FarmPolicy

September 22, 2014

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

Farm Bill: Budget and Spending Issues

Yesterday on the AgriTalk Radio Program, host Mike Adams interviewed Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.).  In part, Chairwoman Stabenow discussed the budget that the House of Representatives passed back in April, and the implications the agricultural portion of that budget is having on negotiations over the debt limit that are being spearheaded by Vice President Joe Biden.

Budget cuts for agriculture contained in the House measure, Chairwoman Stabenow noted, totaled some $48 billion.  By comparison, the recommendations from the President’s deficit reduction commission back in December, contained only $10 billion in proposed cuts to agriculture.

Chairwoman Stabenow indicated that, “So this $48 [billion] now has become something that is being held up in the negotiations since it passed the House and its created more extreme cuts than we otherwise would be seeing because they have changed the bar.  Instead of talking about $10 [billion] or whether its 10 or eight, or nine- now its 48 and someplace between 10 and 48.  So the kinds of numbers being talked about are of great concern to me and have become much larger because the House of Representatives actually passed the huge cuts in their budget.”

Chairwoman Stabenow also discussed the Agriculture Appropriations Bill that the House passed last Thursday.  To listen to a portion of yesterday’s AgriTalk discussion between Mike Adams and Chairwoman Stabenow, just click here (MP3- 4:18).

Meanwhile, in a related budget matter, Jerry Hagstrom reported yesterday at AgWeek Online that, “The House-passed 2012 budget resolution may not require that the 2012 House version of the farm bill spend less than the current farm bill, House Agriculture Committee ranking member Collin Peterson, D-Minn., told Agweek in a recent interview.

“Peterson said House budget experts had concluded that even though the resolution cut the funding allocation for agriculture and other committees in fiscal year 2012, it would not apply to new legislation — including the 2012 farm bill — because the resolution did not contain budget reconciliation instructions.

That viewpoint would indicate that the new farm bill could be written using the baseline in effect at the time of its writing, Peterson said, rather than with the cut of $178 billion over 10 years, as indicated by the budget resolution. But Peterson added that he will not be fully confident that this analysis is correct until he sees how the House Republican majority proceeds.”

In other news regarding agriculture and budget negotiations, a news release yesterday from the National Association of Conservation Districts (NACD) stated that, “The [NACD] joined with a diverse group of more than 400 organizations committed to conservation, outdoor recreation, and to the industries and rural communities these resources support, in sending a letter to the bipartisan ‘Biden group’ supporting funding for federal natural resources programs. The groups expressed concern that current budget negotiations could result in top line cuts that, without even considering the merits of the nation’s key conservation programs, will result in devastating impacts for the future of America’s environment.”

More broadly on the budget negotiations, David Rogers reported last night at Politico that, “House Majority Leader Eric Cantor pushed back hard Tuesday against Senate Republican suggestions of a scaled-back, short-term debt deal, saying it’s ‘crunch time’ in White House budget talks and ‘if we can’t make the tough decisions now, why … would [we] be making those tough decisions later.’

“‘I don’t see how multiple votes on a debt ceiling increase can help get us to where we want to go,’ the Virginia Republican told reporters. ‘It is my preference that we do this thing one time. … Putting off tough decisions is not what people want in this town.’”

Indeed, the next three days could very well define the success of the talks led by Vice President Joe Biden. As if sensing this, Cantor pressed for President Barack Obama to become more involved in the process — then quickly shied away from the suggestion that he and Biden are prepared to surrender the baton to the president and House Speaker John Boehner (R-Ohio).”

Mr. Rogers noted that, “This helps explain the urgency of Cantor’s response Tuesday to recent remarks by Senate Minority Leader Mitch McConnell (R-Ky.) raising the fallback of passing only a short-term debt extension with more modest deficit reduction goals to buy more time.

“It shows a real tactical split between the Senate and House GOP, which has much more to fear from multiple debt ceiling votes between now and the 2012 elections. But it’s also true that pressures from the right and tea party forces have left House Republicans far more divided over domestic spending issues than Cantor or Boehner readily admit.”

Mike Lillis reported yesterday at The Hill’s Floor Action Blog that, “House Minority Whip Steny Hoyer (D-Md.) on Tuesday rejected a plan to hike the debt ceiling in short-term increments – a strategy endorsed recently by Senate Minority Leader Mitch McConnell (R-Ky.).”

Janet Hook and Corey Boles reported in today’s Wall Street Journal that, “Although the Biden talks remain fluid, the White House and House Republicans have expressed increased optimism they will be able to reach an agreement soon. Both sides have been careful so far not to leak details of their discussions, a sign both sides point to that progress is being made.

“Treasury Secretary Timothy Geithner, speaking at The Wall Street Journal’s CFO Network conference in Washington, said there is broad agreement that the country needs $4 trillion to $5 trillion in deficit-reduction over 10 years, but budget negotiators haven’t agreed on how those reductions should be structured. The Congressional Budget Office estimates the cumulative deficit for 2012-21 at $7 trillion.”

And Lori Montgomery and Rosalind S. Helderm reported yesterday at The Washington Post Online that, “The debt-reduction package emerging in talks between the White House and congressional leaders would not ‘fundamentally change’ the alarming rate of growth in the national debt, the chairman of the Senate Budget Committee said Tuesday.

“Sen. Kent Conrad (D-N.D.) said the goal of slicing more than $2 trillion from the federal budget by 2021 falls far short of the savings needed to stabilize borrowing, reenergize the economy and avert the threat of a debt crisis.

“‘A $2 trillion package sounds big, but I think most serious observers would tell you that it takes a package of at least $4 trillion to fundamentally change the trajectory we’re on,’ Conrad told reporters. ‘In the context of our debt, which is nearly $15 trillion and is headed for $25 trillion, $2 trillion over 10 years does not do the job.’”

Anna Palmer and Steven T. Dennis reported today at Roll Call Online that, “K Street lobbyists are scrambling to defend industry tax breaks and spending programs from ending up as fodder to reduce the deficit in the debt limit talks led by Vice President Joseph Biden.

A lack of news about the specific cuts under consideration by the close-lipped bipartisan group, coupled with last week’s surprising 73-27 Senate vote to eliminate long-sacrosanct ethanol tax subsidies has put lobbyists in a defensive crouch.”

Meanwhile, Humberto Sanchez and Dan Friedman reported yesterday at the National Journal Online that, “As the budget talks led by Vice President Joe Biden continue this week, the seemingly defunct Gang of Six will meet Tuesday and is exploring whether to continue its work, disband or seek a lifeline from other senators.

“The Gang of Six, which is working on a comprehensive deficit reduction plan based on recommendations from President Obama’s deficit commission, is seeking a way to remain relevant despite the likelihood that they will not take substantive action ahead of an agreement from the Biden group.”

 

Agricultural Economy

Javier Blas reported yesterday at The Financial Times Online that, “The G20 group of leading nations is set to sidestep the most contentious issues in global agricultural policy, including biofuel subsidies and export bans, as a deep split hampers efforts to reach a broad agreement at this week’s first ever meeting of the group’s agriculture ministers.”

The FT article added that, “The draft of the G20 communiqué, called ‘Action Plan on Food Price Volatility and Agriculture’ and seen by the Financial Times, contains only vague references to the most difficult issues facing agricultural producers.

“While the G20 nations largely agree on the need to improve agricultural productivity and enhance transparency, they disagree on biofuels, export restrictions, and on the regulation of commodities financial markets. The declaration will be adopted on Thursday in Paris.”

Reuters writer Charles Abbott reported yesterday that, “Biofuels are a ‘tremendous job creator’ for rural areas, said U.S. Agriculture Secretary Tom Vilsack on Monday, ahead of a global meeting where the farm-grown fuels may be criticized as a factor in high food prices.”

“Biofuels, especially ethanol distilled mainly from corn (maize) in the United States, have been blamed for driving up food prices. Vilsack says, biofuels’ role in price spikes is small and the fuels boost farm income and spark rural growth.”

Nonetheless, John W. Miller reported in today at The Wall Street Journal Online that, “The U.S. will face new pressure from fellow Group of 20 nations to end government aid for the biofuels industry at a meeting of farm ministers in Paris on Wednesday and Thursday, said trade diplomats and analysts.”

In other news, Leslie Josephs reported in today’s Wall Street Journal that, “Bad weather on both sides of the U.S. border could crimp the country’s sugar supply this year, driving up prices for the sweetener.

“A drought in Mexico, which supplies close to half of the United States’ imported sugar, is expected to clip output for the 2011-12 sugarcane harvest.

A scarcity of sugar could contribute to rising food prices, as the sweetener is commonly found in many of the foods Americans eat.”

 

Biofuels

Todd Neeley reported yesterday at DTN (link requires subscription) that, “For the second consecutive year, the EPA has cut the Renewable Fuels Standard for cellulosic biofuel, dropping the number from the 2011 volume of between 3.55 million and 15.7 million gallons to a range of 3.45 million to 12.9 million gallons in 2012.

“The overall RFS requirement of 15.2 billion gallons of renewable fuel was left unchanged.

The proposal calls for increasing the biomass-based diesel program from 800 million gallons in 2011 to 1 billion gallons in 2012 and nearly 1.3 billion gallons in 2013.”

Ben Geman reported yesterday at The Hill’s Energy Blog that, “The Environmental Protection Agency proposed federal renewable fuel standards for 2012 on Tuesday that acknowledge the next generation of ethanol hasn’t taken off nearly as quickly as Congress hoped several years ago.

“The agency on Tuesday floated draft standards to comply with a 2007 law that mandates escalating annual increases in the amount of renewable fuels blended into the nation’s fuel mix, reaching 36 billion gallons in 2022.”

Meanwhile, Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “There’s been plenty of hand-wringing among politicians, the commentariat and interest groups about the U.S. Senate action last week against the ethanol tax credit, but to the money pros on Wall Street, it’s much ado about nothing.

Most of the big money people say the ethanol industry and farmers will continue to do just fine as long as congress keeps in place the Renewable Fuel Standard that mandates use of non-fossil fuels.”

Similarly, the AP reported yesterday that, “The likely end of a $5 billion-a-year federal subsidy that helped build the ethanol industry will likely mean two things, experts who have followed its development say.

First, it doesn’t guarantee an end to the high prices that corn farmers have enjoyed and livestock producers and other food manufacturers have endured.

“That’s because of the second point: the ethanol industry likely would be fine without the subsidy and keep using just about as much corn as it has the past few years.”

The AP article added that, “Scott Irwin, the chairman of agricultural marketing at the University of Illinois, sees the loss of the tax credit as ‘moderately bad news’ for farmers but a change that likely wouldn’t change prices much.

“Although Irwin said the ethanol producers could manage without the tax credit, he speculated that it would cut down on the industry’s growth potential. Without some sort of subsidy or oil prices pushing $150 a barrel or more, there’s not much incentive right now for anyone to use more ethanol than the mandate requires.”

Darren Goode reported last night at Politico that, “When Rep. Bill Archer — then the powerful chairman of the House Ways and Means Committee — slipped in language in a key Republican tax-cut package in 1997 stripping out subsidies for corn ethanol, he ran into a brick wall.

“That obstacle was in the form of Chief Deputy Whip Dennis Hastert, who reminded Speaker Newt Gingrich that he would lose the crucial support of nearly three dozen farm-state Republicans if he allowed the language to stay. Gingrich — who personally intervened to stop a prior attempt to squash ethanol help in 1995 — quickly acquiesced and the language was history, allowing the subsidy to continue.

Now, after major losses in the House and Senate last week, the ethanol industry is missing the influence of those pro-ethanol congressional leaders.”

The Politico article noted that, “Also gone are former Senate GOP leader Bob Dole of Kansas and former Senate Democratic leader Tom Daschle of South Dakota.

“‘You’ve had key House members and key senators in key places that could either begin the programs or protect them,’ Rep. Joe Barton (R-Texas) told POLITICO last week.

“‘That’s no longer the case overall. John Boehner, Eric Cantor are not corn-state people,’ Barton added. ‘Harry Reid, Mitch McConnell. So you get down to the committee chairmen and ranking members, they’re just not in a stronger position.’”

A news release yesterday from the Committee on Agriculture Democrats stated that, “U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., today joined Rep. Aaron Schock, R-Ill., to introduce the Biodiesel Tax Incentive Reform and Extension Act (H.R. 2238). The legislation extends the $1 per gallon biodiesel tax credit to 2014 and changes the tax incentive to a production excise tax credit.”

 

Trade

Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Sens. Bob Casey (D-Pa.) and Sherrod Brown (D-Ohio) on Monday introduced an amendment to the Economic Development Revitalization Act (EDA) that would extend Trade Adjustment Assistance (TAA) until the end of 2016, and fund it at 2009 levels.

“The program gives benefits to workers who lose their jobs due to international trade, but the program expired earlier this year. Since then, the Obama administration has said it would only support the pending free-trade agreements with South Korea, Colombia and Panama as part of a package that includes TAA renewal.”

 

Regulations

A news release yesterday from Sen. Pat Roberts (R-Kansas) stated that, “[Sen. Roberts], today applauded the [Agriculture] committee passage of a House-passed pesticides bill that will remove regulatory burdens on producers and public health agencies.

“‘I have urged Chairwoman Stabenow to take action on this legislation for some time now and I am pleased this legislation is finally moving forward,’ said Roberts. ‘This bill will eliminate a double layer of red tape that ultimately costs producers and consumers, and I stand ready to protect public health and reduce duplicative regulations by moving this bill to the Senate floor.’

Senate Agriculture Committee members passed H.R. 872, the Reducing Regulatory Burdens Act of 2011, out of their committee today during a business meeting, attended by committee members.”

The release pointed out that, “The bill passed the House of Representatives earlier this year and was then referred to the Senate Agriculture Committee on April 4. Roberts has been pushing for the bill to be addressed ever since.”

A news release yesterday from Rep. Robert Gibbs (R-Ohio) stated that, “I am pleased to see that my bill, The Reducing Regulatory Burdens Act of 2011, has been approved by the Senate Committee on Agriculture, Nutrition, and Forestry.

“HR 872 is a bipartisan effort to remove duplicative and costly ‘red-tape’ requirements that provide no additional health or environmental benefits.  Failure to pass this legislation would prove to be a huge barrier to job creation, as well as a disastrous, unnecessary expansion of government.

I call on Senator Reid to allow the Senate to vote on this common sense legislation that will reduce the regulatory burden weighing down our economy and stifling job creation.   Then, not only will we continue to have a safe environment, but also a better environment for economic growth.”

And House Ag Committee Chairman Frank Lucas (R-OK) indicated yesterday that, “I commend the Senate Agriculture Committee for advancing H.R. 872.  I urge Majority Leader Reid to join this important, bipartisan effort and send the bill to the Senate floor for a vote.  The cost of inaction is far-reaching and significant, and would be a crushing blow to an already struggling economy.”

Keith Good

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