- FarmPolicy - http://farmpolicy.com -

Farm Bill; Trade; Ag Economy; Biofuels; and Climate Issues

Farm Bill: Political Notes- Budget and Spending

Janet Hook and Siobhan Hughes reported in today’s Wall Street Journal that, “The Republican-controlled House, hours before the State of the Union address, passed a resolution Tuesday calling for more drastic and immediate cuts in domestic spending than envisioned by President Barack Obama in the speech.

“The resolution, approved on a 256-165 vote, calls for House Budget Committee Chairman Paul Ryan (R., Wis.) to dramatically lower the ceiling on government spending in the remaining seven months of the current budget year.

“Seventeen Democrats voted for the measure. No Republicans opposed it.”

The Journal article explained that, “The Republican resolution calls for rolling back spending on domestic, nonsecurity-related programs to 2008 levels or lower. That could cut spending by as much as $100 billion from Mr. Obama’s request for the current fiscal year.”

Today’s article added that, “Republicans’ decisions about where specifically to cut spending to meet their overall target will be made in the coming weeks, as the House Appropriations Committee drafts legislation to extend a government-wide spending bill that expires March 4.

“The legislation needs to be approved by the Senate. The spending cuts are unlikely to be as deep in the Democratic-controlled Senate.”

AP writer Andrew Talyor reported yesterday that, “The immediate issue is how to wrap up the long overdue budget for the 2011 budget year that began in October. A battle over the 2012 battle will follow on a parallel track starting with Obama’s budget submission next month.”

The AP article added that, “‘These cuts will go deep and wide and will hit virtually every agency and every Congressional district in this country, including my own,’ said House Appropriations Committee Chairman Harold Rogers, R-Ky. ‘Every dollar that we cut will have a constituency, an industry, an association and individual citizens who will disagree with us.’”

Also in the legislative branch, Derek Wallbank reported yesterday at the MinnPost Online that, “Rep. Michele Bachmann has outlined an estimated $423 billion in potential federal budget cuts that, on the surface, seem simple, but in practice serve as an object lesson in how tough it’ll be for Congress to make any meaningful budget cuts over the next few years.

“Bachmann’s plan outlined Monday contains several cuts that have been on the conservative docket for years: Eliminating all or most of the Education Department, slashing farm subsidies, privatizing several government agencies and cutting foreign aid.”

According to an outline of Rep. Bachmann’s proposals, agriculture would be cut by $20 billion– with this explanation, “Replace farm subsidies with farmer savings accounts, eliminating the Foreign Agriculture Service, merging and trimming budget of four agriculture outreach and research agencies, and funding the Food Safety and Inspection Service with user fees.”

Meanwhile, Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “The grain and cotton growers that dominate U.S. farm subsidies came out unscathed in the first proposal from some of the most conservative House Republicans to cut spending. Instead, the Republican Study Committee targeted spending for organic farmers, sugar growers and an export promotion program that is popular with fruit and vegetable growers.

The panel made no proposal to cut the biggest single source of farm subsidies – the $5 billion in fixed annual payments that primarily go to growers of corn, soybeans, wheat, rice and cotton. About 10 percent payments go to Iowa alone.

Instead, the committee proposed to eliminate a program that subsidizes the cost of getting certified as an organic farm, packer and processor. The proposal is listed as saving more than $56 million. But a group that backs the program, the Organic Farming Research Foundation, says there isn’t that much there. The 2008 farm bill allocated $22 million for the program over five years and most of that has already been spent, and it may run out of money entirely in the fiscal year that starts this fall, said Ariane Lotti, the group’s policy director.”

Mr. Brasher noted that, “Given the committee’s goal of cutting spending by $2.5 trillion over 10 years, ‘it is remarkable they would try to cut a program with less than $5 million remaining while proposing to let a $5 billion a year program like direct payments go unscathed, especially at a time of high prices’ for commodities, said Ferd Hoefner, policy director of the National Sustainable Agriculture Coalition.”

With respect to spending issues and the executive branch, Jackie Calmes reported in today’s New York Times that, “By proposing a two-year extension to the three-year domestic spending freeze he called for a year ago, President Obama sought to quickly counter Republican demands for deeper cuts to shrink government and reduce annual budget deficits [in his State of the Union Address last night].”

Ms. Calmes pointed out that, “For now, the president would extend a partial freeze of domestic spending that he proposed in last year’s address while increasing the government’s economic ‘investments’ in areas like research and education.”

The five-year freeze in so-called discretionary domestic spending would reduce deficits by more than $400 billion in the 10 years through the fiscal year 2021, the administration said. By comparison, a group representing most House Republicans last week called for cutting $2.5 trillion over that decade.”

The Times article added that, “[T]he president declined to embrace any of the recommendations of a bipartisan majority on the fiscal commission he created last year, and which finished in December…[T]he naysayers on the commission included its three House Republicans, including Representative Paul D. Ryan of Wisconsin, the new chairman of the House Budget Committee, who delivered the Republican response to Mr. Obama on Tuesday night. They said the proposed cuts were not deep enough.”

(Note: Recall that the Debt Commission report included a reduction in federal farm spending of $1 billion annually).

Mike Lillis reported today at The Hill Online that, “Liberal House Democrats responded warily Tuesday to President Obama’s call for a five-year freeze on discretionary spending, voicing concerns that it could undermine the very investments the president says are crucial to job creation.”

More specifically on the President’s address last night, Philip Brasher reported last night at the Green Fields Blog (Des Moines Register) that, “President Obama used his state of the union address to call for funding new research into biofuels and mandating that 80 percent of the nation’s electricity in 2035 come from clean sources, including nuclear and natural gas as well as wind and solar.

“To fund new energy development, Obama called for eliminating subsidies that go to the oil industry. ‘I don’t know if you’ve noticed but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy let’s invest in tomorrow’s,’ Obama said.

Obama did not mention ethanol or biodiesel specifically but instead said that ‘with more research and incentives we can break our dependence on foreign oil with biofuels.’”

Iowa Democratic Rep. Bruce Braley appeared in an interview with Wall Street Journal writers last night after the State of the Union that was posted at the paper’s webpage. He discussed ethanol as a possible option to fossil fuels. To watch the entire interview, just click here; to listen to his remarks regarding ethanol subsidies, blending pumps, and food inflation, just click here (MP3- 1:27).

Farm Bill: House Agriculture Committee

A news release yesterday from the House Ag Committee stated that, “Today, Members of the House Agriculture Committee met to formally organize and to adopt the Committee’s rules for the 112th Congress.

The Committee rules approved today are designed to enhance transparency and increase accountability. One addition provides that the text of bills will be posted online for the public no fewer than 24 hours prior to a business meeting. Another addition provides that both live and archived webcasts of hearings and markups be made available online.

“The Committee also ratified the members and leadership of all six subcommittees. Agriculture Committee Chair Frank D. Lucas (OK) and Ranking Minority Member Collin C. Peterson (MN) serve as ex officio members of all subcommittees.”

A full list of subcommittee assignments can be viewed here.

Farm Bill: Conservation

Katie Nickas reported earlier this week at AgriNews Online that, “There is a public dilemma between conservation programs and production agriculture resulting from high commodity prices and funding shifts in farm programs.

“‘Conservation is in real trouble with fewer people believing in public goods,’ said Purdue University agricultural economist Otto Doering. ‘We think of conservation and education as public goods, but society is adopting a much narrower view of public goods.’”

The article noted that, “‘We see the majority in Congress particularly talking about saving $100 billion, and within agriculture, the commodity programs have the most political support,’ Doering said.

“‘For better or worse, we can expect the conservation programs to be on the short end of the stick in all of this.’”

Farm Bill: Crop Insurance

A news release yesterday from USDA’s Risk Management Agency yesterday stated that, “RMA Deputy Administrator Michael Alston spoke to crop insurance agents and other agribusiness professionals on January 18 at the North Dakota State University Extension Service’s 18th Annual Crop Insurance Conference in Fargo, ND.

“In his presentation, Alston gave a general crop insurance update and spoke about the new Standard Reinsurance Agreement (SRA) and other RMA accomplishments of the past year. Alston also touched on the topics of program integrity and technology, and agent compensation.”

Trade

Yesterday the House Ways and Means Committee held a hearing “on the pending free trade agreements with Colombia, Panama, and South Korea and the creation of U.S. jobs.”

Witness testimony, included remarks from Bob Stallman, the president of the American Farm Bureau Federation (AFBF), can be found here; and, a related news release regarding yesterday’s trade hearing from the AFBF is available here.

AP writer Jim Abrams reported yesterday that, “Rep. Dave Camp, the House Republican responsible for overseeing trade policy, said Tuesday that Congress should act on all three pending free trade agreements within the next six months.

“Camp, who chairs the Ways and Means Committee, told a hearing that completion of the trade deals with South Korea, Colombia and Panama was ‘a sure-fire way to create American jobs by growing U.S. exports of goods and services.’”

Also at yesterday’s hearing, Rep. Earl Blumenauer (D-OR) highlighted U.S. domestic farm subsidies and the impact these programs have had on past Free Trade Agreements (FTAs). He specifically highlighted the Brazil WTO Cotton Case and the negotiated settlement the two countries entered into last spring, which resulted in the U.S. paying $147.3 million annually to Brazil. Rep. Blumenauer queried each witness about the possible impacts retaliatory tariffs stemming from farm disputes could potentially have on their industry. To listen to this complete discussion from yesterday’s hearing, just click here (MP3- 5:50).

Rep. Wally Herger (R-CA) questioned the panel about agricultural exports and jobs and explored how passage of the three FTAs could boost domestic economic activity. To listen to a portion of his remarks, which included a discussion with Mr. Stallman, just click here. (MP3- 3:02)

Similarly, Rep. Charles Boustany (R-LA) highlighted potential job creation stemming from agriculture as a result of the implementation of the three FTAs and the impact this could have on rural America. His remarks, which can be heard here (MP3- 3:32), also included answers from questions addressed to Mr. Stallman.

Meanwhile, a news release yesterday from Sen. Pat Roberts (R-KS) stated that, “[Sen. Roberts today joined U.S. Senator Mike Johanns (R-NE) in introducing a resolution expressing that it is in the security, economic and diplomatic interests of the United States to immediately implement the Korea Free Trade Agreement, Colombia Trade Promotion Agreement and the Panama Trade Promotion Agreement.”

Agricultural Economy

P.J. Huffstutter reported in today’s Los Angeles Times that, “Get ready for higher grocery store bills and restaurant checks.

“The U.S. Department of Agriculture’s Economic Research Service released its 2011 Consumer Price Index analysis for projections on food prices this week, and reported that overall food prices are expected to increase 2% to 3% this year.”

And Dow Jones news reported yesterday that, “Surging food and commodity prices threaten world economic growth, the secretary-general of the Organization for Economic Co-operation and Development said Tuesday.”

Biofuels

Reuters writers Tom Doggett and Chuck Abbott reported yesterday that, “A bipartisan group of senior farm-state senators planned to introduce a bill on Tuesday that would put more ethanol-fueled vehicles on America’s highways and provide government aid for pipelines and pumps to dispense the biofuel.”

The bill would require half the new cars and light trucks made in United States during 2014 and 2015 to be ‘flex-fuel’ vehicles that can run on higher blends of ethanol than regular vehicles,” the Reuters article said.

Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “Sen. Tom Harkin, D-Ia., is bringing back legislation that would force auto makers to fit cars to run on ethanol, require the installation of ethanol-capable at service stations and provide loan guarantees for ethanol pipelines. The bill is co-sponsored this year by South Dakota Democrat Tim Johnson and Minnesota Democrats Amy Klobuchar and Al Franken.”

Climate Issues

Andrew Restuccia reported yesterday at The Hill’s Energy Blog that, “A coalition of Republicans will outline a proposal in the coming weeks to permanently block the Environmental Protection Agency from regulating greenhouse gas emissions.

“House Energy and Commerce Committee Chairman Fred Upton (Mich.), the panel’s energy subcommittee Chairman Ed Whitfield (Ky.) and Sen. James Inhofe (Okla.) said Tuesday that they are working together on the proposal.”

Keith Good