FarmPolicy

November 13, 2018

Farm Bill; Ag Economy; Regulations; Food Safety; and Trade

Farm Bill: Policy Issues

Chris Clayton reported yesterday at DTN that, “The National Corn Growers Association released a farm-program proposal Monday in an effort to simplify commodity programs, help manage risk and provide policymakers with a plan that saves money.

“The plan follows through on a desire by NCGA members to shift away from direct payments while providing a new overall commodity program that is simpler than the Average Crop Revenue Election program.

“The corn growers unveiled the ‘Agriculture Disaster Assistance Program,’ which would not only replace ACRE, but would also replace the more traditional Direct and Counter-Cyclical Program as well.”

The DTN article noted that, “‘We are offering this program and the DCP (Direct and Counter-Cyclical) program would no longer be there,’ said Anthony Bush, a Mt. Gilead, Ohio, farmer and chairman of the NCGA Public Policy Action Team. ‘We would do away with the current ACRE program and the current DCP program.’

“NCGA has run the Agriculture Disaster Assistance Program through computer models that project the proposal, as crafted by the group, would cost about 30% less than the current Direct and Counter-Cyclical Program. Few commodities are in a price range to pay counter-cyclical payments, but direct payments cost about $5 billion annually. Projected out over a 10-year congressional budget score, the NCGA proposal saves roughly $15 billion compared to current policies.”

Yesterday’s article added that, “Bush said NCGA leaders realize they aren’t writing legislation, and the proposal is just a concept that would likely be changed in the legislative process. However, NCGA leaders think their plan offers risk protection and simplifies program rules while reducing costs.”

 

Farm Bill: Budget Related Developments

In budget related developments with potential Farm Bill implications, Carol E. Lee and Janet Hook reported in today’s Wall Street Journal that, “The prospects for President Barack Obama’s $447 billion jobs plan grew dimmer Monday as he unveiled the fine print of how it would be paid for—primarily through tax increases that Republicans said would destroy jobs, not create them.”

“Republicans in Congress, who had been striking a more conciliatory tone about backing at least parts of the proposal the president unveiled last Thursday, disputed the White House contention that the plan would cause no additional job losses for the struggling economy.”

The Journal writers pointed out that, “More likely some of the proposals in the bill could be passed piecemeal or could be included in a broader deficit-reduction plan crafted by a congressional supercommittee charged with finding at least $1.2 trillion in savings over the next 10 years. Mr. Obama will submit his own deficit plan of more than $2 trillion over 10 years to the committee on Sept. 19, administration officials said. That plan will include budget cuts, including to programs such as Medicare, not just tax increases like the ones he’s proposing to pay for his jobs bill, administration officials said.”

Rosalind S. Helderman reported in today’s Washington Post that, “The cost of the jobs plan would be in addition to the at least $1.2 trillion in spending cuts or new revenue that a bipartisan congressional ‘supercommittee’ is tasked with finding to reduce the country’s spiraling deficit. But the administration said it is open to other ways to pay for its proposal. If the committee settles on a plan to reduce the deficit by more than $1.5 trillion, the tax hikes would not necessarily be needed any longer, White House officials said.”

The supercommittee will hold its second hearing today, which will be broadcast at 10:30am ET on C-SPAN3; and, Bernie Becker reported last night at The Hill Online that, “Outside observers, even fellow lawmakers, are urging members of the deficit-reducing supercommittee to zoom past their mandate and ‘go big’ to rein in the federal debt.”

The article pointed out that, “With the supercommittee set to start rolling up its sleeves on Tuesday, Alan Simpson and Erskine Bowles — the co-chairmen of President Obama’s fiscal commission — and dozens of others continued to press their case on Monday, outlining their case in a letter to committee members.”

And in other budget developments, David Rogers reported yesterday at Politico that, “In a surprising bit of hardball, House Republicans confirmed that they had been actively considering a plan to tamper with the August budget agreement by cutting even more from 2012 spending in order to put pressure on Senate Democrats to come to terms faster on domestic bills for the coming fiscal year.

“Instead of the agreed-upon appropriations target of $1.043 trillion, a stopgap continuing resolution or CR this week would be calibrated at a lower $1.035 trillion level. The idea – promoted by Speaker John Boehnerwas to effectively withhold about $8 billion for the first two months of the fiscal year, with the money becoming available only as Senate Democrats come to terms with the House on the dozen annual spending bills that cover government operations.”

The article noted that, “Where it’s all going is less clear.

“Even Majority Leader Eric Cantor (R-Va.) was skeptical about cutting the CR funding levels, and having backed the idea, Boehner’s office appeared to be stepping away, saying that $1.043 trillion is the more likely final number.”

And a separate update yesterday at Politico reported that, “Senate Republicans on Monday night rejected Democrats’ effort to move forward on a $7 billion disaster aid package to help areas of the country that have been hard hit by recent tornadoes, hurricanes and flooding.”

“Separately, the Republican-controlled House next week plans to attach disaster aid to legislation needed to avert a partial government shutdown by Oct. 1.”

 

Farm Bill: Rural Development

Ron Nixon reported in today’s New York Times that, “The Obama administration is investing billions of dollars to promote economic development in rural areas by bringing broadband service and small-business financing to regions with chronic poverty and high unemployment.

“But critics say the administration has little to show for its efforts, which highlight the difficulties of creating jobs in remote areas. They say the money has gone to areas where it is not needed, to promote broadband where it already exists and for industrial parks designed to attract business and jobs that may never materialize.

The Agriculture Department said it had provided more than $6.2 billion to help nearly 10,000 small and emerging rural businesses expand, creating or saving more than 250,000 jobs since 2009.”

The Times article indicated that, “Either way, the government program underscores the slow, expensive work of job creation at a time when the administration is trying to make rural development a part of its economic recovery policy. While the nation suffers from high unemployment and a weak economy, rural areas have been especially hit hard. The latest Census Bureau figures show that 16.6 percent of rural Americans are living in poverty, compared with the national average of 13.9 percent.”

Later this morning, the House Agriculture Subcommittee on Rural Development, Research, Biotechnology, and Foreign Agriculture will be holding the committee’s eleventh Farm Bill audit hearing, titled, “Agricultural Program Audit: Examination of USDA Rural Development Programs.”

 

Agricultural Economy

In its latest Crop Production report, the USDA’s National Agricultural Statistics Service (NASS) indicated yesterday that, “Corn production is forecast at 12.5 billion bushels, down 3 percent from the August forecast but up fractionally from 2010 [related graph]. If realized, this will be the third largest production total on record for the United States. Based on conditions as of September 1, yields are expected to average 148.1 bushels per acre, down 4.9 bushels from the August 1 forecast and down 4.7 bushels from 2010. If realized, this will be the lowest average yield in the United States since 2005.

Soybean production is forecast at 3.09 billion bushels, up 1 percent from August but down 7 percent from last year [related graph]. Based on September 1 conditions, yields are expected to average 41.8 bushels per acre, up 0.4 bushel from last month but down 1.7 bushels from last year.”

Incorporating the NASS production estimates, the World Agricultural Outlook Board yesterday also released its monthly World Agricultural Supply and Demand Estimates (WASDE) report.

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

A more detailed analysis of updated variables from yesterday’s reports is available here- “Smaller Corn Crop Confirmed,” by University of Illinois Agricultural Economist Darrel Good.

Gregory Meyer reported yesterday at the Financial Times Online that, “The [corn] crop would still be the third largest in US history. But with consumers from hog farms to ethanol producers driving record global demand, stocks are expected to fall to extremely low levels by next summer.

“‘The corn market continues to remain incredibly tight,’ said Chad Hart, an economist at Iowa State university. ‘Typically, when corn’s tight, all the other grains feel it.’”

The AP reported yesterday that, “Corn prices are climbing on expectations that farmers will harvest a smaller crop than initially anticipated this fall because of damage from the summer’s blistering heat wave.”

And a news release yesterday from the American Meat Institute (AMI) stated that, “USDA data showing declining corn supplies in the U.S. and around the globe will continue sending corn prices skyward, which will also send consumer food bills significantly higher.

“‘Declining corn supplies will put demand for corn by the ethanol industry and livestock and poultry producers on a collision course that can mean just one thing:  higher feed prices and higher food prices,’ said [AMI] President J. Patrick Boyle.”

Also yesterday, Bloomberg writer Jeff Wilson reported that, “The condition of the U.S. corn crop improved last week and soybeans ratings were unchanged, the U.S. Department of Agriculture said today in a report.

“An estimated 53 percent of the corn crop in the top 18 producing states was in good or excellent condition as of yesterday, up from 52 percent a week earlier and down from 68 percent a year earlier, the USDA said.”

Meanwhile, an update posted yesterday at the Southwest Farm Press Online by Donald Stotts stated that, “Preliminary estimates by Oklahoma State University’s Division of Agricultural Sciences and Natural Resources indicate that Oklahoma has suffered more than $1.6 billion in drought-related agricultural losses this year.

“Division officials caution that the results are preliminary while acknowledging the need to release statistics determined thus far so as to allow individuals, organizations, civic leaders and government officials to more effectively address various drought-related concerns and issues.”

 

Regulations

Former Agriculture Secretary and Nebraska GOP Senator Mike Johanns was a guest on yesterday’s AgriTalk program with Mike Adams.  In their wide-ranging conversation, the two touched on the issue of federal regulations, to listen to a portion of this discussion, just click here (MP3- 1:27).

Josiah Ryan reported yesterday at The Hill’s Floor Action Blog that, “Sen. Susan Collins (R-Maine) on Monday afternoon introduced a piece of legislation that would prohibit the Obama administration from putting any ‘significant’ new regulations in place for one year if the rules would have an adverse effects on the economy.”

A news release Friday from Senator John Thune (R-SD) indicated that, “Following President Barack Obama’s joint address to Congress last night, Senator John Thune today sent a letter to the president calling on him to issue an immediate moratorium on overreaching regulations proposed by the Environmental Protection Agency (EPA), which are hampering job creation and economic growth.

“With 14 million Americans currently unemployed, Thune is calling on the president to delay implementation of over 40 major regulatory actions proposed by the EPA until the economy improves and the national unemployment rate falls.”

And a news release yesterday from the National Council of Farmer Cooperatives (NCFC) stated that, “The [NCFC] today called on Congress to enact a two-year moratorium on all discretionary, non-essential regulatory action that would increase the cost of agricultural production and processing in the United States. NCFC, the national organization representing over 2,500 farmer co-ops across the country, outlined its proposal in a letter to House and Senate agriculture committee leadership.”

Meanwhile, Andrew Restuccia and Ben Geman reported yesterday at The Hill’s Energy Blog that, “House Republicans plan to advance two bills Tuesday that would delay and soften a pair of Environmental Protection Agency air toxics rules.

“A House Energy and Commerce Committee panel will mark up a pair of bills aimed at weakening the rules, which affect industrial boilers and cement plants.”

 

Food Safety

William Neuman reported in today’s New York Times that, “The federal government will ban the sale of ground beef tainted with six toxic strains of E. coli bacteria that are increasingly showing up as the cause of severe illness from food. Officials have been under pressure from food safety advocates and some elected officials to do more to keep the potentially deadly bacteria out of meat, but the beef industry said the move was not needed and could force the price of ground beef to rise.

The new rule, which officials said would be announced on Tuesday, means that six relatively rare forms of E. coli will be treated the same as their notorious and more common cousin, a strain called E. coli O157:H7. That strain has caused deaths and illnesses and prompted the recall of millions of pounds of ground beef and other products. It was banned from ground beef in 1994 after an outbreak killed four children and sickened hundreds of people.”

Today’s article added that, “But the American Meat Institute, an industry group, has argued that safety measures already in place are sufficient. On Monday, the group was highly critical of the extended ban.

“‘Imposing this new regulatory program on ground beef will cost tens of millions of federal and industry dollars — costs that likely will be borne by taxpayers and consumers,’ the group said in a statement. ‘It is neither likely to yield a significant public health benefit nor is it good public policy.’

“While several outbreaks caused by the Big Six strains have been linked to produce, the group pointed to the fact that only one has been related to ground beef. In that outbreak, last year, three people fell ill.”

Mr. Neuman noted that, “The Agriculture Department will begin enforcing the rule in March, to give the meat industry time to prepare.”

And Bill Tomson reported in today’s Wall Street Journal that, “U.S. inspectors on Monday started using more sensitive tests to detect antibiotics in pork, part of a stepped-up effort to ensure meat safety after a government report last year suggested consumers might be at risk from harmful drug residues.”

Today’s article explained that, “USDA officials say the new tests will expand the number of antibiotics they can detect in pork, and that the agency can withhold meat with too much antibiotic residue from the market. More contaminated meat ‘will consequently be removed from the food supply,’ said USDA spokesman Dirk Fillpot. The new measures come as the agency is broadening its scrutiny of disease-causing E. coli bacteria in beef to a total of seven strains, instead of just one.”

Mr. Tomson added that, “The effect on people of consuming over a lifetime tiny quantities of penicillin, neomycin and other drugs left over in meat is little studied. Scott Hurd, an associate professor at Iowa State University’s College of Veterinary Medicine, said there is no evidence of ill effects from such consumption.

“The Food and Drug Administration also has been concerned about the rise of drug-resistant pathogens, and last year asked livestock producers to limit the amount of antibiotics they use.”

 

Trade

Reuters writer Doug Palmer reported yesterday that, “World Trade Organization (WTO) members should acknowledge the 10-year-old Doha round of trade talks is ‘deadlocked’ and begin charting a more ‘credible path forward,’ a top U.S. trade official said on Monday.

“‘One thing is clear: What we are doing today in the Doha negotiations is not working. That is not a value statement, but a simple assessment of the facts. After 10 years, we’re deadlocked,’ U.S. Ambassador to the WTO Michael Punke said at a hearing on his renomination to his current job.”

Keith Good

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