FarmPolicy

April 22, 2019

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

Farm Bill Issues

Philip Rucker reported in today’s Washington Post that, “This is what Washington’s new austerity has brought.

“A freshman Republican congressman, himself a fifth-generation corn farmer and his family a longtime beneficiary of government agricultural subsidies, drove through the endless fields of far-flung western Kansas to deliver a difficult message.

“‘Everybody needs to share,’ Rep. Tim Huelskamp told a few dozen townspeople sitting patiently on the hard wooden benches of the Graham County Courthouse. ‘If you’re a farmer like me, you’re going to expect less. Something’s going to go away. The direct payments are going to go away.’”

The Post item noted that, “Huelskamp appears to be right. Dramatically cutting or eliminating direct crop subsidies, which totaled about $5 billion last year, has emerged as one of the few areas of agreement in the budget talks underway between the White House and congressional leaders of both parties.

“In their recent budget proposals, House Republicans and House Democrats targeted farm subsidies, a program long protected by members of both parties. The GOP plan includes a $30 billion cut to direct payments over 10 years, which would slash them by more than half. Those terms are being considered in the debt-reduction talks led by Vice President Biden, according to people familiar with the discussions.”

Mr. Rucker stated that, “So far, the plans spare the agricultural program that farmers and their backers in Congress say is the most essential: insurance to help growers if they have a bad yield or lose crops because of extreme weather, such as a tornado or drought.

“‘Crop insurance is really key to making sure that they can manage their risks,’ Rep. Kristi L. Noem (R) recently told reporters. She represents South Dakota, another large farming state, and her family owns a ranch that receives direct subsidies. ‘So we’re going to make sure that that program remains viable and a useful tool for them.’”

(FarmPolicy.com Note: The Post article did not mention that as provided under the 2008 Farm Bill, the Standard Reinsurance Agreement (SRA) with USDA and the crop insurance industry was renegotiated last year, and under that agreement, the budget for delivering crop insurance was reduced by $6 billion, with some $4 billion going to deficit reduction and $2 billion going to program cuts.)

Yesterday’s Post article did add that, “Charles Conner, president of the National Council of Farmer Cooperatives, said that spending on subsidies has fallen dramatically, relative to other government programs. ‘You cannot in any way claim that rampant government spending over the last several years has been caused by farm programs,’ Conner said [related graph].”

Also on the crop insurance issue, Greg Schwarz, the president of the Minnesota Corn Growers Association, indicated in an opinion item posted on Sunday at the Minneapolis Star-Tribune Online that, “Now I understand that when Congress starts trimming the budget, everyone is going to argue that their specific program deserves protection. While I can’t speak for other aspects of federal spending, I can attest to the fact that crop insurance and other aspects of farm policy work for me.

“Without a doubt, they are the policies that keep family farms like mine in business and our nation food secure.”

The piece added that, “It is important to note that nearly $12.45 billion total has already been cut from crop insurance in the last several years. That’s sobering news for a farmer like me, because I know how much I need crop insurance to protect myself from disaster and how important it is for farmers to have crop insurance to secure a loan.

Agriculture is one of the only industries to have already made big sacrifices to help trim budgets. And, there isn’t much left to cut — farm policies account for less than one-quarter of one percent of federal spending.”

In related news regarding spending negotiations and the debt ceiling, Janet Hook and Carol E. Lee reported in today’s Wall Street Journal that, “Deficit-reduction talks led by Vice President Joe Biden face their biggest test starting Tuesday when the group begins three days of politically sensitive discussions, including a proposal for a government spending cap that is bitterly opposed by the White House… Now, the bipartisan group is picking up the pace with the aim of crafting the beginnings of a deal by July 1.”

A sidebar to the Journal article noted that “farm subsidies” are still “on the table.”

Russell Berman and Erik Wasson reported yesterday at The Hill Online that, “In a rare moment for a GOP leader, [House Majority Leader Eric Cantor (R-Va.)] praised Biden’s leadership of his ad hoc committee.

“‘We have had some really significant and substantive discussions in these talks, and I think the success of these talks thus far is due to the vice president and the way he has conducted these meetings,’ Cantor said.”

David Rogers reported last night at Politico that, “With 2012 appropriations bills already moving through the House, White House budget talks return Tuesday to where they began six months ago: Republican demands for deep cuts from domestic spending and foreign aid.

“Senate Democrats — and a good many House Republicans, privately — are hoping for a breakthrough soon so Congress can avoid a repeat of April’s high drama over a government shutdown. But even after concessions by President Barack Obama, the two sides remain more than $1.1 trillion apart over the next 10 years, and Senate Republicans have yet to step forward to help broker a deal between the administration and the House GOP.

“In the interim, the half-dozen 2012 appropriations bills moving in the House illustrate the pitfalls ahead. And for all the added urgency this week, the simple arithmetic of the crisis hasn’t changed.”

The Politico article noted that, “But fast on its heels is a $17.25 billion agriculture and rural development measure, which has had to absorb a $2.67 billion reduction on top of what was an almost $3.4 billion cut in April from 2010 funding.

“The wheels started to come off at the Appropriations Committee level two weeks ago, and with a single stroke, the bill risks a trade fight with Brazil while pitting the cotton lobby against a nutrition program for low-income mothers and their infants. And amid rising world food prices, the bill’s manager, Rep. Jack Kingston (R-Ga.) appears to be having second thoughts as well about his proposed 26 percent, $487 million cut in overseas food aid.”

More specifically with respect to the House Agriculture Appropriations Bill, a news release yesterday from the House Committee on Rules stated that, the Bill, H.R. 2112 – Ag, Rural Development, FDA Appropriations Act, 2012, will be considered “under an open rule, any amendment that complies with the rules of the House may be offered on the floor.”

The news item stated that, “The rule and the bill are expected to be debated on the floor: June 14 and June 15, 2011.”

Both House Agriculture Committee Chairman Frank Lucas (R-OK) and ranking member Collin Peterson (D-MN) wrote letters yesterday to Rules Committee Chairman David Dreier (R-CA) (Lucas letter, Peterson letter) regarding H.R. 2112.  Rep. Peterson urged “the Chairman to allow Members to strike provisions of H.R. 2112 that would re-write the 2008 Farm Bill.”

At yesterday’s Rules Committee hearing, Rep. Sam Farr (D-CA), the ranking member of the Appropriations Subcommittee on Agriculture, argued in favor of allowing an open rule when considering H.R. 2112.  Related audio from yesterday’s Rule’s Committee hearing, in which Rep. Farr describes some provisions of the spending measure, and also includes comments from Rules Committee Chairman Dreier, is available here (MP3- 4:23).

In part, Rep. Farr stated that, “I know that we are in tough budget times, but even in tough budget times people have to eat.  In my opinion, this bill makes it hard to do that.”

Regarding executive branch perspective on the appropriations measure, Philip Brasher reported yesterday at the Green Fields Blog that, “The Obama administration is registering a series of objections to an agricultural spending bill that the House is taking up this week. The bill would cut spending for the Agriculture Department and the Food and Drug Administration by 13 percent for the budget year that begins Oct. 1.

“Among its concerns, the White House says the bill would provide too little for food safety and for food assistance, both domestically and overseas.”

An article posted yesterday at Agri-Pulse Online also provided additional details of the Administration’s specific objections to H.R. 2112.

 

Biofuels

In other policy news, DTN Ag Polcy Editor Chris Clayton reported yesterday (link requires subscription) that, “Agriculture Secretary Tom Vilsack came to the National Press Club on Monday to talk mainly about food security and what the Obama administration intends to highlight at a major global meeting later this month [prepared remarks, video replay]. Instead, Vilsack found himself putting up another defense of ethanol and policies that help the ethanol industry.

“People in the agriculture, biofuels and food industries are abuzz over a set of potential Senate votes set for Tuesday that could end the 45-cent ethanol blender credit and 54-cent import tariff. Other amendments also could block any funding for blender pumps and even potentially end the Renewable Fuels Standard.

“Sen. Tom Coburn, R-Okla., leads the effort to immediately end the blender credit, formally known as the Volumetric Ethanol Excise Tax Credit. Coburn said the tax code shouldn’t be used to pick winners and losers or aid only the industries with the best tax lobbyists. Advocates for the ethanol industry note Coburn voted earlier this spring to defend tax subsidies for the oil industry.”

Mr. Clayton explained that, “Besides the Coburn amendment, Sen. John McCain, R-Ariz., has an amendment filed to block spending USDA money for blender-pump development. Sen. Jim DeMint, R-S.C., also is threatening to offer an amendment that would end the 2005 and 2007 Renewable Fuels Standards.

Countering those efforts, senators from ethanol-producing states are expected to bring forward a bill that meshes some proposals released last month. The bipartisan bill, spearheaded by Sen. Dick Lugar, R-Ind., and Sen. John Thune, R-S.D., would phase out the ethanol blenders’ tax credit and import tariff while increasing a tax credit for ethanol blender pumps at gas stations.

“Yet, with more than 13 billion gallons in ethanol production capacity, the blender credit is expected to cost close to $6 billion this year. It is slated to expire at the end of the year, so policymakers have been looking at a variety of proposals to change industry support. Vilsack added he was fairly certain some changes would be made in ethanol policies, such as phasing out the tariff on Brazilian ethanol.”

Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “The ethanol industry is under siege in the Senate from all angles. Sen. Tom Coburn, R-Okla., has forced to a vote on eliminating the industry’s 45-cent-per-gallon subsidy. Sen. John McCain, R-Ariz., is proposing to bar the Agriculture Department from making grants for ethanol pumps. And now, Sen. Jim DeMint, R-S.C., says he will have an amendment to repeal the renewable fuel standard, the annual usage biofuel mandates that were enacted in 2005 and increased in 2007.”

Additionally, The Hill Energy Blog contained an update yesterday titled, “Senate Dem leadership works against Coburn ethanol plan,” while National Farmers Union (NFU) President Roger Johnson indicated yesterday that, “NFU is strongly opposed to the amendment by Sen. Coburn to kill the best alternative Americans have to overpriced foreign oil.”  And Iowa GOP Senator Chuck Grassley made a floor speech yesterday arguing against the Coburn amendment.

On the other hand, article posted yesterday at the Addison County Independent (VT) highlighted opposition to ethanol support from House Ag Committee Member Peter Welch (D-VT), and The Wall Street Journal editorial board opined today that, “Oklahoma Republican Tom Coburn believes he’ll have 60 Senate votes Tuesday to end the 45-cent blender tax credit for ethanol, as well as the 54-cent tariff on imported ethanol. For Senators still on the fence, a new study suggests that the world’s poor would benefit even more than U.S. taxpayers if governments stopped subsidizing the transformation of food into fuel.

“The new study, requested by G-20 leaders last November, fingers biofuel subsidies as among the leading causes of agricultural price shocks,” the Journal said.

 

Agricultural Economy

An update posted yesterday at the WTO Online indicated that, “An interagency report published today develops ‘options for G20 consideration on how to better mitigate and manage the risks associated with the price volatility of food and other agriculture commodities, without distorting market behaviour, ultimately to protect the most vulnerable’. The report was requested by G20 leaders at their summit meeting in November 2010 and submitted to the French Presidency of the G20 on 2 June 2011.”

Bloomberg writer Tony C. Dreibus reported yesterday that, “Global agriculture production needs to increase 70 percent to meet food demand by the middle of the century as more people move to cities, the United Nations said.

“Growers will have to increase yields on existing farms as the amount of land available for agriculture is shrinking, the UN’s Food and Agriculture Organization said in a book on farming, ‘Save and Grow.’ About 70 percent of people will live in urban areas by 2050, up from 50 percent today, the FAO said.”

A news release yesterday from the Global Harvest Initiative (GHI) stated that, “[GHI] today published a new policy issue brief which highlights the importance of science-based technologies in sustainably addressing the mounting challenges of global hunger and food security in order to feed an anticipated nine billion people globally by 2050.

“The policy issue brief, ‘Embracing Science-Based Technologies,’ suggests that closing the global agricultural productivity gap between supply and demand and meeting the needs of a growing population will require the embrace of existing and new technologies and innovations that are scientifically proven to safely and effectively increase agricultural productivity.”

Meanwhile, Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “Nationally, most of the corn crop now is planted [the USDA reported yesterday]. Ohio, which a week ago had less than 60 percent of its crop planted, reported 97 percent planted as of Sunday. North Dakota, another problem area due to weather, was reported 96 percent planted.”

And a news release yesterday from the American Soybean Association (ASA) stated that, “[ASA] President Alan Kemper, a soybean farmer from Lafayette, Ind., today welcomed Dr. Paolo De Castro, Chairman of the European Parliament’s Committee on Agriculture and Rural Affairs, at a trade luncheon at the National Press Club in Washington, D.C. ASA organized the lunch for De Castro that included an invited audience of U.S. food, agriculture, and agribusiness leaders. In his remarks, Kemper pointed out the responsibilities that the agriculture sectors in the United States and the European Union share in providing food, feed, fiber, and fuel to meet a growing world demand.”

 

Trade

A news release yesterday from the U.S. Trade Representative’s Office stated that, “Today, United States Trade Representative Ron Kirk announced that Colombia has met the milestones slated for completion by June 15, 2011, under the agreed Action Plan Related to Labor Rights. The Action Plan was announced by President Obama and President Santos on April 7, 2011. The Obama Administration negotiated the Action Plan to address concerns related to the U.S.-Colombia trade agreement. Under the Action Plan, the Colombian Government committed to take a series of measures, within defined time frames, to improve the protection of internationally recognized labor rights, the prevention of violence against labor leaders, and the prosecution of the perpetrators of such violence. The Obama Administration has made clear that Colombia must successfully meet the key milestones in the Action Plan for the trade agreement to advance to the next stage.”

In response to this news, House Ways and Means Chairman Dave Camp (R-MI) indicated that, “Colombia has again met its commitments, and it is time for the U.S. to meet its commitment by moving forward with the long-pending trade agreement with this critical ally.  I urge the Administration to do its part and submit the Colombia trade agreement for Congressional consideration.  We cannot afford to delay any further.  U.S. workers, farmers, ranchers, and businesses will continue to lose market share to competitors from countries that have ratified trade agreements with Colombia while we let our own agreement languish.  The time for U.S. action is now.”

 

Regulations

A news update posted late last week at the National Association of Wheat Growers (NAWG) Online stated that, “NAWG President Wayne Hurst, a wheat farmer from Burley, Idaho, traveled to Washington, D.C., this week to participate in a meeting of commodity leaders with Secretary of Agriculture Tom Vilsack and Environmental Protection Agency (EPA) Administrator Lisa Jackson.

“In what Hurst described as largely a ‘listening session’ for the Administration officials, farmers discussed the plethora of environment and EPA-related regulations and court actions that are facing the agriculture community.”

And John Mr. Broder reported in today’s New York Times that, “Facing intense opposition from Congressional Republicans and industry over a broad range of new air-quality regulations, the Environmental Protection Agency said Monday that it was delaying by two months the release of a proposed rule on greenhouse gas emissions from power plants and other major pollution sources.

“The rule would have a major impact on the nation’s efforts to reduce emissions of gases blamed for climate change, and its postponement is the latest step by the E.P.A. to slow the issuing of regulations that critics say will slow economic growth, drive up energy costs and reduce employment.

“Its delay is a tacit admission that the regulations pose political, economic and technical challenges that cannot be addressed on the aggressive timetable that the agency set for itself early in the Obama administration.”

Keith Good

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