FarmPolicy

August 21, 2019

Budget Issues; Farm Bill; Biofuels; Biotechnology; Ag Economy; and Trade

Budget Issues: Continuing Resolution

David M. Herszenhorn and Carl Hulse reported in today’s New York Times that, “As the strategic jockeying in a fight over federal spending kicked into high gear, the Republican House speaker, John A. Boehner, said on Tuesday that it was up to the White House and the Democrats who control the Senate to agree to at least some Republican-backed cuts to help reach a short-term deal and avoid a government shutdown early next month.

“The House on Saturday approved more than $60 billion in spending reductions, for the fiscal year that runs through Sept. 30, that would hit nearly every area of the government. Not one Democrat voted for the bill, and the White House has threatened to veto it.

Senate Democrats, saying more time is needed to reach a longer-term agreement, are calling for a 30-day extension that would continue to hold spending generally at last year’s levels, but Republicans say that is not enough.”

Today’s article added that, “The stopgap measure now financing the government expires on March 4, and with Congress on recess until next week, lawmakers will have just four days to reach at least a tentative accord or face the prospect of closing down federal agencies — an outcome that both parties say they want to avoid even as they maneuver to blame the other side should it occur.

“The Senate majority leader, Harry Reid of Nevada, said Tuesday that he had asked the Appropriations Committee to draft a 30-day extension of the current stopgap measure that he could bring to the floor next week. But Mr. Boehner and other Republicans quickly rejected the idea, saying that Democrats were stalling to avoid making needed cuts.”

Reuters writers Richard Cowan and Alister Bull reported yesterday that, “The risk of a U.S. government shutdown eased on Tuesday after a top Republican backed a stopgap measure to keep programs funded beyond March 4.

“The White House also expressed confidence that the two parties can agree to keep the government going and avoid a political standoff that could unsettle financial markets and risk mass government layoffs.

“House of Representatives Speaker John Boehner said his chamber ‘will pass a short-term bill to keep the government running — one that also cuts spending,’ if the Democratic-led Senate refused to vote on a tough spending-cut bill that passed the House on Saturday.”

Felicia Sonmez reported yesterday at The Washington Post Online that, “On a conference call with reporters Tuesday afternoon, Reid and Sen. Charles Schumer (D-N.Y.) declined to say whether Senate Democrats would agree to a stop-gap measure that would cut funding below current levels. Schumer said that Reid had ‘offered an olive branch to House Republicans, and they flatly rejected it.’

“While congressional leaders from both parties insist that their goal is not to shutter the federal government, both Democrats and Republicans have been accusing each other of rooting for a shutdown.”

And Jonathan Allen and Carrie Budoff Brown reported yesterday at Politico that, “The X factor in any budget negotiation is the president.

“But with less than two weeks to go before a possible shutdown — and Congress out of session for most of that time — Republicans say Obama and his aides aren’t talking to GOP leaders about a short-term fix.

Boehner gave a flat ‘no’ late Friday when asked whether he had any contact with the White House on the matter. Over the weekend, one of his aides said there’s no staff-level discussion either. And Senate Minority Leader Mitch McConnell’s spokesman said he’s not aware of any White House contacts on a stopgap bill either.”

However, the article added that, “The Obama team sees things differently.

“‘The White House has been in frequent contact with Republican leaders on the whole range of issues confronting us. As part of that process, (chief of staff) Bill Daley and Speaker Boehner had dinner last week,’ a senior White House official told POLITICO. ‘Meanwhile, with regard to the CR, it’s important to note that the House needs to consult with the Senate, since the Senate must pass a bill, too.’

Boehner declined to say whether he had talked to Reid about it, suggesting there has been some cross-Capitol discussion.”

Farm Bill

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “World sugar prices are way above the U.S. support price, but that doesn’t mean there won’t be a battle over the sugar program during the 2012 farm-bill debate.

“Sweetener Users Association leaders said at their annual convention here [San Diego] last week that they intend to challenge the current sugar program, while sugar growers warned users that sugar prices will have to stay high to assure a domestic supply of sugar.

“‘We’re getting hurt’ under the sugar program established in the 2008 farm bill, Randy Green, executive director of the Washington-based Sweetener Users Association, said in an interview. The users group represents candy makers and other companies that use sugar as an ingredient on an industrial level.”

The DTN article added that, “Bill O’Conner, a former Republican policy director for the House Agriculture Committee who is now a senior policy adviser at the Washington law firm of McLeod, Watkinson & Miller, told users during a panel discussion last week that they have a much better chance of achieving changes to their liking in 2012 than in 2008, when the Democrats controlled both houses of Congress.”

“O’Conner noted that for years, growers have successfully defended the program by pointing out that the program, which forces industrial users to pay higher prices for sugar, operates at no cost to the government. But he said tea party freshmen Republicans are committed not only to reducing the budget deficit but to getting the government out of people’s lives — and that the latter goal may mean they will be more willing to change the sugar program.”

Mr. Hagstrom pointed out that, “But Jack Roney, chief economist for the American Sugar Alliance, which represents the beet and cane growers, said in the same panel discussion that all commodity prices have risen, and that if prices do not stay up, growers would shift to other crops and users would lose their domestic source of supply.

“‘We will defend the current program vigorously,’ Roney added in an interview. ‘This is the program that works for us, works for consumers and for taxpayers. I think the users realize that absent our industry they would have a hard time accessing a reliable, safe, high-quality supply on a timely basis.’

“House Agriculture Committee ranking member Collin Peterson, D-Minn., has said he will defend the program in 2012. Senate Budget Committee Chairman Kent Conrad, D-N.D., and incoming Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., are also key sugar program supporters.”

Hembree Brandon reported yesterday at the Delta Farm Press Online that, “U.S. agriculture — and particularly southern agriculture — faces perhaps the most daunting challenge in decades to get its message before Congress and the administration, says Chip Morgan, executive vice president of the Delta Council at Stoneville, Miss.

“With the crafting of the 2012 farm bill in the hands of predominantly non-southern House and Senate Agriculture Committee members, many of them brand new to Congress, ‘our challenge is to make a concentrated effort to educate the new members about the importance of agriculture and to emphasize to them that one policy may not fit all segments of agriculture,’ he said at the annual meeting of the Mississippi Rice Council at Cleveland, Miss.”

The article noted that, “Morgan says he’s frequently asked why agriculture revenue programs are seldom slanted toward southern crops.

“‘You have only to look at the makeup of the ag committees — on the Senate side, committee members are predominantly from Midwest states; only four members are from the South. On the House ag committee, only 17 of 46 members are from southern states.’”

Yesterday’s article added that, “Almost 75 percent of the money for agriculture goes to nutrition programs, Morgan notes, while only 10 percent is for commodity programs and the remainder for research, food safety and other discretionary spending.

“‘Another problem we face in getting across agriculture’s message is that we do not know the ‘go-to guy’ for agriculture in the White House. In previous administrations, there was always someone on the White House staff who knew agriculture that we could work with. In the current administration, we haven’t been able to find that go-to person for agriculture. That’s distressing, because the White House will make the first shot across the bow when it comes to writing the 2012 farm bill.’”

Meanwhile, in remarks delivered yesterday at the Kansas Commodity Classic in Great Bend, Senate Agriculture Committee ranking member Pat Roberts (R-KS) stated that, “But as we begin this ride together, let me be clear: I am not ashamed of production agriculture and you the producers that feed this state, nation, and a troubled and hungry world.

“‘Production agriculture’ is not, should not, and will not be a dirty word on my watch. I will be your champion.”

With respect to budget issues, Sen. Roberts indicated that, “I have made clear to my colleagues that agriculture will do its part. But I have also made clear that any reductions to agriculture spending must be fair and proportional to what all other federal agencies and programs are being asked to give.

I have also made clear that we must maintain a safety-net for our producers and that if we are going to take a hard look at USDA spending everything must be on the table – that includes the 84 percent of current USDA spending that has nothing to do with commodity and conservation programs.”

While the Senate and House are not in session this week, some lawmakers are meeting with constituents back home on Farm Bill issues, including: Sen. Kirsten Gillibrand (D-NY) (news release); Nebraska GOP Senator Mike Johanns (news story); and Rep. Stephen Fincher (R-TN) (news release).

Biofuels

Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “Sen. Chuck Grassley, arguably the most outspoken advocate in Congress for the biofuel industry, said today that he would vote for a deficit-cutting bill even if included some anti-ethanol measures passed by the House.

“He said his vote would be ‘governed by the bigger issue. The bigger issue is whether we’re going to leave this tripling of the national debt to our children and grandchildren and possibly the bankruptcy of our country.’”

Mr. Brasher added that, “A House-passed bill that cuts $60 billion from federal spending includes a measure that would block the Environmental Protection from increasing the amount of ethanol that can be added to gasoline from 10 percent to 15 percent. A second provision would bar subsidies for retrofitting service stations to sell higher amounts of ethanol.

“Both measures, as is the bill as a whole, are limited to the 2011 budget year, which runs through Sept. 30.”

In a related article with implications for biofuels, Liam Pleven, Jonathan Cheng and Guy Chazan reported yesterday at The Wall Street Journal Online that, “Libya’s descent into violence rattled global financial markets Tuesday, sending oil prices surging to their biggest gain in more than two years and driving world stock markets sharply lower.

“U.S. crude oil prices soared 8.5% to $93.57 a barrel as worries grew that the troubles in Libya may cut off some of the world’s oil supplies.”

Biotechnology

Clive Cookson reported yesterday at The Financial Times Online that, “The global area planted with genetically modified crops increased by 10 per cent last year to 148m hectares – equivalent to about 10 per cent of the world’s total area of cropland.

“The increase was the second largest recorded since the commercial growing of GM crops started in 1996.

“The annual survey by the International Service for the Acquisition of Agri-biotech Applications (ISAAA) found that 15.4m farmers in 29 countries planted GM crops last year.”

And Caroline Henshaw reported yesterday at The Wall Street Journal Online that, “European Union officials Tuesday approved proposals to allow trace amounts of unauthorized genetically modified, or GM, material in animal-feed imports, an EU spokesman said.

“In a move campaigners say may signal a shift in the bloc’s zero-tolerance attitude toward unauthorized biotechnology, member states will now allow shipments to include traces of GM material of up to 0.1%.”

“The EU’s feed industry relies on imports for 80% of its needs, but the world’s largest suppliers—Argentina, the U.S. and Brazil—are all widespread cultivators of GM crops, making avoiding even trace contamination virtually impossible,” the Journal article said.

Agricultural Economy

Sameer Mohindru and Patrick Barta reported in today’s Wall Street Journal that, “A rush by farmers to expand plantings in many parts of the world is raising expectations that food prices may retreat as early as the second half of this year if weather conditions remain favorable.

“The global rally in food prices over the past year has pushed prices of wheat, corn and soybeans to their highest levels since 2008, when food riots spread across the globe. This time, concerns over food costs have contributed to the latest unrest in the Middle East, and left many national governments scrambling to find solutions to keep disturbances from spreading further.

“But the most powerful response seems to be coming from farmers themselves, especially in places like Russia, Brazil and Australia.”

The Journal article added that, “A number of analysts still believe it is much too early to call a turn in the market, especially if some of the new plantings don’t come through—which is always a big risk in agriculture, either because of weather or other factors. Farm production is already at or close to record levels in some countries, and it may prove harder to expand output than expected.

It is also possible that other inflationary forces—including an increase in oil prices, or rising wages in some parts of the world—could filter back through the agricultural sector and keep prices from easing.”

Trade

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Sen. Charles Grassley, R-Iowa, basically said Tuesday the Obama administration should call the bluff on Senate Finance Committee Chairman Max Baucus, D-Mont., when it comes to the South Korean Free Trade Agreement.

“Baucus has said he won’t support the FTA because he doesn’t think the Koreans are providing enough expanded access and easing restrictions on U.S. beef. That’s a problem because Baucus’ committee has to clear the FTA out of committee to advance it in the Senate.”

Mr. Clayton noted that, “If Congress doesn’t take action on an FTA within 90 days after it’s sent by the administration the FTA dies.

“Grassley, however, has prodded the administration to send the South Korean FTA to the Senate and get it passed quickly. Grassley said it would be an interesting showdown in the administration sends the FTA to Congress and nothing happens because Baucus wants to sit on it.

“‘Let’s just suppose that the White House has a face down with Baucus and they send this bill, this agreement that’s better to his liking than it was six months ago, but not overly to his liking, and they send it up,’ he said. ‘He’s got 90 days to act on it. Is he not going to act on it in 90 days and let it die? And he’s got that power, and let the European Union, which has about the same agreement we do, and maybe even the same agreement on beef — I don’t know for sure — and let them take all our markets?’”

Keith Good

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