secretary Poneman were very helpful in fully explaining the rationale for the protracted timeline, and I am looking forward to hearing EPA’s decision on E15 soon. My bottom line is that expanding markets for ethanol is a critical to reducing our dependence on foreign oil. Achieving this goal will require strong leadership from the Administration and from Congress, where I am committed to strengthening of American biofuels markets.’”

Trade

Reuters writers Bob Burgdorfer and Christopher Doering reported yesterday that, “Russia has raised ‘further issues’ with a trade agreement that was supposed to have restarted U.S. poultry exports to that country after a six-month ban, U.S. chicken industry sources said on Tuesday.

“Industry and government sources did not specify the issues raised. The matter has reached Washington where U.S. Agriculture Secretary Tom Vilsack said he was ‘concerned’ and monitoring the situation.”

In a broader analysis of trade issues, Elizabeth Williamson and Melanie Trottman reported in today’s Wall Street Journal that, “The Obama administration is promising labor unions that it will enforce a range of worker protections in new trade pacts in an effort to win labor’s support of a revised South Korea free-trade agreement.

“President Barack Obama is aiming to present a new version of the trade agreement at the Group of 20 nations summit in Seoul in November and has made it a centerpiece of his efforts to boost U.S. exports and job growth. But he has run into resistance from labor and other groups that maintain that this and other free trade deals don’t go far enough to protect workers’ rights in partner countries or open markets abroad.”

Climate Issues

Reuters writers Richard Cowan and Tom Doggett reported yesterday that, “U.S. Senate Democrats on Tuesday postponed this week’s vote on alternative energy legislation that also would have strengthened offshore drilling safety in the wake of the Gulf of Mexico oil spill.

“Senate Majority Leader Harry Reid’s decision to take the bill off the Senate’s schedule until at least mid-September, when Congress returns from a long summer break, dealt a blow to Democrats’ efforts to hold BP fully responsible for the economic damage from the Gulf oil spill.”

The article stated that, “For the second time in a month, Democrats failed to build enough support to advance a major environmental bill. In late July, efforts collapsed in the Senate to mandate reductions in greenhouse gas emissions blamed for global warming.

“While Reid said he will try again in September to pass a bill, its fate was uncertain as political partisanship will only grow worse as the November 2 congressional elections near and there are few weeks left to legislate.”

Coral Davenport reported yesterday at Politico that, “Senate Democrats on Tuesday punted their oil spill response bill to next month, but the extra time doesn’t guarantee the measure will pass — far from it.

The delay virtually ensures that strategists from both parties will use the congressional recess to hone their plans, talking points and poison-pill amendments for any floor debate, all with an eye toward the midterm elections.”

With this background in mind, David A. Fahrenthold and Juliet Eilperin reported in today’s Washington Post that, “The Environmental Protection Agency will soon begin regulating greenhouse gases factory by factory, power plant by power plant. That could be unwieldy, expensive and unpopular — even President Obama has said it’s not his preferred solution.

“But for now, it’s his only option.

“The next few months could bring a climax to the long-running debate over how to combat climate change, with the EPA trying to implement its rules and industry groups and opponents in Congress seeking to block it with lawsuits or legislation.”

The Post writers stated that, “The administration will cite a mandate from the Supreme Court, which ruled in 2007 that greenhouse gases could be regulated like other air pollutants. But opponents will say it has chosen an approach that stretches the law and could impose serious economic costs.

The result of their fight could be the first limits on greenhouse gases from American smokestacks — or a significant defeat for the White House and environmental groups.

“The administration ‘wanted to be able to hold out the threat of clean-air regulation [by the EPA], as a way to . . . try to get people to the table,’ said Jeffrey R. Holmstead, an EPA official under the Bush administration, who now works for the law firm Bracewell & Giuliani. ‘They’re now faced with the kind of unenviable task of trying to make it work.’”

Today’s article added that, “In Congress, some senators have worked to stop the EPA in its tracks. In June, a resolution from Sen. Lisa Murkowski (R-Alaska) narrowly failed. Another bill from Sen. John D. Rockefeller IV (D-W.Va.), which would suspend the effort for two years, awaits a vote.

“A White House spokesman said that Obama would veto Rockefeller’s measure if it passed. But more attempts could be made.”

But critics wonder: If the administration couldn’t force a climate bill through Congress, will it really take the heat of regulating greenhouse gases all by itself?

And Lisa Friedman of ClimateWire reported yesterday at The New York Times Online that, “The United States still stands by its promise to slash global warming pollution despite the Senate’s decision to abandon climate legislation this year, U.S. Special Envoy for Climate Change Todd Stern said yesterday.

“In an interview with ClimateWire, Stern said the Obama administration is ‘not backing away’ from its Copenhagen pledge to cut greenhouse gas emissions 17 percent below 2005 levels in the coming decade and more than 80 percent by mid-century. He also laced into critics who say America’s failure to produce legislation this year will have dire consequences for treaty talks.”

Keith Good

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