FarmPolicy

August 15, 2018

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.”

Mr. Hays added that, “Congressman Lucas also believes that under the House proposal- farmers have a very good chance of getting a Direct Farm Program payment after the first of October when the new fiscal year begins- this would be for the fifth year of the five year farm law that we are currently operating under.”

Yesterday’s discussion between Ron Hays and Chairman Lucas, which covered a variety of important topics, can be heard here.

Specifically during yesterday’s interview, Chairman Lucas indicated that, “Right now, as the Boenher plan stands, there are no specific cuts in the agricultural spending.  The alternative plan, very similar, coming from the Senate under [Sen. Majority Leader Harry Reid (D-Nev.)] poses about $15 billion in immediate cuts in agriculture- with some increased requirements for spending- so it comes out to be about a net $10 – $11 billion cut.  The way they do that is, they propose, in the Senate version of the bill, to recalculate how the Direct Payments would be made in October so that producers would only be eligible for [59%] of the acres that they had signed up in the five-year Farm Bill- for the Direct Payments- instead of 85%.

That’s not to say that in Mr. Boehner’s proposal there are not going to be cuts and reductions in spending, but at least in this first go around, the things that are important for the rest of this summer, and the first part of those annual payments in October, are protected under Mr. Boehner’s proposal.”

And, Agri-Pulse Senior Editor Stewart Doan indicated in an audio report from yesterday that, “[House Agriculture Committee] Ranking Member Collin Peterson (D-Minn.) is increasingly optimistic that farm programs will not be gutted in a potential agreement to reduce the federal deficit.  He notes that Congressional leaders are no longer talking about cutting ag spending by $30 billion or more.”

Mr. Doan’s report included this audio clip from Ranking Member Peterson: “They’re talking $10- $11 billion, the highest I’ve heard now is $15 [billion]- and even the Republicans, you know, over here I think have, seemed like they have surrendered on it.  And Harry Reid’s number- a 30% reduction [(85-59) / 85] in the base acres- around $11 billion– that’s kind of what everybody is talking about now.  If that’s the number we get then, you know, I think we can work with that- in the commodity title.”

Earlier this week in an appearance on The Fox News Channel (7/25- interview with Jenna Lee, Debt Ceiling Negotiations) Democratic Rep. Ron Kind (Wis.) indicated that, “You got to go where the big spending programs are. Rising health care costs is the largest and fastest growing area spending, bar none… And we also need to scrub the defense budget… And I’ve been one of the leaders on farm bill reform, too, ending the huge taxpayer subsidies, going to large agri business. It’s not fiscally responsible, and that too should be in the mix.”

In related news, Reuters writer Charles Abbott reported yesterday that, “U.S. agricultural programs face cuts of $10-$11 billion over the next decade as Congress slashes federal spending to reduce the budget deficit, said a senior farm-state Democrat on Wednesday.

“While such reductions would be on the lower end of suggestions of as high as $35 billion over 10 years, there would still be less money available when the House and Senate Agriculture committees begin overhauling the U.S. farm policy next year.

“‘I think we’re winning the war on cuts,’ Collin Peterson, the Democratic leader on the House Agriculture Committee, told reporters.”

Mr. Abbott explained that, “The so-called direct payment of roughly $5 billion a year to grain, soybean and cotton growers is commonly cited as a target for cuts. There also could be cuts in land stewardship programs and in crop insurance supports. Some lawmakers would look at food stamps as an area for cuts.

“A plan offered by Senate Democrats proposes $10 billion-$15 billion ‘in agricultural reforms,’ including a 30 percent cut in the direct payment. It would be achieved by reducing the amount of land eligible for the payments.

“A plan unveiled by House Speaker John Boehner called for cuts in mandatory spending but did not set a figure for agriculture.”

Yesterday’s article added that, “At a hearing on crop subsidies, Agriculture Committee chairman Frank Lucas said a farm safety net was essential and that crop subsidies were so small a part of the federal budget – ‘50 cents out of every 100 dollars’ — that large savings are impossible.”

A FarmPolicy audio clip of a portion of the opening statement delivered by Chairman Lucas at yesterday’s hearing can be heard here (MP3- 2:59).

Also at yesterday’s hearing, Rep. Vicky Hartzler (R-MO) asked some very timely and relevant questions about Direct Payments, which she noted are in the news “here lately.”

In response to her inquiry, Juan Garcia, Acting Deputy Administrator for Farm Programs at USDA’s Farm Service Agency (FSA), and FSA Administrator Bruce Nelson provided additional information about the Direct Payment program, including participation rates.

However, the witnesses were reluctant to provide a lot of detail when Rep. Hartzler asked, “In your opinion, what would be the impact on farmers if Direct Payments were to be done away with?”- An idea Rep. Hartzler made clear she was not proposing.

To listen to this exchange from yesterday on Direct Payments, just click here (MP3- 2:49).

Also at yesterday’s House Ag Subcommittee hearing:

Chairman Lucas spent some of his time for questions asking the witnesses about the Supplemental Revenue Assistance Payments (SURE) Program- audio with Mr. Nelson (MP3- 2:55).

– Rep. Austin Scott (R-GA) focused on issues associated with financing farming operations and risk producers face today including price volatility and high production costs- audio with Mr. Nelson (MP3- 2:27).

– Rep. Chris Gibson (R-NY) inquired about crop insurance and potential variables associated with program reform- audio with Mr. Nelson and Mr. Garcia (MP3- 2:38).

– Rep. Reid Ribble (R-WI) focused on planting restrictions on base acres and restraints of growing fruits and vegetables on enrolled acreage.  He specifically sought more information about growing vegetables for processing on program land- audio with Mr. Nelson and Mr. Garcia (MP3- 2:59).

A complete FarmPolicy.com audio replay of yesterday’s hearing is available here (MP3).

Meanwhile, Philip Brasher reported yesterday at the FoodWatch Blog that, “Farmers who get government payments for land that’s traditionally grown corn, soybeans and other subsidized crops have long been barred from planting fruits and vegetables on that acreage. Existing fruit and vegetable growers in California and other states have insisted on that restriction. However, a special provision in the 2008 farm bill allowed some Midwest farmers to start switching some corn and soybean acreage to tomatoes and other vegetables destined for processing. As it turns out, only about 10,215 acres have been planted to vegetables, just 14 percent of the 75,000 acres allowed under the pilot program.

“Many farmers already had land to grow vegetables on that wasn’t subject to the subsidy restrictions, says Bruce Nelson, administrator of the Agriculture Department’s Farm Service Agency. Another factor: Demand for processed vegetables is weak.

“Some 155 farms participated in the pilot project. Eight-five percent of the farms and farmers were in just three states – Illinois, Indiana and Minnesota – out of seven that were eligible.”

Today, the Senate Agriculture Committee will a hold a hearing this morning titled, “Opportunities for Specialty Crops and Organics in the Farm Bill;” and, a House Ag Subcommittee will hold a hearing this morning titled, “Agricultural Program Audit: Examination of USDA Research Programs.”

In other policy developments, news release from USDA yesterday stated that, “Speaking today at the Council on Foundations Rural Philanthropy Conference, Agriculture Secretary Tom Vilsack called on representatives of philanthropic organizations from across America to ‘step up, take risks and work creatively to create jobs, improve quality of life and make an impact on rural America.’ During his keynote address, the Secretary urged philanthropists to partner with the Obama Administration, through the newly-announced White House Rural Council to drive smart investment strategies in rural America.”

 

Debt Talks

With respect to the debt ceiling issue, Paul Kane reported in today’s Washington Post that, “House GOP leaders mounted a furious bid Wednesday to win support for legislation designed to ease the nation’s debt crisis, delivering a tongue-lashing to their most conservative lawmakers and casting Thursday’s roll call as nothing less than a vote of confidence in their stewardship of the chamber.”

The Post added that, “Republicans received a dose of good news when congressional budget analysts credited Boehner’s legislation with $917 billion in spending cuts.”

Mr. Kane indicated that, “[Sen. Majority Leader Harry Reid’s] own deficit-reduction plan, which calls for raising the debt ceiling enough to cover federal obligations into 2013, faced challenges of its own from the GOP, which objects to the accounting in the bill.

The next move depends on the House vote scheduled for Thursday.”

(The Congressional Budget Office also released a score of the Senate plan yesterday).

Today’s article explained that, “If the Boehner legislation survives that white-knuckle roll call, it will move across to the Senate, where Reid is expected to amend it. He held late-afternoon discussions with Senate Minority Leader Mitch McConnell (R-Ky.) in their continuing effort to craft a compromise that could clear the Senate by the end of the weekend.

“Under this scenario, the amended bill would go back to the House for another vote early next week. But Senate Republicans could balk at any changes in the Boehner bill, forcing President Obama and Senate allies to choose between the legislation or the prospect of default.

If Boehner’s bill fails in the Thursday vote, Democrats say, Reid’s current proposal would ultimately prevail, perhaps with some revisions designed to win bipartisan support.”

David Rogers reported last night at Politico that, “Republicans will hold another conference Thursday morning at which a final decision can be made about moving ahead. But after retooling the bill and getting a higher savings score from the Congressional Budget Office late Wednesday, there was growing confidence that Boehner will move ahead.”

Jennifer Steinhauer reported in today’s New York Times that, “House Republicans and Senate Democrats gained substantial support on Wednesday within party ranks for their separate plans to resolve a looming debt crisis, but the momentum seemed to be pushing both sides further from a compromise.

“It was a day in which Capitol Hill seemed to operate in alternate realities: Republicans in the House sharing near universal belief that the Senate will eventually cave and accept their plan, and Senate Democrats assured that they will have the last word over the weekend and ultimately force the hand of the House.”

 

Agricultural Economy

The AP reported yesterday (“Severe drought in Texas could result in record losses in nation’s No. 2 agriculture state”) that, “The drought has spread over much of the southern U.S., leaving Oklahoma the driest it has been since the 1930s and setting records from Louisiana to New Mexico. But the situation is especially severe in Texas, which trails only California in agricultural productivity.”

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

 

Trade

Elizabeth Williamson and Andrew Ackerman reported yesterday at The Wall Street Journal Online that, “The White House and Congress are inching toward compromise on a deal that could allow a vote on trade agreements with South Korea, Colombia and Panama in September, but the fractious state of Congress still threatens progress.

“Congressional Republicans and Obama administration trade officials say they are working on a highly orchestrated plan for renewing the controversial Trade Adjustment Assistance program after Congress returns from its month-long August recess. That could pave the way for a vote on the three trade agreements in the fall. But aides to Senate Democrats and the administration caution that a final deal isn’t agreed yet.”

 

Regulations

Leslie Kaufman reported in today’s New York Times that, “With the nation’s attention diverted by the drama over the debt ceiling, Republicans in the House of Representatives are loading up an appropriations bill with 39 ways — and counting — to significantly curtail environmental regulation.”

The Times added that, “There is little chance that all the 39 proposals identified by Democrats will be approved by the Senate, which they control, or that a substantial number could elude a presidential veto. In fact, one measure — to forbid the Fish and Wildlife Service to list any new plants or animals as endangered — was so extreme that 37 Republicans broke ranks Wednesday and voted to strip it from the bill.

“Although inserting policy changes into appropriations bills is a common strategy when government is divided as it is now, no one can remember such an aggressive use of the tactic against natural resources.”

A news release yesterday from Rep. Rick Crawford (R-Ark.) stated that, “Today [Rep. Crawford] and Congressman Stephen Fincher (R-Tenn.) sent a letter to Environmental Protection Agency (EPA) Administrator Lisa Jackson, urging her to reconsider a regulation that places an unnecessary burden on farmers and ranchers. Over 100 Members of Congress from across the country signed the letter.

“The EPA mandated Oil Spill Prevention, Control and Countermeasure (SPCC) rule requires that oil storage facilities with a capacity of over 1,320 gallons must make structural improvements to prevent spills. The plan requires farmers to construct a containment facility, like a dike or a basin, which must retain 110 percent of the fuel in the container. Such infrastructure improvements would cost farmers tens of thousands of dollars and would cost even more to procure the services of Professional Engineers.”

Keith Good

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