FarmPolicy

April 24, 2014

Budget (Farm Bill); Regulations; Biofuels; Agricultural Economy; and Trade

Budget: Political Background

Jennifer Steinhauer reported in today’s New York Times that, “The most visible element of the budget fight in Congress is the one over the scale of spending cuts this year. But increasingly, other deeply contentious policy issues that House Republicans insist must be addressed in any budget deal are as much of a stumbling block as the final dollar figure.

“They include efforts to take away money to carry out the new health care law, to limit regulation by the Environmental Protection Agency and to cut federal financing for organizations like Planned Parenthood that provide abortions.”

The article added that, “Republicans say they will battle to retain every one of the scores of riders — which range from one that would strike the word ‘arctic’ from a provision of the Clean Air Act to another that would end money to carry out the health care law — that were included in a version of the budget bill the House passed this winter.”

Janet Hook and Carol E. Lee reported in today’s Wall Street Journal that, “Democrats and the White House are considering whether they can agree to any of a series of conservative policy restrictions backed by Republicans—and opposed by most Democrats—that could help break an impasse in budget talks, Senate Majority Leader Harry Reid said Tuesday…‘We’re happy to look at the policy riders,’ said Mr. Reid. ‘There aren’t many of them that excite me. But we’re willing to look at them. In fact, we’ve already started looking at some of the policy riders.’”

Meanwhile, Paul Kane reported in today’s Washington Post that, “Having difficulty finding consensus within their own ranks, House Republican leaders have begun courting moderate Democrats on several key fiscal issues, including a deal to avoid a government shutdown at the end of next week.

The basic outline would involve more than $30 billion in cuts for the 2011 spending package, well short of the $61 billion initially demanded by freshman Republicans and other conservatives, according to senior aides in both parties. Such a deal probably would be acceptable to Senate leaders and President Obama as long as the House didn’t impose funding restrictions on certain social and regulatory programs supported by Democrats, Senate and administration aides said.”

Alexander Bolton and Molly K. Hooper reported yesterday at The Hill Online that, “Striking a deal with Democrats would set off a wave of revolt among the most conservative members of [Speaker Boehner’s] caucus. It could also allow [Sen. Charles Schumer (D-NY)] to say Boehner abandoned the Tea Party, which would hurt the Ohio Republican with the GOP base.

But refusing to find a middle ground with Democrats could risk a government shutdown and alienate crucial centrist voters. If such a scenario unfolded, Democratic leaders would accuse Republican leaders of appeasing what they have called ‘extremists.’”

David Rogers and Jake Sherman reported last night at Politico that, “Moving to the right of Speaker John Boehner, House Majority Leader Eric Cantor distanced himself Tuesday from spending compromises discussed with the White House and took a harder line on whether Republicans should keep the government open absent a budget deal next week.

“‘Time is up here,’ said the Virginia Republican, telling reporters that a short-term continuing resolution ‘without a long-term commitment is unacceptable’ and that the leadership must push for the full $61 billion in spending cuts approved by the House last month.

“‘That is the House position. That is what we are driving for,’ Cantor said. When asked specifically about a potential compromise framework that would restore about $26 billion of the House cuts, Cantor said he had no knowledge of those discussions from fellow Republicans.”

 

Budget: Farm Bill Issues

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The Senate will proceed on its own schedule on the next farm bill and should finish it as quickly as possible, but Senate Agriculture Committee Chairwoman Debbie Stabenow will not promise to finish the bill in 2012.

“In her first extensive interview since assuming the chairmanship of the committee, Stabenow, a Democrat from Michigan, told DTN, ‘We’re going to start right now and move through the process, and we’ll make decisions as we go along. In terms of an exact timetable, I think it’s in the interest of agriculture, given the backdrop that we’re in right now around budgets and deficits, to move in a thoughtful, methodical way and get this in place as soon as we can.’”

Mr. Hagsrom noted that, “In the interview, Stabenow discussed her relationship with agriculture since she was a child and said the farm bill should:

“- Reexamine the direct payments program to establish the committee’s credibility in a tight budget period.

“- Expand crop insurance to cover more crops.

“- Continue the sugar program.

“- Use the National Milk Producers Federation’s ‘Foundation for the Future’ proposal as the starting point for changing the dairy program.

“- Continue the specialty crops program from the 2008 farm bill.

“Stabenow also said it is necessary to educate members of Congress that agriculture has already contributed $4 billion to deficit reduction over 10 years through the renegotiation of the crop insurance standard reinsurance agreement. She also noted that the continuing resolution that is funding the federal government through April 8 cut rural development, research and conservation programs.”

 

Regulations: Greenhouse Gas Issues- Senate

Recall that back in December of 2009, the EPA issued an “endangerment finding” and stated that, “After a thorough examination of the scientific evidence and careful consideration of public comments, the U.S. Environmental Protection Agency (EPA) announced today that greenhouse gases (GHGs) threaten the public health and welfare of the American people…EPA’s final findings respond to the 2007 U.S. Supreme Court decision that GHGs fit within the Clean Air Act definition of air pollutants.”

A Politico article from December 9, 2009 stated that, “U.S. Environmental Protection Agency Administrator Lisa Jackson announced Monday [Dec. 7, 2009] that her agency has concluded that greenhouse gases pose a danger to human health and public welfare — opening the door to sweeping new pollution regulations that would cover a wide swath of industries…Monday’s ruling forces the EPA to begin mandating greenhouse gas emissions reductions from industrial polluters like power plants, factories, and auto makers. The EPA, Jackson said, ‘is now authorized and obligated to make reasonable efforts to reduce greenhouse gas emissions under the Clean Energy Act.’”

With this background in mind, an opinion item yesterday by Rep. Fred Upton (R-Michigan), Chairman of the House Committee on Energy and Commerce, stated that, “During the last Congress, legislation was introduced to regulate greenhouse gases through a program known as cap-and-tradeThat effort failed as Democrats and Republicans alike recognized such a proposal would cost hundreds of thousands of jobs, make America less competitive, and raise gas and energy costs for everyone — all without significant environmental benefit… With cap-and-trade derailed by bipartisan opposition, the Environmental Protection Agency (EPA) has changed course, now seeking to regulate greenhouse gas emissions by bureaucratic fiat.  To do so, the agency is attempting to grant itself new authority to impose greenhouse gas rules under the Clean Air Act, even though Congress rejected that intention.”

Rep. Upton added that, “In an effort to protect jobs and keep energy prices from rising even higher, I recently joined leading House Democrats in introducing the Energy Tax Prevention Act.  This bipartisan legislation, which passed my committee 34-19, would prevent EPA from regulating carbon dioxide and other greenhouse gases in an effort to address climate change, thereby upholding Congress’s original intent under the Clean Air Act while protecting jobs and keeping costs lower for households and employers.”

With respect to Senate action on this issue, an article posted at The Hill on Friday explained that, “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 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.”

A second amendment, “offered by Senate Minority Leader Mitch McConnell (R-Ky.), would permanently block the agency from regulating greenhouse gas emissions.”

And a the third amendment, “offered by Sen. Jay Rockefeller (D-W.Va.), would delay EPA’s climate regulations by two years.”

In more detailed reporting on the Baucus amendment, E & E writer Jean Chemnick reported yesterday that, “EPA has not proposed direct carbon dioxide regulations for ranchers and farmers, and Baucus’ amendment would make that exemption permanent. It would also bar EPA from considering land-use changes abroad, which were possibly triggered by U.S. biofuels production to judge whether a fuel qualifies for special status under the 2007 renewable fuel standard.

“Despite its farmer-friendly tilt, the agriculture sector is actually divided on whether the Baucus amendment would insulate farmers enough from the rising costs some say would accompany greenhouse gas regulations.

“The American Farm Bureau Federation, which in 2009 and 2010 actively campaigned against cap-and-trade legislation then before Congress, said the amendment would not protect agriculture from a hike in operating costs, because it contains no exemption for other sectors.”

The article added that, “Chandler Goule of the National Farmers Union, which represents small to medium-sized family farmers, said while his group had not yet officially endorsed Baucus’ proposal, ‘our policy is definitely much more in the direction of this amendment.’”

Meanwhile, in a radio interview yesterday, Sen. Jim Inhofe (R-Oklahoma) discussed the three amendments and EPA authority to regulate greenhouse gases in greater detail.  He also commented on Rep. Upton’s efforts on this issue in the House.  To listen to a portion of yesterday’s radio interview with Sen. Inhofe, just click here (MP3- 2:51).

And Reuters writer Richard Cowan reported yesterday that, “The U.S. Senate is moving toward a showdown vote on Wednesday over legislation that would block the Environmental Protection Agency from regulating greenhouse gas emissions, a key energy initiative of the Obama administration.”

Also on the Senate floor yesterday, Minority Leader Mitch McConnell (R- Kentucky) (audio clip, MP3- 1:50), Sen. Roy Blunt (R-Missouri) (audio clip, MP3- 1:51), and Sen. Jerry Moran (R-Kansas) (audio clip, MP3- 1:17) all addressed the amendment that would permanently block EPA’s authority to regulate GHG emissions and the economic implications of not repealing this executive branch authority.

 

Regulations: Pesticides- Sixth Circuit Court Case

In other regulatory developments, Todd Neeley reported yesterday at DTN that, “The EPA has until Oct. 31 to implement a federal pesticide permits program after the Sixth Circuit Court of Appeals granted the agency’s request for more time, according to the court’s ruling Monday. The previous deadline was April 9.”

Mr. Neeley pointed out that, “EPA was forced to create the program as a result of a 2009 decision by the Sixth Circuit Court of Appeals in the National Cotton Council v. EPA case. The court decided that EPA could not exempt pesticide users from Clean Water Act requirements.

“In that case, the court vacated EPA’s 2006 rule that said NPDES permits were not required for pesticides applications to, over or near U.S. waters, as long as they were in compliance with pesticide labeling required by EPA in the Federal Insecticide, Fungicide, and Rodenticide Act, or FIFRA.”

Yesterday’s DTN article added that, “In recent weeks, a bill was introduced in the U.S. House of Representatives to allow pesticide applicators to continue to just follow label directions on products. The bill would amend the Federal Insecticide, Fungicide and Rodenticide Act to not require permits.”

 

Biofuels

Kathleen Hunter reported today at Roll Call Online that, “Budget-conscious GOP Senators are pushing to eliminate a $6 billion federal ethanol subsidy that is cherished by farm-state Republicans, exposing an intraparty schism that could muddy the party’s message on fiscal discipline.

“The GOP ethanol opponents see an opportunity to use their party’s emphasis on cutting federal spending as leverage to support Sen. Tom Coburn’s [R-Oklahoma] amendment that would eliminate a tax credit that oil companies receive for blending ethanol into gasoline. But they face formidable opposition from a band of farm-state lawmakers — led by Sen. Chuck Grassley (R-Iowa) — who have long championed ethanol and say any attempt to limit federal support of the corn-based fuel should be part of a broader debate over national energy policy, rather than an ethanol-specific rifle shot.”

The article added that, “Freshman Sen. Mark Kirk [R-Illinois] said eliminating the ethanol subsidy would have ‘a tremendous impact on the central and southern Illinois economy’ and that he could only consider supporting a cut to the federal subsidy if it was part of broader, across-the-board spending cuts.”

 

Agricultural Economy

University of Illinois Agricultural Economists Scott Irwin and Darrel Good indicated yesterday at the FarmDocDaily Blog that, “In a 2008 report and a 2009 article we addressed the following basic question: Are higher crop prices here to stay? We argued that unfolding evidence suggested that corn, soybean, and wheat prices were indeed likely establishing a higher (nominal) average than previously experienced. Some disagree with this conclusion. We revisit the evidence here to see if the data continues to support our original conclusion.

“Our basic evidence is found in the accompanying three figures [fig. one, fig. two, and fig. three] depicting the average monthly farm price of corn, soybeans, and wheat in Illinois from January 1947 through February 2011. Our original data ended in July 2008, so we now have two-and-half additional years of monthly prices.”

The authors added that, “As they say ‘the proof is in the pudding’ so let’s see how well our original projections for the average price level in this new era have held up. We projected an average price level of $4.60/bu. for corn, $10.58/bu. for soybeans, and $5.80/bu. for wheat. The averages for January 2007-February 2011 turned out to be $3.99/bu. for corn, $10.09/bu. for soybeans, and $5.36/bu. for wheat. Our projections were all a bit too high but certainly in the ballpark. We do not see any trends in the data that lead us to change our conclusion that a new and higher era of nominal crop prices is at hand. However, prices can still move to ‘low’ levels in this new era, particularly in relation to production costs, and they can stay there for considerable periods of time.”

Bloomberg writer Jeff Wilson reported yesterday that, “U.S. corn planting will expand to cover the second-largest area since World War II this year and still fail to meet demand for feed and ethanol, driving prices to their highest in at least 34 years.

“Sowing will expand by 4 percent to about 91.75 million acres, the most since 2007 and the second-highest since 1944, according to a Bloomberg survey of 32 analysts. Corn will rise 5.7 percent to average $7.15 a bushel in the third quarter, the most since at least 1977, Abah Ofon and Koun-Ken Lee, analysts at Standard Chartered Bank in Singapore, wrote in a report.”

Meanwhile, Leslie Josephs reported in today’s Wall Street Journal that, “High cotton prices are expected to encourage farmers worldwide to plant more of the fiber next season, and some industry watchers are predicting prices could be nearly halved by year’s end.”

And Ron Smith reported yesterday at Southwest Farm Press Online that, “Cotton, corn and soybeans will continue to be driving forces behind the peanut market as farmers across the Peanut Belt weigh recent upticks in peanut contract offerings against what they can get from competing crops and as they compare production costs to make final plans for 2011 acreage…[Tyron Spearman, editor, Peanut Market News and chairman of the American Peanut Council] said [during a market outlook session at the recent Oklahoma Peanut Expo in Lone Wolf, Okla.] acreage for 2011 likely will decline by 14 percent nationwide. ‘Georgia acreage could be down 20 percent,’ he said. ‘We hope to see an increase in Oklahoma. We need good quality peanuts.’”

 

Trade

Trade was a key topic on yesterday’s AgriTalk Radio Program with Mike Adams.  On yesterday’s program, Mr. Adams asked Former US Trade Ambassador Susan Schwab:

“Yesterday I was talking with Sec. of Agriculture Tom Vilsack and I asked him why the administration doesn’t want to bring all three trade deals up at the same time- Panama, Colombia and South Korea- and he said that the reason being that if you have all three, and he was using Colombia as an example, if Colombia knows its all or nothing then they are going to ask for more…”

To listen to former Amb. Schwab’s perspective on this analysis, just click here (MP3- 2:45).

Current USTR Ron Kirk was also a guest on yesterday’s show, to listen to a portion of his remarks on the time perspective of getting the Colombia and Panama FTA’s passed this year, just click here (MP3- 3:39).

Meanwhile, Howard Schneider reported in today’s Washington Post that, “The government of Colombia needs to make extensive changes to its laws and bolster its protection of union members before a free trade agreement moves forward, a key Democratic lawmaker said Tuesday in the most explicit statement yet of the hurdles facing the proposed Colombia-U.S. trade deal.

“The comments by Rep. Sander M. Levin (D-Mich.), ranking member of the Ways and Means Committee and an important voice on trade issues, shows the quandary faced by the Obama administration. It is trying to push a recently negotiated agreement with Korea through Congress amid Republican demands that long-pending deals with Colombia and Panama move as well.”

Keith Good

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