FarmPolicy

April 23, 2017

Farm Bill; Biofuels; and EPA Issues

Categories: Ethanol /Farm Bill /Food Aid

Farm Bill- Senate Budget Committee Hearing

Recall that last week the Senate Budget Committee held a field hearing in North Dakota titled, “Writing the Next Farm Bill.”

Some testimony that was delivered by witnesses at that hearing has been posted at the Senate Budget Committee Online. Excerpts of comments made at the hearing included the following:

Ryan Pederson, President, Northern Canola Growers Association- “We feel that agriculture has already endured significant cuts in the crop insurance program as approximately $3.9 billion was trimmed recently. A significant portion of that cut was allocated to deficit reduction, which shows that agriculture has already made some necessary contributions to aid in our nation’s deficit problem. This has to be taken into account when cuts are demanded of growers during the discussions of the 2010 Farm Bill….A sound crop insurance program is critical to growers to protect against losses that can result from factors beyond our control. It is even more critical as input costs continue to increase at rates beyond the rate of inflation. The NCGA opposes cuts in the crop insurance baseline. Any reallocation of spending under the program should be used to pay for reforms needed to make it more effective on a nationwide basis…If changes to direct payments are to be made, we would ask that these funds be redirected into additional risk management tools such as crop insurance…We would like to see the ACRE Program focused at a more local level than is currently the case.”

Jeffrey Oberholtzer, Director, National Sunflower Association (NSA) – “Crop Insurance: This is the number one tool for sunflower farmers to protect farm income. Further strengthening of crop insurance programs will be supported by the NSA…Direct Payments: There is general agreement within the board that direct payments should be reinvented if this program is a lightning rod for farm program opponents. Obviously no one wants to give up an income stream like direct payments. However, if direct payments are viewed negatively by the public then adjustments should be made. We would support redirecting at least a portion of these payments to further strengthen crop insurance programs or possibly SURE and ACRE programs…SURE and Disaster Programs: We have not had much experience with the SURE program but give Congress high marks for putting a permanent disaster program in place.”

Robert Carlson, President of the North Dakota Farmers Union- “A shift of direct payments to a new or better program that reflects cost of production plus inflationary safety nets is also favored by our members. The Average Crop Revenue (ACRE) program was an attempt to begin this process, but was complicated from a farmer’s perspective. The program has two levels of payment triggers to meet before it would make payments. It also involves a commitment from all landlords and a commitment for the life of the program that may not match the land rent agreement. A program like ACRE may work if the state payment trigger could be moved to a much smaller region or an individual farm payment trigger.”

Steve Edwardson, Executive Director of the North Dakota Barley Council- “Providing growers with a holistic safety net is critical to maintaining stability in agricultural production and the supply of human food and livestock feed. Improved risk management products are a primary component of a safety net, and will assist in preventing further erosion in the downward trend of barley production.”

Farm Bill: Policy Variables

The Chicago Tribune editorial board indicated earlier this week that, “Seems like the government can never do enough. Last week, another gift arrived in the form of new environmental rules allowing the sale of motor fuel with an increased percentage of ethanol, which U.S. producers brew from corn. It’s a great way to keep grain prices high — and they have just set a two-year record.

Funny how you haven’t heard much about farm subsidies in the run-up to the Nov. 2 election. Farm lobbyists, and the landowners who mainly benefit from these programs, know enough to lie low when the money is pouring in.

“And is it ever: The current farm programs pay almost as much in good times as in bad. During August, federal analysts forecast a 24 percent gain in farm incomes this year, on top of banner years in the recent past. For every dollar of that income — $77 billion in all — taxpayers contribute 16 cents.”

The Tribune editorial stated that, “After the election, lawmakers need to approve a federal budget. The farm lobby is gearing up to fend off the predictable attacks on their little piece of it, hoping at least to postpone the day of reckoning until the current farm bill expires at the end of 2011…As we note in the editorial above, the nation faces its third consecutive trillion-dollar federal deficit this fiscal year. Wasteful and trade-distorting agricultural subsidies have to be led to the slaughterhouse.”

In other developments with Farm Bill implications, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The U.S. Agency for International Development has shifted $250 million in expenditures on food aid from purchases of U.S. food to purchase in markets in poor countries this year, according to USAID Administrator Rajiv Shah.

“Shah told the World Food Prize Symposium late last week that the amount was ‘up from nothing a few years ago.’ Shah did not say in what countries the U.S. government has bought food for food aid, but he said the administration had been careful about where it bought the food, because its wants ‘to create markets for vulnerable farmers.’

“Shah also said the administration has moved ‘responsibly’ away from monetization, the practice of selling U.S. food aid to raise money for development purposes. Some development advocates have charged that buying food in the United States for aid, then monetizing that food, is inefficient and interferes with local markets. But the coalition of humanitarian, farm and shipping groups that support aid have said moving away from the traditional system of purchases and monetization may reduce political support for food aid.”

Mr. Hagstrom added that, “Sen. Charles Grassley, R-Iowa, told Iowa reporters Tuesday that he agrees with using a percentage of cash for food aid instead of grain, but he added he thinks it would become a problem if a majority of U.S. food aid were converted to cash to buy locally. Grassley said he doesn’t think the issue is on lawmakers’ agendas at the moment.”

Farm Bill: Political Demographics

Beyond the scope of specific policy variables that will be considered as the 2012 Farm Bill debate unfolds, is the potential change in the makeup of Congress and the Ag Committees.

Dave Russell reported yesterday at Brownfield that, “What will the midterm elections mean for agriculture? Speaking in Indianapolis on Monday, October 18 at the Energy, Agriculture and Politics forum hosted by Ice Miller, Indiana Senator Richard Lugar told Brownfield that because of unknowns’ surrounding the midterm elections, such as who will be serving on the various committees in the House and Senate is putting agriculture in flux.”

The Brownfield update noted that, “And it’s a time when Indiana’s Senior Senator says agriculture will need to educate those new members in Congress.

“‘I would say for those who have not been involved in these agricultural debates and hearings, this is really a full scale process,’ said the Senator. ‘All of the ag issues are extremely complex, the intersection of trade with the rest of the world, the intersection with energy production, these are situations people really haven’t thought about, yet are going to be asked to vote on.’”

With respect to the potential makeup of Congress, Alex Isenstadt reported yesterday at Politico that, “Today, however, the nonpartisan Cook Political Report predicts a GOP net gain of at least 40 House seats, with 90 Democratic seats in total rated as competitive or likely Republican.”

The article noted that, “There are dramatic differences in the competitiveness of races even within states. In California, Reps. Jim Costa [who serves on the House Ag Committee] and Loretta Sanchez appear to have easier paths to reelection than fellow Democratic Rep. Jerry McNerney. In New York, Upstate Rep. Bill Owens [who serves on the Ag Comm] has a higher degree of reelection difficulty than Long Island-based Rep. Carolyn McCarthy.”

The Politico article pointed out that, “Freshman Democrats make up a large share — more than a quarter — of those facing competitive races. Of the 38 Democrats serving their first full terms in the House, POLITICO rates 29 as at-risk. Some — such as Reps. Bobby Bright of Alabama [who serves on the Ag Comm], Betsy Markey of Colorado [who serves on the Ag Comm], Alan Grayson of Florida and Frank Kratovil Jr. of Maryland — hail from GOP-friendly districts, where they have been in the cross hairs almost since the moment they were elected.”

Yesterday’s article added that, “The list also includes a handful of veteran Democrats who typically enjoy the benefits of seniority on Capitol Hill and cruise to reelection but this year find themselves locked in competitive races. Among those Democrats are Armed Services Committee Chairman Ike Skelton of Missouri and Budget Committee Chairman John Spratt of South Carolina.”

Jeff Zeleny reported in yesterday’s New York Times that, “[Former President Bill Clinton] also took his pitch to Little Rock, where Republicans are poised to pick up another open Democratic district, and later to Mississippi, where Representative Travis W. Childers, a first-term Democrat, [who serves on the House Ag Comm] is locked in a tough battle to hold a seat that had been in Democratic hands for a century until 1994.

“The campaigns, along with the cotton and corn harvest, were in full swing last week across a wide area of the Mississippi Delta. Many of the competitive districts are stitched together on a map from Arkansas to Tennessee to Mississippi, and Republicans argue that a political realignment is overdue, considering the underlying conservatism of the region.

Rick Crawford, a farm broadcaster here in Jonesboro [Arkansas], is the Republican candidate seeking to replace [Representative Marion Berry], who was elected to the House in 1996 after working on agriculture policy in the Clinton White House. Mr. Crawford said that a cultural and generational change was under way, with voters willing to give a Republican candidate a chance that years ago they would not have.”

The Times article added that, “Representatives John M. Spratt Jr. of South Carolina, the chairman of the Budget Committee, Chet Edwards of Texas and Tom Perriello of Virginia are among those on the list of at-risk Democrats.”

With respect to Rep. Spratt, an update posted on Monday at SCNow.com, which included a video clip of a local news story, reported that, “Rural economic development and job creation efforts were reasons for a visit from U.S. Department of Agriculture Secretary Tom Vilsack and Congressman John Spratt to the Pee Dee on Monday.

“Vilsack said a main purpose of his visit was to reinforce the importance of developing a strong rural economy.”

The article noted that, “The first stop of the visit was to the home of Lamar Collins in Darlington County to discuss a bioenergy digesting plant that uses poultry litter to produce energy.

“The second stop, also in Darlington County, was at Galloway Farms. There, Vilsack, Spratt and local agricultural leaders participated in a roundtable discussion to hear concerns from local farmers.

One of the hot topics of discussion was the formation of the 2012 Farm Bill that covers a wide range of support for farmers of all types, but is not limited to just farming.”

Biofuels

Reuters writer Charles Abbott reported yesterday that, “Attacked as subsidy addicts, U.S. ethanol makers may need help from friends in high places, including the White House, to hold on to lucrative tax breaks set to expire at the end of the year.

The industry says it is ready to discuss revisions in the incentives, worth $6 billion a year. An amalgam of foodmakers, livestock producers, environmentalists and deficit hawks say there is no need for subsidies because biofuels are guaranteed by law a share of the motor fuel market.”

Yesterday’s article explained that, “Corn-based ethanol is a Farm Belt favorite, valued as a home-grown fuel that reduces reliance on imported oil and creates jobs and income for rural areas. Rural lawmakers back ethanol as a success story.

The average ethanol plant employs 40-50 people and spends $130 million a year on supplies, wages and transport. With 204 plants nationwide, that amounts to thousands of jobs and billions of dollars in outlays.”

Noting that, “The farm bloc has influence because rural districts often are a pathway to control of the House. Two-thirds of the most competitive House races are in rural districts this year,” Mr. Abbott went on to explain that, “Trade groups, already at odds over how to get higher ethanol blends onto the market, split in July when a long-term extension of the tax breaks stalled in Congress.”

And Daniel Looker reported yesterday at Agriculture.com that, “The food versus fuel debate found a new audience Tuesday at the Global Financial Leadership Conference in Naples, Florida sponsored by the Chicago Mercantile Exchange.

“The consensus of a panel of experts was that more use of biofuels affects food.

“‘Ethanol is driving up food prices. The only question is how much,’ said Ian Goldin, former vice president of the World Bank and now director of Oxford University’s Oxford Martin School.”

The article noted that, “The exact impact of ethanol on food prices is hard to pin down, said a third panelist, Tim Gallagher, executive vice president of grains and biofuels for Bunge North America.”

Meanwhile, Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “The bright orange warning label that the government is proposing for E15 pumps has angered some in the ethanol industry. Monte Shaw, executive director of the Iowa Renewable Fuels Association, says the label is going to scare motorists from putting the fuel even in cars where it’s permitted.”

EPA Issues

Robin Bravender reported yesterday at Politico that, “Congressional Republicans planning an assault on the Obama administration’s environmental record aim to turn Lisa Jackson into public enemy No. 1.

“On the campaign trail, Republicans have adopted the Environmental Protection Agency as a favorite symbol of the White House’s regulatory overreach. And behind the scenes in Washington, GOP staffers and K Street lobbyists who say they’ve been dissed by the EPA administrator are looking forward to getting some revenge.

“Like other senior administration officials, Jackson can expect to be chained to a witness chair on Capitol Hill if Republicans win either chamber. There, they hope to make her defend policies the GOP contends are unpopular and anti-business.”

The article noted that, “‘I think she’ll be very much in demand on the Hill, at times not of her choosing,’ said a former staffer on the House Energy and Commerce Committee. ‘It will diminish her free time, shall we say.’

“With Democrats holding the reins in Congress, and White House energy and climate adviser Carol Browner taking many of the arrows from the GOP, Jackson has had enough of a political buffer zone to issue some of the strictest environmental rules in history. Republicans have decried the EPA at each step along the way but have been unable to do much about it.

Some of the animosity is personal: Republicans in both chambers and K Street attorneys say Jackson and her staff are too dismissive of opposing views and other stakeholders.”

The Politico article pointed out that, “Rep. Fred Upton (R-Mich.), the favorite to chair the Energy and Commerce Committee if Democrats lose the House, hopes to investigate the Obama administration’s ‘poisonous regulations’ and the role of policy ‘czars’ in the White House, including energy adviser Browner.

“‘If we have the gavel, I can assure you that the oversight subcommittee will be very busy,’ Upton told POLITICO, adding that Browner can also expect frequent invitations to testify. ‘We’ll have a seat reserved for her,’ he said.”

Meanwhile, an update posted yesterday at the House Ag Committee Republicans webpage indicated that, “This week during The Ag Minute [MP3], guest host Rep. Adrian Smith, discusses proposed regulations by the Environmental Protection Agency (EPA) and how they will negatively impact everyone who lives, works, and farms in rural America.”

Rep. Smith stated in part that, “It is imperative we prevent the EPA from imposing standards which would cripple American agriculture and stifle economic growth in rural communities.

“Farmers and ranchers have enough headaches without having to worry about unreasonable federal regulations threatening their livelihood.”

Keith Good

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