FarmPolicy

August 20, 2019

Budget; Farm Bill; Trade; Regulations; and the Agricultural Economy

Budget: S&P on U.S. Treasury Securities- A Potential Catalyst for Budget Talks

Damian Paletta and E.S. Browning reported in today’s Wall Street Journal that, “A blunt warning Monday from a credit-rating firm about the U.S. government’s mounting debt pushed stock markets lower and intensified political divisions in Washington about how best to tackle growing deficits.

Both the Obama administration and House Republicans scrambled to gain leverage from Standard & Poor’s changing its outlook on U.S. Treasury securities to ‘negative’ from ‘stable.’

“S&P didn’t lower its top-notch AAA-bond rating for U.S. government Treasury securities, and their prices initially fell but later rebounded amid optimism that the report could serve as a catalyst to force both sides in Washington to compromise.”

The Journal article explained that, “This year’s budget deficit is projected to rise to between $1.5 trillion and $1.65 trillion, equal to roughly 10% of America’s gross domestic product, or total economic output. The White House is hoping to form a group of Democratic and Republican lawmakers to craft a framework for reducing the deficit, but has made little progress. Vice President Joe Biden plans to host the group’s first meeting May 5.”

Christine Hauser reported in today’s New York Times that, “In its decision, the Standard & Poor’s ratings unit issued a strong warning to government leaders to agree on how to address the medium- and long-term budget challenges by 2013.

“‘More than two years after the beginning of the recent crisis, U.S. policy makers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures,’ said Nikola G. Swann, a credit analyst at Standard & Poor’s. The firm said that there was a one in three chance that it could lower its long-term rating on the United States in two years.”

The Wall Street Journal editorial board opined today that, “There is only one reason the rating agency could suddenly have turned this dark on politics in Washington: President Obama’s speech at George Washington University last Wednesday. Mr. Obama’s ‘fiscal policy’ speech may have sent progressive pundits cart-wheeling, but its political effect was to poison the prospect for budget negotiations.”

The Journal added that, “S&P, as did many others, said it saw the Obama and [House Budget Committee Chairman Paul Ryan (R-Wis.)] budget proposals ‘as the starting point of a process,’ but ‘That said, we see the path to agreement as challenging because the gap between the parties remains wide.’ And: ‘We believe there is a significant risk that Congressional negotiations could result in no agreement.’ And this stalemate will continue ‘over the next two years.’

“S&P is simply connecting the political dots after last week’s un-Presidential tirade against the GOP.”

And Journal columnist Gerald F. Seib noted today that, “When Standard & Poor’s shifted its fiscal outlook for the U.S. government to negative on Monday, the rating agency was merely underscoring a stark reality: The Obama presidency is increasingly and unavoidably being consumed by the great national debate over how to cut the federal deficit.

“But here’s the other stark reality: The odds of resolving this debate are undercut by the fact the two parties can’t even agree on what’s causing deficit woes in the first place. Talks with top leaders in both parties suggest that this disconnect is a big reason neither side sees much hope of a grand deal until some time after the 2012 election, which is precisely the scenario the S&P analysts cited in the downbeat report.”

Clifford Marks reported yesterday at National Journal Online that, “The markets ultimately shrugged off Standard and Poor’s downgrade on Monday of America’s debt outlook, but the report’s pointed criticism of legislative gridlock may give a boost to budget compromise efforts led by a bipartisan group of senators known as the ‘Gang of Six.’”

The article noted that, “‘Today’s warning from S&P highlights the dangers of waiting for the perfect political moment to tackle our debt crisis,’ [Sen. Tom Coburn, R-Okla., a Gang of Six member] said in a statement.”

 

Farm Bill Issues

The AP reported yesterday that, “House Republicans resurrected a 1990s-era fight over food stamps in their budget approved last week, arguing that any serious attempt to cut spending must include an overhaul of government programs that help needy families pay for food.

“Congress already has started cutting some food programs, including reducing the Women, Infants and Children Program by $500 million as part of a deal on this year’s budget. And last year, more than $2 billion in future funding for food stamps was redirected to other programs.

“On Friday, the House approved a Republican proposal to overhaul the $65 billion food stamp program — known officially as the Supplemental Nutrition Assistance Program, or SNAP — by replacing it with capped block grants to states, which would pay for the aid but make it contingent on work or job training. That proposal was included in a 2012 budget plan put forward by Budget Committee Chairman Rep. Paul Ryan, R-Wis.”

Mark Steil reported yesterday at Minnesota Public Radio Online that, “But, with both farm profits and federal budget deficits soaring, even strong congressional supporters of farm subsidies say cuts are coming in the 2012 budget.”

Mr. Steil stated that, “The chairs of both the House and Senate Agriculture Committees say all farm programs are on the table for possible cuts.

“Sen. Charles Grassley, R-Iowa, said he expects Congress to eliminate a $5 billion program called direct payments. The program subsidizes grain farmers even when they’re making lots of money, which they have in recent years.”

Yesterday’s report added that, “‘Direct payments are just seen as a handout,’ said [Anthony Bush is a farmer from Ohio and he chairs the National Corn Growers Association policy committee]. ‘In this time frame where Washington’s on a budget diet, it’s just something that they’re looking at awful hard.’”

Bush would like to see some of that money used to strengthen crop insurance, and other ways to manage the huge financial risks farmers face — programs that pay farmers in bad times, but don’t send them any money if they have a good year.

“‘Risk management programs sell on Capitol Hill; handouts don’t,’ said Bush.”

 

Trade

A news update posted yesterday at the U.S. Trade Representative’s Office Online stated that, “Today United States Trade Representative Ron Kirk sent the following letter to the Chairmen and Ranking Members of the Senate Committee on Finance and the House Committee on Ways and Means regarding the next step for the U.S.-Panama Trade Promotion Agreement.”

In part, the letter stated that, “On February 9, 2011, I testified before the Committee on Ways and Means of the House of Representatives that the President had directed me to intensify engagement with Panama to resolve the outstanding issues related to the United States — Panama Trade Promotion Agreement (the “Agreement”) as quickly as possible this year. In the following days, I met with Panama’s Vice President, Juan Carlos Varela, and afterwards our officials agreed upon a set of actions that, when completed, would ready the Agreement for Congressional consideration. Panama has now fulfilled its commitments regarding those actions.

I am pleased to report to you that the Office of the United States Trade Representative has completed its preparatory work on the Agreement and stands ready to begin technical discussions with Members of Congress on the draft implementing bill and draft Statement of Administrative Action.”

House Ways and Means Committee Chairman David Camp (R- Mich.) noted that, “In ratifying the U.S-Panama Tax Information Exchange Agreement (TIEA), Panama has now addressed each and every issue considered outstanding by the Obama Administration and cleared the path for immediate consideration of the U.S.–Panama Trade Promotion Agreement.   I applaud Panamanian President Martinelli for moving the TIEA forward and for his strong commitment to U.S.-Panama relations.”

An American Soybean Association news release yesterday stated that, “The Panama FTA will benefit soybean farmers by removing immediately upon the entry into force of the FTA tariffs on U.S. soybeans, soybean meal, and crude vegetable oils. Tariffs will also be removed immediately for high quality beef, certain chicken products, frozen whole turkeys and turkey breast, and pork variety meats. In 2010, U.S. exports of soybean products to Panama were $65 million.”

The New York Times editorial board indicated on Sunday that, “After two years of dithering, it is good to see the Obama administration championing freer trade.”

Meanwhile, a news release yesterday from Rep. Adrian Smith (R-Neb.) stated that, “[Congressman Smith] today traveled to Colombia with five other members of the U.S. House on a bipartisan congressional delegation to discuss the pending U.S.-Colombia trade agreement with government officials there.

“‘Traveling to Colombia signals how important this pending agreement is to our nation’s economy, but even more specifically to Nebraska’s economy,’ Smith said.”

In trade news regarding agriculture and the WTO Doha Round of talks, a news item Friday posted at the WTO Online stated that, “In the final meeting of the full membership before he prepares the agriculture negotiations’ ‘contribution’ to the ‘Easter process’, chairperson David Walker told members on 15 April 2011 that the last two weeks have produced no constructive, bridge-building solutions to the deadlocked issues.”

 

Regulations

Philip Brasher reported on Friday at the Green Fields Blog (Des Moines Register) that, “Agriculture Secretary Tom Vilsack is bringing the administrator of the Environmental Protection Agency, Lisa Jackson, to visit two farms and a biodiesel plant in Iowa next week. The EPA has come under a barrage criticism from farm groups and farm-state lawmakers over proposed regulations that farmers claim would be onerous or unfair. The EPA also has been playing an increasingly important in agriculture because of its responsibility for enforcing biofuel mandates and regulating the amount of corn ethanol in gasoline.

Tuesday morning the officials will visit a livestock operation near Pleasantville before touring in the REG biodiesel plant at Newton. At noon, they will visit Gordon Wassenaar’s 1,600-acre row-crop farm at Prairie City. They will hold a press availability afterward.”

And a news release yesterday from Western Growers stated that, “The U.S. House Oversight and Government Reform Committee will hold a field hearing April 19 in Salinas, Calif., to investigate how Environmental Protection Agency regulations and rule-making processes are affecting farmers. Led by committee chairman Rep. Darrell Issa, the hearing will cite specific regulatory processes that result in inflexible and impractical requirements without the benefit of the best available science, public review of data and serious stakeholder engagement. Western Growers President and CEO Tom Nassif and Senior Vice Chairman Mike Jarrard, CEO of Mann Packing Company, will be expert witnesses at the hearing.”

Robin Bravender reported on Friday at Politico that, “House Republicans aren’t happy that top EPA officials are skipping hearings on efforts to roll back the agency’s regulations.

“‘We could call them the Evaporating Personnel Administration, I guess,’ Texas Republican Rep. Joe Barton said Friday. ‘They don’t seem to ever show up and be accountable.’

Of three Energy and Commerce Committee hearings held this week on controversial EPA rules, the agency sent an administration witness to just one.”

Meanwhile, Kate Galbraith reported yesterday at The New York Times Online that, “The recent budget wrangling in Washington will take a toll on the administration’s efforts to combat climate change.

“The budget of the U.S. Environmental Protection Agency was cut $1.6 billion — 16 percent — for the rest of this fiscal year, under the bill that President Barack Obama signed Friday. Other programs, like international forest-protection efforts, will also get less financing than their advocates had hoped.”

In other news regarding climate change, Andrew Restuccia reported yesterday at The Hill’s Energy Blog that, “Fewer greenhouse gases were emitted in 2009 than any year since 1995, the Environmental Protection Agency said Monday.”

Margot Roosevelt reported yesterday at the Greenspace blog (LA Times) that, “Nine months before California is set to finalize a trading system aimed at curbing greenhouse gas emissions, participants have the jitters.

“Litigation threatens to delay the start of the multibillion-dollar program, and industry executives worry that its regulations will fall short of guaranteeing a smoothly operating market. Fear is growing that it could be susceptible to the fraud that has plagued a similar European system.”

And Jess Bravin and Stephen Power reported yesterday at The Wall Street Journal Online that, “A battle over whether states can use nuisance laws to curb greenhouse-gas emissions from power plants will come to the Supreme Court Tuesday in a case that puts a twist on the debate over climate policy.”

In other news, a statement yesterday from American Farm Bureau President Bob Stallman indicated in part that, “The American Farm Bureau Federation appreciates the bipartisan support of 170 members of Congress in challenging ‘regulatory guidance’ that the Environmental Protection Agency and U.S. Army Corps of Engineers are considering for the Clean Water Act. The guidance would take an overly broad view of ‘waters of the U.S.’ It would serve as a road map for EPA and the Corps to designate nearly all water bodies, and even some dry land, as subject to federal regulations that dictate land-use decisions. If unchecked, the guidance would lead to more Clean Water Act permitting requirements, more litigation and less economic growth at a time when our nation needs it most.”

 

Agricultural Economy

Tom Polansek reported in today’s Wall Street Journal that, “U.S. wheat prices rose on fears that dry weather will reduce global output.

“Soft red winter wheat for May delivery, the most actively traded futures contract, ended 4%, or 30 3/4 cents, higher at $7.750 a bushel at the Chicago Board of Trade. Corn and soybean futures also advanced.”

The Journal article added that, “The U.S. Department of Agriculture on Monday rated 36% of the U.S. winter wheat crop as good-to-excellent, unchanged from last week, but well below 69% a year ago. Analysts had expected the crop to be in worse condition.”

Yesterday’s USDA report noted that 7% of the U.S. corn crop has been planted, up from 3% last week and 1% below the five year average.  This time last year, 16% of the corn crop had been planted.

Dan Piller reported yesterday at the Green Fields Blog that, “Just 2 percent of Iowa’s corn crop has been planted through this weekend, compared to 16 percent a year ago, as farmers have been held out of the fields by rains and soil temperatures still too cool for planting.”

Meanwhile, Alyssa Dizon reported recently at the Lubbock Avalanche-Journal Online that, “While the Texas agriculture industry expected to see a surge in 2011 planted cotton acres due to soaring cotton prices, other commodity groups will lose significant acreage, particularly peanuts.”

The article noted that, “Shelly Nutt, executive director for the Texas Peanut Producers Board, said USDA’s Texas estimates were astoundingly higher than what the peanut industry expects.

The USDA report had state peanut acreage at about 165,000 acres with a 3 to 4 percent decrease, but the reduction should be closer to 50 percent, Nutt said.

“‘Some farmers are reducing acreage by a third, a half or not planting any peanuts,’ she said. ‘We’re looking at a very tough year for peanuts in Texas.’”

The article added that, “She predicted West Texas would plant fewer than 60,000 acres and Texas would have about 80,000 planted acres — a major decline for the second-highest peanut-producing state in the last decade.

“Even two board members who have planted peanuts for years do not plan to put a single peanut seed in the ground, Nutt said.”

The Avalanche-Journal article stated that, “But with these low planting estimates and the already low peanut supply, [Nutt] expressed concerns of U.S. manufacturers possibly turning to foreign countries like Argentina for peanuts.

“In addition, the industry witnessed record domestic peanut butter consumption due to the recession.

“‘I don’t think we’re going to have enough peanuts to hardly get through the year until we start harvesting next fall,’ Nutt said.”

Keith Good

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