FarmPolicy

April 23, 2017

Farm Bill; Biofuels; Ag Economy; Trade; and, CFTC

Farm Bill Issues

Pete Kasperowicz reported early this morning at The Hill’s Floor Action Blog that, “The House returns at 9 a.m. for legislative work on the agriculture appropriations bill, which involves wrapping up votes on several more amendments. Members worked on amendments until 12:30 a.m. Thursday morning, when the Committee of the Whole finally rose and stretched its legs.

Among many others, members will vote Thursday on language that would stop payment on discrimination settlements involving black farmers, and two amendments related to USDA’s ‘know your farmer, know your food’ program.

Several amendments that would reduce the Food for Peace program and others were rejected in votes held Wednesday. A full listing of the status on amendments can be found here.

David Rogers reported last night at Politico that, “Already on the defensive, scores of House Republicans joined with Democrats on Wednesday to beat back repeated conservative attempts to make still deeper cuts from nutrition programs and food aid overseas.

“The resulting margins approached 3-1, and the underlying $17.25 billion agriculture bill has clearly touched a deeper nerve than its Republican managers had expected.

“The combined cuts from Food for Peace and the WIC nutrition program for women, infants and children already total over $1.14 billion and triggered an emotional outburst from members of the House Black Caucus when the measure first hit the House floor Tuesday. This was followed Wednesday by a sharp, personal exchange between Rep. Paul Broun (R-Ga.) and the ranking Democrat on the House Appropriations Committee, Norm Dicks (D-Wash.).”

(FarmPolicy Note: The debate over an amendment regarding the Food for Peace program between Agriculture Appropriations Subcommittee ranking member Sam Farr (D-CA) and Rep. Broun illustrated the general nature of some of the arguments for and against amendments on food and nutrition programs.  In this audio clip (MP3- 4:04), Rep. Farr noted that, “Investment in food for people at the basic level is absolutely essential.”  While Rep. Broun indicated that, “We cannot try to feed everybody in the world, we cannot continue to try to be a ‘nanny state’ for everybody even in this country.”)

Mr. Rogers added that, “Rep. Jack Kingston (R-Ga.), the bill’s manager, appears more determined to protect at least the reduced funds allocated for nutrition and food aid in his bill. And to show his commitment, Kingston helped engineer an amendment Wednesday evening that would impose a modest across-the-board cut elsewhere in the bill so as to shield the WIC funding level.

“In earlier floor votes, Republicans split down the middle on an unsuccessful amendment by Rep. Virginia Foxx (R-N.C) to cut $82.5 million more from WIC. Broun was trounced, 360-64, on his 10 percent WIC cut, which garnered only 63 GOP allies. And the deeper cut from Food for Peace lost by a 3-1 margin with Republicans split 139-98 against Broun’s position.”

AP writer Mary Clare Jalonick reported yesterday that, “The Republican spending bill that pays for the nation’s food and farm programs would cut the Women, Infants and Children program, which offers food aid and educational support for low-income mothers and their children, by $868 million, a 13 percent from current spending. It would also cut an international food assistance program that provides emergency aid and agricultural development by more than $450 million, or a third of the program’s budget.

“Conservatives sought to deepen those cuts already in the House bill by offering amendments that would further slash the food aid, scale back efforts to promote U.S. exports abroad and cut in half agricultural research and statistics programs. The chamber rejected 12 separate Republican amendments proposing the cuts.”

(FarmPolicy Note: House Ag Committee member Jim McGovern (D-Mass.) spoke yesterday in defense of the [George] McGovern-Dole Food Aid program.  With respect to an amendment that would “zero out” the program and save $180 million in the coming fiscal year, Rep. McGovern (D-Mass.) advanced arguments in favor of the McGovern-Dole program- FarmPolicy.com audio (MP3- 1:30.))

Also yesterday, Philip Brasher reported at the Green Fields Blog (Des Moines Register) that, “The farm lobby is working to block efforts in the House to tighten restrictions on farm subsidies and block payments to Brazil that were used to settle a trade case [background on that trade case available here and here].

“An agricultural spending bill on the House floor contains provisions that would cut off subsidies to individuals who have more than $250,000 in annual income. The current income limit is $1.25 million, with separate limits for farm and non-farm earnings.”

Mr. Brasher added that, “Another provision would stop the Obama administration’s plans for paying $147 million a year to Brazil to settle a trade case against the way U.S. cotton farmers are subsidized.

“The chairman of the House Agriculture Committee, Frank Lucas, R-Okla., opposes both provisions and will make a move to strip them from the bill on procedural grounds. His maneuver was cleared by the House Rules Committee.”

Yesterday’s update added that, “However, critics of farm programs plan to push for votes on new amendments that would attempt the same ends as the provisions now in the bill, which currently under debate on the House floor.

“Reps. Jeff Flake, R-Ariz., and Ron Kind, D-Wisc., are co-sponsoring amendments that would block the payment to Brazil while also stopping the cotton subsidies that led to the trade case. Flake has a third amendment to set the maximum income for farm subsidies at $250,000.”

A related news release from Rep. Earl Blumenauer (D-Oregon) earlier this week stated that, “[Rep. Blumenauer] announced plans to offer an amendment (#3) to H.R. 2112, the Fiscal 2012 Agriculture Appropriations Bill capping Title I payments at $125,000 per entity. The amendment – supported by Taxpayers for Common Sense as well as national environmental leaders – would cut wasteful government spending by more than $650 million a year.”

Last night, Ag Committee Chairman Frank Lucas spoke about some of these issues (FarmPolicy audio clip (MP3- 1:32)) and stated in part that, “Let the Ag Committee, in regular order, craft the policy, and then when we bring it to the floor…you will have your shot as you have had before.  But please, don’t incite a trade war. Please, don’t ignore the regular order of appropriation and authorization…We have tough decisions ahead of us, Collin [Peterson] and I and the rest of the Committee- we know that, we are going to do what we have to do- but let us do it in regular order.”

Ways and Means Trade Subcommittee Chairman Kevin Brady (R-TX) also spoke last night on the WTO cotton issue and noted that altering the U.S. agreement with Brazil could have a negative impact on U.S. jobs- FarmPolicy audio (MP3- 1:22).

On the other hand, Rep. Ron Kind (D-Wis.) spoke in favor of the amendment that would block funding to Brazil as laid out in the U.S.-Brazil cotton agreement- FarmPolicy audio (MP3- 1:51).

Meanwhile, Jonathan Allen reported earlier this week at Politico that, “House Majority Leader Eric Cantor warned his GOP colleagues Tuesday that they can’t cut government operations if they don’t first approve annual spending bills, hinting strongly at leadership’s concern that appropriations could be hamstrung by reflexive votes against spending.

“‘Not one cut below the current 2011 level will go into effect if we don’t first complete our appropriations bills and make the House-passed levels the reference point for 2012 spending,’ Cantor wrote in a memo to colleagues that contains a projected schedule for consideration of the spending bills on the House floor.”

More broadly on budget negotiations and the federal debt ceiling, Russell Berman reported yesterday at The Hill Online that, “Negotiators in the debt talks led by Vice President Biden met for more than two hours Wednesday, discussing proposals for structural spending reforms.

“Rep. James Clyburn (D-S.C.), the assistant Democratic leader, emerged from the meeting saying he was ‘very optimistic’ the group could strike a deal to lift the debt ceiling, and Sen. Jon Kyl (R-Ariz.) pointed to July 1 as a date when the group hopes to wrap up its work.”

The Hill article noted that, “The Biden group plans to meet for a third consecutive day on Thursday as it tries to ready an agreement to present to party leadership, President Obama and rank-and-file lawmakers.”

The AP reported yesterday that, “For all the optimistic talk, negotiators seeking a deal for lifting a lid on how much money the government can borrow are learning how difficult it is to cut deficits by $2 trillion over the next decade or so.

Just this week, the farm lobby showed it will fight to preserve its lucrative federal support as it rallied to the defense of a $5 billion a year subsidy on corn-produced ethanol, while House leaders maneuvered to protect up to $167 million in cuts in direct payments to farmers.

“At the same time, a blistering outburst from House Democrats against GOP cuts to food aid for pregnant women and hungry people overseas demonstrated that the two parties are miles apart on cutting domestic programs.”

Sara Wyant reported yesterday at Agri-Pulse Online that, “As Vice President Joe Biden picks up the pace with congressional leaders this week on budget negotiations, Senate Agriculture Committee Chairman Debbie Stabenow wants to make one thing perfectly clear: The Senate will not support the House-passed budget cuts for agriculture and nutrition… The Michigan Democrat met with Biden on Tuesday and expressed her concerns about how agriculture and Rural America are being treated as part of the budget talks.”

The Agri-Pulse article noted that, “Stabenow said House action to cut agriculture in the budget resolution and the ongoing appropriations process, which she described as ‘extreme’ is essentially defining expectations with White and congressional budget negotiators.

“‘So I’m having to make it very clear that in the Senate we do not support what the House did. They should not just accept those levels as a place of compromise,’ she emphasized.”

The Washington Post editorial board opined today that, “It’s always risky to predict fiscal sanity in Washington, but perhaps a tiny bit less risky now. Specifically, subsidized agribusiness is under siege. Republicans and Democrats discussing plans to trim the deficit and raise the federal debt ceiling are reportedly set to take on the direct-payment program for commodity producers, which gives $5 billion per year to disproportionately wealthy farmers regardless of market conditions. The GOP offer is to slice $30 billion over 10 years. That’s 12 times the cut President Obama proposed in his 2012 budget, but at least both parties agree on the principle — which should be a no-brainer given that the Agriculture Department projects a 20 percent increase in farm income this year.

“Meanwhile, the ethanol lobby is fighting a rear-guard action to save its corporate welfare, in the form of a 45-cent tax credit for each gallon of ethanol blended into gasoline at the refinery.”

The Post added that, “Now for the depressing part: Instead of encouraging the anti-ethanol trend, the Obama administration is equivocating. Back in April, Agriculture Secretary Tom Vilsack pitched a plan to gradually replace the tax credit with a different set of subsidies for ethanol consumption, including federal funding for more pumps capable of delivering 85-percent-ethanol fuel at stations around the country. A similar approach is embodied in an industry-backed alternative to Mr. Coburn’s measure sponsored by Sens. Amy Klobuchar (D-Minn.) and John Thune (R-S.D.). That bill would cut the cost of the ethanol credit by $2.5 billion — but spend $1.5 billion of the savings on flex fuel pumps and other ‘infrastructure.’”

Also on the budget issue, Damian Paletta reported yesterday at the Washington Wire Blog (Wall Street Journal) that, “A group of five lawmakers, led by Sens. Mark Warner (D., Va.) and Saxby Chambliss (R,. Ga.) is pitching their plan to reduce the federal budget deficit to a larger group of lawmakers, and on Tuesday met with roughly 25 senators to try and corral more support.”

In other Farm Bill related news, Chris Clayton reported yesterday at DTN (link requires subscription) that, “A rural renewable energy program from the 2008 farm bill may be struggling to survive in Congress, but USDA is using the program to tout job creation, investment and new energy jobs in rural America.

“Despite the spur for renewable energy, the Biomass Crop Assistance Program has become a much more expensive program than originally envisioned, which has made it a funding target in Congress. The House Appropriations Committee actually zeroes out the budget for BCAP in the fiscal-year 2012 appropriations bill being debated on the House floor now.

“Still, Agriculture Secretary Tom Vilsack announced new BCAP projects in Arkansas, Missouri, Ohio and Pennsylvania. The projects, and jobs touted, come just a week after the Obama administration created a rural council that is headed by Vilsack. Thus, the BCAP announcements were rolled out in a pair of press calls with senators from Missouri and Ohio championing the projects.”

 

Biofuels

Darren Goode reported yesterday at Politico that, “Senate Majority Leader Harry Reid has scheduled for Thursday votes on amendments striking federal assistance for ethanol.

“Reid late Wednesday announced separate votes for an amendment from Sen. Dianne Feinstein repealing a 45 cent per gallon tax credit to blend ethanol in gasoline — worth upward of $6 billion this year — and one from Sen. John McCain (R-Ariz.) denying federal funds for ethanol blender pumps and storage facilities.

“Both amendments would need 60 votes.”

Steven Mufson reported yesterday at The Washington Post Online that, “[Bob Dinneen, the president of the Renewable Fuels Association (RFA)] says the RFA supports a different measure that would end automatic subsidies but would maintain the federal mandate and subsidize the installation of 53,000 special gas-station pumps that would mix varying amounts of ethanol in with gasoline.

The measure, co-sponsored by Sens. John Thune (R-S.D.) and Amy Klobuchar (D-Minn.) and nine other Midwest senators, would also extend the tax credits for cellulosic ethanol made with feedstocks other than corn, and would tie future tax incentives to the price of oil. When oil prices reach the current high levels, there would be no subsidy, but if oil prices dropped precipitously, the tax credits would go into effect again.

“‘We certainly understand the budget situation being what it is,’ Dinneen said. ‘Industry has grown. Policy has changed over time. So we are in support of reforming the tax incentive program.’”

And Washington Post writer Dan Eggen reported yesterday that, “For years, Washington’s influential ethanol lobby seemed untouchable, successfully defending subsidies that this year alone are worth an estimated $6 billion.

But now ethanol producers find themselves under siege as GOP presidential candidates and lawmakers from both parties look for new ways to save money.”

Mr. Eggen added that, “GOP presidential hopefuls Tim Pawlenty and Rick Santorum have advocated phasing out ethanol subsidies, while former Utah governor Jon Huntsman Jr. has blasted tax breaks for ethanol and other agricultural products. Candidate Newt Gingrich, meanwhile, is one of the industry’s strongest public boosters, earning $312,500 in consulting fees from an ethanol industry group in 2009.”

Despite its history of political success, the ethanol industry spends relatively little on lobbying compared with traditional energy and agricultural interests, records show. The industry’s main trade groups — the Renewable Fuels Association, Growth Energy and the American Coalition for Ethanol — spent about $3 million on lobbying in 2010; the American Petroleum Institute, by comparison, spent more than twice that much,” the Post article said.

 

Ag Economy

Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “Iowa Farm Bureau Federation’s research director Dave Miller said about 100,000 acres of Iowa farmland will be impacted by the rising flood waters of the Missouri River and another 50,000 acres could be indirectly affected by backed-up water that is slow to drain, and that farmers affected by floods will lose about $1,000 per acre.”

 

Trade

Howard Schneider reported yesterday at The Washington Post Online that, “The Obama administration and congressional leaders are nearing consensus on three pending trade agreements and the renewal of support for workers who have been displaced by global trade, ending a standoff that some feared would put U.S. exports at risk, said business, administration and congressional officials close to the discussions.”

 

CFTC (Commodity Futures Trading Commission) Issues

Reuters writers Christopher Doering and Tom Doggett reported yesterday that, “The head of the Commodity Futures Trading Commission said the agency will not introduce its long-awaited position limits plan for commodities anytime soon as the futures regulator heard renewed calls from lawmakers pushing it to act over high energy prices… CFTC Chairman Gary Gensler told lawmakers at a Senate Agriculture Committee hearing it would be some time before the agency moves to finalize its position limits plan.”

A news release from the Senate Ag Committee yesterday regarding the CFTC hearing noted in part that, “Chairwoman Stabenow pressed regulators at the CFTC oversight hearing to make sure new rules harmonize internationally with other jurisdictions, to ensure that reforms of the financial markets aren’t undermined and our companies have a level playing field. She said because of the complexity of market interactions, regulators must make sure they’re taking the time to get them right.”

Keith Good

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