FarmPolicy

February 19, 2018

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.’”

The article quoted Mr. Morgan as saying, “‘One issue that is absolutely going to influence congressional attitudes about the 2012 farm bill is that, in recent years, we’ve had the biggest commodity price increases in history.’

“‘The perception in Washington is that everyone’s selling cotton for $1.40, and with such high prices for commodities today, there’s no reason to have farm programs.’”

The article added that, “And, he says, direct payments ‘will have a big bullseye painted on them when it comes to cutting farm program spending, even though this is only about $5 billion per year for all crops. There’s just not much federal outlay on agriculture left to cut.’”

Mikkel Pates reported yesterday at AgWeek Online that, “In the [North Dakota Farmers Union] meetings, farmers pointed to crop insurance as one of their most important safety nets, [Jim Miller, a senior agricultural policy staffer for Sen. Kent Conrad, D-N.D] says. Earlier this year, the Obama administration was successful in getting new standard reinsurance agreements that dictate the levels of taxpayer subsidies for the programs.

“The Congressional Budget Office scored the cuts at $6 billion but the administration counts them at $4 billion.

We already provided a significant amount to deficit reduction through that exercise,” Miller says.”

The article noted that, “Crop insurance now is the second-largest category of spending in the USDA farm program budget, so likely will be a target for critics. Miller says it is well to remember that the cost has increased because commodity prices have increased.”

Meanwhile, the House Agriculture Subcommittee on General Farm Commodities and Risk Management will be holding a hearing this morning titled, “Agricultural Program Audit: Examination of Title I and the SURE Program.”

For a quick overview of previous Farm Bill audit hearings conducted by the House Ag Committee, see this Farmpolicy.com summary page.

And Philip Brasher reported yesterday at the FoodWatch Blog that, “Congress and the White House still seem far apart on an agreement to raise the debt ceiling, but some of the proposals that have come out may offer some clues as to how much spending will have to be cut in the next farm bill.

“The Gang of Six plan called for $11 billion in cuts over 10 years. The proposal did not specify which programs should be targeted but did protect food stamps from cuts. Were the entire cut to come out of the $4.7 billion in direct annual payments that go to grain and cotton growers it would amount to about a 23 percent reduction. (In Iowa, the largest recipient of such subsidies, the typical direct payment averages around $30 an acre.) Now comes Senate Majority Leader Harry Reid’s plan, which specifically would cut those direct payments by about 30 percent. The cut would be made by reducing the payment rate. Farmers are now paid on 85 percent of their base acreage. That would be reduced to 59 percent.”

And with respect to the debt ceiling talks, Lori Montgomery reported in today’s Washington Post that, “Washington barreled closer to crisis Tuesday as House Speaker John A. Boehner and Senate Majority Leader Harry M. Reid scrambled to build support for rival plans to control the national debt, but both appeared doomed without significant bipartisan modifications.”

The Post article explained that, “House Republicans delayed a vote on Boehner’s bill, which had been set for Wednesday, after congressional budget analysts dealt the legislation a potentially devastating setback by saying it would save far less over the next decade than the $1.2 trillion advertised. The Congressional Budget Office projected that the spending cuts would save only about $850 billion over that period.”

“House Republicans were racing Tuesday night to rewrite portions of the measure to bring the numbers into line. The vote could now come Thursday.

“As Boehner (R-Ohio) pressed toward a cliffhanger vote in the House, President Obama signaled that [he] would veto the measure because it would force another battle over the debt limit early next year. Meanwhile, [Sen. Majority Leader Harry Reid (D-Nev.)] pronounced the proposal ‘dead on arrival’ [related audio from Sen. Reid here (MP3- 1:40)] in the Senate, where Democrats were struggling to rally votes for their own plan to raise the debt limit by $2.7 trillion — enough additional borrowing authority to cover the nation’s bills into 2013.”

Ms. Montgomery stated that, “While Boehner faces major challenges in getting the House to approve his proposal, Reid was faring no better in the Senate. Democratic aides acknowledged that the Senate bill is unlikely to pass without Republican support.

“That backing was not forthcoming Tuesday. Senate Minority Leader Mitch McConnell (R-Ky.) criticized the Democratic alternative, saying it contains ‘highly suspect spending reduction features.’ He argued that more than a third of the $2.7 trillion in savings in Reid’s bill would come from winding down the wars in Iraq and Afghanistan — money Obama never intended to spend.

“With less than a week left to strike a deal, Reid was engaged in talks with Boehner and McConnell about a potential compromise. But they remained deeply divided over the size of a debt-ceiling increase and the mission of a new debt-reduction committee that would be created under both measures.”

Jennifer Steinhauer and Carl Hulse reported in today’s New York Times that, “Almost as soon as Mr. Boehner introduced his plan, Republican party leaders faced a barrage of criticism that the cuts were not nearly deep enough.

“Representative Eric Cantor, Republican of Virginia and the House majority leader, tried to spur his members to support their leaders. Mr. Cantor told Republicans in a Tuesday morning meeting to ‘stop grumbling and whining and to come together as conservatives and rally behind’ Mr. Boehner’s plan.”

Naftali Bendavid and Carol E. Lee reported in today’s Wall Street Journal that, “House Republican leaders said they hoped to bring Mr. Boehner’s plan to a vote on Thursday. If his proposal stumbles in the House, Senate Majority Leader Harry Reid (D., Nev.) will try to seize the initiative with his own plan, which hasn’t yet been analyzed by the CBO and faces its own challenges in passing the Senate.”

Scott Wong and Manu Raju reported yesterday at Politico that, “Senate Republicans on Tuesday roundly criticized Majority Leader Harry Reid’s plan to raise the nation’s debt ceiling, but they left the door open to a possible compromise between rival proposals floated by the Nevada Democrat and GOP House Speaker John Boehner.

“Members of both parties highlighted the fact that the dueling House and Senate plans have two major elements in common: Both call for $1.2 trillion in discretionary spending cuts over the next decade and would create a 12-member bipartisan committee of lawmakers to identify future savings.”

The Politico writers added that, “There’s still one major split between the two proposals: the Boehner plan would require two short-term debt-limit increases, an idea that the White House and Reid have resoundly rejected.

“But with conservative opposition mounting to the Boehner plan, and Reid’s proposal facing slim odds in the Senate, senior Democratic and Republican senators believe they may have to split the difference between the two plans in order to get a deal to avert economic default.”

Meanwhile, The Wall Street Journal editorial board opined today that, “The Boehner plan is the most credible proposal with a chance of becoming law before the 2012 election.

“The Speaker has made mistakes in his debt negotiations, not least in trusting that Mr. Obama wants serious fiscal reforms. But thanks to the President’s overreaching on taxes, Mr. Boehner now has the GOP positioned in sight of a political and policy victory. If his plan or something close to it becomes law, Democrats will have conceded more spending cuts than they thought possible, and without getting the GOP to raise taxes and without being able to blame Republicans for a debt-limit crackup or economic damage.”

The New York Times editorial board indicated today that, the Boehner plan “is irredeemably awful,” while calling the Reid plan, “[T]he less objectionable of the two mainly because it would extend the debt limit through 2012, avoiding a replay of brinkmanship next year. It at least holds out the possibility of future tax increases.”

 

Agricultural Economy

Purdue University Agricultural Economist Chris Hurt noted earlier this week that, “The quantity of beef available to consumers in the U.S. has declined a startling amount in recent years and that trend is going to continue.  The declining supplies are related to continuing liquidation of the cow herd in the past few years due to high feed prices, a weak U.S. dollar that is spurring beef exports, and of course drought in the southwest and southeast.  Declining supplies will support prices across the cattle complex at new record highs in 2011 and again in 2012.  Unfortunately, even higher retail beef prices can be expected for consumers.”

Meanwhile, Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “A spokesman for the Iowa Cattlemen’s Association said a poll of members put the death toll of cattle in Iowa during last week’s heat wave at between 3,400 and 4,000 head.

“Dal Grooms, communications director for the association, said she had reports of up to 3,000 deaths in eastern Iowa, which received not only heat but less rain during last week.”

Internationally, Bloomberg writer Aya Takada reported earlier this week that, “Japan will help meat producer groups remove beef tainted with cesium from the market and has directed them to seek compensation from Tokyo Electric Power Co. as radioactive contamination spreads in the country’s food supply.”

Beef from cattle fed with tainted hay was shipped to 46 out of Japan’s total 47 prefectures, [Hideo Harada, director for livestock policy planning at the Ministry of Agriculture, Forestry and Fisheries] said. Test results showed 23 out of 274 beef samples contained radioactive cesium that exceeded the government’s standard, he said. The recalled beef will be stored and tested and could be shipped to the market again if cesium levels don’t exceed standards, he said.”

And a news release yesterday from the American Farm Bureau Federation (AFBF) indicated that, “While farmers are benefiting from positive commodity prices, rising production costs remain a concern, according to economists with the [AFBF].

“‘These are encouraging times for the U.S. farm economy,’ said AFBF Chief Economist Bob Young. ‘Higher prices for corn, cotton, wheat and soybeans are helping farmers, but higher energy prices are impacting profit margins. It’s important to remember that farming is still a very capital intensive occupation and that high input costs affect the bottom line, even in good times.’

“AFBF economist Matt Erickson outlined the impact of high energy prices on farmers in a new white paper ‘Cost-of-Production Report: the Rising Costs of Inputs.’”

 

Biofuels

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “The ongoing budget battle in Washington isn’t stopping USDA from trying to jumpstart the advanced biofuels industry, as Agriculture Secretary Tom Vilsack announced another round of federal funding to help farmers grow biomass crops.

“USDA will provide $45 million to fund four additional Biomass Crop Assistance Program, or BCAP, project areas in six states, as a way to grow more non-food feedstocks for advanced biofuels.

“The four project areas will set aside acres in California, Kansas, Montana, Oklahoma, Oregon and Washington for the production of renewable energy crops including the oilseed camelina, switchgrass and woody biomass.”

And DTN Ag Policy Editor Chris Clayton reported yesterday that, “Several major farm, commodity and livestock groups see some common ground in a list of principles and policy planks to ensure the biofuels industry grows while enhancing needed feed for livestock.

“The white paper lays out different policy options, and yet reflects continuing tension given that a couple of key livestock and poultry groups that worked on the proposal in the end opted not to sign on. DTN received a copy of the two-page principles and policy paper from members 25x’25 coalition attending the Ag Media Summit in New Orleans.”

The DTN article noted that, “In laying out some policy recommendations, the groups stated that several proposals that ‘represent the majority thinking’ of the group. High on that list are proposals to open more land to production, including changes to the Conservation Reserve Program. Enrollment criteria in CRP should be tightened, ‘allowing early outs for land that can be returned to production in an environmentally sound manner,’ and targeting the programs to environmentally sensitive lands.”

“While proposing to overhaul the blenders’ credit, the groups stated that the Renewable Fuels Standard should be maintained. That recommendation, however, was a sticking point that caused at least two livestock and poultry groups to reject signing the document.”

 

Trade

Reuters writer Doug Palmer reported yesterday that, “Trade Representative Ron Kirk said on Tuesday he was optimistic a deal could be struck with Republicans clearing the way for Congress to pass free trade pacts with South Korea, Colombia and Panama after lawmakers return in September from a month-long recess.

“President Barack Obama had hoped to win approval of the three agreements before the August break but Republicans balked at a White House plan to include an extension of the Trade Adjustment Assistance (TAA) program for displaced U.S. workers in the implementing legislation for the South Korea pact.”

A news release Friday from Ohio GOP Senator Rob Portman noted that, “U.S. Senators [Portman], former U.S. Trade Representative, and Roy Blunt (R-Mo.), joined 10 of their Republican Senate colleagues this week to advance the pending export agreements with Korea, Colombia, and Panama.

“In a letter to President Barack Obama, the 12 Senators urged the Administration to submit the pending export agreements immediately with the understanding that the agreement meets the White House’s insistence that there is a way forward on a separate Trade Adjustment Assistance (TAA) bill.

The Senators have committed to supporting cloture on the motion to proceed to the TAA bill and the bill itself, reflecting bipartisan reforms negotiated by the White House as well as U.S. House of Representatives Committee on Ways & Means Chairman Dave Camp (R-Mich.) and U.S. Senate Finance Committee Chairman Max Baucus (D-Mont.). This provides more than enough votes to ensure the reformed TAA bill can pass the Senate.”

And Alan Beattie reported yesterday at the Financial Times Online that, “The likelihood of the Doha round of world trade talks being declared dead this year rose on Tuesday when it became clear that even a partial deal would not be possible.

“The talks, named after the Qatari capital in which they were launched in 2001, have drifted further towards oblivion in advance of a twice-yearly meeting of ministers this December.”

Keith Good

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