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Disaster Aid; SNAP; Crop Insurance; Farm Bill; Food Safety; Trade; and Crop Forecasts

Disaster Aid

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “The White House has refused to respond to questions about why the Obama administration may be able to find $1.5 billion to fund ad-hoc ag disaster aid but cannot find funding to pay a settlement in a discrimination case against black farmers.

“John Boyd, president and founder of the National Black Farmers Association, issued a news release Wednesday wanting to know why the administration can find money for a disaster program, but not the $1.2 billion needed to settle discrimination claims.”

Yesterday’s DTN article indicated that, “In response to emailed questions from DTN on Tuesday asking for comment on the ad-hoc disaster funding and black farmer’s settlement, a White House spokesperson responded, ‘Off the record — you can say that the White House did not respond for comment.

DTN tried again on Thursday to get a comment from the White House or USDA, but was unsuccessful.”

Mr. Clayton pointed out that, “A report last week from the Environmental Working Group showed some farmers could gain far more from Lincoln’s proposal than from the Supplemental Revenue assistance program, or SURE.

“Environmental Working Group (EWG) President Ken Cook today wrote to the federal Office of Management and Budget (OMB) challenging the rationale for the White House’s promise to fund an agriculture disaster aid package sought by embattled Sen. Blanche Lincoln, chairwoman of the Senate Agriculture Committee.

The letter, addressed to OMB’s Acting Deputy Director Robert Nabors, says the White House proposal violates key principles that make for effective and equitable farm disaster aid and threatens to repeat the mistakes of ‘ill-conceived and poorly administered farm disaster aid programs’ of the past that ‘trample sound policy en route to ransacking the Treasury.’ The letter also raises question about the threshold for receiving aid in Lincoln’s plan and what funds will be used.”

The article added that, “OMB Acting Deputy Director Robert Nabors wrote Lincoln that he was following up on the conversation Lincoln had with [White House Chief of Staff Rahm Emanuel] ‘regarding the administration’s commitment to provide much-needed agriculture disaster assistance to rural Americans, specifically our nation’s farmers and the rural economies they support.’

“‘I want to assure you that the administration is committed to providing assistance consistent with your legislative proposal by the end of the month,’ Nabors wrote. ‘OMB and USDA are aware of existing authorities and are currently reviewing the most appropriate manner by which to provide such assistance. We are currently evaluating options to ensure compliance with existing laws, ease of administration, and effectiveness of targeting the assistance to those in need.’

“House Agriculture Committee Chairman Collin Peterson, D-Minn., has questioned whether USDA had the authority to provide the aid.”

Carolyn Lochhead indicated yesterday at the San Francisco Chronicle Politics Blog that, “It truly would be a disaster for Democrats if they lose the Senate. Maybe that’s why Arkansas Democrat Blanche Lincoln, in a tough re-election fight, got a promise from White House chief of staff Rahm Emanuel to ‘find’ $1.1 billion in taxpayer cash to bail out Arkansas rice farmers.

“Ms. Lincoln is hardly hiding the fact. She prominently displayed the promise on her campaign website:

“‘Senate Agriculture Chairwoman Blanche Lincoln today released a letter from OMB assuring her that USDA has the authority to deliver the $1.15 billion in farm disaster aid that White House Chief of Staff Emanuel promised her last week.’

“It’s enough to raise even the eyebrows of farm subsidy king Colin Peterson, chairman of the House Ag Committee, who according to a report in farm press publication DTN, told his Minnesota constituents that the Lincoln plan would make even a 5 percent loss qualify as a disaster.”

Ms. Lochhead added that, “Meanwhile, Democrats are planning to roll back future increases in food stamps they passed as part of the stimulus because they can’t find enough money to pay for an huge new child nutrition bill, by same said Blanche Lincoln, aimed at improving the sorry state of school lunches, among other things. They also tapped food stamps to pay for the state aid and teacher bill they passed this week.”

SNAP

With respect to funding issues associated with the Supplemental Nutrition Assistance Program (food stamps) Stephen Spruiell indicated yesterday at National Review Online that, “My homepage piece today is on the blowback Democrats are getting for cutting food stamps to pay for the two new spending bills that just passed Congress. What the Democrats’ critics don’t seem to realize is that, as is so often the case in Washington, the Democrats didn’t really cut food stamps. They ‘cut’ them: The 2009 stimulus bill expanded the food stamp programs to make benefits more generous in light of the recession, and these ‘emergency’ expansions were to last through 2015. To fund their latest spending spree, Dems moved up the expiration date — twice — from 2015 to 2014 to fund a child-nutrition measure, then from 2014 to 2013 to fund the state-bailout bill.”

Mr. Spruiell stated that, “What makes this all the more galling is that the offsets were originally supposed to come from real cuts to farm subsidies, not food stamps:

During committee hearings over the child-nutrition bill, Republicans suggested that Democrats look to the bloated farm bill for offsets. Sen. Richard Lugar (R., Ind.) reiterated his position that cuts be made to the direct-payments program, which is a program that sends checks to farmers based on a historical average of what they’ve produced. In other words, it makes no difference how high crop prices are — and lately they’ve been high — or whether a farmer actually grows any crops at all: He still gets a check from the government. Direct payments cost an average of $5 billion a year. Eliminating the program would have paid for all of the new spending contained in the two bills and then some.

“Even farm-subsidy supporter Sen. Saxby Chambliss (R., Ga.) got in on the action, offering up the Conservation Stewardship Program, a program that pays farmers to idle their land….Sen. Blanche Lincoln (D., Ark.), who is running for re-election, compromised by offering cuts to the Environmental Quality Incentives Program (EQIP), which helps big factory farms buy things like methane digesters to deal with industrial-scale manure. But in the end, election-year pressures must have gotten to Lincoln: The cuts to EQIP didn’t make it into the legislation that passed.”

In other nutrition related news, Natasha Singer reported in today’s New York Times that, “The farm stand is becoming the new apothecary, dispensing apples — not to mention artichokes, asparagus and arugula — to fill a novel kind of prescription.

Doctors at three health centers in Massachusetts have begun advising patients to eat ‘prescription produce’ from local farmers’ markets, in an effort to fight obesity in children of low-income families. Now they will give coupons amounting to $1 a day for each member of a patient’s family to promote healthy meals.

“‘A lot of these kids have a very limited range of fruits and vegetables that are acceptable and familiar to them. Potentially, they will try more,’ said Dr. Suki Tepperberg, a family physician at Codman Square Health Center in Dorchester, one of the program sites. ‘The goal is to get them to increase their consumption of fruit and vegetables by one serving a day.’”

Crop Insurance

And an update posted yesterday at the U.S. Agricultural & Food law and Policy Blog noted that, “While the new Standard Reinsurance Agreement (SRA) for federal crop insurance programs has been controversial, vegetable growers may find more benefits and options available under the new SRA, according to Growing Produce.”

Yesterday’s update added that, “Tom Sell, with the Crop Insurance Professionals Association (CIPA), said that ‘crop insurance availability to vegetable growers has grown within the last 10 years, and in part, the design of the new SRA is to move money from large, profitable row crops to less served areas of agriculture, such as vegetables.’ Some have raised concerns about the unavailability of catastrophic insurance policies, but Sell says that the new SRA offers new options.

“Sell also mentioned that the new ‘combination crop insurance policy and land identification program’ will require ‘new training and extensive new requirements for agents and growers.’ The plan will increase efficiency in 4-5 years, but it will cause producers to incur more cost and paperwork in the short-term.

“To read the Growing Produce story, click here.”

Farm Bill

The Washington Insider section of DTN reported yesterday (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., says his counterpart in the Senate, Sen. Blanche Lincoln, D-Ark., is in agreement with his plan to complete work on the next farm bill by the end of 2011. However, speaking earlier this week at a farm leadership conference in Minnesota, Peterson also acknowledged recent statements from Sen. Saxby Chambliss, R-Ga., the ranking member on the Senate committee, against going too fast. Chambliss has pointed out that USDA is still working to implement some of the new provisions of the 2008 farm bill and that it might be a good idea to see how well those programs are working before renewing them for another four or five years.

“As for his own committee, Peterson said ranking member Rep. Frank Lucas, R-Okla., so far has been noncommittal regarding farm bill timing.

“Still, given that over at least the past 30 years, congressional agriculture chairmen have had great difficulty keeping new farm legislation on schedule, it can’t hurt to hold early hearings and begin the process a little earlier than anticipated for the 2012 farm bill.”

(Note: A FarmPolicy.com recap of House Ag Committee 2012 Farm Bill hearings is available here, while a similar summary for the Senate Ag Committee 2012 Farm Bill hearings can be found here).

Food Safety

Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “The Senate moved a step closer today toward overhauling the Food and Drug Administration and its regulation of food safety. After months of delay, Sen. Tom Harkin, D-Ia., and other Senate leaders released a compromise bill today that has bipartisan support. The bill omits a ban on the use of BPA in plastic containers, an issue that has been a sticking point.”

Trade

An update posted yesterday at the Oklahoma Farm Report Online reported that, “Senate Ag Committee Chairman Blanche Lincoln and Ranking Member Saxby Chambliss have written Russian Ambassador Sergey Kislyak – pressing the government to fulfill its commitment to reopen its markets to U.S. poultry imports. Throughout the past three years – U.S. poultry exports to Russia have averaged more than 800-million dollars and Russia has been the largest export market for the United States. Lincoln says Russia’s refusal to resume poultry trade with the U.S. shows a serious lack of commitment to the agreement reached in June. Chambliss says the actions of the Russians don’t benefit them in the eyes of a lot of policymakers trying to make up their minds on other issues. He asks how we can trust the country on issues of nuclear weapon facilities if we can’t work out a deal on chickens and expect them to keep their word. The letter was sent just before U.S. negotiators were scheduled to meet with Russia in Geneva to try and resolve the dispute over the agreement.”

Meanwhile, the AP reported yesterday that, “Cash-strapped Cuba has continued to slash agricultural purchases from the U.S. even as a key bill that would ease Washington’s Cuban travel ban and make it easier to sell more food to the island works its way through Congress, according to a report released Thursday.

“Imports fell 28 percent through the first six months of the year to about $220 million. That follows a 26 percent slippage to $528 million in 2009, down from a peak of $710 million the year before, according to the New York-based U.S.-Cuba Economic Trade Council.”

And a Reuters update from yesterday indicated that, “Russia’s ban on grain exports as a heat wave parches crops in the world’s third biggest wheat exporter has raised questions whether such export curbs break World Trade Organization rules. Russia is not a member of the WTO, and it remains to be seen how its new grain policy will affect its 17-year-old bid to join. But other grain exporters, such as Ukraine, which is also considering export curbs, are part of the global trade referee.

“WTO rules are quite clear that members cannot interfere with imports and exports in a way that disrupts trade or discriminates against other members. But in practice most WTO rules aim to stop countries blocking imports – shutting out competitor’s goods to give their own domestic producers an unfair advantage.”

The Reuters item added that, “Even inside the countries that use them, export restrictions can be unpopular and have perverse effects. Export taxes on grains imposed by the Argentine government prompted a rebellion by Argentine farmers in 2008 and have made it unprofitable for small farmers to grow corn and wheat, shrinking harvests of those crops.”

Crop Forecasts

A news release yesterday from the USDA’s National Agricultural Statistics Service (NASS) stated that, “U.S. farmers are on pace to produce the largest corn and soybean crops in history, according to the Crop Production report released today by [NASS].

Corn production [related graph] is forecast at 13.4 billion bushels and soybean production at 3.43 billion bushels, both up 2 percent from the previous records set in 2009. Based on conditions as of August 1, corn yields are expected to average a record-high 165 bushels per acre, up 0.3 bushel from last year’s previous record. Soybean yields are expected to equal last year’s record of 44 bushels per acre [related graph].

Cotton production is expected to jump 52 percent from last year, to 18.5 million 480-pound bales. Average yield is forecast at 837 pounds per harvested acre, up 60 pounds from last year.”

Also yesterday, the World Agricultural Outlook Board released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which incorporated the NASS production estimates.

A one-page summary of U.S. corn variables from yesterday’s WASDE report is available here, while a similar overview for U.S. soybeans can be found here.

Ken Anderson reported yesterday at Brownfield that, “Although the Midwestern corn crop appears to be doing okay through this prolonged spell of hot weather, the heat is having an adverse impact on yield potential. That according to a veteran weather watcher, Iowa State University ag meteorologist Elwynn Taylor, who says the high temperatures are shortening the development period of the crop.

“‘Basically, across the Corn Belt, hotter than usual weather in the latter half of July in through August is a yield reducer, even if it’s not a drought condition,’ Taylor says. ‘Even under otherwise ideal conditions, hotter than usual weather does cut the yield back from what you would expect otherwise.’

“Taylor says the lack of root development in many fields is also a factor. In fact, Taylor estimates that the heat has probably shaved at least two bushels off the USDA’s national average yield estimate of 165 bushels per acre.”

Meanwhile, analysis on yesterday’s crop projections from University of Illinois Agricultural Economist Darrel Good is available here (MP3-6:28).

In addition, Reuters writers Charles Abbott and Roberta Rampton reported yesterday that, “World wheat supplies will be tighter than expected as a devastating drought in Russia and its neighbors erodes healthy stockpiles, but the U.S. Agriculture Department said on Thursday there was no reason for rising prices to stage a repeat of 2008’s historic surge.

“In its August report, the Agriculture Department cut its world wheat production forecast by 2.3 percent to 645.73 million tons, its first estimate since Russia, normally the world’s No 3 wheat exporter, banned shipments to conserve domestic stocks.

But it joined other government bodies in downplaying fears that the world was headed for another food supply crisis similar to two years ago, when Chicago wheat surged to a record above $13 a bushel.”

Jack Farchy reported yesterday at the Financial Times Online that, “US farmers will reap the benefits from failing crops round the world, the US Department of Agriculture said on Thursday as it forecast the country’s second-largest wheat exports in 15 years, worth billions of dollars.”

The FT article added that, “The boom for US farmers is lifting the outlook for the country’s agribusiness companies. Shares in Archer Daniels Midland, the trading house, have rallied 15 per cent since mid-June. John Deere, the manufacturer of tractors and combines, is up 10 per cent, while Monsanto and DuPont, which sell seeds, have also risen.

Falling wheat production outside the US would make the country’s crop ‘competitive in key Middle East and North Africa markets’, the USDA said.

“The region imports about a quarter of the world’s cereal, and countries such as Egypt, the world’s biggest wheat buyer, have already made large purchases of US wheat.”

Keith Good