FarmPolicy

October 22, 2019

Farm Bill; Ag Economy; and Trade

Farm Bill Issues: Budget- Super Committee Analysis

Ron Hays reported yesterday at the Oklahoma Farm Report Online that, “The Chairman of the House Ag Committee, Frank Lucas, is spending this week making multiple stops in his vast Third Congressional District as he holds Town Hall Meetings. The first of those meetings this week was held Tuesday morning in Clinton, Oklahoma, and Chairman Lucas spent a few minutes before the start of the Meeting with Farm Director Ron Hays as they talked about the budget reductions that will be decided upon this fall by the Super Committee- and how they relate back to the 2012 farm bill.

“Congressman Lucas told the Radio Oklahoma Network that he was spending a good bit of his August communicating with Collin Peterson, the ranking minority member of the Committee, in an effort to develop a unified strategy in what might be proposed to the Super Committee when it comes to spending cuts to programs within the jurisdiction of the House Ag Committee. Lucas says that the Committee will be attempting to decide what to recommend to the Super Committee, if anything, by mid October.

“Lucas says that if the Super Committee would decide to pick and choose programs and make the decision in their package to eliminate them, that would demand a response from the Committee- and it might mean that the House Ag Committee would have to expedite the writing of the 2012 Farm Bill in order to provide a different looking safety net if certain elements were eliminated by the dozen members of Congress that are a part of the Super Committee. For example, Lucas says that if the members decide they want to totally eliminate Direct Payments– that would throw off the balanced nature of the Safety Net as we currently know it- and would take away the only support available to some producers who need it in order to have the resources to keep farming.”

To listen to the entire discussion between Chairman Lucas and Ron Hays (about six minutes), just click here.

Recall that earlier this month, FarmPolicy.com spoke with House Ag. Committee Ranking Member Collin Peterson about super committee issues, a transcript of that conversation is available here.

In more detail regarding super committee developments, Josiah Ryan reported earlier this week at The Hill’s Floor Action Blog that, “Rep. Fred Upton (R-Mich.) said on Monday that the work of the debt-reduction supercommittee, of which he is a member, has already begun.

“‘For sure … we will [get started by September] but we have really started on the phone already,’ said Upton in an interview with local NBC Affiliate WNDU.We have had lengthy conference calls already.’”

And Jake Sherman reported yesterday at Politico that, “In an interview with POLITICO, “[Super committee member Rep. Fred Upton (R-Mich.)] said there has been a clear upside to his travels through his swing district this month: constituents say they are rooting for the committee to succeed – a point that was reflected in many of the constituent questions Upton answered from index cards in the front of a room that doubled as a cafeteria.”

Yesterday’s update added that, “He largely refused to entertain questions about specific areas the committee might hit to find more than $1 trillion in savings, but Upton gave a broad preview of how the panel will work. He said he assumes it will hold ‘a number of public hearings,’ and also said he has spoken to most of the members on the committee since being appointed to serve on the panel. A recent talk he had with Sen. Patty Murray (D-Wash.) showed that the two agreed that constituents are ‘pulling for us to get the job done,’ he said.

“Upton also said he has told colleagues that he would like to see the committee set up a website where Americans could alert the panel of their ideas in cutting the nation’s debt.”

In an interview yesterday with Tom Beres of WKYC Cleveland on Monday (YouTube video replay), super committee member Sen. Rob Portman (R-Ohio) discussed committee issues and reiterated some of the points made by Rep. Upton regarding a super committee webpage and some public hearings.

 

Farm Bill: Policy

Denise Ross reported yesterday at The Daily Republic Online (Mitchell, SD) that, “The next farm bill is likely to look very different from the farm subsidy system America’s agricultural producers have known.

“Sen. John Thune, R-S.D., delivered that message to a roundtable group that also included Rep. Kristi Noem, R-S.D., in Rapid City on Monday. It wasn’t breaking news to the agricultural industry representatives at the meeting.”

The article added that, “‘Direct payments for sure, they’re going to go after that,’ [Thune] said.

“Other ‘low-hanging fruit’ that could be cut or eliminated include the Conservation Stewardship Program, the Supplemental Revenue Assistance Payments Program (called SURE) which covers crop losses due to natural disasters, and the ‘permanent disaster’ provisions which Thune fought to include in the 2008 farm bill.”

Ms. Ross noted that, “Noem said farmers are telling her they would be happy to drop most farm subsidy programs so long as a strong crop insurance program remains in place.”

“[Grady Crew, a crop insurance agent and rancher] himself called for the elimination of direct payments in favor of insurance and a safety net that would kick in the event of low prices.

“‘The crop insurance program, I’m here to tell you, is working. The bankers are happy; the insureds are happy,’ Crew said. ‘My insureds tell me, ‘If I could just have my insurance better and cheaper, I wouldn’t worry about FSA programs.’”

Tom Steever reported yesterday at Brownfield that, “The next farm bill will need to maintain farmers’ ability to manage risk. Senator John Thune Tuesday wrapped up the last of three roundtable meetings on the subject with South Dakota farmers. The senator’s Senior Policy Advisor Lynn Tjeerdsma says that in spite of good commodity prices, there are some areas of the U.S. suffering the worst drought ever, and there are parts of South Dakota that haven’t been planted for two to three years because they’re too wet.”

To listen to a discussion (about five minutes) with Tom Steever and Lynn Tjeerdsma, just click here.

Peter Harriman reported yesterday at the Argus Leader Online (SD) that, “A group advocating the preservation of America’s grasslands worries that rising crop prices are causing farmers to plow under native South Dakota grass to grow more grain.

“Besides the fear of losing native prairie and other grasses, the advocates say they are frustrated by their inability to learn how much grass in the state has been plowed under in recent years.”

The article added that, “Prices for corn, soybeans and wheat have doubled in the past decade and are supported by generous federal subsidies. Biotechnology breakthroughs enable the growth of crops in more arid conditions formally suited to only rangeland.

To offset this, grasslands advocates want to make the case in federal farm negotiations in 2012 that incentives to preserve grasslands and penalties for destroying them need to be prominent features of the next farm bill.”

For a more detailed look at the interaction of farm programs and native grasses, see “Do Farm Programs Encourage Native Grassland Losses?– a recent article that was included in the September issue of the Economic Research Service (ERS- USDA) Amber Waves publication.

Also on the topic of conservation, an update posted yesterday at the ERS Charts of Note webpage stated that, “USDA provides technical and financial assistance to help farmers implement conservation practices on working agricultural lands or on lands temporarily retired from production. As measured in constant (2009) dollars, Federal conservation assistance has fluctuated widely during the past 60 years. Rapid increases in spending have typically been associated with large-scale land retirement in the Soil Bank (1956-1972) and Conservation Reserve (1986-present) Programs. Since 2002, however, and after several decades with stable levels of spending, there has been a big increase in conservation assistance through programs that help farmers defray conservation costs on working agricultural lands. This chart may be found in the September 2011 issue of Amber Waves magazine.”

In news regarding dairy policy, DTN Political Correspondent Jerry Hagstrom reported yesterday that, “As the National Milk Producers Federation held the last of its information meetings on dairy reform proposals Monday in Nashville, House Agriculture Committee ranking member Collin Peterson was making plans to introduce his controversial bill on topic.

“Peterson, D-Minn., has worked extensively on the bill co-sponsored by Rep. Mike Simpson, R-Idaho. Peterson also has advocated that Congress should take up the bill as soon as possible, but House Agriculture Committee Chairman Frank Lucas, R-Okla., has said he will not move a dairy bill separate from the farm bill unless all sectors of the industry including processors are in agreement. Such agreement is elusive.

“The House Agriculture Committee Democratic staff last week released an op-ed article Peterson had written urging consideration of his discussion draft. The National Milk Producers Federation supports it, and has been trying to convince dairy farmers around the country to support it while the International Dairy Foods Association, a processors’ group, says that a dairy market stabilization provision amounts to supply management that will reduce the milk supply and make it difficult for the U.S. dairy industry to compete in world markets.”

Meanwhile, University of Illinois Agricultural Economist Gary Schnitkey indicated yesterday at the FarmDocDaily Blog (“Likelihood of Safety Net Payments in Illinois for 2011”) that, “Much of Illinois has experiences extremely hot, dry weather during July and August, leading to projections for low yields on many farms. Given these low yields, we examine the likelihood of payments under crop insurance, ACRE or the Traditional Counter-Cyclical program, and SURE. These three programs provide farmers with a revenue safety net. Crop insurance will make payments on farms with low yields. ACRE and the traditional counter-cyclical program likely will not make payments because prices will be above levels needed to cause revenue to be below the state guarantee. SURE will not make payments, unless counties in Illinois are declared disaster areas.”

 

Agricultural Economy

In a separate Amber Waves article (ERS- USDA), Aylin Kumcu and Phil Kaufman (“Food Spending Adjustments During Recessionary Times”) stated in part that, “During the 2007-09 recession, Americans of all income levels tightened their belts, primarily by eating out less. According to ERS’s Food Expenditure Tables, which include all sales by the food industry to consumers, governments, businesses, and nonprofit organizations, away-from-home food spending dropped from $533 billion in 2006 to $513 billion in 2009 (in 2006 dollars). Real sales at full-service restaurants dropped by 4.5 percent during the recession, and sales at limited-service eating places, such as fast food outlets, declined by 2.6 percent. Sales of meals and snacks also declined at all other food-away-from-home segments between 2006 and 2009, including hotels and motels (8.8 percent); stores, bars, and vending machines (7.3 percent); and schools and colleges (0.8 percent).

Food-at-home sales also declined during the recession. ERS’s Food Expenditure data show that inflation-adjusted sales in this category fell 1.3 percent from 2006 to 2009the only 3-year drop in real sales over the past decade. Previous ERS research found that the various ways American households save on their at-home food spending included taking advantage of sales, promotions, and coupons in stores where they regularly shop; substituting comparable, but lower cost foods; and seeking stores that offer lower prices and more cost-effective selections” [see related graph].

And in an additional article from Amber Waves (ERS- USDA), Ronald Trostle noted (“Why Another Food Commodity Price Spike?”) that “With the 2008 food commodity price spike still on the minds of consumers, livestock producers, agribusinesses, and governments, prices began increasing again in January 2009, and by February 2011, many food commodity prices had climbed above 2008 peaks. Sharp increases in agricultural prices are not uncommon, but it is rare for two price spikes to occur within 3 years” [see related graph].

The article explained that, “Most price spikes resulted from unusually large changes in supply and/or demand. In some cases, unexpected production shortfalls reduced available supplies; in others, production simply stagnated while demand rose. Based on the five historical price spikes, prices rose more than typical variations until supply and demand adjusted and prices subsequently declined. It may have taken several months or several years for the markets to adjust, but eventually they did so. Historical patterns suggest that the current surge in prices will also eventually reverse directions” [see related graph].

The ERS Amber Waves item concluded by stating that, “High 2011 crop prices are expected to stimulate increased plantings and more intensive use of other production inputs. Farmers around the world will have incentives to increase area planted to all crops, and assuming average weather over the next year or so, world food production would be expected to increase. High prices will also limit grain and oilseed use by consumers, livestock producers, and industrial users.

On balance, higher production and lower use would raise global stocks of grains and oilseeds. Prices would be expected to peak and then to begin to decline, following the historical pattern of price movements. How quickly and how far prices fall will depend on many factors, including weather and its impact on production and stocks and future changes in trade policies and practices.”

In other news, an update posted this week at WXIA-TV Online (Georgia) “Even if Hurricane Irene brings moisture to areas of Georgia desperate for rain, it is unlikely the storm will put much of a dent in the state’s deepening drought.”

The update, which included a video report, added that, “Peanut farmers are among those hoping desperately that Irene will bring them some relief. Don Koehler, Director of the Georgia Peanut Commission said much of this year’s crop was planted in marginal conditions. Without substantial rains, Georgia could produce its smallest peanut crop in three decades.

“‘A lot of our farmers are worried that they’re running out of time,’ said Koehler.

Some areas of south Georgia are facing a rain deficit of up to 14 inches.”

 

Trade

Glenn Kessler reported yesterday at The Fact Checker Blog (Washington Post) that, “A key factor in the delay in submitting the trade pacts is something called Trade Adjustment Assistance (TAA), which was first created in 1962 to help workers and companies deal with the fallout from greater free trade. As the Congressional Research Service documented in an interesting report last month, TAA has frequently been tied to trade deals, in part to win Democratic votes for trade liberalization.

“In May, the Obama administration announced that it would not seek approval of the three trade deals unless Congress agreed to restore the TAA, which had been allowed to lapse in February. What came first — the Republicans’ refusal to extend the program, citing its cost, or the administration’s decision to tie TAA to the trade deals?

The update added, “Or maybe first came the huge expansion of TAA in the stimulus bill by Democrats, which made TAA a target for Republicans? Or maybe it was first the refusal of Democrats to approve the trade pacts — which date back to 2006 — in the waning days of the Bush administration?

See what we mean by chicken-or-egg? Each side can craft the narrative that it wants to make its case.”

Mr. Kessler stated that, “The administration has clearly played a balancing act, trying to attract Democratic support without losing significant Republican backing. We’re not going to judge who is more right on the history leading up to this point, but we do think it is a highly selective recounting of that history for the president to suggest GOP lawmakers are blocking the deal because they are putting party before country. There is actually strong support for these agreements within the Republican Party — just like there is strong support for trade adjustment legislation among Democrats.

“There may be a philosophical dispute over aid for companies harmed by free trade, but the administration in the end is responsible for making passage of TAA a condition for submitting the trade deals. Moreover, Obama leaves the distinct impression that Congress is sitting on the bills, when in fact they have not yet been officially submitted for consideration.”

Julie Harker reported yesterday at Brownfield that, “Colombia’s Ambassador to the [U.S.], Gabriel Silva, is meeting with farmer leaders, labor leaders and local governments in several U.S. states to push for ratification of the pending free trade agreement. Silva, a farmer himself, tells Brownfield he relates to U.S. farmers’ frustrations, ‘The delay in the FTA, in having it approved, is clearly destroying jobs in America and affecting, most of all, American farmers.’”

To listen to a discussion with Julie Harker and Amb. Gabriel Silva (13 minutes), just click here.

Keith Good

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