Farm Bill: Background Issues
A news release yesterday from U.S. Senator Pat Roberts (R-Kansas) stated that, “[Sen. Roberts], a national leader in agriculture, today made history as he was voted the top Republican on the U.S. Senate Committee on Agriculture, Nutrition and Forestry. Roberts goes into the history books as the first Member of Congress to serve as both chairman and ranking member of the House Agriculture Committee and ranking member of the Senate Agriculture Committee.
“In this new post as the ranking Republican, Roberts continues his leadership on behalf of Kansans, rural communities and production agriculture.”
The release added that, “‘I am honored to continue working on behalf of America’s farmers and ranchers in this new position,’ Roberts said. ‘Our nation is blessed with the safest, highest-quality and most affordable food and fiber in the world. I look forward to working with Chairwoman Debbie Stabenow. We have a history of working together on the Agriculture and Finance Committees, and I know we will make a great team for American Agriculture.’
“‘Production agriculture faces a serious challenge: doubling output over the next 40 years to meet global hunger demands. Yet our producers face critical hurdles in meeting this challenge. Often, the federal government is the source of their frustration. I look forward to being a champion for those who feed a troubled and hungry world, while looking for new ways we can propel our industry and our rural communities into the next generation.’”
Yesterday’s update noted that, “Roberts’ priorities for the 112th Congress will focus on maintaining the production agriculture safety net, expanding trade opportunities for farmers and ranchers, conducting oversight of regulations that threaten the competitiveness of America’s farmers, and maintaining the security and science based sustainability of food and agriculture sectors.”
In news regarding the Chairwoman of the Senate Ag Committee, Debbie Stabenow (D-Michigan), Nathan Hurst reported yesterday at The Detroit News Online that, “Republicans have vowed to dim Sen. Debbie Stabenow’s re-election chances in 2012, but with $2 million already in the bank, the Lansing Democrat leads the pack of Michiganian lawmakers on Capitol Hill in terms of cash on hand.
“That hefty sum includes $337,912.86 in individual contributions made during the last six weeks of 2010 plus another $198,750 in donations from political action committees, filings made with the Federal Election Commission in Washington late Monday show.
“The war chest bounty is a big boost for Stabenow, who has signaled she plans a run for a third term in 2012, leaving herself a target for the GOP.”
GIPSA (Grain Inspection, Packers and Stockyards Administration) Proposed Rule
Carolyn Lochhead reported on the front page of Sunday’s San Francisco Chronicle that, “Great herds of tule elk once grazed the rolling grasslands of California’s coast and Sierra foothills. Today it is cattle grazing on private ranches that preserves 20 million acres of incomparable landscape.
“The ranches are under pressure from many directions, including the consolidation of the meatpacking industry that has left few options to slaughter cows in California.
“Modern packinghouses and feedlots, concentrated east of the Rocky Mountains, have become a symbol of factory farming and have left California ranchers – conventional and grass-finished – in a pinch because most of the two-dozen major slaughterhouses that existed in California in the 1980s are gone.”
The article stated that, “The Obama administration has proposed a rule that aims to address market abuses and rescue cattle from the fate of hogs and poultry, where growers work under one-sided contracts with large meat packers, a relationship described as ‘feudal’ by Robert Taylor, an agricultural economist at Auburn University.
“The rule, now under review, generated 65,000 comments and a fierce blowback from packers. It is based on the Packers and Stockyards Act of 1921, which focused on the meatpacking cartel of a century ago. The change is meant to give more power to farmers in contracting and to revive shrinking auction markets.
“Supporters of the rule see it as a first assault on the industrialized food system; it is also integral to Agriculture Secretary Tom Vilsack’s efforts to combat the ‘hollowing out’ of rural towns by agribusiness.”
Sunday’s Chronicle article added that, “But many California ranchers, some of them at the vanguard of the ‘natural beef’ movement, worry that the proposed rule could interfere with their efforts to provide the branded beef consumers increasingly want. Such beef is often grown under contract.
“‘It looks to me like ranchers who have tried to do a good job genetically, gone through organic certification, raised antibiotic-free and hormone-free beef – under the proposed rule I don’t know if we’d be getting any premium,’ said Darrell Wood, owner of Leavitt Lake Ranches in Vina (Tehama County), which has been in his family since the 1860s. Wood won a national conservation award and raises grass-finished beef for Whole Foods.
“Jim Warren, who raises as many as 2,000 cattle on leased land in the Central Coast and operates the 101 Livestock cattle auction in Aromas (San Benito County), selling 30,000 and 50,000 head of cattle a year, is also skeptical.
“‘This rule looks back, not forward,’ he said. ‘Maybe there was some manipulation … that could have been corrected a long time ago and wasn’t. But the reality is we need to look forward.’”
Sunday’s article also pointed out that, “Last year, [Agriculture Secretary Tom Vilsack] and Attorney General Eric Holder held an unprecedented series of workshops across the nation to examine livestock, dairy and seed markets and concentration among supermarket chains. Christine Varney, the assistant attorney general for antitrust, said her office has ‘several investigations’ following leads from the workshops.
“Last summer, the Agriculture Department’s Grain Inspection, Packers and Stockyards Agency – long criticized by the government’s own watchdogs for its failure to enforce the Packers and Stockyards Act – proposed the new rule to toughen enforcement, following congressional orders in the 2008 farm bill.”
Sunday’s San Francisco Chronicle also included an article titled, “Small farmers have poor record in antitrust cases.”
And recall that the House Agriculture Committee held a hearing this past summer on the proposed GIPSA rule, for a summary of that meeting see this FarmPolicy.com update from July 21 (audio clips and links included).
Ron Hays reported yesterday at the Oklahoma Farm Report Online that, “According to Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel, the much anticipated USDA Cattle report confirmed that the beef industry is beginning 2011 with a small cow herd, limited replacement heifers and even tighter feeder supplies. The beef cow herd decreased 1.6 percent in 2010 to a January 1, 2011 total of 30.9 million head. The inventory of beef replacement heifers dropped 293 thousand head to 5.16 million head available as of the beginning of 2011. Despite smaller replacement heifer inventories, estimated feeder supplies decreased by 3.3 percent compared to a year ago, as a result of aggressive feedlot placements late in 2010. The question of how much herds expand in 2011will affect beef production in both the short run and the long run.
“Possible beef cow herd expansion in 2011depends on several factors including how aggressively producers are trying to expand and what Mother Nature will allow the industry to do. Both of these are uncertain as producer intentions are not clear and the potential for significant drought continues to grow this winter. More fundamentally, the inventory numbers themselves suggest limits on what is possible and the implications of various expansion scenarios. Herd expansion will depend on the net change in cow numbers that result from cow culling and heifer placement in the herd. Cow culling has been at very high levels the last three years and the percent of the beef cow herd culled in 2010 was the highest level of any time in the last twenty years.”
Purdue University Economist Chris Hurt indicated on Monday that, “A smaller beef herd reported in USDA’s January 1 Cattle inventory estimates provided the cattle markets with even more bullish news. Beef cow numbers continue to fall as producers seem to want out of the business. The continued decline is related to multi-year financial discouragement due to high and volatile feed prices, shortages of pastures in some areas last summer, and developing dry conditions in the southeast and the central and southern plains. Beef cow numbers at 30.9 million head are down two percent over the past year and down six percent since 2005.”
Dr. Hurt added that, “Weather in 2011 and 2012 will probably be the deciding factor determining when the beef cattle industry will shift from liquidation to expansion. Favorable weather that provides above-trend corn, soybean, and wheat crops along with abundant forages, could shift the industry into expansion by 2012. Much lower feed prices would provide strong financial incentives to expand brood cow numbers. Trend yields should provide modestly lower feed prices and calf prices will rise proportionally next fall, providing some financial incentives to expand brood cow numbers. However, below-trend yields, and shortages of forages would keep the industry in a state of contraction with even higher finished cattle prices in 2012.
“Much is riding on 2011 weather for both crop and livestock producers, and for everyone who enjoys multiple meals a day at moderate costs.”
Meanwhile, USDA’s Economic Research Service (ERS) released a report yesterday titled, “How Much Do Fruits and Vegetables Cost?”
An ERS summary of the report stated: “Federal dietary guidance advises Americans to consume more vegetables and fruits because most Americans do not consume the recommended quantities or variety. Food prices, along with taste, convenience, income, and awareness of the link between diet and health, shape food choices. We used 2008 Nielsen Homescan data to estimate the average price at retail stores of a pound and an edible cup equivalent (or, for juices, a pint and an edible cup equivalent) of 153 commonly consumed fresh and processed fruits and vegetables. We found that average prices ranged from less than 20 cents per edible cup equivalent to more than $2 per edible cup equivalent. We also found that, in 2008, an adult on a 2,000- calorie diet could satisfy recommendations for vegetable and fruit consumption in the 2010 Dietary Guidelines for Americans (amounts and variety) at an average price of $2 to $2.50 per day, or approximately 50 cents per edible cup equivalent.”
Regulations- Environmental Protection Agency
A news release last week from Iowa GOP Sen. Chuck Grassley stated that, “[Sen. Grassley] is pressing the Environmental Protection Agency to make a good faith effort to review industry comments, studies, and economic analysis on the impact of proposed rules on dust. Grassley this week sent a letter to administrator Lisa Jackson expressing his concern that excessive dust control measures would slow economic development and impose significant costs on family agriculturalists.”
Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “Sen. Charles Grassley continues his battle against regulations on rural dust level but he says he doubts Congress could block the Environmental Protection Agency from stopping the rules, so he is focused on jawboning agency into back off. His message: ‘When combining, dust happens, and you can’t keep that dust within your property line,’ he told ag reporters on his weekly conference call.
“Enacting legislation on the issue is a long-shot, given that President Barack Obama could veto it, he said. ‘That’s why I’m spending so much time trying to point out that what EPA is doing on fugitive dust is just laughable.’”
Meanwhile, Thomas Sowell, a senior fellow at the Hoover Institute, indicated in a column yesterday that, “Despite the old saying, ‘Don’t cry over spilled milk,’ the Environmental Protection Agency is doing just that.
“We all understand why the Environmental Protection Agency was given the power to issue regulations to guard against oil spills, such as that of the Exxon Valdez in Alaska or the more recent BP oil spill in the Gulf of Mexico. But not everyone understands that any power given to any bureaucracy for any purpose can be stretched far beyond that purpose.
“In a classic example of this process, the EPA has decided that, since milk contains oil, it has the authority to force farmers to comply with new regulations to file ‘emergency management’ plans to show how they will cope with spilled milk, how farmers will train ‘first responders’ and build ‘containment facilities’ if there is a flood of spilled milk.”
Yesterday’s update noted that, “Since there is no free lunch, all of this is going to cost the farmers both money and time that could be going into farming– and is likely to end up costing consumers higher prices for farm products.”
Holman W. Jenkins, Jr. indicated today on the opinion page of The Wall Street Journal that, “The U.N.’s food price index has hit an all-time high. Food price hikes are widely understood to be a trigger of Egyptian upheavals in a country that imports a large share of its grain. Some blame Ben Bernanke. Some blame the Chinese for gobbling up too much of the world’s resources. Not enough attention is focused on the forces of stagnation loose in our world. Agricultural output has been falling behind population growth for almost two decades, and so has productivity.
“In a small way, consider the Obama Agriculture Department’s decision last week to throw up its hands and finally permit the planting of bio-engineered alfalfa.”
Mr. Jenkins noted that, “But organic alfalfa represents about 1% of the market. Functionally, it is not different from bio-engineered alfalfa. Only the label is different. ‘Organic’ alfalfa is fed to ‘organic’ cows so consumers can splurge on milk that says ‘organic’ on the label.
“Shoppers have every right to indulge themselves in this fashion, and farmers to make a buck meeting their need. But should other farmers be stopped from planting a new seed just because it would complicate their niche marketing strategy?”
The Journal column added that, “A similar lawsuit threatens to halt planting of Roundup Ready sugar beets, which account for nearly half of U.S. sugar production…[I]t’s too bad when change upsets somebody’s livelihood, but these lawsuits seek to award organic farmers a civil right not to have their high-end, advertising-created market segment disturbed by industrial progress. Tom Vilsack, the Obama agriculture secretary, twisted and turned for weeks trying to reconcile the interests of organic and mass-market alfalfa farmers. In the end, he gave up and made the right decision: The organic farmers will have to adjust to a reality that has shifted a little bit against them.”
And Chris Clayton reported yesterday at DTN (link requires subscription) that, “With the decision last week to deregulate Roundup Ready alfalfa, farmers who have grown Roundup Ready sugarbeets are watching USDA for a decision and the federal appeals court for a hearing later this month.
“Groups on both sides of the sugarbeet battle, including USDA, have filed briefs with the Ninth Circuit Court of Appeals in San Francisco over a federal judge’s order late last year demanding USDA destroy 256 acres of Roundup Ready sugarbeet seedlings, typically called stecklings. A hearing before a Ninth Circuit panel on the judge’s ruling is set for Feb. 15. The appeals court will likely take several months to issue a ruling.
“USDA officials are expected to decide as early as this week on how the 2011 crop will be treated. USDA announced options in November that included not allowing any planting of Roundup Ready sugarbeets, partially deregulating the crop with restrictions, or requiring permits for the entire Roundup Ready sugarbeet crop, which could be roughly 1.1 million acres. USDA continues to follow a court order to prepare an environmental impact statement that likely won’t be finished until at least May 2012, said Luther Markwart, executive director of the American Sugarbeet Growers Association. Markwart said farmers are waiting to see how USDA will treat this year’s plantings.”
Andrew Restuccia reported yesterday at The Hill’s Energy Blog that, “More than a dozen scientists took aim at climate skeptics in a letter to members of Congress late last week, calling on lawmakers to put aside politics and focus on the science behind climate change.
“In the Jan. 28 letter, 18 scientists from various universities and research centers called on lawmakers to take a ‘fresh look’ at climate change.”