FarmPolicy

April 23, 2014

Budget (Farm Bill); Regulations; and the Agricultural Economy

Budget: Political Background

Carl Hulse reported in Saturday’s New York Times that, “With time running short and budget negotiations this week having reached an angry impasse, Congressional leaders are growing increasingly pessimistic about reaching a bipartisan deal that would avert a government shutdown in early April.

“Senior Democratic officials involved in high-level efforts to bring House Republicans, Senate Democrats and the White House to a budget agreement said that while some progress had been made toward an accord on an overall level of spending cuts, the parties remained divided on the final figure and had to resolve the fate of ideologically charged policy provisions demanded by House conservatives.”

The Times article noted that, “Aides said that even if myriad outstanding issues were resolved and an agreement struck late next week after lawmakers returned, it would be a challenge to write the legislation and move it through Congress before the current financing bill expires on April 8.”

Congressional officials said the budget talks were set back significantly in a meeting Tuesday when the participants feuded over what legislation should serve as the benchmark for the talks — the House-passed spending measure with $61 billion in cuts for this year or an interim budget bill approved by Congress in early March that maintained financing for most programs at their current levels,” the Times article said.

Felicia Sonmez reported in yesterday’s Washington Post that, “A breakdown late last week in closed-door negotiations between congressional leaders and the White House on funding the federal government makes it increasingly possible that Congress will not agree on a long-term funding resolution or another temporary measure by an April 8 deadline, aides from both parties said.

That means that the threat of a government shutdown — which had receded in recent weeks because of congressional approval of several stopgap funding measures — appears to be back on the table.”

David Rogers reported last night at Politico that, “A significant new White House proposalappearing to double the $11 billion offer on the table — was being reviewed by Senate Democrats over the weekend in hopes that an agreement can still be reached with [House Speaker John Boehner (R-Ohio)] on a top-line number. But the harsh rhetoric Friday night suggests GOP leaders still fear a tea party rebellion. And the continued absence of Senate Minority Leader Mitch McConnell (R-Ky.) from the talks makes it harder to predict a final deal before the next shutdown deadline of April 8.”

And Janet Hook and Damian Paletta reported in today’s Wall Street Journal that, “The White House and Democratic lawmakers, with less than two weeks left to avoid a government shutdown, are assembling a proposal for roughly $20 billion in additional spending cuts that could soon be offered to Republicans, according to people close to the budget talks.

“That would come on top of $10 billion in cuts that Congress has already enacted and would represent a deeper reduction than the Obama administration and Senate Democrats had offered previously in negotiations. But it isn’t clear that would be enough to satisfy Republicans, who initially sought $61 billion in spending cuts and face pressure from tea-party activists not to compromise.”

 

Budget: Farm Bill

On Friday at the DTN Ag Policy Blog, Chris Clayton cited DTN’s “Washington Insider” column and stated that, “Even though the fight over the continuing resolution for FY2011 does not involve the main commodity safety net programs, it is generating a considerable amount of speculation about the coming 2012 farm bill debate. In that process, additional indications about positions of Chairman Frank Lucas, R-Okla., and his House Ag Committee are coming to light.

“For example, last week the chairman told the press that writers of the next bill will have ‘billions of dollars less to spend on the omnibus bill.’ He then speculated that lawmakers could push some now-idled acres in the Conservation Reserve Program back into production, and that the nearly $5 billion annual direct payments to eligible farm program participants could be on the table, as well. At the same time, he was careful not to associate himself with any conclusions about either expectations or preferences.”

Friday’s update added that, “As he put it, ‘There will be some stuff that falls off the table’ as priorities are set for funding. He then volunteered the CRP, which now totals 31.2 million acres and the direct payment program as examples that could be affected during the budget debate. In the end, ‘there may not be as many acres in the next farm bill,’ he said, referring to the CRP. With regard to the direct payments, he said that even though that program is compliant with U.S. obligations under the World Trade Organization, the committee may decide they don’t want it.

“But Lucas said he was ‘not giving anything up’ until he gets into the farm bill process next year. The House Agriculture panel is expected to begin information-gathering hearings this fall and open the bill-drafting process around May 2012.”

On Friday, Michigan Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, announced the Committee’s first Farm Bill field hearing will be held on April 9 at Michigan State University in East Lansing, Michigan.

(Note that a FarmPolicy.com summary of Farm Bill hearings held last year can be found here (House) and here (Senate)).

Agri-Pulse publisher Sara Wyant noted in a recent column at the High Plains Journal Online that, “Relatively high commodity prices, huge federal budget deficits, and the realization that agriculture will have to contribute to deficit reduction. These three factors framed the political landscape back in 1995, when lawmakers inked historic changes in farm policy, officially known as the Federal Agricultural Improvement and Reform Act (FAIR).

“For farm bill ‘veterans’ like Sen. Pat Roberts (R-KS) the political environment in 2011 may seem eerily familiar. As the House Agriculture Committee chairman from 1995 to 1997, Roberts led the reform of federal farm policies in a budget-cutting environment, producing a new farm bill that was widely heralded as ‘Freedom to Farm’ and panned by others as ‘Freedom to Fail.’”

The column added that, “The similarities between that time period and now have been prompting several policy types to talk about the need for another historic change in farm policy, one that takes a longer term view of the challenges and opportunities facing production agriculture. However, Roberts, who now serves as the ranking Republican on the Senate Agriculture Committee, says it is still too early to look at specific changes.

“The folks out in farm country know that we have to quit spending money we don’t have, says Roberts. When it comes to trimming the federal budget, ‘agriculture will do our part. Our plea is that we let the Agriculture Committees and those of us who understand the policy issues…do that job from a policy standpoint.’”

Ms. Wyant noted that, “Roberts has been meeting almost every week with Senate Agriculture Committee Chairman Debbie Stabenow (D-MI) to discuss top issues confronting the industry and prepare for the 2012 Farm bill. Most of their focus thus far has been on trying to rein in regulators.”

 

Regulations

With respect to regulations and agriculture, EPA Administrator Lisa Jackson was a guest on Friday’s AgriTalk Radio Program with Mike Adams.  (Click here to listen to their entire conversation- about 10 minutes).  Near the end of his interview, Mr. Adams asked Admin. Jackson about greenhouse gas regulations and agriculture.

Admin. Jackson indicated that, “[Farms are] exempt from all the standards that we have out there on greenhouse gases…[f]arms do not have to report their methane or CO2 emissions, although business across the country do, farms are exempt.”

However, Mr. Adams asked: “But do you have plans down the line to look again at farms and determine whether or not they should be regulated and whether or not they should stay exempt?”

Admin Jackson: “I do not have the authority right now to exempt farms completely, and so under the Clean Air Act somewhere down the line, and we don’t anticipate any earlier than 2013- and it could be even later- would need to turn to look at farms.  But what we are doing now is looking at the big sources of green house gas…”

To listen to this complete exchange on GHG regulation and agriculture from Friday’s AgriTalk program, just click here (MP3- 1:18).

In her comments about the scope of EPA GHG regulation, Admin Jackson was apparently referring to the “Tailoring Rule,” a “a contentious policy aimed at shielding small polluters from rigid Clean Air Act permitting requirements.”

Recall that at a March 11 House Energy and Commerce Committee hearing, Rep. Lee Terry (R-Neb.) questioned Admin. Jackson about the “Tailoring Rule” and during the discussion, it was pointed out that lawsuits challenging the “Tailoring Rule” have already been filed. Rep. Terry was highlighting the notion that although farms may not be subject to GHG regulations now, the future may be far less certain.

To listen to a portion of the discussion between Rep. Terry and Admin. Jackson from the March 11 hearing, which also included a brief discussion on dust regulations, just click here (MP3- 2:44).

In related news, Andrew Restuccia reported on Friday at The Hill’s Energy Blog that, “A long-simmering battle over Environmental Protection Agency climate regulations will come to a head next week in the Senate.

“The Senate will vote next week on three amendments to small-business legislation that would limit EPA’s climate authority, a Senate Democratic leadership aide said Friday.”

The Hill update stated that, “The aide said lawmakers will first vote on an amendment by Sen. Max Baucus (D-Mont.) that would exempt agriculture from EPA climate regulations and codify EPA’s ‘tailoring’ rule, which exempts smaller emitters from the regulations.

“The vote on the amendment will give cover to vulnerable Democrats who are getting pressure at home to limit EPA’s authority.

“Leadership will meet Monday to determine the floor schedule for the bill, including when and in what order votes on two other climate amendments will occur.”

Robin Bravender reported on Friday at Politico that, “Farm-state Democrats and those in manufacturing-heavy states — especially those facing reelection in 2012 — might look for political cover by supporting the Baucus proposal. Possible ‘yes’ votes include Sens. Sherrod Brown of Ohio, Bob Casey of Pennsylvania, Jon Tester of Montana, Debbie Stabenow and Carl Levin of Michigan, Kent Conrad of North Dakota, Tim Johnson of South Dakota, Claire McCaskill of Missouri and Amy Klobuchar of Minnesota.

“But beyond a few Democrats who want to get on the record endorsing a bid to rein in the EPA, the Baucus amendment isn’t expected to get much love in the Senate. Most Democrats are expected to reject a bid to handcuff White House climate policies, and the Republican caucus is likely to unanimously reject the Democrat-led effort.”

Ms. Bravender also noted that, the Senate would also likely vote on [Senate Minority Leader Mitch McConnell’s (R-Ky.)] amendment, authored by Oklahoma Sen. Jim Inhofe, [which] would fully revoke the EPA’s authority to regulate greenhouse gases under the Clean Air Act, a move the White House opposes and EPA Administrator Lisa Jackson has called ‘draconian.’ Companion legislation is slated for a House vote next month, when it’s expected to easily pass.

“The Senate is also likely to vote next week on a third climate amendment, from Sen. Jay Rockefeller (D-W.Va.), to impose a two-year delay on EPA climate rules for industrial facilities, the leadership aide said.”

The Wall Street Journal editorial board took up this issue in today’s paper, noting in part that, “The [Senate] votes are now due as soon as tomorrow, and [Majority Leader Harry Reid (D-Nev.)] is trying to attract 41 Democrats with a rival amendment from Senate Finance Chairman Max Baucus. The Baucus plan is a political veneer that would exempt some farms and businesses from the EPA maw but at the cost of endorsing everything else. The question for Democrats is whether their loyalties to President Obama and EPA chief Lisa Jackson trump the larger economic good, not to mention constituents already facing far higher energy costs.”

The Journal stated that, “The White House and Mr. Reid will offer phony alternatives to keep 41 Democrats in the corral. The Baucus amendment is the classic Beltway trick of trying to provide political cover while not solving the problem. Mr. Rockefeller is sponsoring a two-year delay before the EPA rules take effect, but that will merely defer the problem.

The McConnell amendment is one of the best proposals for growth and job creation to make it onto the Senate docket in years.”

 

Agricultural Economy

On Friday, Bloomberg writer Terry Barrett provided “the text detailing forecasts for percentage changes in annual food prices” from USDA’s Food Price Outlook, 2011.  The overview stated in part that: “In 2011, the Consumer Price Index (CPI) for all food is projected to increase 3 to 4 percent. Food-at-home (grocery store) prices are forecast to rise 3.5 to 4.5 percent, while food-away-from-home (restaurant) prices are forecast to increase 3 to 4 percent. Although food price inflation was relatively weak for most of 2009 and 2010, cost pressures on wholesale and retail food prices due to higher energy and food commodity prices, along with strengthening global food demand, have pushed inflation projections for 2011 upward.”

Philip Brasher reported on Saturday at the Des Moines Register Online that, “Presidents aren’t used to worrying about the price of meat and milk. But inflation has tripped up a president before. Ask Jimmy Carter.

“Now, President Barack Obama faces the twin prospects of rising gasoline and food prices as he prepares to gear up a re-election campaign.”

The Register article noted that, “Food costs are expected to rise 4 percent or more this year, led by higher prices for meat and dairy products, which are affected most directly by soaring costs of feed grains. Economists say the price of beef could cost nearly 10 percent more this year.

But the administration is not worried that higher food prices could harm the economic recovery, said Agriculture Department spokesman Justin DeJong.”

Mr. Brasher pointed out that, “Rising food prices are already creating political problems for the administration by feeding the growing criticism of government biofuels policy.

“The biggest source of subsidies for biofuels, the 45-cent-per-gallon tax credit for ethanol, is due to expire at the end of the year, but efforts are under way to abolish it before then.”

The administration argues that government subsidies for biofuel development are still needed, and Agriculture Department officials called together industry officials in a private meeting last week to discuss the issue,” the Register article said.

Meanwhile, Elizabeth Williams and Marcia Zarley Taylor reported on Friday at DTN (link requires subscription) that, “Midwest farmland is appreciating so fast that even professional appraisers are humbled by the pace. A good-quality parcel of farmland sold for $11,500 per acre around Bloomington, Ill., earlier this month. That’s up $3,000 to $3,500 from a year earlier, said Charles Knudson, an appraiser with 1st Farm Credit Services.

In September, Knudson appraised a central-Illinois property at $8,100 per acre for an interested buyer, but it sold at auction in February for $10,150 per acre. He’s now appraising farmland at 4-percent-per-month gains, a rate that landowners once savored on an annual basis.”

Keith Good

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