FarmPolicy

September 1, 2014

Farm Bill Issues; and the Agricultural Economy

Farm Bill: Budget Issues- Political Background- FY 2012 Budget Request

Josh Gerstein reported yesterday at Politico that, “President Barack Obama used his first press conference of the year Tuesday to defend his new budget plan against critics who say it doesn’t move quickly enough to cut the federal government’s massive deficit and fails to confront the difficult choices needed to reform ballooning entitlement programs.

“‘You guys are pretty impatient. If something doesn’t happen today, then the assumption is it isn’t going to happen,’ Obama said. ‘My goal here is to actually solve the problem….It’s not to get a good headline on the first day.’”

The article stated that, “Obama denied that by failing to propose major entitlement reforms he was abandoning the plan presented in December by most members of a bipartisan commission he set up to tackle the nation’s grim fiscal picture.”

Jackie Calmes reported in today’s New York Times that, “President Obama conceded on Tuesday that his new budget does not do enough to resolve the nation’s long-term fiscal problems, but he counseled patience, suggesting that he would eventually come together with Republicans on a broad deal.”

Jonathan Weisman and Laura Meckler reported last night at The Wall Street Journal Online that, “Meantime, the center of gravity for addressing long-term federal budget issues appeared to have moved to the Senate.

“Six senators—three Democrats and three Republicans [Mark Warner (D-VA), Dick Durbin (D-IL), Kent Conrad (D-ND), Tom Coburn (R-OK), Mike Crapo (R-ID) and Saxby Chambliss (R-GA)]—hope to finish converting the debt commission’s recommendations into legislative language, according to Senate aides and a lawmaker involved with the process.”

At a Senate Budget Committee hearing yesterday afternoon with Director of the Office of Management and Budget Jacob Lew, Chairman Kent Conrad (D-ND) indicated that there were some items from the President’s budget request that were noteworthy, but he also expressed his support for the fiscal commission deficit reduction plan. While acknowledging that the fiscal commission plan was “not perfect,” he stated that it “provides a better way forward beyond the next two years.”

To listen to a portion of Sen. Conrad’s remarks from yesterday’s hearing, just click here (MP3- 2:36).

Director Lew also appeared yesterday morning before the House Budget Committee where Chairman Paul Ryan (R-WI) expressed concern about the underlying economic assumptions of the executive branch budget request and also questioned why the administration did not significantly address entitlements in the document.

To listen to remarks from Chairman Ryan at yesterday’s hearing, just click here (MP3- 1:27).

In addition, a statement yesterday from GOP House Leaders indicated that, “Our budget will lead where the President has failed, and it will include real entitlement reforms…”

Farm Bill: Budget Issues- Agriculture- FY 2012 Budget Request

Philip Brasher reported yesterday at The Green Fields Blog (Des Moines Register) that, “About 30,000 farmers and landowners nationwide would be affected by tighter income standards and payment limits that the Obama administration wants to impose on farm subsidies, according to the Agriculture Department. That number represents about 2 percent of the total recipients of the $4.7 billion in direct payments that go out each year. Ten percent of that total, or $470 million, goes to Iowa.

That estimate includes the effect of lowering the income eligibility limits for subsidies and of lowering the cap on annual direct payments that an individual can receive. That cap is now $40,000. It would fall to $30,000 under the president’s proposal. That are two limits for adjusted gross income in determining eligibility for payments – one for annual non-farm earnings and one for farm income. The limit on off-farm AGI would drop from $500,000 to $250,000. The on-farm AGI would fall from $750,000 to $500,000.”

Sec. of Agriculture Tom Vilsack was a guest on yesterday’s AgriTalk Radio program with Mike Adams where his discussed the administration’s agricultural budget proposals. To listen to a short excerpt from yesterday’s program, where the Secretary outlined some key parts of the President’s budget request, just click here (MP3- 2:55).

Ledyard King reported on Monday at the Great Falls Tribune (MT) that, “Few [criticisms] were harsher than Sen. Max Baucus, D-Mont., who said the president’s attempts to reduce the deficit seemed to favor urban America.

“‘This budget shows that D.C. bureaucrats don’t understand what’s important for rural America, and that’s why it’s so important that lawmakers have the ability to make funding decisions for their states,’ he said, a critical reference to Congress’ vow to abandon pet-project spending known as earmarks.”

National Farmers Union President Roger Johnson indicated on Monday that, “NFU members understand the importance of balancing the federal budget and reducing the federal deficit. Agriculture and the farm safety net were already cut by $4 billion in 2010 as a result of the Standard Reinsurance Agreement for federal crop insurance programs. NFU will oppose any budget reductions to agriculture programs that are deeper than cuts to other departments.

“The budget document released today by the Office of Management and Budget asserted that farming has been highly profitable in the last decade. However, wild swings in commodity prices have made the last ten years among the most volatile on record for farmers. Government intervention was required to assist several sectors of agriculture, such as dairy and swine, to survive times of low prices and high input costs in just the past several years.

“More importantly, NFU believes that farm policy should be designed to provide support during difficult times. Recent high market prices may lead some to believe that commodity prices will continue long into the future. That conclusion is likely to be very wrong. Every farmer understands that high prices are followed by low prices – and our policies need to recognize that.”

An update Monday at the AgMAg Blog (Environmental Working Group) noted in part that, “The Obama administration’s proposed 2012 federal budget released today targets several wasteful agriculture programs, including cutting $4.25 billion over 10 years from subsidies to large farm operations, wealthy landowners and the crop insurance program. Continuing these subsidies is completely unjustified at a time when growers are profiting from years of record-setting income and commodity crop prices are skyrocketing.”

Ferd Hoefner, Policy Director for the National Sustainable Agriculture Coalition, indicated on Monday that, “We support the thrust of the President’s proposed cut to the per-farm cap for commodity program direct payments from $80,000 a year to $60,000 a year for a married couple. In the face of high commodity prices and an overinflated land market, though, we think Congress should go further by reducing the limit to $40,000 and making the payments and the limit on payments more responsive to economic need.”

Farm Bill: Budget Issues- Political Background- Continuing Resolution Issues

Carl Hulse reported in today’s New York Times that, “Even as the White House threatened a veto, House Republicans pushed ahead Tuesday with their plan to slice tens of billions of dollars from current federal spending, with some arguing for even deeper cuts…[F]or both Republicans and Democrats, this debate is a contentious precursor to coming clashes over raising the federal debt limit and working on Mr. Obama’s budget proposal for 2012.”

The Times article added that, “The current stopgap measure financing the government expires March 4. If the House and Senate are unable to come to an agreement before then or if the financing is not extended temporarily, federal agencies could be shut down. Demonstrating the emphasis Republicans have put on the spending cuts, the spending measure is listed as House Resolution No. 1.”

Janet Hook reported in today’s Wall Street Journal that, “The Republican-controlled House on Tuesday took up legislation to make unprecedented cuts in federal spending this year, opening a freewheeling debate that will showcase the two parties’ views on the size of government in an era of budget deficits.”

The Journal article explained that, “Lawmakers filed hundreds of amendments seeking even deeper cuts after GOP leaders made an unusual decision to lift restrictions on proposing changes to the legislation.”

Ms. Hook added that, “Among the amendments were proposals to block the new health care law, clean air regulations, prisoner transfers from Guantanamo Bay, regulation of the Internet, and on topics that appeared far afield, such as one on the corralling of wild horses and burros.

[House Speaker John Boehner (R-OH)] acknowledged that an unpredictable legislative bazaar lay ahead. ‘We are in some uncharted waters,’ he said. ‘I’m ready to expect—whatever.’”

Farm Bill: Budget Issues- Agriculture- Continuing Resolution Issues

At the DTN Ag Policy Blog yesterday, Chris Clayton pointed out that over 400 amendments to the Continuing Resolution have been submitted and he drew attention to several that related to USDA, EPA, ethanol, and trade.

A news release yesterday from Rep. Earl Blumenauer (D-OR) stated in part that, “As part of reforming America’s agricultural policy and rewarding farmers who grow food instead of commodities, Blumenauer, working closely with Representatives Jeff Flake and Ron Kind, supports amendment language that limit subsidy payments to entities who make more than $250,000 a year, strike conservation payments to farmers who lease their land to oil and gas companies, and restrict funding for the Brazil cotton program in which US taxpayers are paying Brazilian cotton farmers as a result of the distorted subsidies paid to US cotton farmers.”

With respect to ethanol, Andrew Restuccia reported yesterday at The Hill’s Energy Blog that, “A Republican lawmaker has offered an amendment to a House Republican spending bill that would block the Environmental Protection Agency from implementing a program to allow newer vehicles to fuel with higher blends of ethanol in their gasoline.

“Rep. John Sullivan’s (R-Okla.) amendment would block the agency from using funds under the spending bill, which would fund the government through the end of September, on its regulations allowing model year 2001 and newer vehicles to use gasoline containing up to 15 percent ethanol (E15).”

The Hill item added that, “The ethanol industry quickly came out against the amendment. The Renewable Fuels Association (RFA) said ethanol is an important alternative to oil, given the unrest in the Middle East… RFA also criticized an amendment by Rep. Jeff Flake (R-Ariz.) that would block funds for installing blender pumps, which allow ethanol to be blended into gasoline.”

Meanwhile, Daniel Looker reported yesterday at Agriculture.com that, “On the day that President Barack Obama defended his administration’s proposed cuts to federal spending in 2012, farm groups in Washington were fighting to save agricultural programs from even deeper cuts in this year’s 2011 budget.

“Our contacts at the American Farm Bureau Federation and National Farmers Union told Agriculture.com Tuesday that those groups and some 20 others are drafting a letter to all of the members of the House of Representatives, asking that Congress spare the USDA and FDA from cuts that would be two to three times as large as those made to other federal agencies and departments.”

Farm Bill: Personnel and Policy Issues

A news release yesterday from Sen. Debbie Stabenow (D-MI), Chairwoman of the Committee on Agriculture, Nutrition and Forestry, indicated that Jonathan Coppess had been named Chief Counsel for the Committee.

The release added that, “Jonathan Coppess served most recently as Administrator of the Farm Service Agency (FSA) where he oversaw nationwide agency operations including implementation of the safety net programs from the 2008 Farm Bill. Prior to serving as Administrator, he served as the agency’s Deputy Administrator for Farm Programs and previously worked as a Senate aide, focusing on agriculture, energy and environment issues and working extensively on the 2008 Farm Bill. Coppess grew up on his family’s corn and soybean farm in Ohio and earned a law degree from the George Washington University Law School.”

And Agri-Pulse reported yesterday that, “USDA’s Acting Under Secretary for Farm and Foreign Agricultural Services (FFAS) Michael Scuse announced Tuesday that Karis Gutter has agreed to serve as Acting Deputy Under Secretary for Farm and Foreign Agricultural Services.”

Yesterday’s update noted that Scuse also announced “that Val Dolcini, California FSA State Executive Director, will serve as the Acting Administrator for FSA.”

In other news, the House Agriculture Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture held a hearing yesterday to review the various definitions of rural applied under programs operated by the U.S. Department of Agriculture. Testimony from yesterday’s hearing can be found here, while an opening statement from Ranking Member Jim Costa (D-CA) can be found here.

A complete audio replay of yesterday’s hearing can be downloaded here.

At yesterday’s hearing, Rep. Costa asked USDA Dep. Under Secretary for Rural Development Cheryl Cook, “Do you think that the varying definitions of ‘rural’ as they are applied to the Rural Development programs is a workable system, do you think it is need of some repair, or is about time that we look a brand new approach?”

To listen to this very interesting exchange from yesterday’s hearing, just click here (MP3- 5:07).

Meanwhile, a House Ag Comm news release from yesterday stated that, “Today, Rep. K. Michael Conaway (R-TX), Chairman of the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management held a public hearing to further review the Commodity Futures Trading Commission’s (CFTC) efforts to write rules that will implement a new regulatory regime on the derivatives market under title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“This hearing was a continuation from last week’s discussion when the full committee received testimony from Chairman Gary Gensler of the Commodity Futures Trading Commission, as well as five other witnesses, including buyers and sellers of derivatives, and providers of clearing and execution platforms. Today’s panel included additional market perspectives on the potential impact of the more than 30 new regulatory proposals the CFTC has issued since September.”

Agricultural Economy

The Wall Street Journal reported today that, “Farmland values in much of the Midwest are climbing at their fastest rates since the 2008 boom, the Federal Reserve Bank of Kansas City said Tuesday.

“Fueled by rising crop prices, the value of irrigated and nonirrigated cropland across the region known as the 10th District jumped 14.8% and 12.9%, respectively, in the fourth quarter, compared with a year earlier.”

And Howard Schneider reported in today’s Washington Post that, “Rising food prices pushed tens of millions of people into extreme poverty last year and are reaching ‘dangerous levels’ in some countries, World Bank President Robert Zoellick said Tuesday as he released new data showing that the cost of grain and other staples is near a historic high.

“The costs of some key commodities such as wheat have doubled in the past year, and a World Bank index of overall food costs rose 15 percent from October through January. The bank’s food price index, which covers the costs of grain, sugar, food oils and other staples, is just 3 percent below its historic high in 2008 – a level that touched off food riots in several countries.

“Zoellick urged major nations to collaborate on ways to temper the rapid price swings that can lead to shortages in the economically weakest nations and prompt others to stockpile grain or restrict exports.”

Keith Good

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