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Farm Bill; Ag Economy; Trade; and Labor Issue

Farm Bill Issues

Ron Hays reported yesterday at The Oklahoma Farm Report Online that, “The Chairman of the House Ag Committee, Oklahoma Third District Congressman Frank Lucas, talked with Director of Farm Programming Ron Hays about a variety of ag issues on Wednesday morning– including a discussion of the three day debate on the FY2012 Ag Appropriations bill. Lucas says that except for the amendment offered by Arizona Congressman Jeff Flake that prohibits USDA from paying the $147 million to the Brazilian Cotton Institute [background on that trade case available here and here], the attempts to change farm policy on the floor was turned back.”

(FarmPolicy Note: To listen to a portion of yesterday’s discussion between Mr. Hays and Chairman Lucas, which included analysis of the House Agriculture Appropriations bill, just click here (MP3- 3:21).  Also, a related editorial on the Brazil cotton issue posted earlier this week at the Wisconsin State Journal Online (Madison) stated that, “If Congress can’t cut off one wasteful payment to Brazil, how will it ever get serious about scaling back billions in domestic subsidies?”)

Yesterday’s update by Ron Hays added that, “Lucas also talked about the instructions to USDA to not to go forward in finalizing the GIPSA Rule after October first, about the Senate Ag Committee passing HR 872, the 2008 Farm Law Audit Sessions that were supposed to start today, deficit reduction and the efforts by Vice President Joe Biden to broker a deal and the hang-up on the Free Trade Deals.”

To listen to perspective from Chairman Lucas on the deficit reduction negotiations, just click here (MP3- 2:25).

The complete Oklahoma Farm Report discussion with Chairman Lucas from yesterday is available here.

The Washington Insider section of DTN reported yesterday (link requires subscription) that, “House Agriculture Committee Chairman Frank Lucas, R-Okla., plans to hold a number of hearings aimed at identifying potential savings at USDA in anticipation of being required to do so later as a result of agreements reached by Vice President Joe Biden and congressional leaders regarding an increase in the federal debt ceiling.

“The first effort to do that was supposed to start Wednesday with an examination of conservation programs, but the House Agriculture Committee staff announced late Tuesday the hearing had been postponed.”

The DTN item added that, “The so-called ‘audit’ hearings Lucas has in mind also will help the Agriculture Committee gather information it will need as members begin writing the new farm bill. Lucas previously said he preferred to wait until next year to begin that process. However, he now says, ‘It’s time for us to be prepared to make hard economic decisions.’

It is clear that budget considerations will play a greater role in the drafting of the 2012 farm bill than has been the case in at least the past 40 years.”

A news release from the House Agriculture Committee on Tuesday stated that, “This week during The Ag Minute [MP3], Chairman Frank Lucas discusses the House Agriculture Committee’s plan to hold a series of audit hearings on agricultural programs starting this week.”

Chairman Lucas stated that, “This audit of agricultural programs is the first step in the farm bill process.  We are looking for a comprehensive picture of farm policy to determine how all our programs work together.

“We will examine how we are spending money, where the money is going, and whether the goals of each program are being met.  We will look for duplication within issue areas to determine program overlap.  We will scrutinize waste, fraud and abuse, and look for ways to build on the success USDA has already achieved.”

In related news on potential program overlap, recent GAO testimony before the Senate Subcommittee on Primary Health and Aging, Committee on Health, Education, Labor, and Pensions, indicated that, “We have found that some of these programs, including those serving older adults, provide comparable benefits to similar or overlapping populations. For example, the Elderly Nutrition Program administered by the Administration on Aging (AoA), provides home-delivered and congregate meals primarily to individuals 60 years and older. Separately, other programs administered by USDA, including the Commodity Supplemental Food Program, targets a similar population, providing food to older adults, as well as women, infants and children who are also served by the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)… In fact, a recent AoA report conducted by Mathematica found that seven percent of congregate meal recipients and 16 percent of home-delivered meal recipients were also receiving SNAP benefits. The availability of multiple programs with similar benefits helps ensure that those in need have access to nutritious food, but can also increase administrative costs, which account for approximately a tenth to more than a quarter of total costs among the largest of these programs. In addition, our previous work has shown that overlap among programs can lead to inefficient use of federal funds, duplication of effort, and confusion among those seeking services” (at pages 8-9).

And recall that just last week USDA issued a news release regarding food stamps (SNAP), noting that the “Nation’s Primary Nutrition Assistance Program Reaches Highest Accuracy Rate in History of the Program;” however, an Op-Ed in today’s Wall Street Journal (“The Food-Stamp Crime Wave”) noted that, “The number of food-stamp recipients has soared to 44 million from 26 million in 2007. Not surprisingly, fraud and abuse are rampant.”

Meanwhile, the Senate Ag Committee holds a hearing this morning titled, “Farm Bill Accountability: The Importance of Measuring Performance, While Eliminating Duplication and Waste.”

In other policy developments, a news release from USDA yesterday stated that, “The Department of Agriculture (USDA) today joined the Federal Communications Commission (FCC) in releasing a report to Congress entitled, ‘Bringing Broadband to Rural America: Update to Report on a Rural Broadband Strategy,’ for placing new emphasis on the need to support the delivery of broadband to rural communities.”

With respect to farm subsidies, Ron Nixon reported in today’s New York Times that, “With budget cuts all the rage in government, Craig Lang, a dairyman and president of the Iowa Farm Bureau, proposed something that would have been unthinkable in farm country a few years ago: ending direct payments to farmers for crops.

“Mr. Lang, who received more than $25,000 in payments in recent years, had long defended the billions of dollars in government largess, even as farm income and wheat, soybean and cotton prices shot up to records.

“Now, with a weak economy, Mr. Lang and the Iowa agricultural group decided that farmers could not justify taking the money. Instead they proposed a program that would improve crop insurance.”

The Times noted that, “Critics of crop payment programs thought their time had finally come with the election of more fiscally conservative legislators, including several on the Agriculture Committee. Instead, they predict a contentious battle in 2012 as Congress grapples with a new farm bill in an election year.”

“Joe Outlaw, a professor and farm economist at Texas A&M University, defends the farm payments as crucial to the rural economy and says eliminating them would be disastrous.

“‘One of the big reasons the payments are important is that it helps farmers get credit to continue operating, because the lenders know they are going to get their money back,’ he said. ‘You take the payments away and it makes it hard for them to get credit, especially small family farms.’”

The Times pointed out that, “Vice President Joseph R. Biden Jr. is leading negotiations with Republican lawmakers who aim to cut at least $200 billion from the budget over the next 10 years. About $45 billion could come from agriculture, specifically from the subsidies program. [House Budget Committee Chairman Paul Ryan (R-Wis.)], whose southeastern Wisconsin Congressional district has received more than $305 million in subsidies since 1995, recommended cutting $30 billion in the nation’s farm programs.”

For more perspective on the budget negotiations and the House passed budget, see yesterday’s FarmPolicy.com update which included analysis from Sen. Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.).

More specifically on debt ceiling negotiations, Damian Paletta reported in today’s Wall Street Journal that, “The bipartisan deficit-reduction talks led by Vice President Joe Biden grew more contentious Wednesday as Democrats and Republicans became increasingly entrenched on key issues, people familiar with the matter said.”

“President Barack Obama plans to meet with top House Democrats Thursday about the talks.”

The Journal article added that, “One question negotiators face is how quickly to implement spending cuts or tax increases that might be part of any plan. Separate warnings that U.S. policy makers could hurt the weak American economic recovery if they adopted immediate federal spending cuts came Wednesday from Federal Reserve Chairman Ben Bernanke, in a news conference, and the Congressional Budget Office, in a new report.

“Some described the tension between the budget negotiators as expected, given they’re working through some of the most controversial issues involved, and talks are due to wrap up soon. Others said the intensifying differences are adding complexity to the talks and portend difficult discussions ahead.”

Jake Sherman and John Bresnahan reported yesterday at Politico that, “House Democrats are once again afraid they’re about to get sold out by a president from their own party.

“As bipartisan debt limit negotiations between congressional leaders and the White House rev up, a number of Democrats are worried that President Barack Obama will agree to a deal with the GOP that cuts federal spending too deep, undermines the social safety net, slashes entitlement programs and does not include a single dime in tax increases.”

Meanwhile, Steven T. Dennis and Anna Palmer reported today at Roll Call Online that, “Suddenly, the debt limit negotiations aren’t just about distributing painful cuts. They’re also about including sweeteners that could make it somewhat easier for Members to stomach the political risks of such a plan.

“In fact, Senate Democratic leaders Wednesday demanded new job-creating stimulus measures to be included alongside any spending cuts or entitlement reforms in bipartisan debt negotiations led by Vice President Joseph Biden.”

And Erik Wasson reported yesterday at The Hill’s On The Money Blog that, “The 11th round of deficit talks led by Vice President Biden wrapped up Wednesday and Biden said afterwards that the group would probably meet Friday in addition to a scheduled meeting on Thursday in the Capitol.

That would mark four meetings in one week, the most intense level yet.”


Agricultural Economy

Bloomberg writers Rudy Ruitenberg and Tony Dreibus reported yesterday that, “World food prices that rose 37 percent in a year, driving 44 million more people into poverty, are a ‘plague’ that need action from world leaders now, French President Nicolas Sarkozy said.

“Group of 20 farm ministers are meeting in Paris today and tomorrow to discuss food security and proposals for regulating the global agricultural markets.”

Sebastian Moffett reported yesterday at The Wall Street Journal Online that, “The U.S. will push for more transparent food production and open markets to reduce food price volatility at Thursday’s meeting of big economy agricultural ministers, U.S. Secretary of Agriculture Tom Vilsack said.

“Speaking the day before the meeting of Group of 20 agriculture ministers, Mr. Vilsack said he hoped countries could be discouraged from imposing food export bans, which were a factor in food price spikes in 2008 and again in the past year after Russia banned wheat exports in July 2010 amid a drought.”

Caroline Henshaw reported yesterday at The Source Blog (Wall Street Journal) that, “But while farming officials for the Group of 20 nations may agree that markets need more transparency and predictability, opinion is still split over more controversial topics, including governments’ policies on diverting food crops to create biofuels.”

Just yesterday, an AFP article reported that, “US ethanol subsidies pushed up corn prices as much as 17 percent in 2011, according to a study released Wednesday at a time when Washington’s policies on biofuels are coming under heightened scrutiny.”

Meanwhile, in today’s papers, both The New York Times and Wall Street Journal highlighted renewed flooding concerns in and around the Minot, North Dakota area.



Alan Beattie reported yesterday at The Financial Times Online that, “The chances of salvaging even a minimal deal from the so-called ‘Doha round’ of trade talks have receded yet further as the US, European Union and Brazil clashed over rules to restrain cotton subsidies and help the poorest countries.

“At a meeting of the World Trade Organisation in Geneva on Wednesday, Brazil rejected calls for a small agreement planned for December to expand to include agreements on liberalising industrial goods trade and for a ‘tariff standstill’ to keep current import duties in place.”

The FT article noted that, “Although it did not give names, the Brazilian statement to the trade negotiations committee was clearly aimed at the US and EU. Washington, which faces fierce domestic opposition to reforming its own cotton subsidies, has argued that a stand-alone package must also contain cuts in tariffs on ‘environmental goods’ such as solar and wind power equipment.”

Mr. Beattie explained that, “But Roberto Azevedo, Brazilian ambassador to the WTO, said on Wednesday: ‘Trying to reintroduce these market access outcomes through the back door – in the supposedly small December package – via environmental goods or proposals of tariff standstills will undoubtedly ensure yet another stalemate.’

Pascal Lamy, the WTO’s director-general, proposed a deal at a ministerial meeting in December centred on cutting cotton subsidies and extending complete ‘duty-free quota-free’ (DFQF) trade access to the least-developed countries, the 49 poorest economies.”

The article stated that, “Michael Punke, the US ambassador to the WTO, said on Wednesday that a deal limited to those issues was unrealistic, and that the cotton proposal went against the framework that had already been agreed in the Doha talks.

“‘The framework says very clearly we will address all trade distorting cotton policies,’ he said. ‘And that means all of us. Certainly it must mean all major subsidisers. Certainly it must mean the world’s largest subsidiser.’”

Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Sens. Olympia Snowe (R-Maine) and Jay Rockefeller (D-W.Va.) on Tuesday proposed legislation that could slow Senate consideration of any trade agreement that does not include a certification that the U.S. trading partner in question has not manipulated its currency for the last decade.

“The bill, S. 1238, would allow any senator to raise a point of order against trade agreement implementation bills that do not include such a certification.”


Labor Issue

Reid J. Epstein reported yesterday at Politico that, “Georgia Gov. Nathan Deal’s program to replace fleeing migrant farmworkers with probationers backfired when some of the convicted criminals started walking off their jobs because field work was too strenuous, it was reported Wednesday.

“And the state’s farms could lose up to $1 billion if crops continue to go unpicked and rot, the president of the Georgia Agribusiness Council warned.

“In a story datelined Leslie, in rural south Georgia, The Associated Press writes of convicts calling it quits at 3:25 p.m. — more than 2½ hours before the crew of Mexicans and Guatemalans they replaced.”

Keith Good