FarmPolicy

August 17, 2019

Farm Bill; Crop Insurance; Biofuels; Climate; Food Labeling; and Political Notes

Farm Bill

Philip Brasher reported yesterday at The Green Fields Blog (Des Moines Register) that, “The Agriculture Department expects to pay farmers about $430 million for the first year of a new subsidy program, but little of that money is headed for Iowa. Most of the money is going to wheat producers, not the corn growers who pushed for the program, which goes by the name ACRE, which stands for Average Crop Revenue Election. The payments are tied to fluctuations in farm revenue, a combination of crop yields and prices, rather than changes in prices alone.

“The USDA announced today which states would get payments for crops such as corn, soybeans and grain sorghum for 2009. The total payments for all crops are estimated to total about $430 million with about 70 percent of that going to wheat producers and 23 percent to corn growers. Oklahoma, Washington, Illinois, South Dakota, and North Dakota are expected to get about 75 percent of the money, said Isabel Benemelis, a spokeswoman for the USDA’s Farm Service Agency. Farmers in Iowa didn’t qualify unless they grew wheat or oats, relatively minor crops in Iowa for which prices fell sharply in 2009. Illinois corn growers are qualifying for the money because of yield losses they suffered in 2009.”

Crop Insurance

On Wednesday, FarmPolicy.com spoke with Dr. Thomas Zacharias, the president of National Crop Insurance Services (NCIS), and Dr. Keith Collins, the former USDA chief economist regarding crop insurance issues.

A complete transcript of the conversation is available here.

Of particular interest was this exchange: “Question: I’ve covered the farm bill hearings that were held around the country by House Ag Committee Chairman Collin Peterson as well as a recent farm bill hearing held in North Dakota by Senate Budget Committee Chairman Kent Conrad, and one of the things that has struck me is the consistent theme by farmers around the country that what is needed is a good crop insurance program as being the mainstay of a farm program safety net.

“But at the same time you’re hearing this from farmers, the RMA has imposed another ten year budget cut in the program of $6 billion in the Standard Reinsurance Agreement [SRA], and this on top of the $6 billion cut imposed in the ’08 Farm Bill. So with that background, my question is can the crop insurance program meet these farmers’ expectations with these kinds of cuts occurring?

“MR. TOM ZACHARIAS: This is definitely a challenge for the industry. I do believe the companies, the approved insurance providers, AIPs, however you want to refer to them, and the agency force, there’s no doubt we’re going to have to work together much smarter than we have in the past. And part of the backdrop to this is we have had several good years of very good experience in that condition, the outcome in the SRA. But I believe the industry is positioned to deliver. We’re working on new initiatives with RMA. But you’re right. It will be a challenge.”

Another transaction from Wednesday’s conversation included: “Question: As you know, the next farm bill debate is already kind of on the agenda in some farm organizations, particularly at the state level, and some groups have advocated for eliminating direct payments, the fixed, nonvariable aspect of the safety net, and reallocating some of that money from direct payments into improving the safety net of crop insurance. What changes or improvements in crop insurance could be made if more funding were to be made available?”

In part of the response to this answer, Dr. Keith Collins indicated that, “I would say, at this point, the crop insurance industry, NCIS, is very cautious about what kind of tools should be invested in this farm bill, what kind of new tools should be invested in this farm bill. You mentioned taking some direct payment money and using it to expand crop insurance or risk management generally. Well, there obviously still is a lot of support for direct payments among farmers. That varies all across the country, it varies by crop, but there is a lot of strong support. Direct payments are green box under the WTO. They are certain.

Farmers had to give up direct payments to go under the ACRE program, and not many of them chose to do that.”

Dr. Collins pointed out that, “When you talk about taking funds from one program tool to improve another program tool, you could be very limited in doing that kind of a tradeoff if agriculture is facing a pretty steep budget cut. That could reduce the flexibility to move funds from one program tool to another. This is a long way of saying, I guess, that we’re still pretty early in this process, and it’s hard to see what the most effective way is to use the money that we’ve got available because we don’t know what the money is that we’re going to have available.

“But in crop insurance, certainly people have been asking for higher coverage, and that means a lot of different things. For some people it means they want the APH addressed in some way, a more current APH. For other people it means they want to see farmers go from 75% coverage to 85%. For other people it means they want to see the 85% cap on coverage raised to 90%.”

Dr. Collins indicated that, “We do know that because participation has been low in the ACRE program, there is an interest in seeing if that can be improved in some way. [N]one of the commodity organizations have a specific proposal on how to do that, and I know some of them are working on that and looking at ways to do that. And our only thought on that would be that if we’re going to try and pursue the ACRE program in some way that it be pursued in a way that reinforces, complements, crop insurance, so that the two of them work together in providing a better safety net for producers.”

A complete transcript of the FarmPolicy.com discussion regarding crop insurance is available here.

Biofuels

A Congressional Research Service Report (CRS) from October 22, titled, “Cellulosic Ethanol: Feedstocks, Conversion Technologies, Economics, and Policy Options,” (by Randy Schnepf) indicated that, “Under the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140), Congress mandated the use of a large and rapidly increasing volume of biofuels as part of the U.S. national transportation fuel base. In particular, the share of cellulosic biofuels is mandated to grow to 16 billion gallons by 2022—a daunting challenge considering that no commercial production existed as of mid-2010. In addition to the biofuels use mandate, Congress also provides federal support in the form of tax credits to fuel blenders and biofuels producers, and an import tariff on foreign- produced ethanol to protect and encourage the development of the U.S. biofuels industry.

Despite this strong federal support, many uncertainties remain over whether a large-scale, economically viable cellulosic biofuels system can be successfully developed.”

The CRS report stated that, “This report attempts to summarize the current state of knowledge regarding potential biomass feedstocks, production and marketing constraints, processing technologies, and the economics of biomass from field to fuel under current and hypothetical policy circumstances. As such, it is intended to serve as a reference for policymakers interested in understanding the complexity underlying the development of a large-scale, biomass-based fuel system.

“CRS has several reports addressing different aspects of the U.S. biofuels sector (including cellulosic biofuels) and related federal policy. This report is different in that it provides a broad overview of the nascent U.S. cellulosic biofuels industry and the many uncertainties associated with its future. This assessment was conducted by a team of researchers at Purdue University’s Department of Agricultural Economics. The report provides a ‘snapshot’ of current technological development, but is both prospective and retrospective because it also examines emerging or advanced technologies that may affect future biofuels development, and looks at evidence from a growing body of research on the economics of biomass production and biofuels processing as guidelines for shaping energy policy.”

Climate Issues

Darren Goode reported yesterday at The Hill’s Energy Blog that, “A caucus of nearly two-dozen industry and business groups is urging senators to restrict funding for landmark and controversial Environmental Protection Agency limits on greenhouse gases.

“The groups — including the U.S. Chamber of Commerce, the American Petroleum Institute, the National Manufacturers Association and the American Chemistry Council — are pushing top Republicans and potential swing-vote Democrats on the Appropriations Committee to block EPA actions in an upcoming lame-duck spending package.

“The groups want the EPA to be prevented from imposing greenhouse gas restrictions on power plants and other major stationary energy sources. The limits are set to begin on Jan. 2.”

More broadly, Reuters writer Tom Doggett reported yesterday that, “U.S. energy policies face a big overhaul if Republicans, as expected, take control of the House of Representatives and make gains in the Senate in next week’s congressional elections.

“After raising a ruckus on the campaign trail about the ‘Cap and Tax’ energy policies of the Obama Administration, Republicans will want to move away from renewable energy and boost traditional energy sources like oil, nuclear and coal.

“But Republicans won’t be able to push too hard, because President Barack Obama would still have veto power over legislation. Here is how energy sectors could be affected.”

The article went on to outline various potential scenarios and noted that, “Ethanol incentives cost $6 billion a year and could balloon but ethanol makers and the farmers that grow the corn feedstock are in the Midwest, where Republicans are strong.

Still in the drive to save money, Republicans could pare the tax credit. There is a Democratic proposal in Congress for a 36-cent credit, down 9 cents from the current level.

“The industry is working for a one-year extension of the credit and says it will accept lower rates and other reforms.”

Meanwhile, an update yesterday from the Rural America Solutions Group indicated in part that, “House Rural America Solutions Group Co-chairs, Agriculture Committee Ranking Member Frank Lucas (R-OK), Small Business Committee Ranking Member Sam Graves (R-MO) and Natural Resources Committee Ranking Member Doc Hastings (R-WA), sent a letter today to Environmental Protection Agency (EPA) Administrator Lisa Jackson to recap the Rural America Solutions Group forum on job-killing EPA regulations held on September 29, 2010 that she declined to attend.

“The letter states that ‘some of the EPA’s proposed regulations would have a depressing effect on rural jobs and economic growth and that the agency needs to justify its proposed regulations firsthand to rural Americans.’ Click here to read the full text of the letter.”

“The fourteen Members of Congress, forum participants and audience that attended, were disappointed that you declined our invitation to participate. However, in your absence, we heard from seven panelists who each made a presentation on a recent EPA regulation, policy or proposal and its impact on rural America. The panelists represented a broad cross-section of the groups and small businesses that are crucial to employment and economic sustainability in rural America.”

Food Labeling

William Neuman reported in yesterday’s New York Times that, “Responding to pressure from federal regulators, a major food manufacturers organization said Wednesday that it would develop a labeling system for the front of food packages that would highlight the nutritional content of foods, including things like calories, unhealthy fats and sodium that many consumers want to limit.

“The group, the Grocery Manufacturers Association, said the labeling system would be introduced early next year.”

Political Notes

A National Journal Hotline On Call update from earlier this week indicated that, “The Cook Political Report’s pre-election House outlook is a Democratic net loss of 48 to 60 seats, with higher losses possible. A turnover of just 39 seats would tip majority status into Republican hands.”

With respect to Members of the House Ag Committee, a CQ Politics item from yesterday stated that, “President Barack Obama advocated for filibuster reform, while defending his achievements during his first two years in office, during an appearance on ‘The Daily Show With Jon Stewart’ on Wednesday.”

The CQ item added that, “In the ‘Daily Show’ interview, Obama also praised Democratic Reps. John Boccieri (Ohio) [Ag Comm Member], Betsy Markey (Colo.)[Ag Comm Member] and Tom Perriello (Va.), whose re-election campaigns are struggling. Obama said they are ‘being hammered by negative ads every single day’ for ‘yes’ votes on the health care and financial regulatory overhauls.”

Jessica Taylor noted yesterday at Politico that with respect to the North Dakota Congressional race: “Not so fast, Karl Rove. That’s the message Democratic Rep. Earl Pomeroy [Ag Comm Member] has for the Rove-affiliated group American Crossroads GPS, which has been making quite a footprint across this year’s electoral map. But with its latest ‘cookie-cutter’ ad in North Dakota, the group claims the state’s economy is ‘reeling’—when in fact the state has one of the lowest unemployment rates in the country, at just under 4 percent. ‘Next time Karl Rove wants to funnel secret money to North Dakota to influence our elections, he ought to visit our state first or at least pick up one of our newspapers,’ Pomeroy’s campaign shot back.”

With respect to the 23rd District in New York, yesterday’s Politico article noted that, “He’s gone, but definitely not forgotten. Even though onetime spoiler Doug Hoffman said he wouldn’t actively campaign despite his name remaining on the ballot, his presence on the Conservative Party line could propel Democratic Rep. Bill Owens [Ag Comm Member] to yet another improbable win. A Siena College poll showed Owens, who won the 2009 special election thanks to a split in the GOP vote, atop the field with 40 percent. Republican nominee Matt Doheny took 37 percent, but Hoffman still took a 15 percent chunk. Even when voters were told Hoffman had dropped out, he still took 4 percent, leaving the two actual candidates tied at 42 percent apiece.”

And in the South Dakota Congressional Race, yesterday’s Politico article stated that, “The Crystal Ball has spoken. University of Virginia professor Larry Sabato made his final predictions Thursday for which Democrats might not be returning in 2011. His final forecast: at a net gain of 55 seats for the GOP. Democrat Stephanie Herseth Sandlin [Ag Comm Member] was one of those he picked to go down. Joining the three-term congresswoman on the list are House Dem veterans with even longer tenures, including Indiana Rep. Baron Hill, South Carolina Rep. John Spratt and Texas Rep. Chet Edwards.”

The University of Virginia analysis rates the following Democratic House Agriculture Committee Members, who are engaged in competitive races, in the following categories:

Likely Democrat
– Tim Holden, Pa., Vice Chairman
– Mike McIntyre, N.C
– Dennis A. Cardoza, Calif.

Leans Democrat
– Jim Costa, Calif.
– Leonard L. Boswell, Iowa
– Kurt Schrader, Ore.
– Bobby Bright, Ala.

Leans Republican
– Betsy Markey, Colo
– Walt Minnick, Idaho
– Deborah L. Halvorson, Ill.
– Frank Kratovil, Md.
– Mark H. Schauer, Mich.
– Travis W. Childers, Miss.
– Earl Pomeroy, N.D.
– Larry Kissell, N.C.
– Scott Murphy, N.Y.
– Bill Owens, N.Y.
– John Boccieri, Ohio
– Kathleen A. Dahlkemper, Pa.
– Steve Kagen, Wis.
– Stephanie Herseth Sandlin, S.D

Currently, the House Ag Committee consists of 46 Members, 28 Democrats and 18 Republicans.

Keith Good

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