June 16, 2019

Farm Bill Issues; and the Agricultural Economy (WASDE)

Farm Bill Issues: Budget- Super Committee Roster Complete

Robert Pear and Jennifer Steinhauer reported in today’s New York Times that, “The House Democratic leader, Nancy Pelosi, rounded out the membership of a powerful new deficit-reduction panel on Thursday by appointing three of her top lieutenants who have led opposition to cuts in Social Security, Medicare and Medicaid.

“The new appointees are Representatives Xavier Becerra of California, the vice chairman of the House Democratic Caucus [related statement]; James E. Clyburn of South Carolina, the assistant House Democratic leader [related statement]; and Chris Van Hollen of Maryland, the senior Democrat on the Budget Committee [related statement].

In announcing her picks, Ms. Pelosi said the new panel, the Joint Select Committee on Deficit Reduction, must find ways to stimulate economic growth and create jobs.”

Today’s Washington Post included a brief overview of all 12 members of the “super committee,” and C-SPAN has created a webpage dedicated to the activities of the committee, which is available here.

Billy House explained yesterday at National Journal Online that, “When precisely the committee will begin its work is unclear, as Congress is scheduled to remain out of session through early September. But the panel is charged with finding $1.5 trillion in deficit reduction over 10 years by Nov. 23 and approving those moves with a majority vote. Any such recommendation would then be fast-tracked through Congress by Christmas.

“If the panel finds itself deadlocked along partisan lines, then across-the-board spending cuts would be triggered of about $1.2 trillion with half of those cuts coming from defense, and the rest from discretionary spending. Entitlements would remain largely untouched if the cuts are triggered by inaction.”

The Washington Post editorial board opined today that, “The best way to describe the spate of appointments to the new ‘supercommittee’ on debt reduction is depressingly predictable. Or perhaps predictably depressing. None of the congressional leaders, Democratic or Republican, Senate or House, took much of a risk, if any. They named individuals to the Joint Select Committee on Deficit Reduction who for the most part know the substance well but have shown little inclination to move away from entrenched positions of party orthodoxy: no new taxes on the Republican side, no touching benefits on the Democratic side.”

However, Bloomberg writers James Rowley and Kristin Jensen reported yesterday that, “The panel’s work has taken on greater urgency since Standard & Poor’s on Aug. 5 lowered the U.S.’s AAA credit rating for the first time, saying lawmakers weren’t doing enough to reduce record deficits by raising taxes or cutting spending. The so-called super committee will be the central focus of political and lobbying activity in Washington for the next four months, as industries try to protect their interests.”

Corey Boles and Kristina Peterson reported in today’s Wall Street Journal that, “Ohio Republican Sen. Rob Portman is drawing attention as a potential bridge builder between the two political parties on a new deficit-reduction panel, whose roster was completed Thursday as Democrats named their final three members.

“Like the other members, Mr. Portman is faithful to his party’s core fiscal policy positions and is unlikely to break with party leaders. But Mr. Portman, a White House budget director under President George W. Bush, is seen as having the budget expertise and temperament to become a central player on the so-called supercommittee.”

Alexander Bolton reported yesterday at The Hill Online that, “Sen. John Kerry’s appointment to the debt-reduction supercommittee is his big moment to shine as a dealmaker and silence critics who have questioned his modest record of legislative accomplishments.

“Kerry’s opportunity, however, is troubling to some liberal leaders and labor union officials who worry that the senior Democrat from Massachusetts might be too eager to strike a grand bargain.”

And Financial Times writer James Politi also singled out Senators Portman and Kerry in an article from earlier this week: “And there are some potential wild cards in the group that could help forge a deal. For instance, Rob Portman, the Ohio Republican, is considered a more moderate senator whom some Democrats point to as potentially key to unlocking a deal.

John Kerry, the Massachusetts Democrat, is another. Some liberal groups worried on Wednesday that he might be open to cutting health and pension schemes, such as Medicare and Social Security, in order to spare more aggressive military cuts.”

Josiah Ryan reported yesterday at The Hill’s Floor Action Blog that, “Sen. Jon Kyl (R-Ariz.) predicted it could be a ‘real challenge’ convincing his six Democratic colleagues on the new deficit-reduction supercommittee to make cuts in spending without raising taxes…[H]owever, the Republican said the committee would have to work hard to come to a compromise in order to avoid automatic spending-cut triggers that would be activated if it — and the full Congress — fail to reach a resolution.”

Meanwhile, Alexander Bolton reported yesterday at The Hill Online that, “Vermont Sen. Patrick Leahy, the second-ranking Democrat on the Senate Appropriations Committee, is calling on the debt-reduction supercommittee to avoid secrecy in its negotiations.”

With respect to budget issues and Rural America, the National Public Radio (NPR) program Talk of the Nation aired a program yesterday titled, “Rural Communities Fear Budget Cuts Will Hit Hard.”

Neal Conan, the host of yesterday’s show, noted that, “The U.S. Postal Service may close thousands of postal facilities early next year. The Federal Aviation Administration may cut subsidies that keep rural airports open, and budget cuts may hit country schools and clinics disproportionately.”


Farm Bill Issues: Policy

The Red River Farm Network’s Agriculture Today radio program yesterday reported that Sen. Kent Conrad (D-ND) has submitted a Farm Bill related program “concept” to the Congressional Budget Office (CBO) for scoring to determine what the cost of the program would be.

Sen. Conrad noted that the concept borrows from programs that have worked well in the past but the concept is looking at streamlining and simplifying and improving the efficiency of programs so that they deliver more bang for the buck.  The Senate Budget Committee Chairman added that he would have more to say once he received the scores back from CBO.

An audio clip from yesterday’s Agriculture Today program is available here (MP3- 0:37).

Brian Allen reported earlier this week at KSFY-TV Online (Sioux Falls, SD) that, “[GOP Senator John Thune (SD)] and the rest of Congress will soon work to revise the federal farm bill.

Thune wants a more comprehensive crop insurance program and an emphasis on conservation in that new bill and that’s not all; Thune has ethanol and wind energy on his mind too. ‘Getting an energy policy that promotes home grown, alternative energy is going to be a big priority for us as well.’”

Bill Mich reported earlier this week at YNN-TV Online (Syracuse, NY) that, “The senator [Charles Schumer (D-NY)] wants to see biodigesters and methane digesters on Schuyler County farms. The digesters would turn farm waste into electricity.

“‘It’s a win, win, win. It’s a win for the environment, it’s a win for the farmers and it’s a win for the country because we’d import less oil and it would lower electricity rates overall,’ Schumer said.”

The article added that, “Senator Schumer told the group of farmers he met with Wednesday in Watkins Glen that he is going to propose that the government step up and make this new equipment more affordable. Because without that help, the idea of methane and biodigesters being the wave of the future may not become a reality.”

A news release yesterday from the House Committee on Agriculture- Democrats stated that, “U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., today announced that Rep. Mike Simpson, R-Idaho, has joined efforts to reform dairy programs. Simpson is the lead Republican proponent of discussion draft legislation released by Peterson last month. The draft language is based on reform proposals put forward by the dairy industry.”

A related news item from the National Milk Producers Federation (NMPF) yesterday stated that, “Congressman Mike Simpson of Idaho’s second district, a senior Republican from one of the largest dairy states, announced today he will be a cosponsor of the draft legislation incorporating the key elements of NMPF’s Foundation for the Future program.

The [NMPF] hailed this development as ‘an important step in demonstrating the bipartisan, national scope of the effort to reform dairy policy,’ according to NMPF President and CEO Jerry Kozak.”

In other Farm Bill related news, Todd Neeley reported yesterday at the DTN Ag Policy Blog that, “USDA announced Thursday that it will provide $100 million to four Florida counties to acquire permanent easements from eligible landowners and to assist with wetland restoration on nearly 24,000 acres of agricultural land in the northern Everglades watershed, according to a news release from USDA.”

And in news from Europe, Reuters writer Charlie Dunmore reported yesterday that, “Europe’s biggest farms will see their EU agricultural subsidies capped at 300,000 euros a year under draft proposals seen by Reuters to reform the bloc’s farm policy from 2014.

“The plan would cut the current 40 billion euro ($56.34 billion) annual bill for direct farm subsidies by at least 2.5 billion euros, but is likely to face opposition from countries with large land holders such as Britain, Germany, and the Czech Republic.”


Agricultural Economy (WASDE)

A news release yesterday from USDA’s National Agricultural Statistics Service (NASS) stated that, “As U.S. farmers are on track to produce the third largest corn crop in history, this summer’s extreme hot and dry conditions across much of the country are hindering soybean, cotton and all wheat production. This is the latest forecast, according to the Crop Production report released today by [NASS].

Corn production is forecast at 12.9 billion bushels, up 4 percent from last year [related graph]. Based on conditions as of August 1, corn yields are expected to average 153.0 bushels per acre, up 0.2 bushel from 2010, and the fourth highest yield on record. Acreage planted for all purposes is estimated at 92.3 million acres, unchanged from NASS’s June estimate in the Acreage report.

“NASS reports a different picture for soybean production [related graph], which is forecast at 3.06 billion bushels, down 8 percent from last year. Based on August 1 conditions, yields are expected to average 41.4 bushels per acre, down 2.1 bushels from last year. Planted area to soybeans is estimated at 75.0 million acres, down fractionally from the previous NASS estimate.”

The NASS findings were incorporated into the World Outlook Board’s latest World Agricultural Supply and Demand Estimates (WASDE) report, which was also released yesterday.

A summary of key variables for corn from yesterday’s WASDE report is available here, while a soybean summary can be found here.

And an easy to read overview summary of updated variables from yesterday’s reports for corn, soybeans and wheat by University of Illinois by Agricultural Economist Darrel Good was posted yesterday at the FarmDocDaily Blog.

Tom Polansek reported yesterday at The Wall Street Journal Online that, “Federal forecasts show U.S. farmers will harvest dramatically less grain and soybeans than expected this year, failing to ease high prices and rebuild low global supplies.

“The U.S. Department of Agriculture in its monthly crop report Thursday slashed its outlook for the autumn harvests after damaging heat and dryness took its toll on corn and soybean fields in July, while excessive rains hampered spring wheat plantings. Crop futures surged on the report as U.S. farmers are poised for another boom year. Yet consumers aren’t likely to see relief in food prices as the harvest now isn’t expected to ease tight supplies and historically high prices.”

The article added that, “The reduced outlook for corn output leaves supplies as a percentage of usage next year at just 5.4%, close to a record low. Morgan Stanley said even that outlook could be optimistic, as it presumes 150-million bushel reductions in both feed and export demand.

“‘Prices will need to move higher to achieve the USDA’s envisioned demand rationing,’ Morgan Stanley said.”

Financial Times writers Javier Blas and Emiko Terazono reported yesterday that, “The buoyant outlook for food commodities prices bodes well for the agribusiness sector. The share prices of tractor manufacturer Deere & Co, traders Archer Daniel Midlands and Bunge and fertiliser producers such as Potash Corp rose sharply on Thursday after the report.

But it could reduce central banks’ room for manoeuvre as higher corn prices rapidly translate into more expensive beef, lamb, pork and poultry and, thus, higher food inflation. China, India and other developing countries have raised interest rates this year in part due to rising food inflation.

“The US is the world’s top exporter of food commodities, accounting for half the world’s corn, a third of the world’s soyabeans and a up to a fifth of the world’s wheat. As such, USDA forecasts have a big impact on global prices.”

Bloomberg writers Jeff Wilson and Brian Chappatta reported yesterday that, “Corn, soybean and wheat prices surged, signaling higher costs for food and biofuels, after the government said U.S. farmers will harvest smaller crops than forecast last month following a damaging heat wave.”

Dan Pillar reported yesterday at the Green Fields Blog (Des Moines Register) that, “Economist Chad Hart of Iowa State University said the impact on Iowa’s economy would be generally positive, since farmers can expect cash receipts roughly double what they received a year ago on what will be a larger corn crop.”

“Hart said the yield and price projections would continue the boom in Iowa farm land prices, which have increased by 25 percent in the last year and stand now at $5,770 per acre.”

And a Daily Radio News item from USDA yesterday (“Are We on a Permanent New Higher Price Plane?”) addressed the following issue: “Are these higher commodity prices we are seeing today going to be the new standard? One analyst thinks so.”  To listen to this brief audio report, just click here.

Meanwhile, Ron Smith reported yesterday at the Southwest Farm Press Online that, “The Texas Peanut Producers Board has reworked its mission statement for 2012 to reflect expectations of a crop being devastated by the worst drought in Texas history.

“‘This is the worst drought since the state began keeping records,’ says Shelly Nutt, TPPB executive director, from her Lubbock office. Those records go back to the late 1880s, she says.”

The article noted that, “That mission will include efforts to improve grower profitability through research, maintain research that focuses on new releases yearly that are higher yielding and high oleic, and promote peanut breeding of high oleic, stress tolerant peanut varieties.

“Nutt says stress has been more than growers could keep up with this year. ‘We saw peanuts in Terry County recently that had received a lot of (irrigation) water. But when we pulled up the plants there was nothing underneath. Peanuts should be heavy this time of year.

“‘Farmers simply can’t put enough water on to cool the ground enough for peanuts to peg. The hot soil burns the pegs off. Plants might look good, but they have no peanuts.’”

In global news, Bloomberg writer David Lerman reported yesterday that, “Secretary of State Hillary Clinton announced $17 million in additional U.S. aid to East Africa for famine relief while calling for greater international support of long-term development.

“‘Time is not on our side,’ Clinton said today in a speech in Washington to the International Food Policy Research Institute. ‘Every minute more people — mostly women and mostly children — are dying. They’re becoming sick. They are fleeing their homes. We must respond.’

The new donation brings the total of U.S. humanitarian assistance to more than $580 million this year, making the U.S. the largest single contributor to relief in the Horn of Africa, Clinton said. The aid will reach more than 4.6 million people in Somalia, Ethiopia and Kenya, she said.”

The New York Times editorial board indicated today that, “There is no easy answer to Somali’s agonies. It has to start with saving millions now at risk of starvation, helping them improve their ability to grow their own food and finding ways to strengthen a shaky central government.”

Keith Good

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