FarmPolicy

July 23, 2014

Nutrition Bill; Food Safety; Trade; Biofuels; Farm Bill; Ag Economy; and Biotech

Nutrition Bill

Robert Pear reported in today’s New York Times that, “Congress gave final approval on Thursday to a child nutrition bill that expands the school lunch program and sets new standards to improve the quality of school meals, with more fruits and vegetables.

Michelle Obama lobbied for the bill as a way to combat obesity and hunger. About half of the $4.5 billion cost is financed by a cut in food stamps [SNAP] starting in several years.

Mrs. Obama said she was thrilled by passage of what she described as a groundbreaking piece of legislation.”

The Times explained that, “By a vote of 264 to 157, the House on Thursday passed the bill, which was approved in the Senate by unanimous consent in August. It goes now to President Obama, who intends to sign it.

“On the final roll call, 247 Democrats and 17 Republicans voted for the bill. Four Democrats and 153 Republicans voted no.”

“The bill gives the secretary of agriculture authority to establish nutrition standards for foods sold in schools during the school day, including items in vending machines. The standards would require schools to serve more fruits and vegetables, whole grains and low-fat dairy products,” the Times said.

Abby Phillip reported yesterday at Politico that, “In addition to money from a $19.9 billion that Congress used pay for an emergency state aid bill, the child nutrition legislation will be funded with $2.2 billion in cuts from SNAP.

“To soothe anxious Democrats, President Barack Obama has committed to stating his support for SNAP during the White House signing ceremony for the child nutrition bill. The White House also has assured Democratic lawmakers that the administration will work to restore the food stamp funding in the future.”

Nick Anderson reported in today’s Washington Post that, “Democrats took steps to offset the bill’s costs, including a $2.2 billion cut to food stamp benefits for needy families. Those maneuvers, reflecting political pressures to avoid adding to the budget deficit, caused many Democrats to wince even as they voted for the bill because it would effectively shift funds from one anti-hunger program to another.

House Republicans opposed the bill as a needless expansion of government by the lame-duck Congress weeks after voters punished Democrats at the polls. National groups representing school administrators and boards also were opposed, calling the bill an unfunded mandate that would strain strapped school budgets.”

Reuters writer Charles Abbott reported yesterday that, “More than 32 million students eat hot meals each day through the school lunch program and more than 12 million a day eat breakfast through a companion program. Two-thirds of the lunches are free or at reduced price for poor children.

“The government underwrites school meals, operated by local schools, and a handful of smaller child nutrition programs at more than $17 billion a year. The bill approved by Congress would increase funding by $450 million annually for a decade.”

The Reuters article added that, “It boosts the per-meal reimbursement by 6 cents, the first noninflationary increase in 30 years, and bans high-calorie sugary and salty ‘junk’ foods. It also would help pay for after-school meals to poor children at child-care centers.”

Agriculture Secretary Tom Vilsack indicated yesterday that, “This is an historic victory for our nation’s youngsters. This legislation will allow USDA, for the first time in over 30 years, the chance to make real reforms to the school lunch and breakfast programs by improving the critical nutrition and hunger safety net for millions of children.”

Senator Blanche Lincoln (D-Ark.) noted yesterday that, “Passage of The Healthy, Hunger-Free Kids Act puts us on a path toward improving the health of the next generation of Americans, providing common-sense solutions to tackling childhood hunger and obesity.”

In related news regarding nutrition, Michael Howard Saul reported in today’s Wall Street Journal that, “Bucking his traditional supporters, Public Advocate Bill de Blasio is endorsing Mayor Michael Bloomberg’s proposal to bar recipients of food stamps from using them to buy soda or other sugar-sweetened drinks.

“Mr. de Blasio, a Democrat from Brooklyn who won citywide elective office last year with the help of liberal voters, sent a letter this week to the U.S. Department of Agriculture urging approval of Mr. Bloomberg’s proposal for a two-year pilot program excluding sugary drinks from food-stamp purchases in the five boroughs.”

Food Safety

Reuters writer Charles Abbott reported yesterday that, “The Senate may have to vote again on a sweeping overhaul of U.S. food safety rules due to a procedural misstep, giving opponents a chance to rewrite or derail the bill, a top congressional aide said on Thursday.”

“The aide, speaking on condition of anonymity, said it could be next week before the problem was resolved.”

With respect to the “procedural misstep,” Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “Here is what happened, according to Jim Manley, a spokesman for Senate Democratic Leader Harry Reid, D-Nevada: Reid’s staff asked the House if it had a problem with the fee provisions but received no response. The Senate aides assumed that silence meant the House had no objection and told [Sen. Tom Harkin’s (D-Iowa)] staff ‘that there didn’t seem to be a problem or issue.’”

Trade

Mike Lillis reported yesterday at The Hill Online that, “Legislation eliminating a longstanding travel ban to Cuba is dead in this Congress, several senior Democrats said this week.

“Rep. Bill Delahunt (D-Mass.), a strong backer of lifting the ban, called it ‘absurd’ that Congress would maintain restrictions ‘predicated on a Cold-War mentality’ irrelevant to current events. But with the year drawing to a close — and lawmakers reluctant to tackle yet another thorny topic in a politically polarized environment — the bill won’t come up in the lame duck, he said.”

Elizabeth Williamson reported in today’s Wall Street Journal that, “U.S. and South Korean negotiators meeting to revive a stalled trade pact are down to one main sticking point, say people familiar with this week’s negotiations—leaving the biggest U.S. free-trade deal in nearly two decades hinging on an economically negligible but politically potent issue.

The deal now comes down to whether South Korea will agree to give the U.S. four or five years to phase out the 2.5% tariff it levies on Korean-built cars, these people say, rather than cutting the tariff immediately, as Seoul has sought.

“Negotiators led by U.S. Trade Representative Ron Kirk and Korean Trade Minister Kim Jong-hoon were hammering out that point Thursday, these people said, as talks in Columbia, Md., extended to a third day, one longer than planned. People involved in the talks were optimistic about the chances for a deal, calling the narrow focus on the tariffs issue a sign of progress.”

Biofuels

Ben Geman reported yesterday at The Hill’s Energy Blog that, “Sen. Tom Harkin (D-Iowa) said Thursday that expiring ethanol tax credits he’s battling to extend could hitch a ride on a possible omnibus appropriations package.

“‘If we have an omnibus, the chances are pretty good we might get that in the omnibus,’ Harkin told reporters in the Capitol.

“However, the prospects for a catch-all federal spending package rather than a continuing resolution that maintains current spending levels are highly uncertain.”

The Hill update added that, “Harkin also said the issue is tethered to the broader debate about extension of expiring Bush-era tax cuts. ‘A lot of this is wrapped up in this deal with the president … what kind of deal he cuts on the tax breaks, extending them,’ he said.

Harkin said it’s unclear if there are enough votes for extending the credits.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Growth Energy Chief Executive Officer Tom Buis spoke with DTN’s Katie Micik on Thursday, who asked Buis about the remaining potential in the lame-duck session to find a legislative vehicle to pass an extension for the Volumetric Ethanol Excise Tax Credit.

“‘Ultimately they’ll come up with a vehicle or multiple vehicle’ to pass expiring tax credits, Buis said. ‘They don’t have a lot of time, but we remain optimistic our programs with be extended. The devil is in the details. We’d like them to extend as long as can at the current rate. All tax extensions face that same challenge, especially with the federal deficit: How do you extend them for a long time and offset the cost? The conventional wisdom, you can’t take that to the bank, but most people think there will be a one year extension for all expiring tax credit programs.’”

Bloomberg writer Mario Parker reported yesterday that, “Ethanol futures tumbled to an eight- week low in Chicago as factions of U.S. lawmakers split on whether to extend the blending tax credit.

“The biofuel slumped a third time this week less than a month before the expiration of the 45-cent tax credit and 54- cent import tariff. Refiners receive the tax credit for each gallon of ethanol blended into gasoline.”

Meanwhile, an update posted yesterday at the AgMag Blog (Environmental Working Group) stated that, “On Wednesday (Dec 1), 15 senators from Corn Belt states sent a letter to Senate Majority Leader Reid and Minority Leader McConnell asking them to extend the ethanol tax credits and tariff protection that expire at the end of the month. The request, coming from senators representing nine states that account for 75 percent of all corn ethanol production and 71 percent of all corn subsidies, looks more like an earmark for a handful of Midwestern states than anything resembling a meaningful contribution to U.S. energy policy.”

On the other hand, in a speech yesterday on the Senate Floor, Iowa GOP Senator Charles Grassley highlighted the benefits of ethanol, noting in part that, “It’s even more ridiculous to claim that the 30 year-old ethanol industry is mature, and thus no longer needs the support that they get, while the century-old big oil industry still receives $35 billion in taxpayers’ support. Regardless, I don’t believe we should be raising taxes on any type of energy production or on any individual, particularly during a recession. Allowing the ethanol tax incentive to expire will raise taxes on producers, blenders and ultimately consumers of renewable fuel.

“A lapse in the ethanol tax incentive is a gas tax increase of over five cents a gallon at the pump. I just don’t see the logic in arguing for a gas tax increase when we have so many Americans unemployed or underemployed and struggling just to get by.”

Farm Bill

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Under the new Republican leadership in the House, ranking member Frank Lucas, R-Okla., is expected to become the next chairman of the House Agriculture Committee. He has a reputation as a forceful advocate of agricultural safety net programs, and is a strong opponent of subsidy reform.

“Still, times have changed, and many of the current programs no longer work well to stabilize farm incomes in the current stronger, but far more volatile markets. For example, the Iowa Farm Bureau is suggesting that funds now going into direct payments be used for insurance-type programs that could be more useful under modern market conditions.

Lucas’ home state likes the direct payments. At the same time, Don Carr, spokesman for the Environmental Working Group that tracks farm subsidy payments, has been highly critical of them and recently told the press, ‘There will be a fight over’ direct payments.”

Yesterday’s update also noted that, “So far, incoming House Ag Committee Chairman Lucas will only say that he suspects that cuts may be imposed on him. ‘The federal budget is still going to be tighter than anything we’ve seen in my 20 years up here,’ he said. ‘We’re going to have to write it with the money that will be available to us. Who knows what it will be. But I’m almost certain it won’t be as much as the last farm bill,’ he added.

“So, Lucas plans to use the money ‘available’ to the committee, whatever that turns out to be. Still, the long-held view that ag committees and their programs are inoculated against budget cuts by their popularity in home district could be less true in the future than it was in the past, Washington Insider believes.”

In political news regarding incoming Senate Ag Committee Chairman Debbie Stabenow (D-MI), Jeremy P. Jacobs reported earlier this week at the Hotline On Call that, “Finding A Stabenow Challenger: So far, all the discussion about the 2012 Michigan Senate race has focused on outgoing Rep. and 2010 gubernatorial contender Pete Hoekstra (R) and whether he’ll challenge Sen. Debbie Stabenow (D). But here is another name you might be hearing a lot more of after the New Year: Tim Leuliette.

“Leuliette is a businessman and major Republican donor who is considering the race.”

The Hotline update added that, “If Hoekstra passes on the race (his spokesman declined to comment), Leuliette could step into the Republican void coming off a 2010 election where the GOP gained control of both chambers of the state legislature and the governorship. Michigan Republicans also have a history of being receptive to self-funding businessmen — with Gov.-elect Rick Snyder (R) being the most recent example, along with Dick DeVos, who unsuccessfully challenged Gov. Jennifer Granholm in 2006.

“Other potential Republican Senate contenders include Rep. Mike Rogers and Secretary of State Terri Lynn Land, who briefly ran for governor this year.”

Ag Economy

Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “Commodity and land prices have spiked in recent weeks in Iowa, sparking the inevitable talk of an agricultural bubble similar to that which took down the state’s farmers in the 1920s before the Great Depression and in the 1970s before the Farm Crisis of the 1980s.

President Charles Evans of the Federal Reserve Bank of Chicago, whose district includes Iowa, said Thursday on a visit to Des Moines that his supervisors are watching Iowa banks closely for signs of speculative froth, but so far has seen none.

“‘You’ve certainly seen an increase in prices and values, but it’s based on fundamentals,’ Evans said during a visit with Register reporters and editors. ‘There is strong demand for better nutrition throughout the world, and that won’t change.’”

Gary Wulf reported yesterday at The Wall Street Journal Online that, “U.S. grain growers will likely see higher prices on fertilizer next season, according to surveys.

“A federal survey released late last month shows prices for key fertilizer components rose sharply since spring. A forecast from economists at Purdue University, also released in November, projects double-digit percentage increases in the variable cost of growing corn, wheat and soybeans next year, with fertilizer the driving force behind the rise.”

Biotech (Sugar Beets)

Chris Clayton reported earlier this week at DTN (link requires subscription) that, “Monsanto will appeal a federal judge’s ruling to remove Roundup Ready sugar beet stecklings from the ground, the company stated Wednesday.

“U.S. District Judge Jeffrey White in the Northern District of California on Tuesday ordered that restricted plots of Roundup Ready stecklings, or seedlings, must be ‘removed from the ground,’ but didn’t specifically state that the 256 acres of stecklings should be destroyed. USDA had cleared the plantings in September. Each side now has a different interpretation of the ruling, and Agriculture Secretary Tom Vilsack was quick to point out that difference when asked by a reporter to comment on the case Wednesday.”

The DTN article noted that, “Vilsack said USDA ‘is currently engaged in discussions with the Department of Justice about the next steps and what the options are relative to appeal. I don’t want to pre-empt those conversations or discussions. I would say we recognize the significance of this to growers and the concerns that are being raised as a result of the uncertainty.’”

William Neuman and Andrew Pollack reported in today’s New York Times that, “Court decisions that have suspended the planting of genetically modified sugar beets could result in a sharp decline in American sugar production in the next two years, leading to possible price increases for consumers and food processors, according to experts and farmers.

“Unless regulators can devise new rules acceptable to the federal court, the rulings could force farmers to abandon the genetically engineered beets they have come to rely on. Currently, those beets make up nearly all of the United States crop.

Farmers, who would normally order their seeds around now for planting early next year, say they are unsure what to do.”

Keith Good

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