September 23, 2019

Farm Bill; Agricultural Economy; and Trade

Farm Bill Issues: House Appropriations

The AP reported yesterday that, “A House committee voted Tuesday to cut farm subsidies to pay for deficit reduction and other budget priorities, chipping away at the billions of dollars a year that are directed to farmers.

“The votes in the House Appropriations Committee may be a preview of what is expected to be a tough year for agriculture programs. Congressional lawmakers have increasingly looked to billions of dollars in farm subsidies as a source of money for other priorities as crop prices have reached record levels.”

Yesterday’s article explained that, “In a surprise move, the committee approved an amendment by Rep. Jeff Flake, R-Ariz., to lower the maximum adjusted gross income a farmer can have to earn certain subsidies. While many farmers can now make as much as $750,000 annually and still receive subsidies, Flake’s amendment would lower the threshold for some to $250,000. Flake did not say how much money would be saved by the change but said those dollars would go toward reducing the deficit.

“The committee also approved an amendment by Flake to use domestic farm subsidies to pay for $147 million in annual payments to Brazil’s cotton sector to settle a World Trade Organization dispute. The committee later eliminated those payments to Brazil entirely, shifting the money to domestic feeding programs.

“Both of Flake’s amendments would dip into direct payments to farmers, which are a type of subsidy paid regardless of crop price or yield. They cost the government about $5 billion a year and have been a frequent target of critics.”

Related documentation from the House Appropriations Committee yesterday is also available: press release, statement by Committee Chairman Hal Rogers (R-KY), text of legislation, and the report of the legislation.


Farm Bill Issues: Proposed Budget Cuts Amid Debt-Reduction Negotiations

In other news with implications for farm spending, Lori Montgomery and Paul Kane reported yesterday at The Washington Post Online that, “With an August deadline looming, the House overwhelmingly refused Tuesday to raise the legal limit on government borrowing, setting the stage for a long, sweaty summer of haggling over the shape of the largest debt-reduction package in at least two decades.”

The Post article stated that, “Meanwhile, debt-reduction talks between the White House and congressional leaders are underway, led by Vice President Biden. Last week, Biden said the group is on track to produce an agreement that would trim at least $1 trillion from projected budget deficits over the next 10 to 12 years. That would be the biggest debt-reduction package since at least the start of the Clinton administration, when a Democratic Congress approved spending cuts and tax increases estimated to reduce deficits by $433 billion over five years.

“This time around, negotiators have agreed to consider pulling about $200 billion in savings from various programs, including federal worker pensions and farm subsidies. They are also eyeing the nearly $800 billion that Obama has offered to cut from domestic agencies over the next 12 years.”


Farm Bill Issues: Senate Ag Committee Field Hearing

In more specific Farm Bill developments, Zlati Meyer reported yesterday at the Detroit Free Press Online that, “Funding for research, price protection for commodity farmers, pests and access to credit are all issues important to Michigan agricultural community, according to the 15 witnesses who testified at the first public hearing on the 2012 federal farm bill, held at Michigan State University today.”

(Note: An audio replay of yesterday’s hearing, along with submitted witness testimony, can be found here.  A summary and unofficial transcript of the May 26 Senate Farm Bill hearing, is available here. A summary of House Agriculture Committee hearings on the Farm Bill from last spring and summer, prior to the November 2010 elections, can be viewed here. And a summary of Senate hearings relating to the Farm Bill from last summer, under the previous Congress, can be found here.)

Yesterday’s Free Press article noted that, “More than 250 people attended the hearing, hosted by U.S. Sen. Debbie Stabenow, D-Michigan, chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry at the United States’ first land-grant school.”

A news release yesterday from Sen. Stabenow’s office regarding yesterday’s hearing quoted the Committee Chairwoman as saying: “This hearing is officially the first field hearing of the Agriculture Committee on the 2012 Farm Bill. And in Michigan, where one in four jobs relies on agriculture, and where agriculture contributes over $71 billion to our economy, when we talk about the Farm Bill, we are really talking about a jobs bill.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Going into a farm bill where spending cuts are demanded, senators at the Senate Agriculture Committee’s first field hearing Tuesday heard from farmers and other groups who like the current programs, but have more demands as well.”

The DTN article added that, “Ranking Member Pat Roberts, R-Kan., let it be known they understand the farm bill will face cuts, but they don’t believe agricultural programs should take a disproportionate share.”

“Roberts noted that witnesses in the hearing talked little about deficit reduction, but spoke more about the value of current programs. Roberts also stressed that Congress and federal officials must realize that 2% of the country is tasked with feeding the other 98% and more.”

Click here for Sen. Roberts’ opening statement at yesterday’s hearing, and to listen to some of the Ranking Member’s remarks on the farm safety net, crop insurance, the tenuous nature of high commodity prices and sudden disasters, click here (MP3- 1:46).

Mr. Clayton indicated in his DTN article from yesterday that, “As far as commodity programs, Clark Gerstacker, a corn and soybean farmer from Midland, Mich., told senators he is enrolled in the Average Crop Revenue Election Program, or ACRE. Gerstacker said the program hasn’t paid out, and he repeated a theme heard around the country that ACRE might work better on a county level. Nonetheless, when asked by Roberts, Gerstacker said he would enroll in ACRE again as a risk-management tool to work with his insurance.

“‘I do like ACRE. I think it has some very good pieces behind it,’ Gerstacker said.

“Roberts noted only 6% of Michigan farmers have enrolled in ACRE, and in Roberts’s home state of Kansas only 2% of farmers have enrolled.”

To listen to a portion of this exchange between Sen. Roberts and Mr. Gerstacker, where the interaction of crop insurance with the ACRE program was also discussed, click here (MP3- 3:38).

During his opening statement, Mr. Gerstacker, highlighted the importance of risk management tools such as ACRE and crop insurance- which he referred to as “vital.” (Related FarmPolicy audio (MP3- 2:21)).

Also with respect to risk management, Chairwoman Stabenow asked Julia Rothwell, the Chair of the U.S. Apple Association, about crop insurance and specialty crops.  Stabenow wanted to know how crop insurance could be improved for specialty crop producers (Related FarmPolicy audio (MP3- 2:16)).

Peter B. Blauwiekel, a member of the Michigan Pork Producers Council, expressed concern at yesterday’s Senate hearing about a potential short U.S. corn crop this year.  He specifically noted issues associated with the Conservation Reserve Program and biofuels policy. (Related FarmPolicy audio (MP3- 0:42)).

Later in the hearing yesterday, Mr. Blauwiekel stated that he was “scared to death going into this fall” because of crop supply concerns and biofuels policy (FarmPolicy audio (MP3- 0:51)).

(Note: In related news on biofuels policy and livestock producers, the National Cattlemen’s Beef Association (NCBA) issued a press release yesterday which stated that, “The [NCBA] threw its weight behind the Fuel Feedstock Freedom Act, which amends the Clean Air Act to allow states to opt out of the corn ethanol portion of the renewable fuel standard (RFS) and to broaden eligibility of the cellulosic biofuels carve out by redefining ‘cellulosic biofuels’ as ‘next generation biofuels’ to allow non-ethanol sources of renewable fuel. NCBA President Bill Donald said this legislation is a big step toward leveling the playing field for a bushel of corn.)

The American Soybean Association (ASA) also submitted testimony at yesterday’s Senate Ag Committee field hearing.  The ASA statement indicated in part that, “Crop insurance is an important part of the farm income safety net for soybean producers. ASA believes crop insurance should be modified to reflect the lower return per acre and higher input costs for soybean producers in regions that do not participate at meaningful levels. The soybean industry is conducting a survey among soybean producers in different regions to determine why producers choose to participate, or not participate, in crop insurance, and what improvements could be made to increase participation.”

A news release yesterday from the Agricultural Leaders of Michigan (ALM) noted that, “[ALM] said key areas that must be addressed in the 2012 Farm Bill revisions include: Protecting the agricultural safety net and crop insurance; [and] allowing landowners to take their land out of the Conservation Reserve Program (CRP) early without penalty, which is essential to increase production amid growing global demand and shrinking stocks of grain…”

In other developments yesterday, National Farmers Union President Roger Johnson penned an Op-Ed that was published in the Omaha World-Herald where he indicated that, “Amid the long list of federal projects costing taxpayers far more than predicted, one policy stands alone by coming in billions of dollars under budget.”

“To read most urban newspapers or listen to elitist think tanks, you’re left with the impression that farm budgets are bloated and that farm policy is a financial sinkhole for the country. Nothing could be further from the truth.”

Mr. Johnson added that, “Instead of tearing holes in the farm safety net, lawmakers should celebrate farm policy for its fiscal sensibilities and for working just as it was designed. The bulk of the safety net only kicks in when most needed — when crop prices are in a free fall or Mother Nature strikes.

“Crop insurance — which is the most important component of the farm safety net for specialty crop producers and growers of most major crops — was specifically created to ensure that private insurance companies, not taxpayers, shoulder the burden of funding payouts following crises.

“Last year, for example, every federal dollar spent to encourage crop insurance coverage was parlayed into $20 of privately backed protection. That’s a huge return on taxpayer investment, and it was needed.”

Meanwhile, an editorial yesterday at The Free Press Online (Mankato, MN) stated that, “But as Congress looks at budget cutting across the board, it’s clear that many portions of the farm program — particularly the $5-billion-a-year in direct payments to farmers in good and bad years — needs to reformed and reduced.

“The farm program was created as part of New Deal legislation to provide a safety net for Depression-era farmers. Today it is skewed toward corn, soybean and wheat farms, which are given subsidies even when crops are good and commodity prices high.”


Farm Bill Issues: Conservation

A news release yesterday from Sen. Mark Udall (D-CO) stated that, “Today, Mark Udall announced he, along with Senator Michael Bennet, sent a letter to Senate agricultural committee leadership and appropriators highlighting the importance of conservation programming in the 2008 Farm Bill and the role it continues to play in enhancing Colorado’s agricultural economy and conserving one of Colorado’s most valuable natural resources – water.”

“‘As the pressure on our nation’s farmers and ranchers increases to meet growing global demand, it is important that we maintain adequate support for these important conservation tools when they are needed the most,’ the senators wrote.”

A separate news item yesterday from the National Wildlife Federation noted that, “A coalition of more than 50 agriculture and conservation groups representing millions of Americans today are urging lawmakers to reject nearly $1 billion in proposed cuts to farm bill conservation programs.  The organizations are asking the House Appropriations Committee to ‘ensure that reasonable funding levels are continued’ when the committee meets today at 5 p.m. to vote on these huge cuts in the FY2012 agriculture appropriations bill; $500 million already has been slashed from farm bill conservation programs in the FY2011 spending bill.

“‘These conservation programs are crucial to the health and viability of agriculture and rural America,’ said a letter sent to committee members from the agriculture and conservation groups, including National Wildlife Federation, Environmental Defense Fund and National Young Farmers’ Coalition.”

A press release yesterday from the Theodore Roosevelt Conservation Partnership noted that, “As House appropriators deliberate the Department of Agriculture’s budget for fiscal year 2012, sportsmen are sharply criticizing cuts proposed for Farm Bill conservation programs instrumental to fish and wildlife habitat and hunting and fishing, the Theodore Roosevelt Conservation Partnership announced today.”


Farm Bill Issues: Nutrition

AP writer Mary Clare Jalonick reported yesterday that, “House Republicans are pushing back against Obama administration efforts to promote healthier lunches, saying the Agriculture Department should rewrite rules it issued in January meant to make school meals healthier. They say the new rules are too costly.”

And Sara Murray reported yesterday at The Wall Street Journal’s Real Time Economics Blog that, “The share of residents turning to food stamps [SNAP] has risen in nearly every state nationwide in the past year even as unemployment has moderated.

“After a temporary plateau in February, the number of Americans receiving food stamps ticked up again in March. Nearly 44.6 million received food stamps in March, up more than 11% from the same time a year ago, the Department of Agriculture said Tuesday.”


Agricultural Economy

Bloomberg writer Whitney McFerron reported yesterday that, “U.S. corn, soybean and spring-wheat planting trailed the year-earlier pace last week, after wet weather in the eastern Midwest and northern regions inhibited fieldwork.

“About 86 percent of the corn crop, the world’s biggest, was planted as of May 29, the U.S. Department of Agriculture said today in a report. That compares with 79 percent a week earlier and 97 percent a year earlier. The average was 95 percent at this time of year, from 2006 to 2010.”

Meanwhile, Dow Jones News reported yesterday that, “China’s corn imports this year will likely rise several times over last year’s volume as increasing rural incomes underpin steady growth in pork consumption, a senior agriculture industry analyst with Rabobank International said Tuesday.”

In other global agricultural news, the BBC reported yesterday that, “Rising food prices are tightening the squeeze on populations already struggling to buy adequate food, demanding radical reform of the global food system, Oxfam has warned.

“By 2030, the average cost of key crops could increase by between 120% and 180%, the charity forecasts.”

Philip Brasher reported yesterday at the Green Fields Blog that, “Its a solution that seldom gets much attention, but one way to ensure there is more food available is to cut down on what gets wasted.  As much as 20 percent of the grain that Africa produces spoils or is otherwise wasted before it can be processed or eaten, according to a report by the United Nations Food and Agriculture Organization and the World Bank.”

And a news release yesterday from the Global Harvest Initiative (GHI) stated that, “[GHI] today published its latest issue brief outlining recommendations to optimize and leverage development assistance programs in order to address global hunger and food security by sustainably increasing the rate of global agricultural productivity.

“The issue brief, ‘Strengthening and Streamlining Development Assistance Programs,’ acknowledges the benefits of the more than $58 billion in foreign assistance delivered by the U.S. Government each year, but outlines the importance of increased collaboration and efficiency among these programs and the organizations that manage them to maximize benefits and help alleviate the growing challenges of hunger and food security.”



An update posted yesterday at The Financial Times Online noted that, “For believers in unfettered global trade, there is an unfortunate outcome to Russia’s 10-month ban on grain exports, which expires on Wednesday. At least as far as Russia was concerned, it worked. Not only did the restriction cause domestic prices to collapse, helping to restrain one of the highest rates of inflation in the developing world, but it also averted a mass cull of livestock. That, after all, was the main fear arising from the terrible harvest: that poor farmers facing higher feed costs would start to slaughter herds, threatening the nation’s aim of 85 per cent self-sufficiency in meat by 2015.”

John W. Miller reported yesterday at The Wall Street Journal Online that, “The World Trade Organization’s 153 members agreed Tuesday in Geneva to a less-ambitious Doha Round of global trade talks, stripping away enough contentious issues that it now appears feasible to finish a deal by the end of the year.

“The endorsement of what WTO Director-General Pascal Lamy calls an ‘early harvest’ means the group now risks a significant failure if its members can’t agree to even a Doha-lite deal. It also suggests that the era of big, multilateral trade deals is over.”

Reuters news indicated yesterday that, “Faced with the fact that talks will reach no conclusion for several years due to divisions between leading trading powers and upcoming elections, the head of the World Trade Organization called on negotiators on Tuesday to focus on a preliminary deal for now that would grant concessions to least-developed nations.”

For additional information on trade see, “Trade Policy after Doha,” from the German Marshall Fund, and “WTO Disciplines on Agricultural Support: Experience to Date and Assessment of Doha Proposals,” from the International Food Policy Research Institute.

Keith Good

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