FarmPolicy

August 20, 2019

Farm Bill; Ag Economy; Regulations; Trade; and Biofuels

Farm Bill: Budget Background- Supercommittee; Appropriations

Manu Raju reported on Friday at Politico that, “The new supercommittee is facing growing pressure to seek even deeper budget cuts — potentially making its task even more unrealistic.

“President Barack Obama wants the costs of his $450-billion jobs plan to be offset by the powerful deficit-cutting committee, and now a bipartisan group of senators is considering pushing for trillions more in budget savings. That’s on top of the $1.5 trillion goal laid out by last month’s law to raise the national debt ceiling.”

The article indicated that, “As the White House prepares to formally send legislation to Capitol Hill, a group of about two dozen senators will meet early next week to decide whether to issue a joint statement urging the committee to ‘go big’ and put the country on a path to slash $4 trillion over the next 10 years, participants say.

“Taken together, the two efforts significantly raise the bar for the 12-member committee, which has just started to grapple with its goal of approving a $1.5-trillion budget slashing deal before Thanksgiving.”

Friday’s article explained that, “[T]he new bipartisan group of senators does not plan to offer a specific set of budget-slashing proposals for the supercommittee to consider. Instead, it will simply encourage the panel to try to find a mix of discretionary spending cuts, reforms to the tax code and an overhaul of entitlements in the range of a $4 trillion reduction — an effort that participants say would show that there’s support in the Senate for a major deal to reduce the debt.”

Rosalind S. Helderman reported in Saturday’s Washington Post that, “On Friday, President Obama was in Richmond hoping to show Americans that he has a plan to jump-start the economy. ‘Let’s just shake off all the naysaying and the anxiety and the hand-wringing,’ he said. ‘Enough of that. Let’s get to work.’ Tuesday, he’ll try in Columbus, Ohio, and on Wednesday, it’ll be in Raleigh-Durham, N.C.

“But as he ventures outside the politically barbed confines of Washington, it is becoming increasingly clear that the monumental task of figuring out how to pay for his jobs plan will fall to the new special congressional committee already charged with the daunting task of reducing the deficit by $1.5 trillion.”

The Post article noted that, “Obama has asked the group, widely dubbed the ‘supercommittee,’ to expand its mandate and come up with enough in savings to offset the costs of his nearly $450 billion jobs plan, as well.

“The added burden has some members of Congress concerned that the group is now expected to be not just super but downright magical.”

The article pointed out that, “Finding the savings to pay for Obama’s package of tax cuts and infrastructure spending would mean broadening the committee’s deficit-reduction target by nearly a third.

Obama has promised that he will lay out a proposal Sept. 19 to help the committee meet its original mandate and pay for his job creation proposals.

“The president said his deficit-reduction proposal will include spending cuts, modifications to Medicare and Medicaid, and tax increases for the wealthy and big corporations.”

And Jackie Calmes reported in today’s New York Times that, “Led by President Obama, pressure is building on the new Congressional committee on deficit reduction to ‘go big’ — beyond its mandate to shave as much as $1.5 trillion from budget shortfalls over 10 years — even as doubts remain about the panel’s ability to find enough bipartisan agreement to meet even the original goal.

A group of at least 57 prominent business executives and former government officials have signed a petition in support of a greater deficit reduction, which they are to release at a news conference on Monday. Among them are former treasury secretaries, budget directors and economic advisers to eight presidents from Richard M. Nixon to Mr. Obama; former Congressional leaders; and executives of top companies.”

Today’s article added that, “The petition does include what has fast become a catchphrase for those who believe Congress is thinking too small. ‘We urge you to ‘go big,’’ they wrote, ‘and develop a large-scale debt-reduction package sufficient to stabilize the debt as a share of the economy.’

“Generally that level is estimated at $4 trillion in deficit reductions over the decade, savings that would build in later years. Because Congress and Mr. Obama already agreed last month to nearly $1 trillion in reductions in so-called discretionary spending for social and military programs, the special committee would have to find more than $3 trillion more to meet that goal — double its mandate for $1.2 trillion to $1.5 trillion, written into the August deficit-reduction deal.”

More specifically with respect to agriculture, an update posted on Friday at the National Sustainable Agriculture Coalition (NSAC) Blog reminded readers that, “On Wednesday, September 7, the Senate Appropriations Committee passed its fiscal year (FY) 2012 Agriculture Appropriations bill by voice vote.”

The NSAC update pointed out that, “The Senate bill cuts from the farm bill mandatory conservation programs by 12 percent, over $700 million, on top of the half billion dollar cut contained in the FY 2011 agriculture appropriations bill.  This is better than the over $1 billion cut by the House bill, but still a huge cut.”

“All authorizing committees, including the Senate and House Agriculture Committees have until October 14 to submit formal recommendations to the special committee.  While the special committee could theoretically propose to further reduce discretionary spending, it is widely expected to concentrate its efforts on mandatory spending and tax expenditures.  Given the Senate Appropriations Committee action yesterday, we hope the special committee is paying attention: mandatory conservation programs have already been forced to take massive hits, so any further Farm Bill mandatory spending cuts included in the special committee’s recommendations should come from other Farm Bill titles,” Friday’s NSAC update said.

And Seung Min Kim reported last night at Politico that, “Meanwhile, Congress has not enacted a single appropriations bill for the coming fiscal year, which it is supposed to do by Sept. 30. The House has passed six of 12 appropriations bills, while the Senate has passed just one. A short-term bill, or continuing resolution, will be necessary.

Congressional leaders have made it clear they want to avoid a spending fight. The agreement reached in August that raised the nation’s debt ceiling established a $1.043 trillion spending cap, and House Majority Leader Eric Cantor (R-Va.) said in an August memo to his colleagues that ‘it is in our interest’ to stick to that funding level. House Minority Whip Steny Hoyer (D-Md.) said after the partisan rancor over the debt limit, there’s no appetite for another bruising legislative battle.

“But conservatives in the House could push for a lower spending level outlined in the budget penned by House Budget Committee Chairman Paul Ryan, which caps spending at $1.019 trillion for fiscal 2012. Cantor has announced that the House will take up a continuing resolution during the week of Sept. 19.”

Similarly,  John Stanton reported today at Roll Call Online that, “Conservatives, unhappy that last month’s debt limit deal included significantly higher budget levels than those included in Budget Chairman Paul Ryan’s (R-Wis.) budget, are demanding the CR — and a subsequent omnibus spending measure — stick to Ryan’s numbers rather than those agreed to in the debt deal.

“But Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.) and other leaders are in no mood for another budget battle, and the Appropriations Committee is expected to produce a CR that runs through November that meets the budget levels set in the debt deal.”

 

Farm Bill: Policy Focus

Amy Bickel reported on Saturday at The Hutchinson News Online (Kansas) that, “[Tim Huelskamp, R-Kan], along with Republican Sens. Pat Roberts and Jerry Moran, answered questions…[at the Kansas State Fair]… – mostly dealing with potential ag funding cuts. Farmers stressed concerns about everything from the elimination of an ethanol tax incentive to cuts to research being done at land-grant colleges and to farm bill programs.”

The article noted that, “Federal lawmakers have slashed more than $12 billion from crop insurance programs since 2008, [Moran] said, noting that subsidized crop insurance is important in a state that this year was ravaged by everything from flooding to drought.

“Crop insurance, Moran said, ‘helps in our ability to get young farmers back to the farm, get a loan at the bank.’

“‘Let’s just do it in a way that is fair and won’t put anyone out of business,’ he said of subsidy cuts.”

Meanwhile, former Secretary of Agriculture Dan Glickman penned an editorial regarding U.S. farm policy on Friday at The Hill Online- “Opinion: Next farm bill must address long-term food needs.”

In other analysis, Pat Westhoff, the director of the Food and Agricultural Policy Research Institute at the University of Missouri, noted in an opinion item (“Cuts to farm subsidies may or may not raise food prices”) posted over the weekend at The Columbia Daily Tribune (Missouri), that, “Congress is considering cuts in farm subsidies to help reduce the federal budget deficit. Farmers have obvious concerns about the effects of budget cuts, but what would reduced farm subsidies mean for food prices? At the risk of sounding like an economist, the correct answer is ‘it depends.’”

Dr. Westoff pointed out that, “The direct payment program often has been targeted by those seeking to reduce federal spending. Before the August debt limit agreement was reached, there were proposals to reduce direct payments by 30 percent or eliminate the program.

“Cutting direct payments likely would have only small effects on consumer food prices. The payments are small relative to the value of what farmers earn from the products they sell and are even smaller relative to what consumers spend on food.

“The direct payment program has important impacts on farm income and the value of cropland, but it probably has only small impacts on crop production and prices. Our institute estimates that eliminating it would raise consumer food prices by less than one-tenth of one percent.”

 

Agricultural Economy

Janet Cho reported late last week at The Plain Dealer Online (Cleveland, OH) that, “First gas, then coffee, and now peanut butter.

“Consumers fed up with the higher cost of filling up their cars and buying their morning java might now have to pay more for their PB&J.

Scorching hot, dry weather in the major peanut-growing states like Georgia and Texas has devastated this year’s peanut crop.”

The article stated that, “The U.S. Department of Agriculture is predicting this year’s peanut crop could be about 3.61 billion pounds, 13 percent smaller than last year’s 4.16 billion pounds.

“Bottom line: Consumers will see higher prices on peanuts and peanut butter at least through the winter.”

The Plain Dealer article noted that, “Patrick Archer, president of the American Peanut Council in Alexandria, Va., said that although a lot could change between now and harvest, price hikes at the supermarket are inevitable.

Shelly Nutt, executive director of the Texas Peanut Producers Board in Lubbock, Texas, said although the bulk of this year’s crop won’t be harvested for another month or so, the farmers who’ve already pulled up their peanut plants have found very few peanuts.

The worst drought in Texas history combined with more than 90 days of 100-plus-degree temperatures caused the plants to wither on the vine.”

Meanwhile, a detailed update posted on Friday at the FarmDocDaily Blog (University of Illinois) by Scott Irwin and Darrel Good (“2011 U.S. Corn and Soybean Yield Expectations”) concluded by saying: “The analysis of the U.S. average trend-adjusted yields in previous years with Illinois summer weather conditions similar to those of 2011 leads to expectations for a 2011 U.S. average corn yield of about 148 bushels and a soybean yield of about 40.5 bushels. The USDA will release new yield forecasts on September 12, October 12, and November 9. The final yield estimate will be released in the second week of January 2012.”

 

Regulations

Laura Meckler and Carol E. Lee reported in today’s Wall Street Journal that, “Cass Sunstein, the White House regulatory chief, had long argued for restraint in the growth of federal rules. As 2011 opened, he found a powerful, new ally inside the White House.

Bill Daley, a veteran of the top circles in business and politics, had been hired by President Barack Obama as chief of staff after the Democrats’ disastrous midterm elections. In the months that followed, Messrs. Daley and Sunstein helped reshape the administration’s regulatory posture.”

The Journal article added that, “The most prominent result came Sept. 2, when Mr. Obama surprised environmental activists by scrapping a rule that would have toughened air-quality standards, and which business groups had said would cost jobs. But the push to give business arguments greater consideration has been seen in other regulatory moves.

“Republicans and some business groups say Mr. Obama must jettison a host of other proposed regulations to reverse what they argue is an antibusiness perspective.”

The Journal writers explained that, “Still, the U.S. Chamber of Commerce, a lobby group for business, has noted a change at the White House. Bill Kovacs, a senior vice president at the Chamber, said Mr. Sunstein is far more visible than during the first two years of the administration. And he said Mr. Daley had ‘changed the climate’ at the White House.”

“Political imperatives have influenced the new approach. Mr. Obama’s political team helped spur the change, aiming to reposition the president in the political center and win back independent voters who deserted Democrats in 2010.”

Today’s Journal article concluded by saying: “Mr. Obama explained his effort at balance in his address to Congress on Thursday. Some rules put an ‘unnecessary burden’ on businesses and are unjustified, he said. ‘But what we can’t do, what I will not do, is let this economic crisis be used as an excuse to wipe out’ rules that he called ‘basic protections’ for Americans.”

 

Trade

House Speaker John Boehner (R-OH), Majority Leader Eric Cantor (R-VA), Majority Whip Kevin McCarthy (R-CA), and Republican Conference Chairman Jeb Hensarling (R-TX) sent s letter to the White House Friday requesting the text of the legislation proposed by President Obama in his address to Congress on Thursday evening.

Near the end of the letter, the lawmakers stated that: “We again ask that you send those agreements [Colombia, Panama, South Korea trade agreements] immediately to the Congress for our consideration and approval.”

Molly K. Hooper reported on Saturday at The Hill Online that, “House Republican leaders face a tough task of finding enough votes to pass the three long-stalled free trade agreements.

“Organized labor and some Tea-Party lawmakers are poised to rally against the pacts, which President Obama is expected to send to Congress this fall.

“Republican sources on Capitol Hill anticipate the votes will eventually be there to pass the Panama, South Korea and Colombia deals, but acknowledge that it will not be easy.”

 

Biofuels

Philip Brasher reported on Saturday at The Des Moines Register Online that, “With the ethanol subsidy all but dead, some of the industry’s critics are turning their attention to the government mandates that force motorists to fill up with the corn-based gasoline additive and other biofuels.

“Under current law, the mandates will require refiners to increase their use of corn ethanol to 15 billion gallons a year by 2015. Livestock groups have been discussing ways that would make it more likely that the ethanol usage mandates will be reduced at times when corn prices are spiking and driving up their production costs. Some environmentalists want new safeguards to protect land and water resources.”

After more detailed analysis, Mr. Brasher pointed out that, “Fortunately for the ethanol industry, the livestock sector and environmental lobby aren’t working together on what changes they might seek in the biofuel mandates. The environmental groups have not agreed among themselves on what they want to do.

“The livestock industry could unveil some of its ideas as soon as this week at a House Agriculture Committee hearing on the availability of animal feed. The groups want to make it easier for the government to lower the mandates when problems with the grain supply ‘create spikes in corn, and soybean prices, for that matter,’ according to Sherrie Rosenblatt, a spokeswoman for the National Turkey Federation.

“‘Everyone is under the same tremendous pressures as far as the price of corn is concerned,’ said Richard Lobb of the National Chicken Council.”

Keith Good

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