FarmPolicy

August 29, 2014

Farm Bill; Budget; Ag Economy; Trade; and Regulations

Farm Bill Issues

The Washington Insider section of DTN reported yesterday (link requires subscription) that, “When Congress drafted the 2008 farm bill, Sen. Debbie Stabenow, D-Mich., played a key role in assuring that fruit and vegetable growers were able to receive some federal assistance, something that had taken years to come to fruition. ‘It took multiple farm bills to get there,’ she recently reminded the press.

“At the time, Stabenow was a junior member of the Senate Agriculture Committee. Today, she is chairwoman of that committee, but even with her new authority and responsibilities, Stabenow’s ability to help so-called specialty crop producers is likely to be more limited than before.

“Fruit and vegetable producers said in 2008 that they were less interested in direct payments or price supports than in assistance aimed to opening new markets and gaining new customers for their produce. Stabenow says that in the 2012 farm bill she favors expanding a program of block grants to states to grow the market-building initiative, but notes that as with everything else on Capitol Hill, it will come down to the budget with which she will have to work.”

An update posted yesterday at the Southeast Press Online indicated that, “Funded in part by Cotton Incorporated, Texas A & M University’s Agricultural Food Policy Center (AFPC) has developed a decision aid for producers considering ACRE…The ACRE Decision Aid, developed by Agricultural and Food Policy Center faculty and staff, attempts to take into consideration all of these factors including price and yield risk and the corresponding state and farm yield correlations. A copy of the decision aid is available at http://www.afpc.tamu.edu.

“The deadline to sign up for ACRE or DCP is June 1, 2011.”

Meanwhile, an update from USDA’s Economic Research Service yesterday explained that, “While the Direct and Counter-cyclical Program and Federal crop insurance are both part of the farm safety net, they do not necessarily serve the same farmers. Looking at counties that received at least $20 in direct payments per cropland acre in 2008, or $20 in crop insurance indemnity payments averaged over 2007 to 2009, clear geographic patterns emerge [see graphical illustration here]. Direct payments tend to be higher in the Corn Belt (corn and soybeans), Mississippi Delta (cotton and rice), and the Texas-Louisiana Gulf Coast (cotton and rice). They are also high in Arizona (cotton), California (cotton and rice), and parts of the Southern Atlantic Seaboard. Crop insurance indemnity payments tend to be higher in the wheat-growing regions in the Northern Plains and parts of the Southern Plains, as well as North and South Carolina. Both programs are high in the Texas Panhandle (cotton and wheat) and across Alabama and Georgia (cotton and peanuts).”

In other news, Julian Pecquet reported yesterday at the Hill’s Healthcare Blog that, “More than 40 bipartisan members of Congress have signed on to a letter to Agriculture Secretary Tom Vilsack asking him to rethink school lunch regulations.

“New proposed rules tied to the childhood nutrition bill passed last year seek to increase student access to fruits and vegetables ranked as being ‘good’ and ‘excellent’ sources of potassium, fiber, Vitamin D and calcium. But the lawmakers question whether restricting potato servings and other starchy vegetables will really encourage students to make other food choices.”

The Hill update noted that, “School lunches are big business for farmers and processed food manufacturers, whose bottom lines are directly affected by changes in serving recommendations because school districts must abide by national standards to get federal reimbursements.”

With respect to dairy issues, Marc Heller reported recently at the Watertown Daily Times (NY) that, “This year’s budget fights in Congress are paving the way for a struggle next year on dairy policy, and the effects are likely to linger for several years.”

The article stated that, “In 2008, the main safety net program for dairy farmers — the Milk Income Loss Contract [MILC]— was funded at $1.25 billion. Another part of the safety net, the dairy price support program, was funded at about $200 million.

“Those levels were hard to achieve because the prior farm bill, in 2002, had not established much of a funding baseline, said Robert Gray, executive director of the Council of Northeast Farmer Cooperatives.

“Now, the main lobbying group for dairy farmers, the National Milk Producers Federation, is proposing to replace those programs with margin insurance and other measures to protect farmers from low milk prices and high feed costs. The organization expects its proposals to cost about as much as the programs they are replacing, and others may save the government money, said Christopher Galen, an NMPF spokesman.”

Mr. Heller noted that, “But the prospect of budget cuts — as well as the House GOP budget resolution crafted by Rep. Paul Ryan, R-Wis., last month — is clouding the picture, Mr. Gray said.

“‘My concern is that the Ryan budget and perhaps the Senate budget will reduce these baseline numbers, and if the elimination of the MILC program is agreed upon and the money shifted to a dairy insurance program there may be much less money available,’ Mr. Gray wrote in an emailed response to questions.”

Later, the article indicated that, “Some lawmakers, including Sen. Kirsten E. Gillibrand, D-N.Y., are pushing for the creation of new dairy programs in addition to the MILC program, which they do not want to phase out — all the more challenging in light of the budget talk.”

 

Budget Issues

Carl Hulse reported in today’s New York Times that, “Speaker John A. Boehner said Monday that Republicans would insist on trillions of dollars in federal spending cuts in exchange for their support of an increase in the federal debt limit sought by the Obama administration to prevent a government default later this year.

“In his most specific statement to date on what Republicans will demand in the debt ceiling fight, Mr. Boehner told the Economic Club of New York that the level of spending reductions should exceed the amount of the increase in borrowing power.”

Naftali Bendavid and Matt Phillips reported in today’s Wall Street Journal that, “While disagreeing with Mr. Obama about the way forward, Mr. Boehner tried to reassure the listeners that he took seriously concerns about brinksmanship in the debate over raising the limit on borrowing.”

The Wall Street Journal editorial board opined today that, “Mr. Boehner’s formula of a dollar in spending cuts for every dollar of new debt authority has some promise. If Mr. Obama wants a big increase in the debt limit, then he is going to have to engage on reforming the big entitlement programs like Medicaid, Medicare and perhaps even Social Security.

“If he refuses to discuss those programs, then Republicans can approve a smaller debt increase, cut domestic discretionary accounts in the interim, and wait for Mr. Obama to ask again for a debt increase. If the President wants the debt issue to dominate the political debate every three months through Election Day next year, so be it. That’s sturdier political ground for the GOP than it is for liberals.”

Russell Berman reported yesterday at The Hill Online that, “The U.S. is expected to hit the debt limit on May 16, but Treasury Secretary Tim Geithner has said the government could stave off a default until early August. The Treasury wants the authority to borrow an additional $2 trillion, which the department believes would last through the 2012 elections.

Boehner’s proposal would thus mean spending cuts of more than that amount, making the $38 billion that lawmakers agreed to chop earlier this year resemble a rounding error.

Vice President Biden will hold the second in a series of high-level meetings on the issue Tuesday, and President Obama is scheduled to meet with senators from both parties this week.”

Meanwhile, David Rogers reported yesterday at Politico that, “With Senate Budget Committee action stalled, Chairman Kent Conrad said Monday that his goal remains to cut projected deficits by $4 trillion over the next decade but Congress may need to raise the debt ceiling in short-term increments before the plan can be put in place by the end of this year.”

 

Agricultural Economy: Planting Progress- Weather Impacts

Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “Aided by warm and dry conditions, 24-row planters and willingness to work 18-20 hour days, Iowa farmers advance corn planting from 8 percent a week ago to 69 percent through Sunday, according to the U.S. Department of Agriculture.

“Iowa and Nebraska, which reported 57 percent of its corn planted, fared better than Corn Belt states east of the Mississippi River, where cold and wet conditions have persisted.”

Mr. Piller added that, “Illinois, the nation’s number two corn producing state behind Iowa, reported 34 percent of its corn planted. Indiana was just 4 percent planted and Ohio 2 percent planted.

“Nationally, the crop is 40 percent planted compared to a five-year average of 59 percent planted on this date.”

A Daily Radio News item from USDA yesterday (audio- about one minute) noted that, “A break from the weather allowed many corn producers time to catch up on their crop planting this past week,” and included comments from USDA Meteorologist Brad Rippey.

Meanwhile, University of Illinois Agricultural Economist Darrel Good noted in part yesterday at the FarmDocDaily Blog that, “The wild card in the corn market is the development of the 2011 crop. The slow start to planting has raised issues about both the yield potential for the 2011 crop and the magnitude of planted acreage. The U.S. average corn yield can still be high with more than the normal amount of the acreage planted after the optimum date, but yield would be expected to be lower than if most of the crop was planted in a timely fashion. The weakening LaNina provides some hope that the Corn Belt will not experience stressful summer weather and that the U.S. average corn yield can still approach a trend level. Reports suggest that planting made good progress last week in northern Illinois, Iowa, and Nebraska. Planting delays look to be more severe in the rest of the country. Corn acreage may exceed intentions in areas now being planted rapidly, but could fall short of intentions in the extremely wet areas.

“Unlike the previous price declines over the past 9 months, corn prices may have more difficulty rebounding from the current decline if the USDA increases the projection of year ending stocks. Prices will likely now depend more on planting progress and crop development.”

In other news, Cameron McWhirter and Mike Esterl reported in today’s Wall Street Journal that, “The swollen Mississippi River rose to its highest level in nearly 75 years near Memphis, Tenn., Monday, inundating low-lying neighborhoods and acres of farmland and pushing up wholesale gasoline prices as fuel terminals along the waterway closed.”

The AP reported yesterday that, “The land behind the Birds Point levee in southeast Missouri is among the richest in the Midwest, so farmers displaced by last week’s intentional levee breach are understandably worried about what they’ll find when the water goes down. One expert said Monday he is hopeful the damage won’t be as bad as many fear.”

The article stated that, “The nature of the intentional breach might lessen the impact on land at Birds Point, said Bob Holmes, national flood specialist for the U.S. Geological Survey.

“A natural levee breach occurs when the force of the water, often combined with a saturated levee, creates a hole that allows the water in. That hole is typically 500 feet to 1,000 feet wide. Because the river water rushes through a relatively narrow opening, it comes with a high velocity that causes scours and deposits large amounts of sand into the area behind the levee, Holmes said.”

“By contrast, the orchestrated explosion at Birds Point created an 11,000-foot-wide opening allowing the water to flow through more gently, Holmes said. For that reason, he is cautiously optimistic damage won’t be as severe.”

Meanwhile, the AP reported yesterday that, “With much of the nation focused on a spring marked by historic floods and deadly tornadoes, Texas and parts of several surrounding states are suffering through a drought nearly as punishing as some of the world’s driest deserts.

Some parts of the Lone Star State have not seen any significant precipitation since August. Bayous, cattle ponds and farm fields are drying up, and residents are living under constant threat of wildfires, which have already burned across thousands of square miles.”

 

Agricultural Economy: Food Security

Andrew England reported earlier this week at The Financial Times Online that, “The head of the African Development Bank has said that rising oil and food prices are combining to create a ‘Molotov cocktail’ for Africa as the continent attempts to push ahead with its recovery from the economic crisis.

Donald Kaberuka, AfDB president, told the Financial Times that the rising costs were particularly affecting the continent’s urban poor at a time when governments have fewer resources to counter the problem than during the previous food crisis of 2007-08.”

A news release yesterday from the Global Harvest Initiative (GHI) stated that, “[GHI] today published the second of five issue briefs outlining policies to sustainably increase the rate of agricultural productivity and address hunger and food security in anticipation of a global population surge to over 9 billion people by 2050.

“The issue brief, ‘Removing Barriers to Global and Regional Trade in Agriculture,’ highlights the critical importance of improving food and agricultural trade flows in the coming decades to counter the impact on agricultural supply resulting from changing weather patterns, urban population shifts, and limitations of water, land and inputs, among other factors.”

 

Trade

A news release yesterday from the National Pork Producers Council (NPPC) stated that, “The [NPPC] and 39 state pork associations in a letter sent today to Republican and Democrat leaders in the Senate and House urged lawmakers to approve three pending free trade agreements.”

“‘Colombia, Panama and South Korea are crucial markets for U.S. agricultural products, and the industry stands to gain sales with implementation of the FTAs,’ said NPPC President Doug Wolf, a pork producer from Lancaster, Wisconsin.”

A National Cattlemen’s Beef Association news release from yesterday stated that, “The month of May is World Trade Month and National Beef Month. This combination spurred three letters from the National Cattlemen’s Beef Association (NCBA) to urge President Obama, members of the U.S. Senate and the U.S. House of Representatives to expedite the three pending trade agreements with South Korea, Panama and Colombia. NCBA President Bill Donald said the United States cannot afford to wait any longer to implement the trade pacts.”

And Jean-Pierre Lehmann noted in a comment letter published today at The Financial Times Online that, “Sir, The idea put forward by Jagdish Bhagwati (Letters, May 6) that ‘bin Laden’s death is an opportunity to close Doha deal’ is pure fantasy. His recollection of the events leading to and following the launch of the Doha Round in November 2001 requires qualifications. Without 9/11 it is indeed more than probable that the Round would never have been launched. With the Doha meeting occurring only a few weeks after, there was a feeling of global solidarity that prevailed momentarily. But the ink of the Doha Declaration was hardly dry before the solidarity dissipated. A few months after Doha (in May 2002) President George W. Bush signed the Farm Security and Rural Investment Act, an egregious violation of the ‘spirit of Doha’. The following year the World Trade Organisation ministerial meeting in Cancún collapsed because of Washington’s refusal to negotiate and implement reductions in highly harmful trade distorting cotton subsidies. What Prof Bhagwati refers to as ‘our determination to reaffirm our values, which include an open economy and society’ could hardly have been more ephemeral.”

 

Regulations

Sally Schuff reported yesterday at Feedstuffs Online that, “Ever wonder who pays the high costs of pursuing citizen lawsuits through years of litigation?

“Many of the legal fees incurred by activist groups that file court cases against federal agencies apparently are paid by the American taxpayer.

Decisions — or settlement agreements — in those cases have had profound effects on implementation of the Clean Water Act, the Endangered Species Act and other public policies. The impacts are felt each time a federal agency makes the now-familiar claim: ‘The court made us do it.’”

The Feedstuffs article added that, “Those lawsuits are a well-known problem, and the scope of the financing issue was articulated at a recent House Agriculture Committee hearing by Rep. Glenn ‘GT’ Thompson (R., Pa.).

“He said, ‘In my opinion, some environmental organizations and individuals are purposely using the legal system to try to expand upon the basic congressional intent and jurisdiction of the law. I also think they are using it as a very successful fund-raising program as well since the federal government reimburses most of those costs for them.’”

Ms. Schuff added that, “In an interview with Feedstuffs, Thompson, chair of the House subcommittee on conservation, energy and forestry, explained that the court decisions or settlement agreements give federal agencies the legal cover to expand their guidance or rule-making on sensitive issues, many of which have profound economic effects.

“Federal reimbursement for legal fees in successful citizen suits comes from a fund authorized in the 1980 Equal Access to Justice Act (EAJA), which Thompson said began with good intentions but, in recent years, has suffered from a lack of transparency.”

An editorial at the Capital Press Online last week indicated that, “The Humane Society of the United States has made good on its threat to seek a ballot initiative in Oregon that would impose strict standards for the size of laying cages used by egg producers in the state.

“HSUS filed a petition with the Oregon secretary of state April 25 for a ballot initiative it is calling the ‘Prevention of Farm Animal Cruelty Act.’ In it, the society asks voters to require farmers give egg-laying hens room to fully extend their wings, a requirement of at least 216 square inches of floor space per bird.”

The item added that, “Egg producers say the standards demanded by the initiative would put them out of business. Animal husbandry experts say they’re unnecessary for the welfare of the hens. But HSUS will mount a high-dollar, multimedia campaign to appeal to the emotions of well-meaning urbanites by demonizing responsible producers.”

Keith Good

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