Farm Bill: Federal Spending- Background
Naftali Bendavid and Jonathan Weisman reported in Saturday’s Wall Street Journal that, “Even as President Barack Obama signed a broad, bipartisan tax law, battle lines were being drawn over spending cuts and Mr. Obama’s health-care law, setting up the likely first big fights in the new Congress.
“Senate Republicans, facing an uproar from tea-party activists, rose up late Thursday to scuttle a $1.1 trillion spending bill, turning their backs on billions of dollars in projects that they had championed.”
The Journal article added that, “The president is pushing Congress for a yearlong resolution funding the government at current levels. That would put off the looming battle with resurgent Republicans to fund health care, but could also set back implementation of the program.
“But Republicans want a short-term funding bill so they can start the fight with the White House over government spending sooner rather than later.”
“Conservative activists already are targeting programs such as ethanol and agriculture subsidies, but any trims in those areas would likely prompt fierce resistance from lawmakers and constituents who support them,” the Journal article said.
Likewise, Carl Hulse reported in Saturday’s New York Times that, “The collapse of a government-wide spending package in the final days of this Congressional session sets up a politically charged fiscal showdown early next year, testing the determination of Republicans about to take over the House with promises to slash an array of domestic programs.”
The Times article pointed out that, “‘Beginning in January, the House is going to become the outpost in Washington for the American people and their desire for a smaller, less costly and more accountable government,’ said Representative John A. Boehner of Ohio, the incoming House speaker.
“‘I will tell you,’ he added, ‘we are going to cut spending.’”
Farm Bill: Federal Spending- Farm Programs
More specifically on agriculture, Jim McTague noted on Saturday at Barron’s Online that, “Hold off on the celebratory tea parties. Even though the 85 fiscally conservative, GOP freshmen entering in the House of Representatives with the 112th Congress next year have vowed to slash the federal government’s dissolute budget, the odds of their fulfilling that promise are long.” [NOTE: A correction to this Barron’s item has been released].
The Barron’s item indicated that, “The GOP Claims that it will behave differently during the 112th Congress, when it rules the House. The most formidable test of its commitment to fiscal sanity will be the next farm bill. Previous farm bills cost taxpayers $245.2 billion from 1995 through 2009 to provide unneeded crop subsidies that largely went to corporate farming operations. Farmers tend to get everything they request.
“‘The farm lobby is one of the most sophisticated, best- organized and most potent special-interest groups in Washington, and reform won’t come easy,’ says Democratic Rep. Ron Kind of Wisconsin, a fiscal conservative. ‘Republicans are going to have to say ‘no’ to traditional friends and allies. But that’s the point. We all are going to have to say ‘no’ if we are going to get serious about deficit reduction,’ says Kind.”
Mr. McTague stated that, “One of the GOP old guard already is trying to protect the farm bill from the budget axe. Oklahoma Rep. Frank Lucas, who will become chairman of the House Committee on Agriculture, has decided to wait until the current bill expires in 2012 to begin work on the successor legislation, hoping the fiscal environment is more spender-friendly by then. His predecessor, Democratic Rep. Collin Peterson of Minnesota, had been planning to start work on the next farm bill in 2011. Postponing debate until 2012 is a ‘serious negative,’ says Kind, because it’s difficult to pass a farm bill during a presidential election year. That means debate probably won’t begin in earnest until 2013.”
“One of the most contentious sections of the 2008 farm bill guaranteed payments to farmers, regardless of conditions. These ‘direct subsidies’ total about $5 billion annually, according to Brian Riedl, a research fellow at the Heritage Foundation. Commodity prices are at record highs. Farmland prices have soared. Net farm income hit a record $92.3 billion in 2008, translating into average household income for farmers of more than $89,000. Yet the subsidy checks kept coming. ‘The problem is not farmer poverty. The problem is year-to-year income stability,’ says Riedl. He’d replace the subsidies with farmer savings accounts and improved crop insurance,” Saturday’s Barron’s item said.
Farm Bill- Crop Insurance
Agri-Pulse Editor Sara Wyant indicated in a recent item posted at the High Plans Journal Online that, “Budget cutters will be looking to trim almost every federal program next year, and the federal crop insurance program will be no exception. But the head of USDA’s Risk Management Agency says he is ready to spread the word that the crop insurance industry already took a $6 billion cut, with $4 billion of that going to deficit reduction.
“‘Six billion is quite a savings. As we get talks going into the 2012 farm bill, I definitely want to make that known when we get into the discussions,’ Murphy told Agri-Pulse in a recent interview.”
Ms. Wyant added that, “RMA released a report Dec. 14 that indicates current investments in crop insurance are delivering significant bang for the buck. While the cost of the federal crop insurance program has increased by about 23 percent from fiscal year 2001 to 2007, the level of insurance protection almost doubled, from $36.73 billion to $67.34 billion over the same period.
“Insurance coverage is now available for almost every commodity and specialty crop, from apiculture to wheat, as well as livestock operations.”
The High Plains item pointed out that, “Despite the growth in crop insurance coverage over the last decade, growers in several regions of the country still complain that the program does not have enough historical production and loss data to accurately determine rates. Murphy says RMA is doing a review of rice, cotton, sugar cane and other crops to see if additional adjustments can be made. For example, RMA looked at the rate structure in the rice program and plans to drop premium costs, perhaps as much as 10 percent.”
Meanwhile, an article posted last week at the Kansas City Star Online reported that, “Techies in California have launched an insurance service for farmers seeking insulation against the largest source of crop loss — bad weather.
“It’s called WeatherBill, and the company’s deep-pocketed investors are betting that they’ve caught lightning in a bottle.
“The San Francisco company, which already sells insurance against nasty weather to clients such as the U.S. Open tennis tournament, is in the midst of shifting 80 percent of its focus to agriculture.”
Farm Bill- Conservation
Philip Brasher reported on Saturday at The Des Moines Register Online that, “The next chairman of the House Agriculture Committee thinks the government should consider releasing idled land for crop production if the acreage is needed to stabilize supplies of corn and other commodities.
“Rep. Frank Lucas, R-Okla., who will take over the committee next month, said the next farm bill, due in 2012, could include a provision allowing the Agriculture Department to reduce the size of the Conservation Reserve Program in case of crop shortages.
“That would give the USDA the ‘flexibility to allow at least enough acres to come out to maintain some kind of equilibrium’ between the competing uses of corn for livestock feed, food and biofuels, he said in an interview with The Des Moines Register.”
Mr. Brasher added that, “Lucas said many farm programs could face cuts in the next farm bill, including the $5 billion in fixed, annual payments that go to U.S. grain and cotton growers.
“‘Let’s face it. Even direct payments along with everything else is going to be on the table,’ he said.”
Saturday’s article added that, “Lucas is reluctant to shift money away from direct payments into programs that might be more difficult to defend under international trade rules. The direct payments are considered to have less effect on production and prices than other types of subsidies.”
Farm Bill- Trade- Chairwoman Stabenow
With respect to trade related issues, the December 17 Issue of Inside U.S. Trade reported that, “With changes in the U.S. cotton program looming in the next farm bill as a result of an adverse World Trade Organization (WTO) ruling, U.S. cotton producers are losing some of their strongest champions in the Senate Agriculture Committee’s chair and ranking member, according to a Senate aide.
“Chairwoman Blanche Lincoln (D-AR) lost her election, and Ranking Member Saxby Chambliss (R-GA) is expected to give up his slot but remain on the committee. These two lawmakers represent states that account for a combined 20 percent of U.S. cotton acreage, according to the Senate aide.
“Next year, that number is set to shrink to about 2.5 percent when a new chairman and ranking member take over, the aide said. The incoming committee chair, Sen. Debbie Stabenow (D-MI), hails from a state that produces largely specialty crops, and the new ranking member is expected to be Sen. Pat Roberts (R-KS).”
Lou Anna K. Simon, the president of Michigan State University, and Jeffrey Armstrong the dean of the College of Agriculture and Natural Resources at MSU, penned an opinion item last week at The Detroit News Online, which stated in part that, “In just 40 years, the Earth’s 6.8 billion people will grow past 9 billion, increasingly urbanized and yet needing to be fed with no more land or water than we have today. The policies set and appropriations made by Congress will make a fundamental difference in the United States’ role and effectiveness in responding to this challenge.
“Leadership on the U.S. Senate Committee on Agriculture, Nutrition and Forestry is crucial to ensuring that the nation is prepared. And Michigan Sen. Debbie Stabenow, D-Lansing, is an excellent choice to chair that committee. She represents a state where agri-food represents a $71.3 billion annual economic impact and comprises the second-largest economic sector. Agriculture accounts for almost 20 percent of Michigan’s economic engine and employs a quarter of its work force.”
The item added that, “Her leadership has helped bring about a foresighted new focus on agricultural research, specialty crops, development of renewable fuels and critical land, habitat and water conservation efforts. Her role in crafting the 2008 Farm Bill broadened its perspective, which in our view will more fully assure the supply of high-nutrition food in the coming years. The most recent proposals in this area were awarded to projects in 19 states, benefiting farmers across the country.”
Ag Economy- Cotton
P.J. Huffstutter reported in today’s Los Angeles Times that, “King Cotton is back.
“More than a decade after the state’s ‘white gold’ crop started losing its luster, booming commodity prices have farmers cashing in on growing export demands — and have turned great swaths of Central California a snowy white during harvest season.”
Today’s article stated that, “Although California’s current production numbers are a pittance compared with the 1990s, when more than 1 million acres of cotton flourished, farmers are ramping up — particularly in the San Joaquin Valley, historically the heart of the state’s cotton industry.
“Growers were expected to plant a total of 309,000 acres of Pima and upland cotton this year, up from 201,000 last year, according to the U.S. Department of Agriculture’s Economic Research Service.
“A similar movement is happening in the South, Southwest and elsewhere in rural America. Nationwide, the total acreage of cotton planted grew nearly 21% this year to 11.04 million acres. The amount of cotton harvested? It jumped 51%.”
Philip Brasher reported on Friday at the Green Fields Blog (Des Moines Register) that, “President Barack Obama has signed into law the tax bill that extends the ethanol subsidy and tariff through next year and revives the $1-a-gallon tax credit for biodiesel and also continues it through 2011. The ethanol incentives are due to the expire at the end of this year. The biodiesel credit expired at the end of 2009.”
Reuters writers Charles Abbott and Timothy Gardner reported on Friday that, “U.S. ethanol makers face a battle over reforming subsidies next year after current incentives are rolled over in the tax package signed into law by President Barack Obama on Friday…[b]ut it left the battle to reform the incentives — possibly transforming the blender tax credit into a lower-cost subsidy for pipelines and new fuel pumps — until next year.”
“Growth Energy, an ethanol producers group, wants Congress to replace the blender credit with a program called Fueling Freedom to improve the ethanol infrastructure,” the article said.
The article added that, “The White House supports the biofuels industry because it provides jobs in the Farm Belt, but has been quiet about how the subsidy battle should play out.”
Climate Change Issues
Reuters news reported on Friday that, “Legislation imposing a two-year pause on Environmental Protection Agency regulation of carbon dioxide pollution from smokestacks appeared to be dead for this year as Senator John Rockefeller accused Republicans on Friday of withholding their needed support.”
Ben Geman reported on Friday at The Hill’s Energy Blog that, “But [Sen. James Inhofe (R-Okla.)] quickly noted that in June the Senate turned back Sen. Lisa Murkowski’s (R-Alaska) GOP-backed resolution that would have gone even further by stripping EPA’s power to regulate greenhouse gas emissions outright.”
And Mr. Geman reported yesterday that, “Sen. Jay Rockefeller (D-W.Va.) believes the new Congress will be ‘much more likely’ to approve his legislation that would halt looming Environmental Protection Agency climate change rules.”
“Sen. Lisa Murkowski (R-Alaska) is also mulling new efforts to block EPA rules next year.”
The AP reported yesterday that, “The Senate on Sunday passed a sweeping bill to make food safer, sending it to the House in the waning days of the Congressional session.
“It was the second time the Senate passed the bill, which would give the government broad new powers to increase inspections of food-processing plants and force companies to recall tainted food. The first time, three weeks ago, it was caught in a snag when senators mistakenly included tax provisions that by law must originate in the House.
“The version passed Sunday was amended to avoid another such problem.”
For a more in-depth look at this development see, “Food-safety measure passes Senate in Sunday surprise,” by Lyndsey Layton, which was posted yesterday at The Washington Post Online.
Lastly today, the New York Times editorial board stated in today’s paper that, “The [McDonald’s] Happy Meal is up for some well-deserved scrutiny. Last week a mom from Sacramento filed a class-action suit supported by the center to make McDonald’s stop using toys as bait to lure children. Last month, the San Francisco Board of Supervisors passed a measure requiring that meals sold with toys meet a minimum standard of nutrition.
“McDonald’s chief executive, Jim Skinner, has pushed back at what he calls the ‘food police,’ arguing that these actions seek to deprive families of choice. A company spokeswoman told us, ‘We are proud of our Happy Meals and intend to vigorously defend our brand, our reputation and our food.’
“Parents are responsible for their children’s diet. And they certainly could do a better job: almost 17 percent of American children are obese, three times as many as in the 1970s. But it would be easier for parents to do their job if they didn’t have to push back against the relentless tide of marketing aimed at their children.”