FarmPolicy

June 16, 2019

Farm Bill Issues; Ag Economy; CFTC Issue; and Trade

Farm Bill: Senate Ag Committee Field Hearing

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Kansas farmers and agribusiness people offered a unified theme Thursday that crop insurance provides the strongest safety net and deserves more protection from federal budget cuts than other farm-bill programs such as direct payments.

“A field hearing by the Senate Agriculture Committee in Wichita offered Chairwoman Debbie Stabenow, D-Mich., a chance to see drought’s effects on Kansas farmers and hear people involved in Kansas agriculture offer their thoughts on what the next farm bill should offer farmers and ranchers. A hotel ballroom was packed with more than 400 people from across the state for the hearing that lasted more than three hours.”

Mr. Clayton noted that, “With a joint 12-member committee in Congress tasked with cutting $1.2 trillion in spending over 10 years, the House and Senate Agriculture Committees are now tasked with recommending places to cut. That likely accelerates possible changes in the next farm bill and keeps the target on programs such as direct payments.

“‘Agriculture remains a target with this new super committee,’ Stabenow said. Shortly after, she added, ‘The bottom line is, I think it’s clear we in agriculture have to make some tough decisions or somebody else is going to make them.’”

(Note: To listen to extended remarks from Chairwoman Stabenow from yesterday’s hearing click on this FarmPolicy.com audio link (MP3- 2:30)).

Also her in opening statement, Chairwoman Stabenow pointed out that, “Let’s review the facts: the House of Representatives passed a bill earlier in the year that would have cut $48 billion from production agriculture’s baseline. That bill did not have the votes in the Senate.

“Then, Senator Roberts and I worked very hard and successfully to create a process where the Agriculture Committees can recommend the deficit reduction cuts and policies related to them. As a result, the deficit reduction agreement didn’t make any immediate cuts to Agriculture.”

In his opening statement yesterday, Committee Ranking Member Pat Roberts (R-Kansas) indicated that, “Yesterday I lead a drought tour to see firsthand the effects of Mother Nature. For months I have been working with the state and USDA to find ways to provide necessary and responsible relief for our farmers and ranchers.

“We know that our programs face budget pressure…and they should. The federal debt and deficit are out of control. All USDA programs should be under consideration in a budget review and the agriculture committees with the best experience and knowledge of those programs should lead in that effort.

“Agriculture faces a tough challenge ahead. Global population continues to grow at a rapid pace…exceeding 9 billion in the next several decades. That’s a lot of mouths to feed. At the same time, emerging economies are demanding higher value proteins and grains.”

(Note: To listen to extended remarks from Ranking Member Roberts from yesterday’s hearing click on this FarmPolicy.com audio link (MP3- 1:37)).

Yesterday’s DTN article by Chris Clayton pointed out that, “Steve Baccus, president of the Kansas Farm Bureau, said crop insurance cannot afford more cuts such as those made in the 2008 farm bill and the $6 billion cut over 10 years in the growth of crop-insurance expenses that was made last year. Baccus also defended the value of direct payments in providing stability for farmers facing disaster.”

“Yet, the Kansas Farm Bureau stated in written testimony, ‘If priorities must be declared, then a strong and viable crop insurance program will top our list.’”

Mr. Clayton added that, “While advocating for crop insurance, farmers said they worry about yield declines in actual production history, or APH, because of repeated claims, particularly in a major disaster. Further, dealing with shallow losses not covered under crop insurance is a problem.

“‘As your crop declines from these severe droughts and extended droughts in Texas and western Kansas and all over, those decline your insured acreage,’ said Ken McCauley, a farmer from White Cloud, Kan., and former president of the National Corn Growers.”

(Note: To listen to an extended Q & A between Chairwoman Stabenow and the second panel of witness from yesterday’s hearing, click on this FarmPolicy.com audio link (MP3- 5:53)).

Yesterday’s DTN article also stated that, “Roberts, who is considered by many as the father of direct payments, said before the hearing that everything is on the table in terms of cuts. Later in the hearing, he told farmers he understood the message lawmakers needed to heed when looking at places to protect in the farm bill. ‘We have heard crop insurance about 100 times. We get the message. I hope we can bring that message back to Washington.’”

The AP reported yesterday that, “Kansas farmers and rural leaders told the U.S. Senate committee drafting the new Farm Bill that the federal crop insurance program is critical to Kansas agriculture.”

The article pointed out that, “Direct payments, which pay producers for crops whether they have had a good year or a poor year, is not as effective for the taxpayer, said Jeff Whitham, chairman of Western State Bank in Garden City.

“‘From our perspective, the most effective is multi-peril crop insurance,’ he said.”

A news release yesterday from the National Association of Conservation Districts stated that, “Kansas farmer and conservationist Ronald Brown testified this morning at a field hearing held by the U.S. Senate Agriculture Committee in Wichita, Kan. The hearing focused on issues surrounding the 2012 Farm Bill. A lifelong resident of Fort Scott, Brown serves as president of the Kansas Association of Conservation Districts and on the Board of Directors for the National Association of Conservation Districts.

“Brown urged Congress to, at a minimum, maintain the mandatory conservation funding levels as agreed in the 2008 Farm Bill. He also called for full funding of technical assistance to help farmers, ranchers and landowners continue their critical role in protecting our nation’s air, water and soil.”

Rick Plumlee reported yesterday at The Wichita Eagle Online that, “Gov. Sam Brownback called on Congress to consider policies for the 2012 Farm bill that will benefit the Ogallala Aquifer, the main source of underground water for western Kansas farmers.

“Specifically, he wants to see programs that will encourage producers to conserve water without negative financial impacts.”

Additional reporting on yesterday’s hearing is also available at the DTN Ag Policy Blog where an update by Chris Clayton titled; “Senators on Appropriations, Research” is available.

In other Farm Bill developments, an update posted yesterday at WANE-TV Online (Fort Wayne, IN), which included video, reported that, “Agricultural committees in both the U.S. Senate and House will start writing their versions of the latest federal farm bill in a matter of weeks. So to get an idea of what farmers would like to see in it, Senator Richard Lugar and Congressman Marlin Stutzman held a listening session Thursday.”

Yesterday’s update added that, “Steve Pittman is in the ethanol business which relies heavily on corn crops. He said he’s concerned if the bill takes too much away from farmers his business could be hurt, too…‘We want to continue to see the support of crop insurance and protection that they have in case we can’t get planting in like we did this year.’”

Meanwhile, a news release Wednesday from Rep. Joe Donnelly (D-IN) stated that, “Today, [Rep. Donnelly] announced that he is an original co-sponsor of The Farming Flexibility Act of 2011, H.R. 2675, which would give farmers the flexibility to grow the crops of their choosing.  Current farm program rules prevent some farmers from growing fruits and vegetables on base acres that receive direct and counter-cyclical payments.  This legislation would give American farmers more certainty by expanding and making permanent the current Farm Flex pilot program, which currently provides select Midwestern farmers with more choices and increased farm income by giving them access to alternative crops.”

Recall that Sen. Richard Lugar (R-IN) reintroduced this legislation in the Senate back in July and discussed it in some detail during a Senate Ag Committee hearing on July 28.

In other news, Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “The Iowa Farm Bureau will hold its annual summer policy conference next Tuesday and Wednesday at its West Des Moines headquarters.

“Member/delegates from Iowa’s 99 counties will meet to review the state Farm Bureau’s policies on state and national agricultural issues and hear an address from president Craig Lang.

Last year the Iowa Farm Bureau became the first state Farm Bureau organization to publicly call for end to Direct Payments as part of the Farm Bill. Organization officials expect the Farm Bill to again be reviewed at next week’s meeting.”

 

Farm Bill: Super Committee

Tom Lutey reported this week at the Billings Gazette Online (Montana) that, “Between Sept. 7 and Nov. 23, [Sen. Max Baucus (D-Mont.)] and the other 11 members of the supercommittee will have a chance to make targeted cuts from federal programs.

“Their recommendations will then be presented to the House and Senate as a take-it-or-leave-it proposition, to be voted on by Dec. 23… [I]f Dec. 23 passes without approval of the supercommittee’s proposal, there will be automatic cuts in federal spending, including $600 billion cut from defense, $600 billion cut through 9 percent spending reductions to all other programs except Medicare, which would be cut 2 percent.”

The article stated that, “Those across-the-board cuts would be painful. For federal farm programs used by Montana’s largest industry, the cuts could mean an $18 billion reduction in spending over the next 10 years. That cut isn’t as bad as some of the farm subsidies proposed earlier this year, Baucus said, but the supercommittee could do better.”

“However, the depth of farm program cuts has varied wildly, from the $48 billion in cuts proposed by House Budget Committee Chairman Republican Paul Ryan of Wisconsin to the $10 billion cut proposed by the Simpson-Bowles commission.”

The article added that, “Urban lawmakers, unfamiliar with agriculture, don’t recognize the value of key ag programs like federal subsidies for crop insurance, Baucus said. Still, cuts are going to have to be made. He suspects that direct federal payments to farmers, regardless of whether the plant anything or not, are going to end.

“For some individual Montana farmers, those payments amount to $44,000 a year. As the nation struggles with a recession, market commodities prices have been on the upswing, which makes it tough not to cut some subsidies, he said.

“Farm state politicians are counting on Baucus to be the voice for agriculture on the supercommittee. House Agriculture Committee ranking member Collin Peterson, D-Minn., told farm constituents last week that Baucus’ focus during debt ceiling talks was to minimize cuts to agriculture. He expected Baucus to do the same on the 12-member supercommittee.”

For additional perspective on what sequestration (automatic cuts) could potentially mean for agriculture programs, see this Farmpolicy.com interview with House Ag Committee Ranking Member Collin Peterson from earlier this month.

 

Agricultural Economy

A news release yesterday from University of Missouri Extension stated that, “Tight crop supplies and record farm prices dominate a midyear baseline update from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.

“‘Drought, floods and changing economics raise the outlook for many agricultural commodities,’ said Pat Westhoff, director, MU FAPRI.

“A new baseline update takes those changes into account, Westhoff said, but does not represent a full baseline report. The updated baseline will be used for independent economic analysis of farm, budget and biofuel policies.”

The release added that, “Wet conditions and floods delayed and prevented plantings across the Corn Belt and Northern Plains. Droughts across the south and other areas added to the factors changing the outlook.

“In the FAPRI baseline, corn prices increase on average from $5.25 per bushel to $6.46 for the 2011-12 crop to be harvested this fall. Likewise, soybeans rise from a projected $11.25 this year to $13.53 per bushel for 2011-12.”

 

Commodity Futures Trading Commission (CFTC) Issue

Reuters news reported last week that, “Oil trading data that exposed the extensive positions speculators held in the run-up to record high prices in 2008 were intentionally leaked by a U.S. senator, sparking broader concern about industry confidentiality as Congress moves on Wall Street reform.

“Senator Bernie Sanders, a staunch critic of oil speculators, leaked the information to a major newspaper in a move that has unsettled both regulators and Wall Street alike.”

The “major newspaper” was The Wall Street Journal, which ran an article last week titled, “As Oil Spiked, Many Traded,” which stated in part that, “The list was shown to the Journal by the office of Sen. Bernie Sanders, who is among a number of federal lawmakers seeking to limit participation in the oil market by investors who have no direct commercial interest in crude.”

In response to this development, The Futures Industry Association indicated in a letter yesterday to CFTC Chairman Gary Gensler that, “The members of the Futures Industry Association were shocked and outraged by the disclosure of confidential data on derivatives market positions published recently in The Wall Street Journal.  In our view, this unfortunate incident poses a serious threat to the confidence of market participants in the CFTC’s ability to protect proprietary information; raises troubling questions about the role of Congress in handling such information; jeopardizes the CFTC’s future ability to obtain cooperation in data collection and market surveillance; and undermines the agency’s ability to work cooperatively with its counterparts in overseas jurisdictions.”

 

Trade

Jennifer Steinhauer reported in today’s New York Times that, “Even with almost zero common ground between them, President Obama and Republicans in Congress generally concur on the need for free-trade agreements with South Korea, Colombia and Panama. But they disagree on whose fault it is that those agreements — years in the making — have still not been approved.

“For weeks, President Obama has derided Congress for failing to pass the agreements, as well as a measure that would provide money to assist workers displaced by foreign competition. ‘The only thing preventing us from passing these bills is the refusal by some in Congress to put country ahead of party,’ he said at a recent news conference.

“Senior Republicans in Congress have howled in protest, pointing out that the agreements have not left the president’s desk to journey to the Hill for a vote.”

The Times article noted that, “That Congressional Republicans and the president cannot even agree on the status of these critical trade agreements reflects just how toxic and divisive their relationship is, anchored largely in fiscal policy disagreements. The two sides have fought endlessly over the last year about the complexion of the bills and how and when they will be brought to the floors of each chamber.”

Keith Good

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