FarmPolicy

August 21, 2019

Farm Bill Issues; House Passes Ag Comm Bills; Food Safety; Trade; and Ag Economy

Disaster Aid

AP writer Mary Clare Jalonick reported yesterday that, “The Obama administration is making good on an election-year promise to Arkansas Sen. Blanche Lincoln to give hundreds of millions of dollars in aid to farmers who lost crops due to weather.

“Many of the farmers eligible are in Arkansas and the Southeast. Lincoln, caught in a bruising race for re-election, has pushed for the aid, and she secured a promise from White House chief of staff Rahm Emanuel in July that the money would be paid out. It took the Agriculture Department almost two months to figure out how to do it, since such disaster aid is usually subject to congressional approval.”

The article noted that, “Agriculture Secretary Tom Vilsack announced Wednesday that the $630 million in disaster aid will come from a pot of money at USDA that is often used to supplement nutrition programs but is also designated to restore the purchasing power of farms. Vilsack said the aid to cotton, rice, soybean and sweet potato producers would do that. Also included are payments for poultry producers, a major industry in Arkansas, and fish farms, which also have a presence in the state.

The amount is about half of what Lincoln, the Democratic chairwoman of the Senate Agriculture Committee, had pushed for. It would go to 26 states and 1,000 counties, Vilsack pointed out, but the bulk of the cash will go to Southern farmers. All but two counties in Arkansas are eligible for assistance.”

Yesterday’s article added that, “Critics were quick to call the money an election-year giveaway. The threshold for the assistance is low – farmers only have to show 5 percent losses to be eligible.

“‘Should we just ask every American who feels like they took a five percent hit last year if they’d like some money?’ said Ken Cook, president of the Environmental Working Group [EWG], an advocacy group that protests farm subsidies. ‘It’s outrageous.’” [Note that related background on this issue from EWG is available here].

Ms. Jalonick indicated that, “Vilsack says USDA has used this program for disaster assistance several times before, but critics say the White House took an easy out by dodging Congress. Oklahoma Rep. Frank Lucas, the top Republican on the House Agriculture Committee, said he doesn’t like the precedent the disaster distribution sets.

“‘From the beginning, I questioned whether USDA had the legal authority to do this and I stand by that,’ he said.”

John Lyon reported yesterday at Arkansas News Online that, “Lincoln admitted to some disappointment today but said ‘it’s not about the dollar figure; this is about helping producers most in need.’

“‘I certainly would have preferred that the program look like my original disaster legislation, which would have really helped producers of all crops in all regions, but this goes a long way in helping those producers that are most in need, especially in Arkansas,’ she said.”

Recall that the disaster aid package was an issue that was discussed in a debate on Friday between Sen. Lincoln and her GOP challenger U.S. Rep. John Boozman. To listen to the discussion on the disaster aid issue from that debate; just click here (MP3- 5:55).

A Lincoln campaign news release from yesterday stated that, “Chairman Blanche Lincoln today made good on her promise to deliver disaster aid to Arkansas farmers who qualify, while five-term Congressman John Boozman continues his stand with east coast newspapers and Washington in opposition to her efforts.”

In his Arkansas News article from yesterday, John Lyon quoted Sen. Lincoln as saying; “Congress Boozman is going to look to his party before he looks to the state to find out how or what he’s going to support.”

The article added that, “Boozman campaign spokesman Patrick Creamer said today the suggestion that Boozman looks to his party before looking to his state for guidance was ‘complete nonsense.’ He said Boozman supports disaster aid for farmers.

“‘All he has asked is that it be paid for,’ Creamer said. ‘The party leadership that Sen. Lincoln answers to controls Congress and they refused to bring the package up in a responsible manner. This administration and their allies in Congress continue to bring up spending bill after spending bill with no ability to pay for them.’”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Vilsack defended the disaster plan as a way to provide some fairness to Southern producers, despite appearances that the $630 million total disaster package seems to be a boost for Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark, who is struggling in her re-election bid. He also stressed the disaster plan covers more than 1,000 counties in 26 states, though the coverage map tilts heavily toward Alabama, Arkansas, Georgia, Louisiana, Mississippi and Oklahoma.

“The disaster program created in the 2008 farm bill, the Supplemental Revenue Assistance Program (SURE), has problems and doesn’t adequately cover Southern crops, Vilsack said.”

Mr. Clayton noted that, “Vilsack said he did not think a similar package would be needed in 2010 because crop conditions so far appear better. Further, the disaster aid won’t have some of the requirements of SURE, such as buying minimum levels of crop insurance. Vilsack said he thinks that would likely be a discussion for the 2012 farm bill debate.

“‘It’s certainly a conversation that will take place in the context of the 2012 farm bill,’ he said.”

Yesterday’s DTN article pointed out that, “Sen. Saxby Chambliss, R-Ga., ranking member of the Senate Agriculture Committee, also called the disaster package ‘a disappointment’ because a bill passed through Congress would have been more comprehensive.

“‘For months, Georgia producers have expressed concerns about deficiencies with the SURE disaster program, and unfortunately they are disappointed about the shortcomings of the disaster program announced by USDA today,’ Chambliss said.”

Budget

On a separate issue, DTN’s Chris Clayton reported yesterday (link requires subscription) that, “Lobbyists for farm groups, nutrition, conservation and rural development got a sobering briefing this week about the budget hole facing the 2012 farm bill.

“With the public demanding less spending, a lot of farm bill programs could be in jeopardy as lawmakers try to craft a bill that doesn’t spend more than the 2008 farm bill. Right off the top, there are 38 programs in the 2008 farm bill that don’t have a budget baseline for past 2011. To build those programs into the baseline for those five years would cost about $9 billion.

“None of that bodes well for anyone wanting to make dramatic changes in policy, a packed crowd heard at a Farm Foundation meeting Tuesday at the National Press Club.”

Yesterday’s article pointed out that, “Some major programs going into 2012 without a mandatory budget include the permanent disaster fund — the Supplemental Revenue Assistance Program (SURE) — as well as the Wetlands Reserve Program and the Grassland Reserve Program. Further, several major Rural Development programs and practically none of the USDA energy programs have a baseline.”

Mr. Clayton noted that, “Spending on crop insurance also will draw more scrutiny in coming years. Commodity programs will cost $64 billion over the decade, but crop insurance will cost taxpayers between $76 billion to $83 billion in spending depending on different economic analysis. Higher crop prices and bigger yields are going to lead to higher crop insurance indemnities, said Pat Westhoff, program director for the Food and Agricultural Policy Research Institute at the University of Missouri.

“‘We can actually have a situation where higher prices turn into more government spending,’ Westhoff said.”

After additional analysis, yesterday’s article concluded by indicating that, “The crop insurance agreement took away $6 billion in spending over 10 years. The administration attributed $4 billion of those cuts to deficit reduction. If there is a budget reconciliation, members of the Agriculture Committee will make the case they have already contributed $4 billion in cuts.

“‘You can be very sure that argument will be made,’ [Craig Jagger, chief economist for the House Agriculture Committee] said.

Senate Ag Committee Hearing- “The National Organic Law at 20: Sowing Seeds for a Bright Future.”

A news release yesterday from Senate Ag Committee Ranking Member Saxby Chambliss (R-Georgia) stated that, “[Sen. Chambliss] (R-Ga.) today heard testimony during a full committee hearing on the 20th anniversary of the Organic Foods Production Act (OFPA) of 1990.”

“Sen. Chambliss said, ‘The 2008 farm bill took several important steps to provide additional tools to support organic agriculture, including extending the certification cost-share program, establishing that producers are eligible for technical assistance under the Environmental Quality Incentives Program for converting their farm to organic production, and providing funding for research and data collection about the price, production, and marketing of major organically produced commodities. Establishing a reliable certification system and developing tools to assist farmers in their transition to organic production did not happen overnight, and I join my colleagues on the committee in recognizing just how much has been accomplished in the past 20 years.’”

A replay of yesterday’s hearing, along with prepared testimony, is available here; while a brief overview of the Committee meeting has been posted here.

SNAP (Food Stamps)

The AP reported yesterday that, “Despite widespread efforts to attract low-income shoppers, farmers’ markets have had limited success in drawing people like Bishop Reed, who in the past three years has lost his job and his home.”

“About one-fourth of the nation’s 6,000 or so farmers’ markets accept food stamps, now known as Supplemental Nutrition Assistance Program or SNAP. But the bulk of SNAP benefits redeemed last year — 82 percent — went to grocery stores and supercenters. Less than 0.01 percent was spent at farmers’ markets, according to the U.S. Department of Agriculture.”

House Passes Ag Committee Bills

A news release yesterday from the House Ag Committee stated that, “The U.S. House of Representatives today approved The Mandatory Price Reporting Act of 2010 (S. 3656) and The Veterinary Services Investment Act (H.R. 3519).

“The Mandatory Price Reporting Act of 2010 will reauthorize mandatory price reporting programs run by the U.S. Department of Agriculture (USDA) for five years. The Act requires livestock sales information to be reported and published in a timely fashion, allowing buyers and sellers to make more informed decisions.”

“The Veterinary Services Investment Act would establish a competitive grant program at USDA to support efforts to increase access to veterinary care in underserved areas.”

Rep. Adrian Smith (R-Nebraska) and the National Pork Producers Council issued related news items yesterday regarding these House passed measures.

Food Safety

P.J. Huffstutter and Andrew Zajac reported today at the Los Angeles Times Online that, “As lawmakers prepare for hearings into the largest egg recall in U.S. history, food safety advocates say the congressional probe could give momentum to a long-delayed measure that would enhance the power of the Food and Drug Administration.

If passed, say policymakers, the FDA Food Safety Modernization Act could be the first major step toward streamlining the often unwieldy food safety system.”

The article stated that, “But while most policymakers and food safety experts agree the regulatory system is broken, they also agree that chances of a significant overhaul any time soon are dwindling.

The upcoming hearing, which is expected to attract significant media attention, could speed passage of the Senate bill, which has languished for months. Or the bill could be sidelined by a legislative calendar already compressed by the pending midterm elections.

In either case, the bill doesn’t solve the awkward division of responsibility between the USDA and the FDA.”

Elizabeth Weise reported today at USA Today Online that, “Newly released reports pointing to years of positive salmonella tests at an Iowa egg facility have baffled some experts and egg producers.

Congressional investigators said Tuesday that they obtained records that show Wright County Egg had evidence of even more problems than filth and vermin, as the Food and Drug Administration reported last month. The records show that since 2008, the company, which is at the center of the outbreak that sickened about 1,500 people and led to the recall of 550 million eggs, has had multiple positive tests for salmonella that it did not report.”

The article added that, “The large number of positive test results is surprising, says Caroline Smith DeWaal, food safety director with the Center for Science in the Public Interest. ‘The company had clear evidence that their flocks were infected long before the outbreak occurred,’ she says. ‘It isn’t the first time a company involved in an outbreak ignored its own test results, and it won’t be the last, unless legislation pending before the Senate is enacted and FDA takes its role of inspecting food facilities far more seriously.’”

Trade

A news release yesterday from Nebraska GOP Rep. Adrian Smith indicated that, “[Rep. Smith] today testified before the House Ways and Means Committee on the significance of America’s agriculture exports to China. The purpose of the hearing was to examine China’s exchange rate policy, its effect on the U.S. economic recovery, and other issues.

“‘I agree we need to ensure market mechanisms are not distorted. We must also address the ramifications any congressional action might have on the U.S. economy. Any legislative proposal must be given the utmost attention so we do not disrupt our currently growing exports to China, particularly those from the U.S. agriculture industry,’ Smith said.

“U.S. agricultural exports to China continue to grow and are one of the few areas in which the U.S. maintains a large trade surplus. The value of U.S. food and agricultural exports to China more than doubled from $6.8 billion in 2003 to $15.9 billion in 2009. Every dollar in agricultural exports generates $1.65 in further economic activity, with Nebraska’s $4 billion in agricultural exports translating into $6.7 in additional economic activity.”

Derek Wallbank reported yesterday at the MinnPost Online that, “A bill that would end the Cuban travel embargo and ease restrictions on agricultural experts has enough votes to pass the House, but not enough to clear the committee it’s currently stuck in, Rep. Collin Peterson said Tuesday.

“‘If we can get this bill to the floor, we have the votes to pass,’ he said.

“Currently the legislation (co-sponsored by every other Minnesota House Democrat) is before the House Foreign Affairs Committee, where it has yet to be scheduled for a mark up because there apparently aren’t the votes for it on that panel, Peterson said, imploring members of the National Farmers Union to help change that math. If it gets past that stage, Peterson said he’s confident that House Speaker Nancy Pelosi (who supports the measure) will schedule it for a floor vote in the lame duck session if the bill clears committee.”

Ag Economy

The AP reported yesterday that, “The price of corn touched a new two-year high Wednesday as questions remain about the available supply of the crop.

“Corn prices have been on a nearly unchecked climb since late July and are approaching the psychological $5 a bushel level. The price of corn for December delivery rose as high as $4.975 a bushel during trading Wednesday before falling back to settle at $4.9525 a bushel. Corn prices have jumped more than 25 percent since the end of July.”

And Tom Sellen reported in today’s Wall Street Journal that, “Cotton prices hit fresh 15-year highs before backing down amid uncertainty over India’s exports of the increasingly scarce fiber.”

“The U.S. Department of Agriculture estimates that global cotton stockpiles will end the next marketing year at a 16-year low of 45.44 million bales that weigh 480 pounds each. This has led textile mills to scramble for supplies as they wait for the U.S. harvest, which is expected to be relatively large.

Cotton futures on Wednesday hit 94 cents a pound during intraday trading, their highest since October 1995. Futures later pared gains to end 0.98 cent, or 1%, lower at 92.81 cents a pound on the ICE Futures U.S. exchange [related graph].”

Keith Good

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