FarmPolicy

September 18, 2019

Farm Bill; Ag Economy; Regulations; Climate; 1099 Vote; and Trade

Farm Bill: Background- Budget and Spending Issues

Mike Lillis reported yesterday at The Hill Online that, “House Democratic leaders on Wednesday urged Congress to ramp up spending on research and infrastructure projects for the sake of job creation, while also vowing ‘a laser-like focus’ on deficit reduction.

“The message echoes that delivered by President Obama in last month’s State of the Union address, but sets Democrats on a collision course with Republican leaders, who say increases in federal spending will drown out investment and job creation in the private sector.”

The Hill article pointed out that, “Republican leaders, meanwhile, have insisted that the federal government has little role to play in the economic recovery aside from getting out of the way of private enterprise. They’re urging Congress to cut taxes, slash federal spending – including emergency aid to states and the unemployed – and scale back regulations they say are preventing private-sector businesses from hiring new workers.”

Reuters writers Alister Bull and Richard Cowan reported earlier this week that, “President Barack Obama on Tuesday spelled out that his upcoming budget [to be released on February 14] will seek a ‘responsible’ path to reducing U.S. debts over time, while lawmakers pushed for a summit to tackle the problem.

“Obama discussed ‘tough choices’ with his cabinet to be laid out in the administration’s budget proposal for 2012, alongside investment he wants to spur hiring and growth.”

The Reuters article added that, “On Capitol Hill, Senate Budget Committee Chairman Kent Conrad repeated his call for a White House-Congress summit on long-term deficit reduction. He cautioned that his committee might have to craft one on its own if this option was ignored.”

Meanwhile, Jeffrey Sparshott and Jeff Bater reported in today’s Wall Street Journal that, “Citing better-than-expected tax receipts, the U.S. Treasury Department on Wednesday extended its estimate of when the country hits the debt ceiling to somewhere between April 5 to May 31.”

Farm Bill: Background Issues

The American Farm Bureau Federation, the National Cattlemen’s Beef Association, and the American Sugar Alliance all recently expressed delight that Kansas GOP Senator Pat Roberts will be the new Ranking Member of the Senate Agriculture Committee. And yesterday, Sen. Roberts announced several senior Ag Committee staff selections– all of them have some ties to Kansas.

Agricultural Economy

Liam Denning reported in today’s Wall Street Journal that, “The global wheat market is caught between freezing winds and a sirocco. Prices, up 13% since the start of December, likely will keep rising.”

The Journal article explained that, “Winter wheat in the ground ideally has at least 4 inches of snow to insulate it against ‘winter kill,’ where freezing temperatures damage the crop, according to Joel Widenor of consultancy Commodity Weather Group. He says most areas of the wheat belt have less than 2 inches of cover now, and he cannot remember such a combination of thin cover and freezing weather in over 15 years. Another mass of cold air is forecast to descend next week.”

Javier Blas reported yesterday at The Financial Times Online that, “Prices of agricultural commodities have jumped to new highs, with sugar hitting a 30-year peak, as global weather conditions continued to adversely affect production prospects.

“Food commodities traders and agriculture officials increasingly believe that the worst effects of the current spike in agriculture inflation are still to be felt, both in terms of further price rises and the potential for civil unrest.”

In a separate FT article from yesterday, Mr. Blas indicated that, “The cost of commodities such as wheat, corn and soyabean is likely to surge even more as demand remains very strong, while some poor countries hoard supplies and the weather continues to be a handicap, particularly in Latin America.”

Anthony Deutsch and Taufan Hidayat reported in yesterday’s Financial Times that, “Indonesia’s authorities are being forced to import large quantities of rice as the country’s own production has been hit by heavy rain, heightening fears of more price inflation.”

John Revill reported yesterday at The Source Blog (The Wall Street Journal) that, “Commodity prices are going up, but when will the global food companies dare to pass on rising cocoa and wheat increases to consumers stumbling out of tough economic times?

“In December, the Food and Agriculture Organization of the United Nations Food Price Index smashed past its June 2009 peak, reflecting increases in world prices of all commodities. Particularly high was the FAO Cereal Price index, which includes staples such as rice, wheat and maize, which were 39% higher than a year earlier.”

Mr. Revill added that, “Worried perhaps about the impact on fragile consumer confidence, nobody wants to go first.

“‘Raising prices for the consumer is the last thing you do,’ Nestle’s chief executive Paul Bulcke told The Source at an event in Switzerland. ‘You have to play all your other cards first.’”

Meanwhile, Bloomberg writer William Davison reported yesterday that, “Africa’s increased investment in agriculture over the past few years has left it in a better position to weather the jump in global good prices in 2010, the World Bank’s African vice president said.

“Global food costs rose to a record in December on higher sugar, grain and oilseed prices, the United Nations said on Jan. 5, exceeding levels reached in 2008 that sparked riots in African nations including Somalia, Burkina Faso and Cameroon.

“‘The situation is different to 2008-09 when many of the African countries were really caught in a bind,’ Obiageli Ezekwesili said in an interview yesterday in Addis Ababa, the Ethiopian capital. ‘Today what we have is a more ebullient harvest environment.’”

Domestically, Bloomberg writer Elizabeth Campbell reported yesterday that, “Wells Fargo & Co. will boost agriculture lending this year as producer costs climb, said Rod Alt, a senior vice president in the bank’s food and agribusiness division.

“The bank issued $9.4 billion in new U.S. agriculture loans last year, he said, without providing details on how much lending may gain in 2011. He spoke today in an interview at an industry conference in Denver.

“Analysis of borrower balance sheets and cash flow will be ‘critical’ when producers seek more funding as everything from grain to gasoline rises, he said in a presentation at the conference.”

Regulations

Georgia GOP Senator Saxby Chambliss was a guest on yesterday’s AgriTalk Radio Program with Mike Adams. In part, their discussion focused on issues regarding federal regulations and agriculture. Sen. Chambliss discussed recent conversations he had with Office of Information and Regulatory Affairs (OIRA) Administrator Cass Sunstein.

Sen. Chambliss reminded listeners that he and Sen. Ag. Comm. Ranking Member Pat Roberts (R-Kansas) recently submitted several pending federal regulations that could potentially be a significant burden on agricultural producers. To listen to a portion of yesterday’s discussion with Sen. Chambliss and Mike Adams, just click here (MP3- 5:00).

Todd Neeley reported yesterday at DTN (link requires subscription) that, “Last week the state of Vermont was told it would have to rework its total maximum daily load regulations on phosphorous runoff for Lake Champlain, in part to account for future effects from climate change.

Wednesday, a member of the U.S. Senate’s Environment and Public Works Committee grilled EPA Administrator Lisa P. Jackson about the Vermont TMDL during a hearing on development of a regulation for perchlorate in drinking water.”

Mr. Neeley pointed out that, “Sen. John Barrasso, R-Wyo, asked Jackson whether the rejection of the previously-approved TMDL in the Clean Water Act is the first of more to come across the country and whether EPA examines the economic effects of its rulings.

“‘America’s physical and fiscal health is tied to rulings from EPA,’ said Barrasso.

An EPA spokesperson told DTN last week that it is not yet clear what a new TMDL in Lake Champlain will mean to farmers.”

Climate Issues

Reuters writer Timothy Gardner reported yesterday that, “U.S. lawmakers introducing legislation to stop the federal government from regulating emissions blamed for global warming may have a stronger bargaining position now that President Barack Obama wants to pass a clean-energy plan.

“Republicans Fred Upton, chair of the House Energy and Commerce Committee, and Senator James Inhofe readied draft legislation Wednesday that would stop the Environmental Protection Agency from regulating carbon dioxide and other greenhouse gases.”

The article noted that, “A fellow Republican, Senator John Barrasso, introduced a more wide-ranging bill Monday that would also stop the EPA from regulating the gases.

“In addition, Senator Jay Rockefeller, a Democrat from coal-rich West Virginia, reintroduced legislation Monday that would delay the EPA from regulating greenhouse gases for two years.

Obama officials have repeatedly said since last year that the president would veto any legislation seeking to clamp down on the EPA.”

Yesterday’s article explained that, “But analysts said the administration may look to compromise with lawmakers after Obama introduced a Clean Energy Standard in his State of the Union address last month…‘[I]f the Obama administration wants to get legislation done this year on energy that would support his clean-energy goals, one of the things he is going to have to consider compromising on is the EPA and greenhouse gas emissions,’ said Whitney Stanco, an energy policy analyst at MF Global.”

Ben Geman reported yesterday at The Hill’s Energy Blog that, “Senate Environment and Public Works Committee Committee Chairwoman Barbara Boxer (D-Calif.) is issuing a challenge to skeptics of climate change science: Bring it on.

“Boxer said Wednesday that she’s expecting hearings on the issue.

“She said Sen. Sheldon Whitehouse (D-R.I.), who is expected to head the panel’s oversight subcommittee, ‘is working on getting us going with some hearings.’”

And Reuters writer Peter Henderson reported yesterday that, “A San Francisco judge has tentatively ruled that California did not adequately consider alternatives to creating a carbon market, a decision which clouds the premier U.S. climate change program’s outlook.

“California’s so-called cap-and-trade plan is seen as the vanguard of U.S. climate change policy after the U.S. Congress failed to pass a federal system, and the plan’s fate is being watched globally by environmentalists and industry.

“An attorney representing the challenge on Tuesday said the ruling, if finalized, could potentially delay implementation of the cap-and-trade carbon market due to start next year.”

1099 Vote

A news release yesterday from Sen. Ag. Comm. Chairwoman Debbie Stabenow indicated that, “The U.S. Senate today passed an amendment offered by Senator Debbie Stabenow to repeal a burdensome recordkeeping requirement for small businesses in a bipartisan vote of 81-17. Called the ‘1099 requirement,’ this IRS regulation would require small business owners to file an IRS form 1099 for each vendor from whom they make purchases of $600 or more. Many small business owners and national associations have advocated for the repeal of this provision.”

With respect to the vote, Nebraska GOP Senator Mike Johanns stated that, ‘I’m thrilled that after multiple attempts to repeal this burdensome mandate, the Senate has finally done the right thing in voting to repeal it,’ Johanns said.”

Trade

Shailagh Murray reported in today’s Washington Post that, “Senate Finance Committee Chairman Max Baucus (D-Mont.) has a beef with the South Korean trade deal, and it could hurt President Obama’s prospects for winning quick approval of the pact.

“The U.S.-Korea Free Trade Agreement is a key item on Obama’s job-creation agenda, as his chief of staff reiterated Wednesday. ‘We want Korea,’ William M. Daley told reporters at a breakfast organized by Bloomberg News.

But Baucus, whose committee oversees trade issues, is siding with cattle ranchers from his home state who were shut out of the deal. He has pledged opposition until South Korea reconsiders restrictions on the many U.S. beef exports it has barred. Baucus’s stand is a major obstacle to the White House and Republicans who are eager to bring the long-delayed pact to the Senate floor.”

(FarmPolicy Note: Recall that back on August 4, at a Sen. Ag. Comm. hearing on trade and exports, Sen. Baucus highlighted particular aspects of the free trade agreement with South Korea and expressed concerns about these provisions relating to beef. He sought assurances from U.S. Trade Representative Ron Kirk that key provisions on trade relating to beef be included in a final draft and noted that if they were omitted from a final negotiated FTA, he would have to evaluate whether or not to bring the agreement up for a Finance Committee hearing. To listen to this firm exchange from the August hearing on the South Korea FTA and beef, just click here (MP3- 4:02)).

Today’s Post article added that, “‘I don’t support Korea until Korea opens up its market,’ Baucus said in an interview Wednesday. By failing to resolve the beef dispute, he said, ‘they didn’t help at all, the administration or the Koreans.’

Baucus has not said whether he will merely vote against the agreement or will use the full force of his authority as finance chairman to block it indefinitely. The senator said he is working behind the scenes with U.S. trade officials to tweak the agreement to ensure Montana ranchers get a better deal.

“‘When I see that, I’ll support Korea,’ Baucus said.”

Also on the trade front, the Food and Agricultural Policy Research Institute (FAPRI) recently released a report titled, “WTO Domestic Support Measures: How Accounting Rules and Market Circumstances Matter.”

A brief summary of the report posted at FAPRI Online stated that, “WTO negotiations could lead to new commitments to limit domestic agricultural support. The report shows how the implications of a new agreement for U.S. farm programs could be sensitive to accounting rules and market circumstances.”

Keith Good

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