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Farm Bill; Ag Econ; Regulations; and Trade

Farm Bill: Policy and Budget Issues

Bart Schott, the President of the National Corn Growers Association was a guest on yesterday’s AgriTalk program with Mike Adams, where he talked about the organization’s proposal for the 2012 Farm Bill.

To listen to a portion of this discussion from yesterday’s AgriTalk program, just click here (MP3- 3:14)

Recall that DTN Ag Policy Editor Chris Clayton explained earlier this week that, “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.”

Mr. Clayton indicated that, “The proposal would use harvest prices and establish a five-year Olympic average of farm revenue as the basis for payments. Further, rather than using state yields, NCGA proposes using National Agricultural Statistic Services regional crop reporting districts in each state to set the crop-revenue guarantee. In testimony before the Agriculture Committees, farmers have often suggested using a county yield average, but [Anthony Bush, a Mt. Gilead, Ohio, farmer and chairman of the NCGA Public Policy Action Team] said NASS just isn’t able to get yields that detailed across the entire country.

“‘The problem with going past reporting districts is NASS doesn’t feel they have adequate data for every county,’ Bush said. ‘They feel confident in their data for CRDs (crop reporting districts). That is why we chose to go crop reporting districts.’

“NCGA’s proposal also would make some other tweaks to ACRE. For one, NCGA calls for basing the new program on a farmer’s actual planted acres, not program base acres.”

On the issue of using NASS crop reporting districts to set the crop-revenue guarantee, the USDA’s Economic Research Service (ERS) came out with a report yesterday titled, “Alternatives to a State-Based ACRE Program: Expected Payments Under a National, Crop District, or County Base.”

Although yesterday’s report focuses on the ACRE program, an ERS summary of the study stated in part that, “The Average Crop Revenue Election, or ACRE, program is a commodity support program that bases coverage on aggregate State-level and individual farm-level revenue variability. Changing the level of aggregation from State to one closer to the farm level—Crop Reporting District or county—would generally increase payments.”

Recall that Mr. Clayton’s DTN article indicated that, “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.”

In broader news with potential budget implications for the next Farm Bill, Scott Wong and Manu Raju reported yesterday at Politico that, “Ignoring calls for their talks to be out in the open, members of the new deficit-cutting supercommittee went behind closed doors Thursday to begin their first bargaining that could reshape federal spending and programs for years to come.

“Emerging from the more than hour-long breakfast, the 12 members of the bipartisan panel were mum about their discussions, other than saying they were positive and encouraging.”

Meredith Shiner reported yesterday at Roll Call Online that, “The co-chairs of the Joint Committee on Deficit Reduction announced today that the panel’s next public hearing will be Sept. 22 and will feature testimony from a top tax code expert in a session that could set the table for what likely will be the group’s most challenging hurdle: revenues.”

In related news, Paul Kane reported in today’s Washington Post that, “House Speaker John A. Boehner (R-Ohio) on Thursday reaffirmed GOP opposition to any tax increases to solve the nation’s deficit problem, signaling a swift return to the trench warfare that characterized the debt and spending debate of early summer.

“Boehner said that the special committee seeking long-term debt reduction should acheive its mandated $1.5 trillion in savings entirely by cutting federal agency spending and shrinking entitlement programs.”

Meanwhile, as President Obama prepares to present his ideas for deficit reduction on Monday, Zachary A. Goldfarb reported in today’s Washington Post that, “The plan is also likely to call for at least $800 billion in tax increases and, according to a person familiar with the matter, include principles for redrawing the personal and corporate tax codes. Obama may also call for scaling back farm subsidies and requiring bigger contributions to civil pensions by federal employees.

“Aides say the president’s plan will be modeled after a series of proposals he made in April amid pressure from Republicans to show he was serious about curbing the growth of the nation’s debt.”

In other budget developments, Robert Pear reported in today’s New York Times that, “In last year’s campaigns, Republicans ripped into Democrats for failing to perform one of Congress’s most basic duties: providing money in a timely way for the operations of government.

“But Republicans acknowledged Thursday that they would miss the deadline they had promised to meet. They began to rush a stopgap spending bill through the House because, they said, Congress could not finish work on any of the 12 regular appropriations bills before the new fiscal year starts in two weeks, on Oct. 1.

“The stopgap measure maintains spending for the first 49 days of the fiscal year, through Nov. 18, with a 1.5 percent across-the-board cut from current levels, averting at least for now the threat of a government shutdown. Congressional leaders hope the additional time allows them to finish many of the overdue spending measures.”

And with respect to the President’s jobs bill, a separate variable that could have important budget implications, Alexander Bolton reported yesterday at The Hill Online that, “Senior administration officials met with Senate Democrats for an hour and a half on Thursday to answer their complaints about President Obama’s jobs bill.

“Democratic lawmakers voiced objections to several of the president’s proposals to pay for the $447 billion stimulus package, including an elimination of tax breaks for the oil-and-gas industry.

David Plouffe, a senior adviser to the president, acknowledged after a marathon meeting in the Senate’s Mansfield Room that not all Democrats are sold on the plan.”

In other agriculture policy developments, a news release yesterday from Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) stated that, “[Chairwoman Stabenow] and Senator John Thune [R-SD] today introduced a bipartisan bill that will spur new agricultural research and improve American agriculture by creating charitable partnerships between universities and private entities. The bill, The Charitable Agricultural Research Act, amends the tax code to allow for the creation of a new type of charitable, tax-exempt agricultural research organization (ARO).

“‘Research is critical in protecting the health and welfare of our rural and farming communities and expanding our agriculture economy,’ Senator Stabenow said. ‘American agriculture outpaces and outperforms every other nation in the world because of decades of research – learning how to be more efficient, innovative and productive with fewer resources. This productivity has created an American agricultural sector that’s 16 million jobs strong. This is a ‘win-win’ effort that builds on decades of success and momentum by continuing to pursue new research – and doing so in a cost-effective way by engaging the private sector.’”

Yesterday’s release added that, “The establishment of AROs will complement existing public and private research and also create the opportunity for previously under-funded projects to be fully funded, such as projects addressing specialty crops and specific diseases.”

And a news release earlier this week from Rep. Peter Welch (D-Vermont) stated that, “Rep. Welch today joined Rep. Chris Gibson (R-N.Y.) in introducing bipartisan legislation to help farmers currently ineligible for disaster assistance become eligible.

“Some Vermont farmers affected by Tropical Storm Irene are ineligible for U.S. Department of Agriculture disaster assistance because they did not have crop insurance when the storm hit, a requirement under current law. The Welch/Gibson Bill (H.R. 2905) would temporarily waive this requirement, allowing farmers access to USDA assistance. Farmers taking advantage of the waiver would be required to purchase crop insurance.”

Also on the issue of crop insurance, an update posted yesterday at USDA’s Risk Management Agency (RMA) Online included a link titled, “Administrator Presents Federal Crop Insurance Program Update.”  This file contains a series of slides from a recent presentation by RMA Administrator Bill Murphy.

And in news regarding nutrition, the AP reported yesterday that, “Calorie by calorie, first lady Michelle Obama is chipping away at big portions and unhealthy food in an effort to help America slim down.

“In the year and a half since she announced her campaign to curb childhood obesity, Mrs. Obama has stood alongside Wal-Mart, Olive Garden and many other food companies as they have announced improvements to their recipes — fewer calories, less sodium, better children’s menus.”

The article added that, “The changes are small steps, in most cases. Fried foods and french fries will still be on the menu, though enticing pictures of those foods may be gone. High-sodium soups, which many consumers prefer, will still be on the grocery aisle. But the amount of sodium in each can will gradually decrease in some cases, and the taste of their low-sodium variety will be improved.

On Thursday, the first lady joined Darden Restaurants Inc. executives at one of their Olive Garden restaurants in Hyattsville, Md., near Washington to announce that the company’s chains are pledging to cut calories and sodium in their meals by 20 percent over a decade. Fruit or vegetable side dishes and low-fat milk will become standard with kids’ meals unless a substitution is requested.”

Meanwhile, a separate AP article from yesterday reported that, “The Food and Drug Administration has cautioned the corn industry over its ongoing use of the term ‘corn sugar’ to describe high fructose corn syrup, asking them to stop using the proposed new name before it has received regulatory approval, The Associated Press has learned.

“The Corn Refiners Association wants to use ‘corn sugar’ as an alternative name for the widely used liquid sweetener currently labeled as high fructose corn syrup on most sodas and packaged foods.”

The article explained that, “In a July 12 letter obtained by the AP, Barbara Schneeman, an FDA director, wrote to the Corn Refiners Association to say she was concerned with the trade group using the terms high fructose corn syrup and ‘corn sugar’ interchangeably.

“‘We request that you re-examine your websites and modify statements that use the term ‘corn sugar’ as a synonym for (high fructose corn syrup),’ Schneeman wrote.”

The AP article pointed out that, “The FDA has no regulatory control over the corn association’s advertising because it is not selling a product but promoting an industry. The federal agency can prosecute companies that incorrectly label ingredients and Schneeman wrote that the FDA may launch enforcement action against food companies listing high fructose corn syrup as ‘corn sugar.’”

 

Agricultural Economy

Javier Blas reported yesterday at The Financial Times Online that, “Global economic growth is slowing, with the deceleration spreading from the US and Europe to developing countries such as China, according to Cargill, one of the world’s largest commodities traders.

“Paul Conway, Cargill deputy chief, said the company, which dominates food commodities trading, felt that global economic growth was ‘weak and weakening.’”

The article noted that, “Mr Conway cautioned that agricultural commodities prices were unlikely to drop significantly in the near term in spite of lower economic growth because of the impact of disappointing harvests, particularly in the US, and low inventories.

“‘Global macro economic factors are pushing down, but agricultural micro economic factors are pulling up prices,’ Mr Conway said. ‘We have serious stocks issues,’ he added, referring to the historically low level of inventories of corn.

“‘We are unlikely to see prices going down,’ he said, adding that the world needed at least two or three years of good crops to replenish stocks. ‘The [corn] market is tight and there is not room for any supply shock [before the year end],’ he said, adding the market had the potential for ‘explosive’ price swings.”

Meanwhile, a Dow Jones article from yesterday reported that, “About 84% of Texas cattle ranchers reduced the size of their herds as a result of the severe drought in the state, according to a survey by the Texas and Southwestern Cattle Raisers Association.”

 

Regulations

Elise Viebeck reported yesterday at The Hill’s Floor Action Blog that, “Sens. Mike Johanns (R-Neb.) and Chuck Grassley (R-Iowa) on Thursday asked Environmental Protection Agency (EPA) Administrator Lisa Jackson to support their bill prohibiting the agency from regulating farm dust.

“On the Senate floor, Johanns called it an opportunity for Jackson to clarify the agency’s position on the issue, which Republicans have criticized all year as one of many regulatory overreaches.”

And Reuters writers Timothy Gardner and Peter Henderson reported yesterday that, “The U.S. Environmental Protection Agency will delay yet again plans to curb greenhouse gas emissions, its second delay of a major anti-pollution initiative in as many weeks.

“The head of the EPA said the agency needs more time beyond the Sept. 30 deadline to forge a plan to limit emissions of carbon dioxide from power plants.”

The article noted that, “Unlike the halt in the ozone rule, the delay in the greenhouse gas proposal was not a directive from the White House, a senior EPA official said on Thursday.

“‘It’s a complex rule so we needed more time,’ the official said. ‘But there’s in no way any White House interference with it.’”

 

Trade

Clayton Yeutter and Jonathan Stoel indicated in an Op-Ed posted today at The Wall Street Journal Online (Opinion Asia) that, “Yoshihiko Noda, Japan’s new prime minister, must be totally perplexed by his country’s own trade policy, or lack thereof, and by those of his major trading partners. His predecessor flirted recently with a number of potential free trade agreements—bilateral pacts with Korea, China and the European Union, plus the multilateral Trans-Pacific Partnership (TPP) that would include the U.S. and much of Southeast Asia—but little came of it. It looks worryingly as if nothing ever will.

“This is a bad state of affairs both for Japan and for its trading partners. The country needs the additional market access for its exports, but also the beneficial domestic competition freer trade would bring. If Mr. Noda wants to reinvigorate the Japanese economy, which voters surely expect him to try to do, a trade rethink is in order. Doing so would also offer crucial trade leadership for the rest of the world.”

The writers noted that, “TPP must be the focus. The global Doha Round of negotiations is in limbo after a decade of talks among every major trading country hasn’t resulted in an agreement. The TPP is the only other multilateral trade negotiation going. But TPP will soon be in limbo too unless it produces something meaningful. Right now the U.S. is the only ‘big player’ at the table. Companies in participating countries have stood on the sidelines instead of pushing for a serious deal since they know a deal wouldn’t be possible without stronger leadership. Absent that political pressure, leaders feel little sense of urgency in pushing forward. A negative feedback loop is developing.

Japanese participation could help break the logjam.”

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And lastly today, a news release yesterday from The Federal Reserve Bank of Kansas City stated that, “Esther George, first vice president and chief operating officer of the Federal Reserve Bank of Kansas City, has been appointed president and chief executive officer of the Bank. She will succeed Thomas M. Hoenig, who is retiring from the Bank on Oct. 1 as required by mandatory Federal Reserve retirement rules for presidents. The announcement was made by Paul DeBruce, chair of the Bank’s board of directors and CEO and founder of DeBruce Grain Inc., Kansas City, Mo.”

Keith Good