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Farm Bill; Ag Economy; Trade; and Regulations

Overview: Budget Deal Passes, Focus Turns to Super Committee

Naftali Bendavid and Carol E. Lee reported in today’s Wall Street Journal that, “The Senate approved—and President Barack Obama immediately signed—the long-awaited deal to raise the nation’s debt limit Tuesday, as the battle shifted to how a special committee created by the measure will cut the deficit by $1.5 trillion.

“The Senate voted 74-26 for the package, which raises the government’s borrowing limit by $2.4 trillion and cuts $917 billion in federal spending. A fiery debate is likely over the next step, the bipartisan panel, and how much of its $1.5 trillion in deficit reductions will come from tax increases and how much from cuts in safety-net programs.”

The Journal writers added that, “The panel’s six Democrats and six Republicans are to make recommendations by Nov. 23, with Congress voting on the package by Dec. 23. Congress won’t be able to amend the proposal, and Senate approval will take 51 votes instead of the usual 60 needed to avoid a filibuster. If the panel deadlocks, or Congress doesn’t accept its recommendations, an array of cuts totaling $1.2 trillion would kick in.

“The White House and Republicans were already battling Tuesday over what budget projections the committee would use to forecast future deficits, a decision with major implications for how the tax code could be changed as part of any plan.”

Jennifer Steinhauer reported in today’s New York Times that, “On Capitol Hill on Tuesday, the conversation quickly shifted to a powerful new committee that will be created to recommend ways to reduce deficits by a total of at least $1.5 trillion over 10 years.”

With respect to the selection of the super committee, Meredith Shiner and Jessica Brady reported today at Roll Call Online that, “Because the policy positions of both sides are so entrenched, with Republicans refusing to budge on revenues and Democrats still seeking continued protection of entitlements, leaders’ choices will be about people who will exhibit party discipline and not go rogue on their top brass.

“‘It’s all about loyalists,’ one Senate aide said. ‘The leaders are not going to do something that will make them feel nervous about these negotiations — nobody wants freelancing.’”

Anna Palmer reported yesterday at Politico that, “K Street wasted little time putting clients on notice about the next phase of the debt ceiling debate with a simple message: Nobody is safe from the super committee.

Lobby shops say a much-broader-than-expected range of budget cuts and tax provisions could be in play, especially compared with the relatively small group of industries that were afraid of getting a haircut during the earlier debt ceiling negotiations led by Vice President Joe Biden.

“And although the defense and health care industries have the most to lose from the way the debt ceiling bill is set up, that doesn’t mean everyone else can sit on the sidelines, K Street warns.”

Chris Frates reported this week at National Journal Online that, “When the Divine Dozen are named, it will lead ‘to the emergence of a pack of superlobbyists who will have access to those members’ and who can try to protect clients from the carnage, said Democratic consultant David Di Martino. That’s because with only six members from each party on the committee, influencing the super committee will largely be an inside game with Democratic and Republican lobbyists working their respective lawmakers.

Each appointment will be closely watched for the signals it sends about the direction of the super committee, more formally known as the Joint Select Committee on Deficit Reduction.”

 

Farm Bill Issues: Budget Deal and Agriculture

Reuters writers Rene Pastor and Charles Abbott reported yesterday that, “U.S. agriculture will have no choice but to face possible painful cuts as Congress wrestles with a deficit reduction plan crafted by lawmakers and the White House, a U.S. Senator said Tuesday…‘We have to expect that agriculture will have to contribute … to deficit reduction,’ Sen. Kent Conrad, chairman of the Senate budget committee and a senior member of its agriculture panel, told the annual meeting here of the American Sugar Alliance.”

The article noted that, “‘We need to ensure that agriculture does not have a disproportionate share of the burden,’ said the long-time senator from North Dakota who is retiring after next year.

“On Monday, small-farm activist Ferd Hoefner said if the super committee includes farm program cuts in a report due this fall, ‘that’s the vote … the commission is going to rewrite the farm bill.’”

Nebraska GOP Senator Mike Johanns was a guest yesterday on the AgriTalk radio program with Mike Adams where he discussed some of the potential implications the debt deal may have on agriculture.  To listen to a portion of his remarks from yesterday’s AgriTalk show, just click here (MP3- 2:46).

And DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Exactly what the agriculture and ethanol industries stand to lose or gain in the deficit reduction legislation approved by Congress this week remains to be seen, but Sen. Charles Grassley, R-Iowa, said Tuesday that agriculture shouldn’t be asked to shoulder the brunt of future cuts in federal spending…‘We’ve been hearing $10 billion to $48 billion in cuts to ag spending,’ he said. ‘Farmers are ready to do their part, but ag should not take the disproportionate amount of cuts.’”

The article added that, “Grassley said both the Senate and House agriculture committees can propose cuts to the super committee, whose members are yet to be determined.

“‘They can use the proposals or ignore them,’ he said. ‘The House and Senate ag committees will have to get serious about what they will propose in the farm bill and get to it in the next couple of months. Time has run out.’

Grassley said the super committee can decide on its own what, if any, cuts are made to agriculture.”

Mr. Neeley noted that, “Grassley said he ‘wouldn’t be surprised’ if some of the gang of six senators on deficit reduction end up on the super committee. They include Sens. Tom Coburn, R-Okla., Kent Conrad, D-N.D., Saxby Chambliss, R-Ga., Mike Crapo, R-Idaho, Dick Durbin, D-Ill., and Mark Warner, D-Va.”

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “The bill to raise the debt ceiling and reduce the deficit that the House passed Monday does not provide for any cuts in mandatory farm spending in the short run or end ethanol tax breaks, but it is still possible that appropriators could reduce mandatory farm programs and the special nutrition program for women, infants and children known as WIC when they make the cuts.”

The DTN article indicated that, “In a call to reporters Monday, White House National Economic Council Director Gene Sperling said President Barack Obama had called for cuts in the direct payments that farmers get whether prices are high or low, and a group of senators had worked on a measure to end the tax breaks for ethanol but provide subsidies for constructing a better ethanol infrastructure. Yet, in the end, the negotiators decided to ‘just deal with discretionary savings’ in the debt and deficit package.

But a farm lobbyist attending the American Sugar Alliance meeting here said it would probably still be possible for appropriators to cut mandatory farm spending programs in order to fund other priorities.

“‘I bet we still get chimped,’ the lobbyist said, using the Washington phrase that is used to describe that process, or ‘cuts in mandatory programs.’”

The Washington Insider section of DTN reported yesterday (link requires subscription) that, “How agriculture will fare in this process remains to be seen, but cuts in the main payment programs, such as direct payments, would be part of the second stage of budget cuts. Still, there is little expectation in Washington now that these programs will escape sharp cuts, along with the biofuel blending credits. The commodity program cut backs likely will be assigned to the House and Senate Ag Committees for inclusion in the 2012 bill, while the supports for biofuels likely will be allowed to expire at the end of this year, Washington Insider believes.”

An update earlier this week at the National Sustainable Agriculture Coalition (NSAC) Blog stated that, “Unlike earlier proposals, the new agreement does not include any immediate cuts to farm bill spending.  A plan proposed by Senate Majority Leader Harry Reid (D-NV) last week included an immediate cut of $11 billion to commodity program ‘direct’ paymentsInstead, the 12-member special committee will decide whether farm bill programs are cut and if so by how much and how.  They could decide to go with the $11 billion cut in the earlier Reid package, or the $48 billion cut proposed in the House-passed budget resolution from earlier this year, or any number in between, or perhaps even zero, though the latter seems unlikely.”

The NSAC update added that, “Given that most cuts to mandatory spending programs will be decided by a special committee later this year, the House and Senate Agriculture Committees will very likely delay any mark ups on the next farm bill until 2012 at the earliest so as to have a clear picture of what will be available for farm bill programs moving forward.”

A statement yesterday on the debt ceiling agreement yesterday from National Farmers Union President Roger Johnson stated in part that, “In a recent letter to the White House and Congressional leaders, NFU and 33 other agriculture and rural organizations asked that any cuts to agriculture be proportional and that credit be given to agriculture for the $6 billion reduction it absorbed last year. NFU hopes that any decision to reduce agriculture spending will provide the Senate and House Agriculture Committees with certainty and enough resources to write an effective farm bill.”

Meanwhile, an opinion item by Lee Egerstrom, which was posted yesterday at The Twin Cities Daily Planet Online (Minneapolis), stated that, “Higher farm commodity prices are making government commodity payments unnecessary by design, helping ease federal ag spending. Still, some in Washington want deeper U.S. Agriculture Department cuts, calling for as much as 25 percent spending reductions while most government programs look at proposed cuts of about eight percent.

You have to remember, federal agriculture spending also pays for critical programs far from the countryside. Such cuts would undermine federal efforts to improve public health through nutrition and access to food, protect the safety of the food supply, stimulate local economies through rural economic development, and support environmental and conservation efforts that are important to all Americans.

“‘We need to take our hits just like everyone else,’ admits Rep. Collin Peterson, the Northwestern Minnesota DFLer who chaired the House Agriculture Committee when the current farm program was written. ‘We shouldn’t take a disproportionate hit that will cut into the infrastructure of our economy.’”

In more specific Farm Bill program developments, Bloomberg news reported yesterday that, “The number of Americans receiving food stamps [SNAP benefits] rose to a record 45.753 million in May, up 2.5 percent from the previous month, the Department of Agriculture said.”

And an Agri-Pulse article from yesterday reported that, “Sugar policy should be in a good position in the next farm bill because of its no-cost status, said Senate Budget Committee Chairman Kent Conrad (D-N.D.) via videoconference today at the 28th International Sweetener Symposium.

Although at greater risk during the ongoing debt reduction talks, he noted that sugar policy should continue to fare well. Conrad emphasized that he and other legislators steered negotiations to reduce farm spending by $11 billion over 10 years.”

Angus Loten reported yesterday at the In Charge Blog (Wall Street Journal) that, “Federal limits on the supply of imported sugar in the U.S. market are boosting prices for bakeries, candy makers and other small businesses, according to the president of the Sweetener Users Association, a beltway lobby group.

Speaking at an annual meeting of sugar trade groups on Monday in Stowe, Vt., Randy Green said the limits are forcing smaller firms to buy sugar in lower volumes and at higher prices.”

 

Agricultural Economy

Tom Polansek reported in today’s Wall Street Journal that, “U.S. grain futures soared on renewed concerns about hot weather reducing the size of the coming corn harvest.

“Weather forecasters said Tuesday that intense heat in July would reduce the corn-crop yields, which would leave less to feed livestock and make into ethanol.”

Today’s article noted that, “Traders are keeping a close eye on crop conditions as farmers need to harvest a large crop to replenish low supplies. Corn futures have pulled back 11% since reaching a record high near $8 a bushel in early June, although grain users remain nervous about threats to the crop.”

Yesterday the USDA’s National Agricultural Statistics Service (NASS) released its Farm Production Expenditures 2010 Summary, which stated that, “United States Total Farm Production Expenditures were $289.0 billion in 2010, up from $287.4 billion in 2009. The 2010 Total Expenditures rose 0.6 percent compared to 2009 Total Expenditures” [see related graph].

The NASS report added that, “Total Fuels Expense was $12.9 billion [related graph].  Diesel, the largest sub-component, was $8.2 billion accounting for 63.1 percent. Diesel expenditures were up 13.2 percent in 2010. Gasoline was $2.6 billion, up 4.9 percent. LP Gas was $1.5 billion, down 24.9 percent. Other Fuels were $0.7 billion, down 10.0 percent.

The four largest expenditures at the United States level totaled $134.4 billion and accounted for 46.5 percent of Total Expenditures in 2010. They were Feed, 15.7 percent; Farm Services, 12.4 percent; Labor, 9.5 percent; and Rent, 9.0 percent.

In 2010, the United States Total Farm Expenditure average per farm was $131,793 compared with $131,137 in 2009, an increase of 0.5 percent.”

 

Trade

President Barack Obama indicated yesterday in remarks regarding the debt deal that, “And I want Congress to pass a set of trade deals — deals we’ve already negotiated — that would help displaced workers looking for new jobs and would allow our businesses to sell more products in countries in Asia and South America, products that are stamped with the words ‘Made in America.’”

However, Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “Consideration of three long-delayed free-trade agreements will have to wait until at least September as lawmakers head out of town early for their August recess.

“Debt-limit negotiations have dominated the legislative landscape, leaving no time for the White House and congressional leaders to craft a deal on a worker-aid program that would move the agreements forward.”

The update stated that, “Negotiations on the trade deals are expected to continue through August between the Obama administration and congressional staff, with the aim of producing a deal on Trade Adjustment Assistance (TAA) so the three agreements can be sent up to Capitol Hill in the fall.

“Several proposals are in the mix, but differences on how to get TAA through Congress in tandem with the agreements with Korea, Colombia and Panama is holding up a final agreement.”

GOP Rep. Tim Huelskamp (Kansas) noted yesterday that, “Every day that goes by without these trade agreements is a missed opportunity. With unemployment lagging, manufacturing declining, and overall economic growth stagnating, these agreements would provide immediate relief and opportunity to reverse these negative trends. Like every other state in the nation, Kansas would benefit tremendously both in economic activity and job creation as a result of finalizing these agreements.”

 

Regulations

The Wall Street Journal editorial board indicated today that, “The White House lookback on ‘excessive’ regulation has concluded and—breaking news—there’s more work left to do. So let’s commend those in Congress trying to force the Administration to conduct a credible cost-benefit test.

“Last month the House Energy Committee passed a bill that reforms the Environmental Protection Agency’s process for creating new rules and mandates, which it has been doing with a special fervor under administrator Lisa Jackson. Known by the acronym the Train Act, the bill would help expose some of the true costs that the agency is trying to hide.

“One major improvement is that the Train Act broadens the definition of costs. Under the status quo, the EPA can define almost anything as a benefit, and does. But the EPA rarely considers more tangible economic consequences, like its effects on employment, the price and reliability of energy, or the competitiveness of U.S. companies.”

Keith Good