FarmPolicy

February 21, 2019

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.”

The Agri-Pulse article noted that, “‘As we go to Capitol Hill, we want members to understand that they shouldn’t do arbitrary cuts. We support deficit reduction, but any cuts should be done by the agriculture committees,’ explained Kemper.

“Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich, spoke to ASA members Tuesday afternoon and told them that the federal crop insurance program, which took a $6 billion hit last year, is unlikely to be cut again. However, she warned that direct payments could be cut substantially, Kemper said.

“‘Crop insurance is a huge priority as a risk management tool for the future,’ Kemper added.”

On the issue of crop insurance, an opinion item posted yesterday at The Gazette Online (Cedar Rapids, Iowa) by Alan Rosendahl, a farmer and senior vice president at Iowa State Bank, stated that, “Recognizing the inherent risk in agriculture and the need for the country to have a stable food supply, Congress years ago assembled a set of policies known as ‘farm safety net programs’ to ensure that farmers weren’t knocked out of business because of bad weather or wild market fluctuations. The most important of those policies — and the one that best serves agriculture — is crop insurance.

As a banker and a farmer, I can tell you that federal crop insurance is the only thing that makes it possible for us to loan money to small farmers in Iowa. Banks, like other businesses, need to turn a profit to stay in business. But loaning money to small and beginning farmers can be very risky, because they often have less net worth, and tighter cash flows. Coupled with the fact that small banks are inherently risk-averse, particularly after the banking implosion of 2008, and you can see the dilemma.

“But federal crop insurance bridges the risk problem because it serves as the collateral that the farmer needs to secure the loan, lowering or eliminating the risk to the bank altogether and ensuring the loan is made. Crop insurance establishes the floor for the farmer under which he can fall no further, ensuring that although he is small, he will be here to farm yet another year.”

Meanwhile, Hembree Brandon reported yesterday at the Delta Farm Press Online that, “In negotiations for crafting the 2012 farm bill, Gary Adams says, ‘there is one overriding theme — budget, budget, budget.’

“‘This farm bill is going to be one where the budget will dictate policy,’ the National Cotton Council vice president for economics and policy analysis said at the annual joint meeting of the Mississippi Boll Weevil Management Corporation and the Mississippi Farm Bureau Federation’s Cotton Policy Committee.

“‘Our challenge is going to be to try and maintain the funding we have, and also to extend some of the programs in the 2008 farm bill that don’t have any baseline going forward. There are 38 programs in the 2008 law that are unfunded.’”

Yesterday’s article added that, “The U.S. debt limit will be reached sometime in early August, Adams notes, and ‘we anticipate that the Congress will broker some kind of agreement with the group headed by Vice President Joe Biden. But any agreement to raise the debt limit likely will be coupled with spending cuts and cuts to agricultural programs.’

“‘This could add more short term pressure if they need to move quickly to enact some kind of measure to increase the debt limit.’”

With respect to the budget and executive / legislative branch negotiations on the debt ceiling, Carol E. Lee and Janet Hook reported in today’s Wall Street Journal that, “Partisan wrangling over how to reduce the federal deficit hit a new low Wednesday when President Barack Obama ended his testiest meeting with congressional leaders by declaring ‘enough is enough.’

“Despite the flaring tempers and rising frustrations in the group, the participants left the White House meeting with a clear set of choices if they want to reach a deal to raise the federal borrowing limit. Republicans can either give in on their opposition to tax increases or back off of their demand for spending cuts that match or exceed the amount of a borrowing-limit increase. Or Democrats can accept more spending cuts and retreat from their insistence on tax increases.

The question now is who is going to blink. Mr. Obama said he wants an answer by Friday from the congressional leaders.”

David Rogers reported last night at Politico that, “Moody’s Investors Service added its voice Wednesday, threatening to lower the U.S. credit rating because of what it now sees as a small but rising risk of default. Treasury Secretary Timothy Geithner informed congressional leaders meeting with Obama at the time of the announcement after markets closed. And in testimony earlier in the day, Federal Reserve Chairman Ben Bernanke warned of ‘shock waves through the entire financial system’ if lawmakers don’t act.”

Carl Hulse reported in today’s New York Times that, “Across Washington, officials were weighed down with a sense that they were hurtling toward a crisis. Grim-faced lawmakers spent the day shuttling from meeting to meeting in search of a way out of the fix.

“The stakes are high, for the economy, the financial markets and both parties. But the pressure was particularly intense on Republican leaders, who only weeks ago seemed to be on the offensive and in a strong position to extract major concessions from Mr. Obama and the Democrats.”

 

Farm Bill: Dairy Issues

In other Farm Bill developments, a news release yesterday from the House Agriculture Committee Democrats stated in part that, “U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., today made the following statement after releasing a dairy reform discussion draft that would offer protection, create stability and inspire growth in the dairy sector. [See also a fact sheet, and detailed summary of the draft.]  The draft language is based on reform proposals put forward by the dairy industry.

“‘I released this discussion draft now because we need to act before the next farm bill. If we have another dairy crisis like we had in 2009, we could lose half our dairies. The discussion draft allows us to keep the ball moving while continuing to have a dialogue with the dairy industry.’”

A statement yesterday by Connie Tipton, President and CEO of the International Dairy Foods Association noted in part that, “We are disappointed that Rep. Collin Peterson is circulating draft legislation that clearly would take the dairy industry in the wrong direction. Instead of encouraging job growth and reducing regulation on an already overregulated industry, the discussion draft would impose new and intrusive government mandates on dairy markets at the cost of a growing dairy export business and the jobs that have come with it.”

On the other hand, a news release from the National Milk Producers Federation (NMPF) yesterday indicated that, “The effort to make dramatic improvements in U.S. dairy policy took a big step forward Wednesday with the release of draft legislation incorporating the key elements of NMPF’s Foundation for the Future program.

“The discussion draft text has been made available by the House Agriculture Committee’s Ranking Member Collin Peterson (D-MN).

“‘This is a long-anticipated and very welcome next step in the process of upgrading dairy policy to better provide farmers with protection, stability, and the opportunity for growth,’ said Jerry Kozak, President and CEO of NMPF.”

House Agriculture Committee Chairman Frank Lucas (R-OK) noted yesterday that, “It is important for the entire dairy industry to continue discussions regarding possible dairy legislation.  Rep. Peterson’s discussion draft is a step in the process.”

In other dairy related news, the AP reported yesterday that, “Dean Foods Co., one of the largest dairy distributors in the United States, says it has agreed to pay $140 million to settle a lawsuit over pricing with a group of dairy farmers in the Southeast.

“The dairy farmers claimed that Dean and cooperatives that are major buyers worked together to keep the prices of milk artificially low, thereby limiting the farmer’s profits. Dean Foods denied the claims.”

 

Farm Bill: Sugar

Dow Jones writer Bill Tomson reported yesterday that, “A coalition of groups representing food, beverage and candy companies in the U.S. is taking a fresh shot at tearing down government support programs that they say keep sugar prices high in the U.S.

“The Coalition for Sugar Reform, representing groups like the American Bakers Association, the Grocery Manufacturers Association, the Consumer Federation of America and others, is again taking its case to Congress as lawmakers there begin work on the next farm bill, which is scheduled for completion in 2012.

“The coalition was formed a couple of years before the 2008 farm bill to advocate lifting restrictions on the U.S. sugar trade and now it is back, said Larry Graham, chairman of the coalition and president of the National Confectioners Association. The group has already held listening sessions for Congressional staff in the Senate and House and will be flying in members to meet face to face with lawmakers later this year.”

 

Farm Bill: Nutrition Issues

The AP reported yesterday that, “The popularity of farm-to-school programs that put locally grown food on cafeteria trays has exploded in recent years — so much so that the federal agency in charge of school lunches is giving them a new stamp of approval.

“Deputy Agriculture Secretary Kathleen Merrigan said the programs have become so popular so fast that her agency doesn’t have solid figures on how many schools are serving their students vegetables, fruits and meat grown by local farmers.”

 

Farm Bill: Hearings

A news release yesterday from the House Agriculture Committee stated that, “Today, Rep. Timothy V. Johnson, Chairman of the House Agriculture Committee’s Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture, held an audit hearing to examine trade, food aid and agricultural development programs operated by the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) and the U.S. Agency for International Development (USAID). This is the fourth hearing in the audit series that is designed to provide members of the committee with a greater understanding of farm policy.”

A FarmPolicy.com audio replay of yesterday’s hearing is available here.

And the Senate Ag Committee will be holding a hearing this morning titled, “Growing Jobs in Rural America.”

A news release yesterday from the American Soybean Association (ASA) noted that, “The [ASA] is pleased that the United State Senate Committee on Agriculture, Nutrition & Forestry, chaired by Senator Debbie Stabenow (D-MI), will hold a ‘Growing Jobs in Rural America’ hearing on Thursday that will highlight the contributions biobased products are making to jobs and the U.S. economy.

“‘This hearing underscores the benefits of the efforts of ASA, soybean farmers, and the companies that are making soy biobased products to grow and create jobs, displace petroleum, and improve the environment,’ said ASA Chairman Rob Joslin, a soybean farmer from Sidney, Ohio. The Ohio Bioproducts Innovation Center, which collaborates with the Ohio Soybean Association, is participating in the hearing. ‘ASA and the soybean industry have and will continue to lead efforts to establish and expand federal programs and policies that support and promote the development of biobased products.’”

Note that a FarmPolicy.com summary of 2012 Farm Bill hearings from last year, before the November elections, can be found here (House) and here (Senate).  An overview of Farm Bill hearings held since the November elections can be found here (Senate) and here (House).

 

Agricultural Economy

Dow Jones News reported yesterday that, “World food prices will remain expensive and a fall towards their levels prior to the food crisis that peaked in 2008 will be a long time coming, as production of most agricultural commodities isn’t rising fast enough to meet demand, an official at the United Nations Food and Agriculture Organization said Wednesday.

“‘Food prices aren’t likely to return to pre-food crisis levels at least for the next 10 years,’ FAO policy officer Sumiter Singh Broca said on the sidelines of an agriculture conference. ‘Food production will have to [increase significantly] to fight rising prices.’”

A separate Dow Jones article from yesterday noted that, “Higher food prices are here to stay, General Mills Inc.’s (GIS) Chief Executive Ken Powell said Wednesday, adding that it was unlikely that food prices will slip into a deflationary cycle as they did last year.”

Bloomberg Luzi Ann Javier writer reported yesterday that, “China, the second-largest corn user, may more than double purchases to a record as it seeks to boost stockpiles and cool the fastest inflation in three years.

“The country will probably buy 5 million metric tons this year from about 2 million tons in 2010, said Abdolreza Abbassian, senior economist at the United Nations’ Food & Agriculture Organization. That would top the 4.3 million tons in the year ended September 1995, according to U.S. government data.”

Meanwhile, the AP reported yesterday that, “The unrelenting Texas drought has produced a cruelly ironic twist: cattle dying from too much water.

“Agriculture officials in parched Texas said Wednesday there are no hard numbers on how many head of cattle have died but reports of deaths from too much water or too little are showing up across the nation’s leading cattle production state.”

 

Regulations

Robin Bravender reported last night at Politico that, “The House on Wednesday approved legislation to smack down the Obama administration’s water pollution policies, despite a looming veto threat from the White House.

The chamber voted 239-184 to adopt a bipartisan bill that seeks to limit EPA’s authority over state water quality decisions after recent agency actions have irked lawmakers, particularly in coal states and in Florida.

“Backers of the bill sent a loud message that they’re not pleased with recent EPA water policies, including a January veto of a West Virginia mining permit and new nutrient pollution standards in Florida.”

And DTN Political Correspondent Jerry Hagstrom reported yesterday that, “Senate Majority Leader Harry Reid will not bring up a House-passed bill to eliminate a pesticide permit requirement until senators who have placed holds on the bill and advocates for it have worked out a deal, Senate Agriculture Chairman Debbie Stabenow said Tuesday.

“The measure would eliminate a requirement that farmers and public health agencies apply for a permit to use a pesticide over water under certain circumstances. The House has already passed the legislation.

“The Senate Agriculture Committee has approved the bill, Stabenow said, but she noted that Senate Environment and Public Works Chairman Barbara Boxer, D-Calif., is one of the senators who have placed a hold on the bill. Boxer wants the bill to have to move through her committee before coming to the floor for a debate.”

 

Trade

Vicki Needham reported yesterday at The Hill Online that, “House and Senate Republicans are split on how to proceed with three pending trade agreements as negotiations with the White House continue over the inclusion of a worker-assistance program.

“Although Republicans in both chambers agree that the program — known as Trade Adjustment Assistance — should be considered separately from the trade agreements, they differ on what procedures to use.”

The Hill article added that, “House Republicans are considering holding separate votes on TAA and the Korean trade agreement. After the vote, they would recombine the two parts and send the package to the Senate.

“But Senate Republicans say separate consideration of TAA isn’t enough. Minority Leader Mitch McConnell (R-Ky.) wants the TAA measure tied to the renewal of Trade Promotion Authority, otherwise known as ‘fast-track.’ That authority allows the White House to negotiate new trade agreements and submit them to Congress for an up-or-down vote without any amendments.”

The editorial page of today’s Wall Street Journal included a lengthy editorial on trade, which concluded by saying, “This is a good time to consider what’s at stake. A Canada-Colombia trade agreement goes live on August 15 and the E.U.-Korea trade pact went into effect on July 1. This means that American producers—including Montana ranchers and wheat farmers—will find that their exports are less competitive while [Sen. Finance Committee Chairman Max Baucus (D-Montana)] fiddles with TAA. Is Washington so dysfunctional that it can’t even pass something that both sides agree on?

 

Animal Agriculture

Yesterday’s AgriTalk radio program with Mike Adams featured additional analysis on the recent agreement between the United Egg Producers (UEP) and the Humane Society of the United States (HSUS) regarding egg production.

Recall that earlier this week, Chad Gregory, the Senior Vice President of the United Egg Producers discussed the recent agreement on AgriTalk.

Yesterday’s program featured perspective on the UEP-HSUS agreement from National Pork Producers Council President Doug Wolf, and Colin Woodall of the National Cattlemen’s Beef Association.

Keith Good

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