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Farm Bill; USDA (Staff Change); Ag Economy; and Biofuels

Farm Bill: Nutrition

Tim Carman reported in today’s Washington Post that, “Calling it not only a national health issue but also a military one, Agriculture Secretary Tom Vilsack on Thursday proposed to overhaul the nutrition guidelines for public school meals for the first time since 1995, when Americans were mostly alarmed by the fat content of food.

“The proposed rules are far more wide-ranging and would gradually reduce sodium, limit starchy vegetables, ban most trans fats, require fat-free or lowfat milk, increase whole grains, add more fruits and vegetables, and, for the first time, limit the number of calories children consume daily [see an example here]. The guidelines are consistent, Vilsack said, with first lady Michelle Obama’s Let’s Move initiative, which promotes healthier eating for children.

“‘The numbers are rather troubling. We have today nearly a third of our youngsters at risk of being obese or, in fact, are obese in our schools,’ he said in a conference call Thursday [audio replay available here]. He added: ‘If we do not get our hands around the obesity epidemic in the United States by the year 2018, we will face nearly $344 billion of additional health-care costs. That’s money we won’t be able to spend on innovation and creating jobs and improving our education system.’”

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The rule has been in development for several years, but USDA published it now because the Healthy, Hunger-Free Kids Act passed by Congress and signed by President Obama in December will provide additional resources to the schools, Agriculture Secretary Tom Vilsack said in a call with reporters. USDA is seeking input on the proposed rule from the public through April 13, 2011. Vilsack said he hopes the schools will begin to make changes by the beginning of the 2011 school year next fall.”

The Department of Agriculture also provided a recap of reaction to the release of yesterday’s proposed rules.

Farm Bill: Senate

David Catanese reported yesterday at Politico that, “Saddled with slumping approval ratings, Michigan Sen. Debbie Stabenow says she’ll be proud to campaign with President Obama frequently in 2012.

“‘I’d like him to be there as much as possible. He helped save our economy in Michigan,’ Stabenow said in an interview with POLITICO last week in her Hart Senate office.

Stabenow, who has served in elected positions since age 24, heads into her fight for a third term facing some early warning signs.”

The update indicated that, “With the defeat of Arkansas Sen. Blanche Lincoln, Stabenow will become chair of the Agriculture Committee, which takes the leading role in crafting the farm bill.”

Sanjay Talwani reported yesterday at the Independent Record Online (Helena, MT) that, “The Farm Bill is coming up for reauthorization by Congress in 2012, and the massive policy piece will have consequences for Montana farmers and ranchers, with ripple effects across the state and its economy.

“A group of about 10 people representing farmers, ranchers, food retailers and others on Wednesday told Sen. Jon Tester, D-Mont., what the government can or shouldn’t do to keep food production viable here and what the farmer-senator can tell his Washington colleagues when the bill comes up.

First, there’s ethanol; most in the room didn’t like it.”

The article added that, “Feed costs ‘have gone through the roof’ over the past four years or so, said Bruce Samson, president of the Montana Pork Producers Council and Montana Hog Marketing Association.”

Tester noted that ethanol production doesn’t seem to result in a net energy gain. ‘That’s a real problem,’ he said.”

“In a meeting earlier in the day with the Independent Record editorial board, Tester noted that while he is not on the Senate Agriculture committee, despite being one of only two farmers in the Senate, he will play an active role in lending background and credibility to the process,” yesterday’s article said.

Farm Bill: Budget and Policy Issues

Erik Wasson reported yesterday at The Hill Online that, “GOP appropriators plan to cut federal agency budgets and steer administration policy by withholding funding from White House priorities, several cardinals on the spending committee said in separate interviews.

“The subcommittee chairmen, who are under orders from GOP leaders to craft a spending-cut package for floor action at the end of January, met with staff for the first time this week to start identifying cuts.”

Mr. Wasson added that, “Farm subsidies and the Commodity Futures Trade Commission (CFTC) will come under scrutiny from Rep. Jack Kingston (R-Ga.), the new chairman of the Agriculture subcommittee.

“The Wall Street overhaul tasked overseeing the swaps market with the CFTC, which needs more money to carry out its new duties. Kingston suggests more funds will not be forthcoming. He also wants to reduce waste in farm subsidies, and suggests cuts to food stamps and other nutrition programs are a possibility.

“‘We should be tough on red-state policies and blue-state policies,’ he said. ‘We have got to measure everything on the same stick. If there is an agricultural conservation program that is popular in red states, we have to look at it. If there is an inner-city school lunch program popular in blue states, we have to look at that, too.’”

AP writer Ray Henry reported today that, “The nation’s biggest farm lobbying group supports a balanced budget. It’s against tax increases and says the federal government needs to tighten its belt.

“Just don’t ask its members where the government should trim billions of dollars in agriculture spending — they can’t agree.

Despite warnings about belt-tightening and record federal deficits, delegates to the American Farm Bureau Federation left their annual convention this week without making major suggestions on where Congress should trim spending in the next Farm Bill, which sets federal funding for agriculture.”

Mr. Henry noted that, “Senior Farm Bureau leaders, a ranking senator and even U.S. Agriculture Secretary Tom Vilsack signaled this week that cutbacks are likely as the aftermath of the Great Recession pushes U.S. government deficits to levels last seen during World War II.

“‘We have a responsibility, even an obligation, as an organization with great political and policy influence, to weigh in and help find solutions to these problems facing our nation,’ Farm Bureau President Bob Stallman told the convention in his opening address. He urged his fellow farmers to ‘make choices and establish priorities.’

“It didn’t happen.”

Today’s article stated that, “Some farmers signaled a willingness to compromise to save the U.S. money. They suggested individual farmers should pick which safety net program they want from the federal government but not take assistance from multiple programs.

“Money saved under that plan could be used to expand agriculture insurance and price protection for all farmers, said Craig Lang, who leads the Iowa Farm Bureau and helped draft the proposal. Farmers with better insurance would be protected from problems that hit their wallets but are beyond their control, such as disease outbreaks and drought.”

“But the proposal was ripped apart by other delegates, especially Southern farmers. They prefer direct payments from the federal government — one part of the existing safety net — and have complained that insurance premiums are too high for the benefits they receive.”

American Farm Bureau President Bob Stallman spoke on Wednesday’s edition of the AgriTalk Radio Program with Mike Adams and provided a brief recap of the group’s annual meeting. In a portion of his remarks (MP3- 1:38), Mr. Stallman commented on budget concerns and dairy issues. For more background on dairy issues and the Farm Bill see this recent Congressional Research Report, “Previewing Dairy Policy Options for the Next Farm Bill,” by Dennis A. Shields (December 17, 2010).

Meanwhile, Tom Steever reported yesterday at Brownfield that, “Kansas State University Agricultural Economist Barry Flinchbaugh says agriculture is contributing to deficit reduction by shouldering decreases in federal commodity program spending.

“The venerable ag and political pundit says the Deficit Reduction Commission calls for a 10 percent cut in farm spending in the 2012 farm bill, which he says agriculture can live with.

“‘The point that needs to be made is that in the year 2000 we spent $32 billion on commodity programs; we’re now down to roughly $10 billion,’ Flinchbaugh told Brownfield, during a recent interview. ‘If that happened across the board in the U.S. government we would be talking about what to do with our surplus.’”

USDA: Staff Change

John Holland and Robert Rodriguez reported on Wednesday at The Modesto Bee Online that, “Gov. Jerry Brown on Wednesday named Karen Ross, the former president of a wine industry group, to lead the California Department of Food and Agriculture.

Farm leaders around the state hailed the selection of Ross, who has been chief of staff to U.S. Agriculture Secretary Tom Vilsack for the past year.

“‘Karen Ross is a well-known and dedicated advocate for California’s diverse and dynamic agriculture,’ said Modesto-area nut grower Paul Wenger, president of the California Farm Bureau Federation, in a news release.”

McClatchy writer Michael Doyle reported yesterday that, “Karen Ross’s departure for California’s leading farm job will leave the nation’s biggest farm state scrambling for a new Agriculture Department champion at a very delicate time.

Ross’s current position as Agriculture Secretary Tom Vilsack’s chief of staff has made her the best-placed Californian at the $140 billion-a-year department. That means her new appointment to head the California Department of Food and Agriculture is a mixed blessing for the state’s farmers and lawmakers.

“‘It’s an incredible opportunity for her,’ Dan Haley, a lobbyist for California raisins, dates, walnuts and other crops, said Thursday, ‘but suffice it to say, it’s a deep hole for California agriculture here.’”

Mr. Doyle explained that, “Californians haven’t yet rallied around a new consensus Agriculture Department leadership candidate to help fill the gap left by Ross’s departure. In 2008 and 2009, by contrast, California farm organizations and lawmakers had united behind Ross as a consensus candidate for an Obama administration appointment.

“‘California has always fought to get a Cabinet position or, as a consolation prize, to get the deputy position,’ noted Scott Nishioki, chief of staff for Rep. Jim Costa, D-Calif.

“Obama, though, chose the Iowa resident Vilsack and Massachusetts resident Kathleen Merrigan for the secretary and deputy secretary slots. Vilsack brought Ross back as an adviser and then, starting last January, as his chief of staff.”

Ag Economy

AP writer Sandy Shore reported yesterday that, “Corn prices extended a rally Thursday as Argentina’s crop appeared to be too damaged to save, despite a forecast for rain in the South American country.

“Some of Argentina’s key growing regions have been baking in dry weather for weeks. The rain could provide some relief for soybean crops but may not be enough to avert damage to the corn crop, which is farther along in the growing season.”

In March contracts, corn rose 11.5 cents to settle at $6.425 a bushel. Soybeans edged up a penny to $14.16 a bushel. Wheat gained 13 cents to $7.8350 a bushel,” the article said.

Cheryl Anderson reported yesterday at DTN (link requires subscription) that, “Feed grain prices will be a big factor this year in determining whether beef, dairy, poultry and swine producers across the nation are prosperous.

“Some analysts believe the livestock industry could be looking at $5 to $6 corn for much of 2011, cutting into profit margins and increasing the need for risk management.”

Gregory Meyer reported yesterday at The Financial Times Online that, “Guessing which crops will win the annual ‘battle for acreage’, using government crop statistics and historical price ratios to forecast how much land will sprout corn stalks or soyabean plants, is especially fraught this year. Stocks of corn and soyabeans are set to fall to the lowest levels in more than a decade with prices at 30-month highs. Because the US exports half the world’s corn and a third of the world’s soyabeans, changes in acreage, and hence output, have a huge impact on global commodity supplies.

“Other crops join in the contest. These include cotton, the prices of which are at record highs of more than $1 a pound.

“But limits on cultivable land will this year make plantings a zero-sum game, increasing one crop only at the expense of others. Rabobank, one of the world’s leading agribusiness lenders, says this year’s battle ‘will be one of the fiercest in history’”.

The FT article added that, “With corn and soyabean socks tight, however, even small adjustments can make a big difference in supplies.

“‘The implications are much greater this year than most, because just a few million acres one way or another in an individual crop can mean supplies stay very limited or we see some rebuilding of inventory,’ says Darrel Good, agricultural economist at the University of Illinois.”

And Gregory Meyer, Javier Blas and Jack Farchy reported on Wednesday at the FT Online that, “The world has moved a step closer to a food price shock after the US government surprised traders by cutting stock forecasts for key crops, sending corn and soyabean prices to their highest level in 30 months.

“The price jump comes after the UN’s Food and Agriculture Organisation warned last week that the world could see repetition of the 2008 food crisis if prices rose further. The trend is becoming a major concern in developing countries.

“While officials are drawing comfort from stable rice prices, key for feeding Asia, they warn that a sustained period of high prices, especially in grains such as wheat, would hit poorer countries. Food price hikes have already led to riots in Algeria and Mozambique.”

Meanwhile, an update from the Federal Reserve Bank of Kansas City stated yesterday that, “Farmers have significantly increased their debt levels in recent years. Since 2004, real farm debt has risen nearly 5 percent annually, the fastest increase since the prelude to the 1980s farm debt crisis. The latest issue of the Main Street Economist examines the concentration of debt and farm financial stress across U.S. producers. It also considers how financial stress would be affected by an abrupt surge in interest rates or a drop in farm income.” To read the complete article, “Debt, Income and Farm Financial Stress,” by Brian C. Briggeman, just click here.


A recent news release from Iowa GOP Senator Chuck Grassley stated that, “Sen. Grassley] today responded to comments from two senators that a tariff on ethanol imports likely violates international trade rules, as Brazil argues in opposition to U.S. ethanol policy. Grassley comment:

“‘This isn’t a question for debate. The highest authority on U.S. trade policy said more than two years ago that the U.S. ethanol tariff is clearly permitted under World Trade Organization rules. Besides, the United States already provides generous duty-free access to ethanol from Brazil and other countries imported under the Caribbean Basin Initiative, but the CBI cap has never once been filled. In fact, as of December 20, Brazil and other countries filled the cap for 2010 less than 1 percent.’

“A letter from then-United States Trade Representative Susan Schwab to Grassley concluding that the U.S. ethanol tariff is WTO-compliant is available here. A letter from Grassley to Schwab is available here.”

Keith Good