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Farm Bill; Ag Economy; Biofuels; Trade; and Food Safety

Farm Bill Issues

Jake Sherman reported on Friday at Politico that, “House Majority Leader Eric Cantor told Republican lawmakers in a memo Friday what to expect for the rest of the summer, including votes on three stalled trade agreements, action on an intelligence bill, and movement throughout the summer on the debt ceiling…[C]antor did not let on to when he thinks there will be a vote to raise the statutory debt ceiling — the major issue of the next two months. He said he expects action ‘throughout the summer.’”

More specifically on the debt ceiling issue, Carl Hulse reported in yesterday’s New York Times that, “As hard as it may be for lawmakers and the White House to reach an agreement to raise the federal debt ceiling in the coming weeks, striking a budget bargain is just the beginning of the real work.

“When and if bipartisan talks being overseen by Vice President Joseph R. Biden Jr. produce some combination of spending cuts, major program changes and revenue increases, the House and Senate must then assemble those various agreements into legislative form and approve them.

“While many members of Congress might like the overall framework of any budget deal, some are sure to balk at the legislative detail required to wring money out of popular programs like farm subsidies, Medicaid and Medicare or to force federal retirees to kick in more of their own money for their pensions.”

Mr. Hulse explained that, “The emerging budget deal, which could reach into scores of complex federal programs that will have to be restructured to produce the savings, creates a whole different set of problems.

“‘That was about numbers,’ Senator Kent Conrad, a North Dakota Democrat who is the chairman of the Budget Committee, said of the earlier agreement that averted a government shutdown. ‘This is about policy.’

“Put another way, negotiators cannot just wave a magic budget wand and change the farm subsidy program to get billions of dollars in savings; the appropriate panels in the House and the Senate also have to weigh in.”

The Times article indicated that, “‘You can’t supersede the jurisdiction of the committees,’ said Senator Saxby Chambliss, a Georgia Republican taking part in budget talks being conducted by a rump group. ‘If anybody comes out and says, ‘You have to reduce spending on Ag by X number of dollars,’’ he said, referring to the Department of Agriculture, ‘then the Ag Committee is the one that is going to have to do that.’

Those taking part in the main budget talks say they are only beginning to grapple with the mechanics of putting any agreement into place. What they decide could influence how the deal itself is structured and sold to lawmakers.

“In fact, a new push for at least a handshake agreement on a deficit-cutting plan within the next month could be because Congressional leaders and White House officials recognize that they are going to need ample time to write and pass a set of bills before the Aug. 2 deadline for raising the debt ceiling.”

Mr. Hulse added that, “The Senate, which has yet to consider a budget this year, could advance a spending blueprint that incorporates the debt limit agreement and includes directions to the relevant committees to come up with legislation that produces the changes called for in the bipartisan pact. Or the leadership could direct the committees to begin writing measures on their own that would put the budget deal into law.”

In related news, Marin Cogan reported last night at Politico that, “Commodity prices are near all-time highs, an anti-spending mission dominates among the House majority and the House Agriculture Committee is packed with 15 GOP freshmen, some of whom were swept into office backed by a tea party movement that seemed poised to slash everything — including crop subsidies.

But it’s an open question whether these freshmen will move to slash the sacred cow of farm subsidies — as several of the rookies themselves have received hundreds of thousands in subsidies over the years, including some on the Agriculture Committee, which will debate a farm bill in the coming year.”

The Politico article stated that, “At issue is the estimated $15 billion to $20 billion the government spends in subsidies each year [related graph]. Originally a Depression-era program, farm subsidies have evolved into a complex maze of economic assurances for farmers: direct payments, federal crop insurance programs, counter-cyclical payments (which trigger when commodity prices fall below a certain mandated level) and other programs.

“The farm bill, which comes up on a five-year basis, typically inspires a Washington battle of the wills between the powerful special interests that support farm subsidies and those who would like to see them end. When the Agriculture Committee takes up the farm bill in earnest next year, the freshmen say they’ll be looking particularly at the $5 billion that goes to direct subsidies as a place to cut. As for counter-cyclical payments and crop insurance, the freshmen say they will take a lighter touch.”

Yesterday’s article noted that, “But [Rep. Bob Gibbs (R-Ohio)], like [Rep. Marlin Stutzman (R-Indiana)], supports cutting the direct payments for crops such as corn and soybeans. ‘Cuts to direct payments are long overdue. Commodity prices are at a long-time high. That discussion needs to happen, and I’m looking forward to it,’ Stutzman said.”

The Politico article added that, “Stutzman, whose farm received direct and counter-cyclical payments, said they were useful for him when corn prices dropped in the 1990s. ‘It worked, and it helped a lot of us farmers survive,’ he says. ‘That’s why I believe we need to make sure we have a strong crop insurance program, a safety net in place.’”

An article, which was in a “Q and A” format with Rep. Gibbs (“Rep. Bob Gibbs talks deficit, farms, districts”) by Malia Rulon, that was posted on Saturday at the Zanesville Times Recorder (Ohio), included this exchange on farm program spending: “Q: Regarding cutting the deficit, should Medicare be on the table? What about farm subsidies and defense spending?

“A: [B]ase program payments (for farmers) are also on the table. With the deficit what it is, some of that is going to have to change…”

Also on the budget and farm programs, Rep. Tom Latham (R-Iowa) spoke last Thursday on the AgriTalk Radio Program with Mike Adams.

The two discussed a variety of issues and during the course of the conversation Rep. Latham noted that, “Everyone understands that there’s going to be real changes as far as any Farm Bill going forward.”  Rep. Latham added that, “it is going to be very, very difficult to sustain any kind of direct payments,” and stated that, “What I believe will come out of this, [will hopefully be], a much more robust risk management plan– whether it be based on revenue, is probably my best guess at this point is where it will come down.”

To listen to comments on the Farm Bill by Rep. Latham from Thursday’s AgriTalk program, just click here (MP3- 0:55).

Recall that a FarmPolicy.com update from September 6, 2010 stated that, “DTN Ag Policy Editor Chris Clayton reported on Friday [Sep. 3] that (link requires subscription) that, “Congress should eliminate direct payments, and the Average Crop Revenue Election program should be based on county, rather than state, yields and revenue, Iowa Farm Bureau delegates stated Friday.”

In other Farm Bill news, Ledyard King reported on Saturday at The Argus Leader Online (SD) that, “Floods, drought and other severe weather events are ravaging America’s farmland this spring, but a program that compensates growers for crop losses because of natural disaster soon could disappear.

“The Supplemental Revenue Assistance Payment, known as the SURE program, has doled out more than $2.4 billion, including $102 million to South Dakota farmers, since it was created in the 2008 farm bill. The aid is provided to farmers for crop losses that aren’t covered by insurance.”

The article noted that, “But the program runs out of money in September, and there doesn’t seem to be a lot of appetite on Capitol Hill to continue it as lawmakers look to curb spending to address the spiraling national debt.”

“But many farmers complained about the complexity of the program and the delays of up to two years before growers get their disaster assistance. And with other agricultural aid programs such as direct payments, crop insurance and ‘prevented plantings’ facing their own budget pressures, some producers said they’re willing to give up SURE as a trade-off.”

Marc Heller reported yesterday at the Watertown Daily Times (NY) that, “The top Democrat on the House Agriculture Committee has endorsed a revamping of federal dairy policy proposed by farmers’ bargaining cooperatives and will introduce a bill in the next few weeks.

“That is the word from Rep. Collin C. Peterson, D-Minn., who heads the minority side of the Agriculture Committee. But the proposal, called Foundation for the Future, still faces considerable hurdles — even though an initial review by budget analysts suggests it will cost less than extending current policies.

“Mr. Peterson’s comments, reported this week by Farm Futures, indicate Democrats on the committee will push to revise the dairy safety net a year ahead of the 2012 scheduled rewrite of farm policies.”

Yesterday’s article noted that, “But the chairman of the committee, Rep. Frank Lucas, R-Okla., has said he wants all stakeholders in dairy policy to be in basic agreement before he tries to forge ahead with big policy changes a year ahead of time. The National Milk Producers Federation, which proposed Foundation for the Future, and the International Dairy Foods Association, representing milk processors, disagree on key elements.”

And, Philip Brasher reported on Saturday at The Des Moines Register Online that, “A subsidy that next-generation biofuel producers are counting on to procure their feedstocks is in danger in Congress.

“The subsidy program, created in the 2008 farm bill, is set to expire in 2012 and it could be out of money sooner if House Republicans get their way.

“An Agriculture Department spending bill that the House could debate this week would eliminate funding from the Biomass Crop Assistance Program for the budget year that starts Oct. 1.”

Bloomberg writer Dan Kraut reported late last week that, “The U.S. Department of Agriculture said farmers who suffered losses tied to breached levees may have to pay more to insure their crops in 2012.

“Property flooded under such circumstances ‘will likely be considered high-risk land with potential premium rate increases for the 2012 crop year until the levee is repaired and the land is brought back to its former level of productivity,’ the department said today on its website.”

 

Agricultural Economy

Bloomberg writer Jeff Wilson reported on Friday that, “Corn surged to a record approaching $8 a bushel on signs that global inventories will drop as adverse weather slashes acreage in the U.S., the world’s top producer, and demand rise for livestock feed and ethanol.”

Ian Berry reported on Saturday at Barron’s Online that, “Don’t expect King Corn to fall from its lofty perch anytime soon. U.S. futures for the crop rallied to an all-time high last week of $7.99 a bushel, as worries grew that supplies would run short this summer, and would remain tight for at least another year. Prices have climbed 140% over the past year—capped by a recent surge as U.S. farmers struggled to plant the coming crop due to wet weather.”

Mr. Berry indicated that, “Whether the $8 price level proves to be a ceiling could depend largely on weather, one of the few things that has been more volatile than the market itself. The recent end of the La Niña weather pattern probably indicates that, judging from past experience, corn-belt weather will be moderate, with the crop likely following recent yield trends, observes Mike Tannura, meteorologist and head of T-storm Weather in Chicago.”

Gregory Meyer reported on Thursday at The Financial Times Online that, “‘This new USDA forecast is worrying. Rising food prices could intensify political unrest in the Middle East and north Africa region over 2011-12 and will complicate policymaking in emerging markets,’ said Charles Robertson, global chief economist at Renaissance Capital in London.

“This year’s corn-growing season was tenuous from the start, with ideal conditions needed to replenish stocks from levels that could threaten mills and ethanol plants.”

In other news, an article posted on Saturday at the Great Falls Tribune Online (MT) reported that, “The estimated damage total from flooding in Montana is $8.6 million to date, Gov. Brian Schweitzer’s office announced Friday.”

A news release Friday from USDA stated that, “Acting Farm Service Agency Administrator Bruce Nelson will travel to Montana today to tour areas of the state devastated by flooding.

“‘Severe weather this spring is making things extremely difficult for many farmers and ranchers,’ said Nelson. ‘We want producers affected by the flooding to know that we are here for them and we have several programs in place that could help them during this recovery period.’”

Joe Barrett and Douglas Belkin reported in Saturday’s Wall Street Journal that, “This small riverside town [Hamburg, Iowa] is racing to build a backup for its faltering levee as cities up and down the Missouri River steel themselves for a summer of some of the worst flooding in decades and longest-lasting high waters on record.”

Jeremy Wise reported on Friday at The Enterprise Ledger Online (Alabama) that, “Coffee County routinely ranks among the top counties in agriculture production in the United States, but recent drought and extreme heat conditions are threatening this major economic contributor.

“Alabama Cooperative Extension System Regional Agronomist Brandon Dillard said  Coffee County received about 2 fewer inches of rain in May than in average years. He estimates the area currently is facing a shortfall of 8 to 10 inches in total rainfall this year.”

And the AP reported on Friday that, “The U.S. Drought Monitor says much of eastern Virginia is now in a moderate drought, while parts of Southside Virginia and the Richmond area are abnormally dry.”

 

Biofuels

Lori Montgomery reported on Friday at The Washington Post Online that, “The anti-tax pledge signed by 95 percent of congressional Republicans faces a key test Tuesday, when the Senate is scheduled to vote on a plan to repeal billions of dollars in annual tax credits for ethanol blenders — a move the pledge defines as a tax increase.

“Sen. Tom Coburn (R-Okla.) surprised Senate leaders when he filed a motion late Thursday to force a preliminary vote on the measure [a related statement from Sen. Coburn is available here].

“The ethanol credit is widely condemned by Republicans as bad economic policy, and Coburn derides it as spending through the tax code. But a vote to kill it would represent a significant break with more than two decades of GOP tax orthodoxy, which prohibits increasing revenue by any means other than economic growth.”

 

Trade

Alan Beattie reported yesterday at The Financial Times Online that, “The gradual realisation at the World Trade Organisation in Geneva that the so-called ‘Doha round’ of global trade talks has drifted on to the rocks has led to a scramble to salvage something from the wreck.

“But even a plan for a simple standalone agreement to give more trade privileges to the world’s poorest countries has started to founder on a similar clash of interests to that which brought the round itself to a halt.”

Rod Smith reported on Thursday at Feedstuffs Online that, “In courteous but deliberate remarks today, the South Korean ambassador to the U.S. said the U.S. is ‘running out of time’ for ratifying the Korean-U.S. Free Trade Agreement (KORUS).

“Once Korea’s largest trading partner, the U.S. has now been surpassed by China, Japan and the E.U. and, without ratification, soon will be challenged by Australia and Canada, Ambassador Han Duk-soo warned in speaking to a luncheon at the World Pork Expo.”

 

Food Safety

Alan Cowell reported in Saturday’s New York Times that, “After days of confusion, German authorities said on Friday that they had concluded that contaminated sprouts from an organic farm in the country’s north were the most likely cause of one of the world’s worst outbreaks of E. coli.”

The Wall Street Journal editorial board stated today that, “German Greens and their European Union acolytes have long fought scientific advances in food production and protection. After a spice manufacturer in Stuttgart employed the world’s first commercial food irradiation in 1957, West Germany banned the practice in 1959 and has since allowed few exceptions. So it’s no small scandal that the latest fatal E. coli outbreak has been linked to an organic German farm that shuns modern farming techniques.”

“So here we go again: agitation for more money and regulation, though agricultural authorities still don’t know where the German farm erred. Sprouts require warm and humid farm environments, which makes them particularly hospitable to bacteria. But both harmful and harmless E. coli strains are present in the intestines of most animals, as well as human beings. No amount of standardizations or certifications will guarantee E. coli’s eradication from food.”

The Journal item noted that, “This latest E. coli outbreak is painful real-life evidence that natural foods are not always better, nor safe for consumption.”

Keith Good