Farm Bill Issues
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “With budget-cutting in vogue, Sen. Charles Grassley is dusting off his long-time proposal to put a hard cap on farm-program payments.
“Grassley, an Iowa Republican, told reporters Tuesday that he is introducing ‘The Rural American Preservation Act’ that would put a $125,000 cap on farm payments for individuals and a $250,000 cap for married couples.
“‘We need to not subsidize big farmers getting bigger and driving up the costs of farmland and cash rents so younger, beginning farmers can’t get started,’ Grassley said.”
(Note that this Brownfield link contains an audio replay of Sen. Grassley remarks from yesterday).
Mr. Clayton explained that, “Under current law, the cap on direct payments for an individual is $40,000 and the cap for counter-cyclical payments is $65,000. There is no cap on loan-deficiency payments or marketing-loan gains.
“Grassley wants to lower the direct-payment cap to $20,000 and counter-cyclical payments to $30,000 for individuals. His bill also would set a marketing-loan cap at $75,000.
“With commodity prices where they are, the major impact would be to lower the cap on direct payments. However, some producers could be affected by tightening the marketing-loan gains.”
Meanwhile, writing yesterday at the DTN Ag Policy Blog, Mr. Clayton pointed out that, “The full House could take up agricultural appropriations as early as next week, the Capitol website, thehill.com reported Monday.
“The Ag appropriations bill would cut about $2.69 billion from discretionary spending in a variety of programs and, effectively, everyone in agriculture has something they don’t like about the bill, slugged as H.R. 2112.”
Yesterday’s update added that, “While the bill highlights cuts in programs, the biggest expense in the bill is the Supplemental Nutrition Assistance Program, or the old food stamp program. The bill provides $71.1 billion, up $5.96 billion over 2011 levels. The committee report highlighted that there are nearly 45 million people receiving SNAP benefits. The committee also rejected a pilot program by USDA to allow SNAP funds for certain states for fast-food. (This is odd, and conflicting because some states do have these programs where people can use state electronic benefit cards to go to fast-food places. The argument is that they can’t make their own food, particularly homeless people.)
“While there are cuts throughout agency programs, the bill does increase child nutrition program spending $1.45 billion over 2011 levels to $18.8 billion.
“The Women, Infants and Children program, or WIC, takes a $685.7 million cut to put spending at $6 billion.”
In other news, an update posted on Monday at Farm Futures Online reported that, “There are going to be more challenges to the writing of the 2012 Farm Bill than agriculture has ever seen. That’s according to American Farm Bureau Federation Senior Director of Congressional Relations Mary Kay Thatcher, who notes the budget is challenge number one.”
The article added that, “Thatcher says another challenge is the number of urban members of Congress, many of whom believe farmers are getting rich thanks to strong prices. But she notes good prices come and go and inclement weather can strike at any time. That’s why Thatcher says it’s important to remember that the Farm Bill covers several years and should be written to cover the bad. That’s one reason she says crop insurance is such an important component of the Farm Bill.
“‘It’s just a real good risk management tool,’ Thatcher said. ‘We’re able to have farmers pay part of the premium, have the government pay part of the premium to make it affordable, and it insures that if we have tough weather, like we’re having now with wildfires in Texas and a lot of flooding in the Midwest, that farmers are able to get enough assistance that they can farm for another year.’”
With respect to budget issues and negotiations over raising the debt ceiling, Bob Cusack and Erik Wasson reported yesterday at The Hill Online that, “Republican leaders are considering asking the White House to back a significant reform of the federal budget process in exchange for raising the nation’s debt ceiling…[T]he proposed spending revamp, which has been pending in Congress for more than a decade, would require the president to submit a budget every other year at the beginning of the first session of Congress.”
And Alexander Bolton reported yesterday at The Hill that, “GOP congressional leaders are heading for a clash with conservative lawmakers who demand a balanced-budget amendment before raising the $14.3 trillion national debt ceiling.”
Also at The Hill Online, Erik Wasson reported last night that, “Republicans want a short-term increase to the debt ceiling if the talks led by Vice President Biden do not produce sufficient spending cuts, Senate Minority Whip Jon Kyl (R-Ariz.) said Tuesday.
“Kyl, who is representing Senate Republicans in the high-level talks, said his caucus largely agrees with House Speaker John Boehner’s (R-Ohio) demand that the increase in the $14.3 trillion debt ceiling be paired with even bigger spending reductions.”
Mr. Wasson noted that, “But Kyl said the GOP would look to a shorter-term increase in the debt ceiling if the talks fail to produce more than $2.5 trillion in cuts.”
Bloomberg writers Allison Connolly and Jason Gale reported yesterday that, “Germany’s E. coli outbreak killed another patient, bringing the death tally to 23, and sickened 96 more people as officials continued to search for a source.
“At least 674 people have developed a life-threatening complication from E. coli in Europe out of the 2,429 who have been stricken since May 2, the European Centre for Disease Prevention and Control said today.”
Alan Cowell reported in today’s New York Times that, “The German government came under increased criticism on Tuesday at home and abroad, accused of mismanaging the crisis surrounding an E. coli outbreak that has killed more than 20 people.
“German officials, however, reported a slight fall in the rate of newly reported infections. ‘There is much to suggest that we have put the worst behind us,’ said Daniel Bahr, the federal health minister. Still, officials said they did not know the source of the outbreak.”
Matthew Dalton and Laura Stevens reported in today’s Wall Street Journal that, “European Union authorities have proposed giving vegetable farmers EU funds to destroy their harvest in an effort to bolster agriculture markets hard hit by the European E. coli outbreak, EU officials said Tuesday.”
Food safety developments in the EU have provided an impetus for a closer look at food safety issues in the U.S.
Dan Vergano reported yesterday at the USA Today Online that, “Agriculture Secretary Tom Vilsack said he is ‘reasonably confident’ that U.S. consumers won’t face the same sort of E. coli outbreak now plaguing Germany.
“But the European episode ‘reinforces that we need to remain vigilant here about food safety,’ Vilsack said Monday, speaking with the USA TODAY editorial board.
“Public health experts, however, warned that another serious outbreak in the U.S. is just a matter of time and luck.”
Yesterday’s article explained that, “In January, President Obama signed a food safety act ramping up Food and Drug Administration authority to police food imports.
“But Caroline Smith DeWaal of the Center for Science in the Public Interest warns those inspections may be cut in the ongoing congressional budget battle.”
William Neuman reported in today’s New York Times that, “Federal officials said on Tuesday that a national monitoring system for food-borne illness detected an increasing number of sicknesses last year from a group of rare E. coli bacteria related to the little-known and highly toxic strain that has been ravaging Germany.
“For the first time, the group of rare E. coli strains was collectively identified as the cause of more illnesses in the United States than the more common form of the pathogen, probably because more laboratories have begun to test for their presence, said officials at the Centers for Disease Control and Prevention, which on Tuesday released 2010 results from its nationwide tracking system for food-borne diseases.
“The rarer strains of E. coli found in the United States have generally caused less severe illness, leading to fewer hospitalizations and deaths than the predominant strain, known as E. coli O157:H7. That strain has long been the focus of campaigns to eradicate it from the food supply.”
Lyndsey Layton reported yesterday at The Washington Post Online that, “Food poisoning cases caused by salmonella have increased by 10 percent in recent years, despite widespread campaigns to educate consumers and foodmakers about food preparation and handling, according to new federal statistics that detail the stubborn presence of salmonella in the U.S. food supply.
“The findings are part of an annual food safety report card released by the Centers for Disease Control and Prevention, which since 1996 has tracked the prevalence of the nine most common food-borne pathogens.”
And Helena Bottemiller reported yesterday at Food Safety News Online that, “The leading Democrats on the House Energy and Commerce Committee are asking their Republican counterparts to hold a hearing on the public health threat posed by the rare and extremely virulent strain of E. coli responsible for the ongoing foodborne illness outbreak in Germany.
“Rep. Henry A. Waxman (D-CA), Ranking Member of the committee, Rep. Frank Pallone, Jr. (D-NJ), Ranking Member of the Health Subcommittee, and Rep. Diana DeGette (D-CO), Ranking Member of the Oversight and Investigations Subcommittee, sent their request Monday in a letter to Chairman Fred Upton (R-MI) and Subcommittee Chairmen Joseph Pitts (R-PA) and Cliff Stearns (R-FL).”
Neena Rai, Caroline Henshaw and Sebastian Moffett reported in today’s Wall Street Journal that, “Drought in some areas and heavy rain in others are keeping world food prices near record levels, threatening the food supply for poorer, food-importing countries, the United Nations’ food body said Tuesday.
“The Food and Agriculture Organization forecast in its biannual report that world cereal output would rise 3.5% to a record 2.3 billion metric tons in 2011—but warned that this might not be enough to replenish scarce world stocks and calm the recent turbulence in world food markets.”
Former Senate majority leader Tom Daschle penned an Op-Ed yesterday at Politico which stated in part that, “Food security is a defining challenge facing the human race, a serious threat to stability worldwide. Today, 1 billion men, women and children are food insecure. Unless we find better ways to produce and distribute food, this number will only increase. The consequences present challenges that should matter to all — policymakers, the public and private sectors, farmers and consumers… [T]he DuPont Advisory Committee on Agricultural Innovation and Productivity for the 21st Century has spent the past 18 months examining the challenges and has identified solutions [report available here].”
Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “A group of agricultural policy experts assembled by biotech giant DuPont is calling for both the private sector and governments to invest more money in boosting food production in poor countries.”
Yesterday’s update noted that, “Their ideas, included in a report released today in Washington, included a recommendation that companies create ‘science-based’ regulations to speed commercialization of genetically engineered crops and other products. DuPont is parent company of Pioneer Hi-Bred, one of the top producers of biotech of seeds.
“Other recommendations include boosting research and extension services and breeding higher yielding, more nutritional versions of crops such as yams and cassava that are of little interest to seed companies since there is little potential for profit.”
Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “The gist of the report is that demand for food is at risk of outstripping supply — and it could get worse if not addressed in a comprehensive manner.”
Meanwhile, Ian Elliott reported yesterday at Feedstuffs Online that, “Farm groups in the European Union warned governments last week of the ‘challenge’ farmers face with this summer’s crop, asking the EU Commission to get ready to provide needed support to the crop and livestock sector.
“Some of Europe’s farmers now face yield cuts of 8 – 15%, the Secretary General of Copa – Cogeca (European Farmers and Agri-Cooperatives) told EU Agriculture Commissioner Dacian Ciolos. The yield cut comes as farmers face high fertilizer prices. Fertilizer represents 40% of the cost of producing grains.”
Domestically, Bruce C. Smith reported yesterday at the Indianapolis Star Online that, “Several days of hot, dry weather the past week helped Hoosier farmers racing the calendar to get this year’s corn crop planted.
“However the planting is still about 24 days behind last year’s pace and at least 9 days behind an average year.
“Some farmers have given up on corn for 2011, and they are accepting crop insurance payments assuming the clock has already run out on this spring’s planting season.”
Mr. Smith pointed out that, “The late planting this spring, caused by rain and prolonged cold temperatures, is a difference of at least 500,000 to a million acres of Indiana crops not in the ground and growing, which means up to $1 billion in lost farm income, according to crop insurers.
“The USDA statistics service said Hoosier farmers are taking advantage of the improving conditions and they can make up a lot of the lost ground with 10 days of dry weather.”
Abby Phillip reported yesterday at Politico that, “For labor unions, the pending trade agreements with South Korea, Panama and Colombia are a bitter pill. To console a key Democratic constituency, the Obama administration is pushing Congress to extend a displaced worker assistance program that expired in February. The program provides job training and health care funds to workers who lose their jobs as a result of free-trade agreements, a reflection of labor’s worries that industries will flee overseas, leaving more U.S. workers jobless.
“Senate and House Republicans oppose the Trade Adjustment Assistance program and say it is impractical spending in a time of soaring deficits. They want to move forward on the trade agreements without the workers’ aid, and they have threatened to hold up the confirmation of Obama’s nominee for commerce secretary, John Bryson, until the agreements are finalized.”
A related news release yesterday from Sen. Mitch McConnell (R-KY) contained remarks the Minority Leader delivered on the Senate floor Tuesday regarding trade. In part, Sen. McConnell indicated that, “The President himself has explicitly acknowledged in front of the cameras that free trade agreements will create tens of thousands of jobs for American families who need them. Yet now, the President’s advisors say that the White House plans to hold off on this bipartisan job-creating initiative unless it can spend more money on a government benefits program first.
“At a time when 14 million Americans are looking for work, they actually want to hold off on these known job-creating agreements in exchange for a green light to spend more money.
“It’s astonishing. I mean, how do you explain to an American manufacturer or farmer that they have to lose business to France because some members of Congress want a better benefits package for their allies in organized labor?”
And a news release yesterday from Senate Finance Committee ranking member Orrin Hatch (R-UT) indicated that, “By tacking the expansion of TAA [Trade Adjustment Assistance] onto the stimulus bill, and refusing to allow Congress to vote on the extended TAA program on its own merits, it is unclear whether there is, in fact, bipartisan support for this expanded program. If the expanded TAA program can stand on its own merits, as each of the FTAs can, then it should be introduced and voted on separately from the FTAs.”
In other trade news, the International Food Policy Research Institute (IFPRI) held a seminar yesterday titled, “Agricultural Support in Doha and Beyond.” The discussion drew “upon the newly published book WTO Disciplines on Agricultural Support: Seeking a Fair Basis for Trade edited by David Orden, David Blandford, and Tim Josling (Cambridge University Press, 2011). After an overview of the main findings by David Orden, Ambassador Clayton Yeutter presented his observations as one of the leaders of the negotiations that created the WTO.” Agricultural journalist and author, Jerry Hagstrom, moderated yesterday’s event.
During yesterday’s seminar, Former U.S. Secretary of Agriculture and Trade Representative Clayton Yeutter provided an excellent overview and background on the foundations of the modern multi-party trading scheme and agriculture that transpired during the negotiation and passage of The Uruguay Round trade agreement in 1986.
A portion of Dr. Yeutter’s presentation is available here (MP3- 9:09).
As a general proposition, these trade disciplines in the 1980s were hammered out during a time of abundant supply and low prices for many globally traded commodities such as wheat, corn and soybeans.
During the Q and A portion of yesterday’s program, some participants inquired about the much different agricultural economic outlook today, when food security, low inventories and high prices are a concern of policymakers. Participants asked how this different economic environment is impacting trade analysis, and also wanted to know about the future of the Doha Round of WTO trade talks.
A portion of this discussion from yesterday’s IFPRI seminar is available here (MP3- 5:20). The audio clip includes remarks from Tim Josling, David Blandford and David Orden.