FarmPolicy

September 25, 2017

Farm Bill; Food Safety; GIPSA Issue; Ag Economy; and Climate Issues

Farm Bill

On Friday, USDA issued a statement indicating that, “U.S. Department of Agriculture Press Secretary Justin DeJong today released the following statement in response to the recent Bloomberg/Business Week story titled ‘Broadband Trumps Farmer Payments in Rural Aid’:

“‘The Obama Administration cares deeply about our farmers and ranchers, and USDA continues to work hard and provide them with the critical support they need to provide this nation with the food, feed, fiber and fuel we rely on. Since becoming Secretary of this department, Secretary Vilsack has advocated fiercely about the need to keep American agriculture strong through farm safety net programs, as well as through efforts to spur economic opportunity in rural America. In recent interviews with a Bloomberg reporter, at NO time did Secretary Vilsack call for $5 billion cuts to farm programs. In fact, he pointed out how USDA already saved $4 billion that was put toward deficit reduction by renegotiating our agreement with crop insurance companies. He also discussed using existing resources more effectively to spur growth and opportunity. As Secretary Vilsack testified before both Senate and House committees regarding the 2012 Farm Bill and he continues to discuss with people throughout the country, rural America continues to face inordinate challenges. As the transcript makes clear, he continues making the case that it is imperative that we keep the farm safety net strong so that the American people can continue to have access to safe, affordable and abundant food.’

“Full transcripts from interviews that took place Thursday, August 5, 2010, and on Tuesday, August 17, 2010 are available.”

Meanwhile, the Washington Insider section of DTN reported on Friday (link requires subscription) that, “There is a line of thinking about agricultural policy that says modern policies are changed fundamentally when producers decide they are no longer worth the trouble — as in the 1980s and 1990s. Now, once again, there is a lot of concern about how well programs are working in this era of higher prices and much greater market volatility, it may be time for fundamental changes.

For example, in what would be a major shift in policy, the Iowa Farm Bureau is considering a proposal for the 2012 federal farm bill that would end direct payments to farmers in favor of insuring farmers against revenue fluctuations.”

Friday’s update added that, “This development is news at least partly because of Iowa’s role in agricultural safety net programs — the state received just under $500 million in 2008, about 10 percent of the U.S. total and the largest amount of any state. ‘We are looking at alternatives to the direct payments,’ Iowa Farm Bureau President Craig Lang told the press last week following his appearance on an Iowa State Fair panel with Secretary of Agriculture Tom Vilsack.

“‘Direct payments are harder and harder to defend, and we are interested in doing our part to help reduce the budget deficit,’ Lang said. If the delegates support the resolution, it would go to the American Farm Bureau Federation for consideration as a national policy position.”

After additional analysis, the DTN article noted that, “The direct payments are controversial because they are based on historical production rather than current plantings, they favor certain crops, and they often go to the largest farmers. For these and other reasons, they’ve become a favorite target of critics and House Agriculture Committee Chairman Collin Peterson, D-Minn., told a hearing in May direct payments had become too difficult to defend and some change would be needed before the new farm bill could be passed by 2012.”

The August 27 edition of The Kiplinger Agriculture Letter stated that, “If she’s reelected, Senate Ag Com. Chairman Blanche Lincoln (D-AR) promises to fight any cut in direct payments, and several farm state senators will join her. As with past farm bills, the House will likely pass its version before legislation emerges from the Senate, then hold sway on most of its safety net revisions.”

In other news regarding Sen. Lincoln, the AP reported yesterday that, “Lincoln has cited as her biggest accomplishments in her first year as agriculture chairman her work on a portion of the financial overhaul bill regulating derivatives, disaster aid for farmers and child nutrition legislation approved by the Senate.

“But two of those – the disaster aid package and the child nutrition bill – remain in limbo. Lincoln said she’s confident both will become reality and says her chairmanship represents the amount of work she’s put into representing her state.

“‘You work hard to get into places where you know you can be beneficial,’ Lincoln said.”

Food Safety

Carolyn Lochhead reported in Friday’s San Francisco Chronicle that, “A recall of a half-billion eggs from two mega-farms in Iowa is stoking a fierce controversy over whether factory farming is inherently unsafe – and a battle in California over a 2008 voter initiative banning the standard industry practice of packing hens so tightly in battery cages that they cannot spread their wings.

“Voters passed Proposition 2 overwhelmingly in 2008 after animal welfare activists released horrific undercover videos of strangled, deformed and mummified hens in battery cages.

“It will take effect in 2015. Animal welfare activists are linking battery cages to the Iowa salmonella outbreak, saying they are not just cruel to animals but a threat to food safety.”

The article noted that, “‘Proposition 2 requires cage-free treatment of laying hens, and the evidence is very clear that caging laying hens increases the risk of salmonella,’ said Paul Shapiro, head of the Humane Society of the United States’ Factory Farming Campaign.

“But Arnie Riebli, a Petaluma chicken farmer and president of the Association of California Egg Farmers whose family runs Sunrise Farms, a million-hen operation, insisted cages are safer.

“‘In a caged environment you are separating the birds from their feces,’ Riebli said. ‘In a cage-free environment you do not do that. You allow the birds to walk in it and you allow the birds to eat it. Believe me, all you’re doing is feeding them bacteria. Would you allow a small child to play in his excrement or eat his excrement?’”

Friday’s Chronicle article pointed out that, “The bird battle is raging on three fronts:

“– Animal rights activists and egg farmers, usually arch enemies, came together behind a law signed by Gov. Schwarzenegger last month that will ban all eggs coming from outside the state that fail to comply with the battery-cage ban. The new law could save the state’s egg farmers and spread Prop. 2 nationally.

“California egg farmers no longer face the threat that cheaper battery-cage eggs from the Midwest will put them out of business. Other states that want to sell in California could be forced to pass their own cage bans. Some states already have passed varying types of bans.

“– Farmers and animal activists are clashing over whether Prop. 2 permits any cage, specifically the larger ‘furnished’ hen cages common in Europe that provide perches, nesting boxes and scratch posts that allow hens to express natural behaviors.

“– As the California ban promises to spread, it is escalating a national fight over whether factory farming itself is to blame for large outbreaks of food poisoning.”

Philip Brasher and Tony Leys reported in yesterday’s Des Moines Register (“DeCosters in Iowa: A checkered legacy”) that, “Wright County seemed to have finally gotten the best of both worlds with the DeCoster family. The notoriety and the environmental problems the DeCosters brought were gone. The money and the jobs they provided were still here.

“But now, the county and its most famous businessman are household names nationwide, linked to a massive recall of eggs and the biggest recorded outbreak of illnesses caused by the type of salmonella bacteria found in eggs.”

Yesterday’s article noted that, “But Jack DeCoster became a polarizing figure in Iowa soon after arriving in Wright County from Maine in the late 1980s when he started building the huge farms, now common across Iowa, that house thousands of hogs and millions of hens.”

“DeCoster piled up one environmental violation after another over his farms’ mishandling of hog and chicken manure in the 1990s until he was denounced by both then-Gov. Terry Branstad, a Republican ally of agribusiness, and the Iowa Farm Bureau Federation, the state’s leading farm organization. In 2000, the state classified DeCoster as a ‘habitual violator’ of environmental rules, which was supposed to ban him from expanding his farms or starting new ones for five years. As it turned out, DeCoster was able to expand his egg operation by using associates to get permits that state officials didn’t link to him. Branstad is running for his old office this year and is using the outbreak to remind voters of his old confrontation with DeCoster.”

And the AP reported yesterday that, “Two New York State legislators want to require farmers in the state to vaccinate hens against salmonella, which sickened thousands of Americans and triggered the largest egg recall in U.S. history.

“State Sen. Daniel Squadron and Assemblyman Brian Kavanagh announced their proposal Sunday in front of a Lower East Side supermarket in the wake of a nationwide recall of more than a half billion eggs. None of the recalled eggs came from New York.”

GIPSA Issue

Bloomberg writer Whitney McFerron reported on Friday that, “U.S. Agriculture Secretary Tom Vilsack took a livestock-industry probe to Colorado today, as part of an inquiry that may lead to new rules governing how Tyson Foods Inc., Cargill Inc. and other processors operate.

“Vilsack and Attorney General Eric Holder met farmers, meatpackers and feedlot owners in Fort Collins in the fourth of five sessions centered around monopolies in agriculture. The meeting followed a Department of Agriculture proposal that would stop processors from selling livestock to each other and require them to justify their choice of one farmer supplier over another.

“The USDA’s June proposal came after the number of cattle and hog farms shrank by 55 percent since 1980 and the top four packers saw their control of boxed beef output rise to 80 percent from 36 percent. Colorado was one of 17 states in a civil action in 2008 that sought to block JBS SA, the world’s largest beef producer, from taking over National Beef Packing Co., the fourth-largest U.S. processor. JBS ended the bid last year.”

Reuters writer Bob Burgdorfer reported on Friday that, “There are fewer U.S. livestock producers now than 30 years ago, and Agriculture Secretary Tom Vilsack believes that may be because concentration in the meat industry has forced many to leave the business.

“Vilsack and U.S. Attorney General Eric Holder on Friday jointly chaired a public hearing on such concentration, with the intent of slowing the decline in rural populations.”

The article noted that, “While Friday’s hearing was designed to focus on concentration in the meat industry, many of the attendees used the forum to speak out for or against marketing rules proposed by USDA’s Grain Inspection and Packers and Stockyards Administration (GIPSA).

“Large producers in attendance opposed the rules, claiming they would dismantle marketing agreements that reward them for producing the size and quality of cattle and hogs that meat packers want.”

“Smaller producers want the rules, claiming they would make marketing agreements public and would give leverage to GIPSA to prosecute violators.

“The comment period on the GIPSA rules ends on November 22.”

DTN Ag Policy Editor Chris Clayton reported on Friday (link requires subscription) that, “Producers at Friday’s USDA-Department of Justice hearing who testified about the proposed USDA livestock competition rule will have their comments put into the record for the rule-making process.

“Some groups leading up to the meeting had questioned whether comments made about the Grain Inspection, Packers and Stockyards Administration rule would be part of the public record for the public-comment period. Secretary of Agriculture Tom Vilsack made it clear that was the case.”

Mr. Clayton indicated that, “The makeup of the panels Friday did not reflect some of the division in the cattle and hog industry over a livestock competition rule proposed by GIPSA. During public testimony, more criticism of the GIPSA rule was heard. Public officials stressed that there must be a balance on the role of government in the market.

“‘I think what we heard, artfully said by virtually every panelist, is this is a delicate balance and what we’re going to do is make sure if there is a rebalance that we recalibrate, and if we recalibrate, that we do it in a way that doesn’t necessarily result in harming a market that we want to function,’ Vilsack said. ‘The Congress directed us to do this. The act has not been looked at in quite some time, and it’s fairly clear that the world has changed since the act was enacted.’

“Assistant Attorney General Christine Varney reiterated what she has said in each of the previous agricultural competition hearings, that there is no agenda to these meetings and the direction in agricultural competition. But Varney added, ‘There is something wrong with the system when the farmers can’t make a living.’”

A news release Friday from the National Cattlemen’s Beef Association stated that, “Beef and pork producers rallied against USDA’s Grain Inspection, Packers and Stockyards Administration’s (GIPSA) proposed federal rule on the buying and selling of livestock at a public meeting held in Fort Collins, Colo., Aug. 27. The meeting on competition in the livestock industry was hosted by USDA and Department of Justice.”

And a news release Friday from the National Farmers Union stated that, “‘A lot of attention has been drawn to this workshop based on the recent disputes on the Grain Inspection, Packers and Stockyards Administration (GIPSA) proposed rule,’ said National Farmers Union (NFU) President Roger Johnson. ‘NFU is pleased to have two members on the speaker panel representing U.S. family farmers and ranchers, who are in favor of the proposed rule. It is vital to have speakers from groups that represent the family farmer, not just the packer-producer organizations.’

“Chris Peterson, Iowa Farmers Union president, and Armando Valdez, Rocky Mountain Farmers Union member, both livestock producers, spoke at the workshop. Peterson and Valdez each highlighted the need for reform in the livestock industry, with an emphasis on the increasing consolidation and vertical integration in the livestock and poultry marketplace, resulting in a tougher environment for independent producers.”

Meanwhile, an update posted on Friday at the National Hog Farmer Online reported that, “Rep. Jack Kingston (R-GA) has called for a sound economic analysis to judge both the need and the use for a proposed USDA Grain Inspection, Packers and Stockyards Administration (GIPSA) rule on the procurement of livestock.

“‘In my view, it is unprecedented for a federal agency to propose such a wide-sweeping regulation and not conduct an economic analysis,’ Kingston says in a letter to U.S. Department of Agriculture Secretary Tom Vilsack. ‘I am concerned that despite Congress having appropriated $13 million in the current fiscal year for the USDA Office of the Chief Economist, GIPSA has seemingly ignored this resource to analyze the proposal.’”

Agricultural Economy

The New York Times editorial board opined on Saturday that, “Agricultural experts say they’re not worried about the recent jump in wheat prices, caused largely by the drought in Russia and the ban on Russian wheat exports. The Department of Agriculture is predicting that world wheat production will reach the same level this year — 645 million metric tons — that helped bring prices down from their astonishing $13.50 a bushel peak in February 2008. At present, prices for December wheat are about $6.95 a bushel, down over 50 cents from a month ago, but up nearly 55 percent since early June.

We don’t find the experts consoling. One reason prices have been less volatile is that big grain buyers, like cereal companies, have learned to hedge their buying. And to say that this episode of market volatility is not as bad as the one two years ago — which led to food riots in many parts of the world — is not encouraging.

“We’re not supposed to attribute a couple of bad harvests, or the floods in Pakistan, to a changing climate. But this volatility in grain prices was not caused by farmers’ decisions or failures of government policy. It was caused by drought and flood. If this looks like a pattern — or simply a glimpse of things to come — it is worrying.”

Climate Issues

David A. Fahrenthold reported in today’s Washington Post that, “On Thursday, some of the country’s most respected environmental groups – in the midst of their biggest political fight in two decades – sent a group of activists to Milwaukee with a message.

“We’re losing.”

The Post article noted that, “A year ago, these groups seemed to be at the peak of their influence, needing only the Senate’s approval for a landmark climate-change bill. But they lost that fight, done in by the sluggish economy and opposition from business and fossil-fuel interests.

Now the groups are wondering how they can keep this loss from becoming a rout as their opponents press their advantage and try to undo the Obama administration’s climate efforts. At two events last week in Wisconsin, environmental groups seemed to be trying two strategies: exhibiting defiance and pleading for sympathy.”

Mr. Fahrenthold indicated that, “Washington’s climate battle is still far from over. The Environmental Protection Agency is setting limits on some sources of greenhouse gases: first auto tailpipes, then power plants and factories next year. Now, industry groups and senators from coal-producing states are trying to prevent that.

“The White House has said President Obama would veto such an effort, but that would be far easier if environmental groups could whip up public support for him.

“There could also be fights over smaller pieces of environmentalists’ agenda: efforts to require more renewable-energy generation nationally and to defend state-level climate plans such as the one in California.”

Today’s article stated that, “Before, green groups had wanted so much more than this – they wanted a ‘cap and trade’ bill that would set emissions limits nationwide. The House passed a bill like that, but – after industry groups said it would kill jobs and slow the economy – the Senate decided last month to not even take the issue up.

The bill’s chances, already bad, will get worse if Republicans gain seats, as is widely predicted, in the midterm elections.

“‘If it’s not addressed in a lame-duck session of Congress, it will have been punted to the next generation,’ said David Wasserman of the Cook Political Report.”

Keith Good

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