FarmPolicy

November 21, 2019

Policy Issues; Ag Economy (WASDE); Biofuels; and Food Safety

Policy Issues

Robin Bravender reported last night at Politico that, “Top Cabinet officials insisted Thursday that the White House hasn’t forgotten rural America, despite critics’ claims that the administration is pursuing policies that will hurt farmers and small businesses.

“President Barack Obama signed an executive order Thursday establishing a White House Rural Council aimed at boosting job creation and economic development in rural areas.

“But key administration officials said Obama has had rural America’s back all along.”

The article added that, “Agriculture Secretary Tom Vilsack, who will serve as chairman of the council, said the new initiative is just the latest move in a ‘concerted effort’ by the administration to support rural communities. ‘We know we have to do more; we know that there’s still concern about the economy,’ he said.”

(Note: A related USDA news release on this issue from yesterday is available here, and a White House Blog update from Sec. Vilsack yesterday can be found here.  Sec. Vilsack was also on yesterday’s AgriTalk radio program with Mike Adams, and his comments regarding the Rural Council can be heard here).

Yesterday’s Politico article pointed out that, “Vilsack touted the administration’s efforts to improve roads, drinking water projects and broadband access in rural areas. He added that Environmental Protection Agency Administrator Lisa Jackson has made a series of trips to farm country — including a recent visit with Vilsack to Iowa.

“On Wednesday, Sen. Mike Johanns (R-Neb.) blasted EPA on the Senate floor for conducting a disingenuous ‘charm offensive’ in farm country while pursuing rules that will hurt agriculture. For instance, he said, farmers are concerned that EPA will start regulating dust on farms, even though Jackson has repeatedly said her agency has no plans to do so.”

A related news release from Sen. Johanns yesterday stated that, “[Sen. Johanns] today pressed to require the Environmental Protection Agency (EPA) to consider the costs of its proposed regulations before enacting them. Johanns signed onto an amendment identical to a bill he introduced in March with Environment and Public Works Ranking Member Jim Inhofe (R-Okla). The bill would require a comprehensive analysis of the total economic impact of the agency’s rules on jobs; retail electricity rates and gasoline prices; power plant closures; state and local governments; small businesses; electric reliability; and energy-intensive manufacturers.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Citing that 16% of Americans live in rural counties, the president signed an executive order stating that sustainable rural communities are essential to the country’s future. ‘These communities supply our food, fiber, and energy, safeguard our natural resources, and are essential in the development of science and innovation.’”

The DTN article noted that, “‘Rural America makes significant contributions to the security, prosperity, and economic strength of our country,’ stated Agriculture Secretary Tom Vilsack. ‘The Rural Council announced by President Obama shows his continued focus on promoting economic opportunity, creating jobs, and enhancing the quality of life for those who live in rural America. Together with the rest of the Obama administration, USDA has worked to support families and businesses in rural communities so that their success will pay dividends for all Americans.’”

In Farm Bill related developments, a news release yesterday from Iowa GOP Sen. Chuck Grassley stated that, “Senators [Grassley] and Tim Johnson of South Dakota today introduced legislation to cap total farm payments at $250,000, close loopholes that are being used to game the farm payment system, and target payments to actively engaged farmers who need assistance getting over the bumps that come with ensuring a safe and abundant food supply.”

The release, which also included a floor statement Sen. Grassley delivered yesterday on the bill, added that, “The legislation would set a limit of $250,000 for married couples for farm payments in an attempt to better target farm program payments to family farmers.  Specifically, the bill caps direct payments at $40,000; counter-cyclical payments at $60,000; and marketing loan gains (including forfeitures), loan deficiency payments, and commodity certificates at $150,000.  It also closes loopholes that people are using to maximize their take from the federal government.  The bill also improves the standard which the Department of Agriculture uses to determine farmers who are actively engaged in their operations.”

With respect to budget related pressure in policy development, Michael McNutt reported yesterday at The Oklahoman Online that, “Reining in federal spending is a goal among House Republicans and dealing with the nation’s debt, estimated at $14.3 trillion, is among the dominant issues before Congress this year, [House Ag Committee Chairman Frank Lucas, R-Cheyenne], told more than 100 members of the Oklahoma Conservative Political Action Committee at their weekly meeting.”

More broadly on current budget negotiations, David Rogers reported yesterday at Politico that, “Picking up the pace, the White House wants three meetings a week with lawmakers for the remainder of June in hopes of hammering out a deficit- reduction agreement by the July 4th recess…[T]he July 4th target leaves time for President Barack Obama to step in and make final decisions with leaders like Speaker John Boehner who are not part of the immediate talks. And even if a deal is reached, much of July is still needed for Congress to write complicated changes in federal programs and raise the federal debt ceiling before the Aug. 2 deadline set by the Treasury Department.”

Carl Hulse reported yesterday at The New York Times Online that, “In their two-hour meeting at the Capitol on Thursday, lawmakers, White House representatives and Treasury officials explored potential sources of new revenue that Democrats say will be essential to winning their support for any deal in the House and Senate. Officials close to the talks said the participants had at least a few more weeks of work to do.”

Lori Montgomery reported yesterday at The Washington Post Online that, “Much remains to be decided in the sessions, which are set to resume Tuesday. There has been no agreement on how much to raise the debt limit, how much to cut spending or what form the agreement will take, according to people familiar with the talks. Republicans have said they want cuts equal in size to the increase in the debt limit, and the Treasury needs an increase of at least $2 trillion to get through the end of next year. But a shorter extension is also a possibility.

Next up on the agenda: agency spending, including at the Pentagon, and an enforcement mechanism to lock in any multi-year budget deal. Republicans want spending caps with automatic cuts if the caps are breached. Democrats want caps on annual deficits that could trigger tax increases.”

Janet Hook and Damian Paletta pointed out in today’s Wall Street Journal that, “Sources familiar with the talks say the mood at the negotiations has been constructive and positive—less hostile and antagonistic than when the two parties earlier this year negotiated a package of spending cuts for the 2011 budget.”

Meanwhile, Alexander Bolton reported yesterday at The Hill Online that, “After months of keeping their work secret, the remaining members of the Senate Gang of Six have opened up their negotiations to a broader group of Democratic and Republican colleagues.

About 18 senators, an even mix from both parties, met in Senate Democratic Whip Dick Durbin’s (Ill.) office Thursday to build support for the Gang of Six’s unfinished work.”

 

Agricultural Economy (WASDE Report)

Tom Polansek and Bill Tomson reported in today’s Wall Street Journal that, “Low corn supplies are here to stay, with federal forecasters cutting the outlook for this year’s harvest and projecting inventories to stay at levels not seen since the mid-1990s.

“The U.S. Department of Agriculture crop report caused futures prices to surge to a new, all-time high of more than $7.90 a bushel at the Chicago Board of Trade.”

(Note: Yesterday’s complete World Agricultural Supply and Demand Estimates (WASDE) report is available here. A summary of U.S. corn variables from the report can be found in this one page overview, while a one-page synopsis for soybeans (here) and wheat (here) are also available.  USDA also released its Crop Production report yesterday; an overview of the two reports from yesterday has been posted at the FarmDocDaily Blog (University of Illinois)).

Today’s Journal article added that, “U.S farmers have struggled this spring to get their crops in the ground as wet weather has plagued portions of the corn belt. As a result, federal forecaster pegged U.S. corn production at 13.2 billion bushels this year, a 2% decline from its May estimate, yet still a record crop.

“The large harvest isn’t seen boosting low domestic supplies, with the agency slashing its forecast for end-of-season inventories for next year to just 695 million bushels, below the 900 million bushels predicted in May. That is slightly below end-of-season corn supplies estimated for this year, but above a record low set in the 1996 [related graph].”

Bloomberg writer Jeff Wilson reported yesterday that, “Corn jumped to the highest price in almost three years after the U.S. Department of Agriculture forecast tighter supplies, as adverse weather hurt crops.”

The article stated that, “Planted acreage was forecast at 90.7 million acres, down 1.6 percent from last month’s projection. In a survey released in late March, farmers indicated they planned to sow 92.178 million acres with corn this year. The USDA will update its estimate of farmers’ intentions in a report on June 30.

“The USDA forecast the yield from this year’s crop at 158.7 bushels per acre, unchanged from a month ago and up from 152.8 bushels last year.

“The department also projected record U.S. farm prices for next year, with corn fetching $6 to $7 a bushel on average in the year that begins Sept. 1, up from last month’s forecast of $5.50 to $6.50 and the current-year’s average of $5.20 to $5.50.”

Scott Kilman reported yesterday at The Wall Street Journal Online that, “The USDA said that May flooding on the Mississippi River and Ohio River, and now on the Missouri River, will probably prevent corn farmers from harvesting 1.9 million acres of land this autumn, prompting the agency to cut its one-month-old production forecast of the nation’s biggest crop by 2.3% to 13.2 billion bushels.”

The Journal article indicated that, “Economists expect the tight supply situation to keep corn prices at record-high nominal levels, which in turn will help to lift prices of other major Midwest crops such as wheat and soybeans. High prices aren’t cooling demand for corn by the federally supported ethanol industry, which is expected by the USDA to use 5.05 billion bushels of the yet-to-be harvested crop.

“‘We are barely out of the blocks and we are already 10 yards behind,’ said USDA Chief Economist Joseph Glauber, who had thought before the spring planting season began that, with good weather, farmers could produce up to 13.73 billion bushels of corn. ‘Now, it seems supplies will be tight through next year as well.’”

Additional analysis from Dr. Glauber is included in this USDA daily radio news item from yesterday (“Weather Behind Crop Production Forecast Changes”).

The AP reported yesterday that, “U.S. food prices are expected to stay high through 2012 because heavy rains and extreme flooding will likely cut the size of this fall’s corn harvest…[M]ore expensive grain has led to food price increases this year. That could ultimately make everything from beef to cereal to soft drinks more expensive at the supermarket. For all of 2011, the USDA predicts food prices will rise 3 percent to 4 percent.”

Meanwhile, beyond yesterday’s official crop estimates, Bloomberg writer Tony C. Dreibus reported yesterday that, “Climate change will cause more droughts and reduce food production, the United Nations’ Food and Agriculture Organization said.”

And Jack Farchy reported on Wednesday at The Financial Times Online that, “Dry weather across northern Europe has raised concerns among commodity traders of another potential crop failure, similar to last year’s devastating losses in Russia.”

A separate FT article from Wednesday noted that, “In France, the months of March and May were the hottest for more than a century, while England and Wales had their second-driest spring since 1910. Between January and April, ‘severe’ rain deficits were recorded in Belgium, the Netherlands, Germany, Denmark, Hungary and Austria, according to the European Commission.

“Recent storms in some parts of Europe have done little to refill heavily depleted water tables.”

And Doreen Carvajal reported in today’s New York Times that, “Suffering from a record-shattering drought, European nations started preparing emergency plans this week to conserve water and provide millions of euros in aid to farmers, including the deployment of soldiers to deliver hay for cattle grazing on sun-baked soil.

“On Thursday, President Nicolas Sarkozy toured a cattle farm in western France to announce an aid package and the service of soldiers and national trains to deliver fodder for livestock farmers. They are comparing the warm temperatures to the heat wave in the summer of 2003, when more than 10,000 people died in Europe.”

In other news regarding crop production, the AP reported yesterday that, “Scientists say they’re close to producing new ‘super varieties’ of wheat that will resist a virulent fungus while boosting yields up to 15 percent, potentially easing a deadly threat to the world’s food supply.”

In a separate look at other variables in the agricultural economy, William Neuman reported in today’s New York Times that, “For all the talk about sustainable agriculture, most small farms are not self-sustaining in a very basic sense: they can’t make ends meet financially without relying on income from jobs off the farm.

But increasingly farmers are eking more money out of the land in ways beyond the traditional route of planting crops and raising livestock. Some have opened bed-and-breakfasts, often known as farm stays, that draw guests eager to get a taste of rural living. Others operate corn mazes — now jazzed up with modern fillips like maps on cellphones — that often turn into seasonal amusements, with rope courses and zip lines. Ranchers open their land to hunters or bring in guests to ride horses, dude ranch style.

Known as agritourism, such activities are becoming an important economic boost for many farmers.”

 

Biofuels

Darren Goode reported last night at Politico that, “Sen. Tom Coburn has pulled the trigger and is forcing a long-sought vote on an amendment repealing billions in annual tax incentives for ethanol.

“The Senate will vote Tuesday afternoon on Coburn’s motion limiting debate on his amendment that would do away with the 45 cent blender tax credit for ethanol — worth about $6 billion this year — and the 54 cent tariff on imported ethanol.

“Coburn didn’t inform either Senate Majority Leader Harry Reid or Minority Leader Mitch McConnell before he made his move, appearing to catch both completely off guard.”

Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “Sen. John McCain, the ethanol industry’s best-known critic in Congress, is going after subsidies for the biofuel again. This time, he wants to stop Agriculture Secretary Tom Vilsack from giving money to rural service stations to install ethanol pumps. The money would come from a farm bill program that has funded solar and wind projects and energy-efficient grain driers.

“McCain said today that Vilsack’s plan was the ‘latest effort on the part of the ethanol lobby to take more and more of the U.S. taxpayer dollars.’ McCain wants to insert his funding ban in an economic development bill that’s pending in the Senate. The Senate isn’t expected to vote on his proposal until next week at the earliest.”

More broadly, Joshua Chaffin reported yesterday at The Financial Times Online that, “Government subsidies to promote the use of biofuels should be eliminated, a group of leading multinational organisations has concluded in a report outlining ways to reduce volatility in global food prices.”

And, Reuters news reported yesterday that, “The White House has signed off on a new gasoline pump label that would warn consumers when they are about to fill their vehicles with a fuel blended with a higher rate of ethanol.

“The Environmental Protection Agency approved raising the ethanol levels in gasoline to 15 percent from 10 percent for newer cars and trucks in January, a move welcomed by the ethanol industry and by farmers who supply the corn to make the fuel.

“The new label means the so-called E15 gasoline could be available nationwide by the end of September, according to Growth Energy, the pro-ethanol trade group.”

 

Food Safety

The New York Times editorial board indicated today that, “The deadly outbreak of food-borne illnesses in Germany may seem a distant threat, especially since that strain of E. coli bacteria has never caused an outbreak here. Don’t get complacent.”

The opinion item stated that, “Early this year, the Agriculture Department proposed to regulate six rare strains that are already implicated in causing illnesses here. Its proposal has been languishing at the Office of Management and Budget. To be effective, the final regulation must ban the sale of ground beef containing the pathogens and require recalls of contaminated products. It should be expanded to include the strain now causing sickness in Europe.

Fresh produce, the probable source of the German outbreak, has been even less adequately regulated. The responsible agency, the Food and Drug Administration, has long had fewer resources and authority than its counterparts did at the U.S.D.A. Under a new food-safety law enacted just months ago, the F.D.A. was given expanded powers to require food producers and processors to develop safety plans, conduct more frequent inspections domestically and abroad and order recalls of tainted foods.

The problem now is getting adequate financing for this effort when Congress and state and local governments are set on cutting spending. Ensuring the safety of the food we eat is not a luxury. It’s an essential service.”

Keith Good

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