FarmPolicy

November 21, 2014

Farm Bill; Budget Issues; and the Agricultural Economy

Farm Bill: Hearings

Yesterday, the Senate Agriculture Committee held a hearing titled, “Opportunities for Specialty Crops and Organics in the Farm Bill.”

A news release from the Senate Ag Committee yesterday indicated that, “Michigan Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, today said that specialty crops and organics are bright spots in the nation’s economic future, but maintained that critical support for research and risk management will be key to continuing growth in the sectors.

“‘Specialty crop and organic growers are not only helping to supply healthy products to our schools, families and communities, but these farmers are also making a major contribution to the American economy,’ Chairwoman Stabenow said. ‘Sales of U.S. specialty crops top $60 billion annually, with nearly $2 billion of those sales coming from Michigan alone. Organic sales also continue to grow, reaching nearly $29 billion in 2010.  We need to make sure these important producers are heard as the next Farm Bill is being written.’”

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Farm Bill; Debt Talks; Ag Economy; Trade; and Regulations

Farm Bill Issues

Ron Hays reported yesterday at the Oklahoma Farm Report Online that, “There is a significant difference in how agricultural programs will be treated in the bills that continue to be developed by the House and Senate to address the debt ceiling/deficit reduction discussions that have captured the attention of the financial and political worlds. According to the Chairman of the House Ag Committee, Oklahoma Congressman Frank Lucas, the Senate proposal under development by Senate Leader Harry Reid would call for immediate ag spending cuts of several billion dollars- and the measure is very prescriptive in which programs the money will come from.

“In contrast, the House proposal that is being reworked for more savings by House Speaker John Boehner is not specific about how the cuts are to be made in agricultural programs- but rather will offer a number for the House Ag Committee to then decide how to spend those dollars by looking at which programs are most important to the farm community.”

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Ag Economy Provisions of the Fed’s Beige Book Report

Today the Federal Reserve Board released its latest Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” today’s report included the following information about the U.S. Agricultural Economy.

Sixth District- Atlanta: “While most of the District continued to experience drought conditions, recent rains have provided relief to some of the District’s stressed pastures and crops. Based on results of a recent state survey, a contact reports concerns that farm labor shortages has had a negative impact on Georgia’s fruit and vegetable production.”

Seventh District- Chicago: “There were mixed changes in crop conditions throughout the District. A small percentage of acres along the Missouri River were lost to flooding. Though there was some concern about recent above-average temperatures, contacts still see the potential for good to excellent corn and soybean yields this fall, contingent upon favorable weather for the rest of the summer. Historically low stocks of corn and soybeans have put a premium on delivery commitments before harvest. On balance over the reporting period, cash prices for corn, wheat, and cattle were down while prices for soybeans, milk and hogs prices moved higher; all of these prices, however, remained above the levels of a year ago. Livestock operations faced margin pressure from high feed costs. Some elevators were under financial pressures due to expanded margin calls on their contracted positions as well as higher costs for planned input purchases for next year’s crop.”

Eighth District- St. Louis: “The majority of the corn, soybean, sorghum, rice, and cotton crops in the Eighth District are currently in fair or better condition. Winter wheat harvests are either complete or close to completion in all District states, and the production of winter wheat and the area harvested for the crop increased from 2010 to 2011. Finally, the fraction of pastures in good or better condition has declined in most District states since our previous report.”

Ninth District- Minneapolis: “Agriculture was mixed. While production in western portions of the District was hampered by severe flooding, prices for agricultural outputs remained strong. Preliminary estimates suggest that 6.3 million acres in North Dakota may have gone unplanted due to flooding. Contacts suggested that impacts on hay and feed crops could increase costs for some cattle producers, but a bank director noted that overall hay production in Montana and the Dakotas will be very strong due to moisture conditions. In other parts of the District, crop progress has fared better recently than early-season indicators suggested, but is still behind last year’s pace. Prices for some District agricultural commodities increased since the last report, including corn, soybeans and dairy products; however, cattle and wheat prices decreased recently.”

Tenth District- Kansas City: “Agricultural conditions varied with weather and input costs. Poor pasture conditions due to drought in the Southern Plains prompted increased placements of cattle in feedlots. However, initial reports on wheat yields in drought areas of Kansas and Oklahoma were poor but better than expected. The corn and soybean crops were progressing normally and generally rated in good or better condition, especially in Nebraska. Agricultural commodity prices remained high but volatile in recent weeks, shifting with export and production forecasts. Rising feed costs trimmed margins for livestock producers. Higher prices for fertilizer, fuel, and feed boosted farm loan demand. Elevated crop prices fueled further gains in District cropland values.”

Eleventh District- Dallas: “Drought conditions worsened, with about three-quarters of the district now in the most severe drought classification. Most Texas counties were designated natural disaster areas in June because they lost at least 30 percent of crops and pasture to drought. President Obama signed a disaster declaration in July for 45 counties in Texas that were heavily impacted by wildfires, which allows federal aid to help with recovery efforts. Crop conditions continued to deteriorate, causing low yields and complete crop losses in some instances. Farmers will depend heavily on crop insurance payments this year. Ranchers continued to cull herds due to very poor grazing conditions, limited hay supply and costly supplemental feeding.”

Keith

Farm Bill; Ag Economy; Biofuels; and Trade

Editor’s Note: Yesterday’s FarmPolicy report has been corrected.

Farm Bill- Budget Issues

Hembree Brandon reported earlier this week at the Delta Farm Press Online that, “The fiscal 2012 budget in the House would cut $30 billion from commodity programs and crop insurance, $18 billion from conservation, and $127 billion from nutrition programs — a total of a little less than 15 percent for all three, [Chip Morgan, executive vice president of the Delta Council said at the annual meeting of the Delta Council/Southern Cotton Ginners Association’s Ginning and Cotton Quality Improvement Committee.]

“‘In my 37 years with Delta Council, the fiscal outlook for writing a farm bill is about as bleak as I’ve ever seen for southern agriculture.’”

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Farm Bill; Ag Economy; Regulations; and Biofuels

Editor’s Note:  The original version of this update mischaracterized this document from today’s Washington Post as “the Boenher plan,” actually, it is the “Reid” plan.

Farm Bill- Budget Issues

Paul Kane reported in today’s Washington Post that, “President Obama and House Speaker John A. Boehner escalated their battle over the national debt on Monday, pressing their arguments in a pair of prime-time television addresses as Congress remained at a loss over how to keep the United States from defaulting next week for the first time.

“The challenge facing any plan for reducing the debt was underscored when a new Republican proposal to raise the ceiling on federal borrowing was met Monday with misgivings by some conservatives and skepticism by many GOP freshmen. That called into question whether Boehner (R-Ohio) could even get his own caucus to back his approach.

“As Boehner tried to rally support for his two-step plan [CORRECTION: the link to this document is Sen Reid’s plan] to cut $3 trillion in spending, Senate Majority Leader Harry M. Reid (D-Nev.) offered a strikingly similar proposal for increasing the debt limit before the Aug. 2 deadline. The two leaders, however, remained bitterly divided over Boehner’s demand to hold another vote next year to further expand the government’s borrowing authority.”

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Farm Bill Issues (Debt Negotiation Developments); and the Ag Economy

Farm Bill Issues

Scott Kilman reported in today’s Wall Street Journal that, “Land prices are way up and so are bank deposits, as high corn and soybean prices mean local farmers are making the most money in their livesAn exception to the boom is the local office of the U.S. Agriculture Department, the dispensary of federal payments to farmers from an array of arcane programs with names like ‘loan deficiency’ and ‘milk income loss.’ On a recent afternoon, the parking lot in front of the squat brick building behind a Chinese restaurant was nearly empty.

“The reason: Payments from America’s primary farm-subsidy program, dating from the 1930s, have stopped here. Grain prices are far too high to trigger payouts under the program’s ‘price support’ formula. The market, in other words, has done what decades of political wrangling couldn’t: slash farm subsidies.”

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FarmPolicy.com Interview: Chairman Conrad- Group of Six Proposal and Agriculture

Categories: Audio /Budget /Farm Bill

Today FarmPolicy.com spoke with Senate Budget Committee Chairman Kent Conrad (D-ND) about the Group of Six budget proposal and its potential implications for agriculture.

A transcript of our conversation is available here.

An audio replay of the discussion can be heard here (MP3- 9:00).

Keith Good

 

Farm Bill; Ag Economy; CFTC Issues; and Trade

Farm Bill Issues

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “House Agriculture Committee ranking member Collin Peterson on Wednesday endorsed the Gang of Six senators’ budget proposal and said he has instructed his staff to begin researching a farm bill with the $11 billion in cuts that the proposal would involve.

“‘I think this is coming together,’ Peterson, a Minnesota Democrat, told DTN. ‘I told my staff to start looking at this yesterday.’

One key farm lobbyist said farmers would be ‘dancing cartwheels’ if the cuts in farm programs can be held to $11 billion over 10 years. House Budget Committee Chairman Paul Ryan, R-Wis., proposed a $48 billion cut over 10 years in the fiscal year 2012 budget bill that the House passed. Senate Agriculture Chairman Debbie Stabenow, D-Mich., has said that passage of the Ryan budget proposal has made it increasingly difficult to keep the discussion of ag cuts at the $10 billion proposed under the Simpson-Bowles presidential commission plan.”

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Farm Bill Issues; and the Ag Economy

Farm Bill Issues

Philip Brasher reported yesterday at the FoodWatch Blog that, “It’s an axiom among many critics of U.S. farm policy that crop subsidies to grain and cotton subsidies encourage practices that are bad for the environment.  What those critics may fail to realize is that producers who take that money have to comply with restrictions on how they farm environmentally sensitive land, such as slopes that are prone to erosion. End those subsidies, or cut them so much that farmers stop taking them, and those producers will be largely free to farm how they like at a time when high commodity prices are encouraging growers to plant fencerow to fencerow.

“With Congress likely to make deep cuts in farm spending as part of a deficit-reduction plan, there’s a chance that the $5 billion in fixed, annual direct payments to growers will be slashed or replaced altogether. Conservationists are worried about what that could mean for highly erodible cropland.

“‘The end of direct payments would have a significant impact, a negative impact, on the compliance incentive,’ USDA economist Roger Claassen said at a meeting this week of the Soil and Water Conservation Society.”

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Farm Bill; and the Agricultural Economy

Farm Bill Issues

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Environmental groups want farmers to adhere to stronger conservation compliance rules and want to tie eligibility for crop insurance to conservation compliance, as well.

This is a growing topic as reliance on crop insurance grows and voluntary conservation programs are cut. Regardless of how the debate turns out, trying to build momentum going into the farm bill and really getting these issues front and center is key.”

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Farm Bill; Trade; and the Ag Economy

Farm Bill Issues

A section in the 2nd Quarter (2011) issue of Choices Magazine titled, “The Environment of the Next Farm Bill Debate,” by Steven L. Klose, indicated that, “As is always the case, the approaching end of a farm bill brings many questions. At this stage—with the 2012 crop year still covered under current legislation—the pressing questions revolve around: When? When will the debate begin in earnest? Will the House or Senate Ag Committee lead the way? Will the debate start and conclude in time for a policy to be in place before farmers make 2013 crop decisions? Or, will an extension of current legislation be necessary? Should we call it the 2012 Farm Bill, or will it not happen until 2013? Certainly, the congressional turnover of the 2010 elections has had an impact on the farm bill debate process. New leadership in both the Senate and House Agricultural committees requires the development of leadership priorities, agendas, committee staffing, and engaging stakeholders. How quickly these get off the ground will dictate how soon the committees can seriously take up the next farm bill. What we know for certain is that the current farm bill will expire after the 2012 crop year, and we will not plant the 2013 crop under 1949 permanent legislation provisions. So, ready or not, the debate begins.”

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Farm Bill; Ag Economy; and Trade

Farm Bill: Budget Concerns

The AP reported on Saturday that, “Farm groups are rushing to save government subsidies they’ve long received.

“President Barack Obama and lawmakers have targeted $30 billion or more in agriculture spending cuts as they try to negotiate a deficit-reduction deal.”

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Farm Bill; Ag Economy; and Biofuels

Farm Bill Issues

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Soybean and corn growers on Capitol Hill this are pleading with lawmakers to let the House and Senate Agriculture Committees make the cuts needed in USDA’s budget as part of the farm-bill process.”

However, yesterday’s update noted that, “Cuts in the appropriations process could take $2.6 billion out of USDA’s Fiscal Year 2012, and the long-term understanding is that agriculture could take $30 billion over 10 years in commodity cuts and $18 billion over 10 years in conservation — and potentially more in both categories. That’s apparently what’s been sitting on the table at the White House in these drama-filled talks over the deficit and debt ceiling.”

“Arizona Republican Jeff Flake has been on the hunt ever since he came to Washington. He issued a news release Tuesday announcing the ‘Reducing the Deficit through Eliminating Agriculture Direct Payment Subsidies Act,’ or REAPS Act, H.R. 2487, ‘which would eliminate agriculture direct payments subsidies completely and permanently,’ Flake stated.

“Going through the farm-bill process, the House and Senate Ag Committees might look to take a slice off direct payments, then shift the savings to crop insurance. Flake just wants to bag the whole program and hold up the pelt,” the DTN item said.

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Farm Bill; Ag Economy; Regulations; Trade; and Animal Agriculture

Farm Bill: Budget Issues (Crop Insurance)

Sara Wyant reported yesterday at Agri-Pulse Online that, “Leaders of the nation’s leading corn, soybean and wheat organizations want lawmakers to know that agriculture has already contributed to deficit reduction and any further cuts should be made by the House and Senate Agriculture Committees.

“Those are just some of the key messages that leaders of the American Soybean Association (ASA), the National Corn Growers Association (NCGA), and the National Association of Wheat Growers (NAWG) agreed to during meetings this week, said ASA President Alan Kemper.”

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Ag Economy (WASDE); Trade; Farm Bill; and Animal Agriculture

Agricultural Economy (WASDE)

University of Illinois Agricultural Economist Darrel Good indicated yesterday at the FarmDocDaily Blog (“USDA Report Highlights”) that, “Today, the USDA’s World Agricultural Outlook Board (WAOB) released the monthly report of World Agricultural Supply and Demand Estimates (WASDE) and the National Agricultural Statistics Service (NASS) released new wheat production forecasts. The WASDE report incorporated the information in the Grain Stocks and Acreage reports released on June 30.”

A summary of corn related variables from yesterday’s WASDE report are available here, while an overview of soybean and wheat indicators can be found here and here.

Reuters writer Charles Abbott reported yesterday that, “U.S. corn stocks will languish near 15-year lows for longer than expected as ethanol plants overtake livestock as the biggest consumers of the feed grain and China buys more American corn, according to government forecasts.

“The U.S. Agriculture Department, as expected, boosted its forecasts on Tuesday of ending stocks this year and next, largely due to weaker-than-expected consumption by the livestock sector this year. But the revisions fell short of analysts’ forecasts and supported prices that have fallen 15 percent from their peak on signs of healthier supplies.”

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Ag Economy; Farm Bill; Trade; Biotech; and Animal Agriculture

Agricultural Economy

Kim Severson and Kirk Johnson reported in today’s New York Times that, “The heat and the drought are so bad in this southwest corner of Georgia that hogs can barely eat. Corn, a lucrative crop with a notorious thirst, is burning up in fields. Cotton plants are too weak to punch through soil so dry it might as well be pavement.

“Farmers with the money and equipment to irrigate are running wells dry in the unseasonably early and particularly brutal national drought that some say could rival the Dust Bowl days.”

The Times front page article indicated that, “The pain has spread across 14 states, from Florida, where severe water restrictions are in place, to Arizona, where ranchers could be forced to sell off entire herds of cattle because they simply cannot feed them.

In Texas, where the drought is the worst, virtually no part of the state has been untouched. City dwellers and ranchers have been tormented by excessive heat and high winds. In the Southwest, wildfires are chewing through millions of acres.

“Last month, the United States Department of Agriculture designated all 254 counties in Texas natural disaster areas, qualifying them for varying levels of federal relief. More than 30 percent of the state’s wheat fields might be lost, adding pressure to a crop in short supply globally.”

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