FarmPolicy

July 23, 2014

Farm Bill Issues; Ag Economy; and Animal Agriculture

Farm Bill: Dairy

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “While a key element in the dairy reform bill announced last week would be voluntary, the Congressional Budget Office has estimated that producers of at least 60% of the nation’s milk would sign up for it, National Milk Producers Federation President Jerry Kozak said Monday.

“A bill introduced Friday creates a new subsidized margin insurance that covers 80% of a milk farmer’s production history. A market stabilization program also would reduce milk production during times of low margins. If dairy producers wish to elect to sign up for the subsidized margin insurance program, they will automatically be enrolled in the stabilization program.

“The draft written by House Agriculture Committee ranking member Collin Peterson, D-Minn., initially made participation in a dairy market stabilization program mandatory, but after some dairy farmers told National Milk officials during a series of meetings this summer that they did not want to participate, the federation made the participation optional.”

The DTN article noted that, “In a call to reporters, Kozak said the CBO has estimated the bill would save $167 million over the first five years, but estimated savings scale back to only $131 million over 10 years. Continuing current programs would cost the government $672 million over 10 years.”

A companion bill has not been introduced in the Senate yet, but Kozak said he is ‘optimistic’ that a senator will come forward to do so. Sens. Kristen Gillibrand, D-N.Y., and Amy Klobuchar, D-Minn., have said they want to save at least some of the elements of the MILC program, but Kozak said he believes that Gillibrand’s and Klobuchar’s serious interest in dairy policy will lead them to consider the bill,” yesterday’s article said.

The AP reported earlier this week that, “The International Dairy Foods Association, whose members process cheese, ice cream and fluid milk, said last week it remains opposed to any form of supply management.

“The bill’s prospects are uncertain. House Agriculture Committee Chairman Frank Lucas, R-Okla., has said he would not support passing a dairy reform package before the 2012 Farm Bill unless all sides agreed. A companion bill has not been introduced in the Senate.”

 

Farm Bill: Sugar

Bill Brock, the chair of the International Policy Roundtable for the Center for Strategic International Studies penned an update that was posted yesterday at The Hill’s Congress Blog where he noted that, “There is finally a concerted effort in Congress to make changes to U.S. sugar policy, and it’s about time. For decades, no other agricultural policy has been more counterproductive for American consumers and business, not to mention the farmers in less developed nations who could otherwise serve many, if not most, of our needs for sugar.

The opinion item added that, “Congress can change course in the comprehensive farm bill that comes up for renewal in 2012. There are several key legislative measures that promise to deliver a positive economic impact to countless businesses in our nation.

Companion bills in the Senate and House can provide a comprehensive reform of the current sugar program. They would discontinue loan guarantees to sugar processors, eliminate tariff-rate quotas on sugar imports, and unwind federal policies that have put U.S.-based food manufacturers at a severe disadvantage to their foreign competitors.”

An update posted yesterday at BakeryandSnacks Online indicated that, “Last week, hundreds of confectioners and bakers gathered on Capitol Hill, the meeting place of the US congress, to call for an end to the sugar price support programme, which they claim is keeping sugar prices artificially high and forcing food companies out of business.”

The update noted that, “‘The US sugar program has played a major role in the loss of thousands of jobs in sugar using industries,’ said Larry Graham, president of the National Confectioners Association and chairman of the Coalition for Sugar Reform – an alliance of consumer and trade organisations, food and beverage manufacturers and other groups, whose mission is to promote sugar policy reform.”

“The coalition claims reform of current policy is needed to put an end to tight sugar supplies, high sugar prices, plant closures and job losses, and has been lobbying Members of Congress to bring about change.”

 

Farm Bill: Recent Proposals (Crop Insurance), and Supercommittee Issues

With respect to the President’s budget proposal from last week, which included unexpected proposed cuts to the crop insurance program, Brownfield reporter Ken Anderson interviewed David Graves of the American Association of Crop Insurers yesterday for additional perspective and background on the executive branch ideas regarding the crop insurance program.

A portion of the Brownfield interview with Dr. Graves can be heard here (MP3- 4:45), while the entire interview is available at this Brownfield link.

The Brownfield update noted that, “An official of the American Association of Crop Insurers thinks there is an ulterior motive to the Obama administration’s proposal to cut another eight billion dollars from the federal crop insurance program.

“‘We don’t think it’s based in any kind of analytical reality,’ says David Graves, manager and secretary of the crop insurers’ organization, ‘and is therefore just simply a political statement by the Administration wanting to whack private sector delivery and private sector jobs—possibly looking to have those jobs moved back to the government.’

“The crop insurance program saw a six billion dollar budget reduction in the 2008 farm bill and another six billion dollar cut in the Standard Reinsurance Agreement of 2010.  Graves says the latest proposed budget cut would likely lead to further consolidation of crop insurance companies and agencies.”

Meanwhile, an editorial item posted yesterday at The Great Falls Tribune Online (Montana) stated that, “Obama’s initiative targets ‘fixed direct payments,’ under which farmers and other landowners get the same amount of money every year, no matter how well their operations are doing.

Farm groups are pushing to reallocate that money into other programs that operate more like crop insurance, providing payments only in years when farm revenues are being pinched.”

The opinion item added that, “We’ve said before and we’ll say again that farm payments accomplish two important objectives. They are: One of the ways the federal government reduces risk for operators in a risky but essential, weather-influenced business; and a primary reason why Americans — including lower-income Americans — enjoy relatively low prices at the supermarket.

“We recognize that in deficit-reduction mode, everything is and should be on the table.  But mechanisms helping to assure that all Americans can afford to eat should be far down the hit list.”

Julie Harker reported yesterday at Brownfield that, “Although the National Corn Growers Association supports a bipartisan Senate bill introduced to replace direct payments with a revenue-based safety net, there are some things they’d like to tweak. Ohio grower Anthony Bush says his NCGA committee worked closely with his home-state Senator Sherrod Brown, co-sponsor of the Aggregate Risk and Revenue Management Program (ARRM) Bill, along with Senators Thune, Durbin and Lugar.”

“But, Bush tells Brownfield there are some differences between ‘ARRM’ and NCGA’s  – Agriculture Disaster Assistance Program proposal (ADAP).”

The update indicated that, “‘The main one there that they did was the 85% of planted acres. We would still like to see that at 100% of planted acres.’  Bush says they might be able to adapt their ‘ADAP’ proposal and still stay at 100% of planted acres, ‘You know, we want to run these scenarios through our computer models that we have invested in and we are doing that as speak,’ says Bush.

“Bush calls this a ‘second tier safety net’ and says the NCGA continues to work with the Cotton Council on their proposal which, like NCGA’s, makes crop insurance the cornerstone of the 2012 Farm Bill.”

A separate Brownfield article from yesterday reported that, “The major U.S. commodity groups are working on proposals for a reformed agriculture safety net. The American Soybean Association has not presented a plan yet but ASA President Alan Kemper says they’re working on it and will release recommendations later this week…Kemper, a soybean producer from Lafayette, Indiana says they will recommend changes to the Farm Bill that would ‘reallocate baseline funding to a revenue-based program that improves risk management and complements crop insurance.’ Like the other commodity groups, Kemper says ASA wants the current crop insurance program to be protected from further cuts.”

In supercommittee news, Jake Sherman and Matt DoBias reported yesterday at Politico that, “The supercommittee has become supersecret about most of what it’s doing.

“On Tuesday, Sen. John Kerry (D-Mass.) encapsulated the attitude of the members of the Joint Deficit Reduction Committee: ‘I don’t want to discuss what we discussed.’

“As 12 lawmakers tackle the historic task of slashing at least $1.2 trillion from the nation’s deficit, they have spent lots of time behind closed doors, speaking almost nothing of their proceedings while leaving behind little more than a trail of sandwich wrappers and unanswered questions.”

The article pointed out that, “Tuesday was the second straight closed-door day for the supercommittee.

“The panel met for roughly 6½ hours in the Capitol, and when its members left, they wouldn’t answer basic, innocuous questions about the policies they were discussing nor specify when the next meeting would take place.”

Meredith Shiner reported yesterday at Roll Call Online that, “The Joint Committee on Deficit Reduction has held three public meetings and four full-panel private sessions, including on Monday and a 6.5-hour affair today, but it’s unclear what kind of progress is being made or where the group is headed.”

Reuters writers Richard Cowan and Walter Brandimarte provided an interesting analysis yesterday where the two authors looked at “calculating the odds of U.S. deficit deal.”

The piece looked at the potential of a partial deal (which could include cuts to farm subsidies), no deal, full deal, robust deal, and the possibility of a delayed deal.

And a separate Reuters article from yesterday by Walter Brandimarte noted that, “President Barack Obama’s deficit reduction plan would be positive for the United States’s credit ratings but chances of its implementation are ‘extremely low,’ Moody’s Investors Service said on Monday.

“Obama’s plan is the latest in a series of proposals that, together, demonstrate that substantial deficit reduction is the goal of the administration and the leadership of both political parties. But the differences between Republicans and Democrats mean that ‘none of the plans so far presented will be adopted,’ Moody’s said in a report.”

Rosalind S. Helderman reported in today’s Washington Post that, “Despite early and regular pleas from the White House, Senate Democrats say they will not move immediately to take up President Obama’s jobs bill when they return next week from a short recess.”

“White House senior adviser David Plouffe, appearing on CNN’s ‘State of the Union’ on Sunday, also predicted a Senate vote on the plan in October.”

 

Agriculture and Public Perceptions

Julia Moskin reported in today’s New York Times that, “Last week, a new public-relations campaign about agriculture got off to a splashy start. With full-page ads in newspapers and panel discussions live-streamed on the Internet, the newly formed U.S. Farmers and Ranchers Alliance began what it called a bid to ‘reshape the dialogue’ about the American food supply.

“‘When did agriculture become a dirty word?’ the Alliance asks on its Web site.

Chris Galen, a founding member of the group and head of communications for the National Milk Producers Federation, said, ‘There is a feeling across the board in agriculture that Americans have concerns about the food supply, and those are best addressed by farmers.’”

After additional discussion, the Times article stated that, “The battle is over more than labels. Also at stake is the $25 billion annual budget for discretionary spending by the Agriculture Department, and crop subsidies worth even more. Bob Stallman, chairman of the Alliance, is also president of the American Farm Bureau, the farmers’ main lobbying group in Washington.

Under the Farm Bill, dozens of subsidies are set to expire in 2012, which some say is the reason for the escalation of the current debate.”

 

Agricultural Economy

A news release from Rabobank earlier this week stated that, “Rabobank believes the world is set to face a period of increasing scarcity of food commodities in the next ten years. This also marks the beginning of a fundamental transition in the global food and agriculture sector. The prices of commodities will rise further and there will be increased volatility. While this is not a new phenomenon in itself, what is happening this time is genuinely different. These conclusions are set out in the ‘The Impact of Agricultural Price Volatility on Sourcing Strategies’ report that was presented in Washington yesterday during the Rabobank Duisenberg Lecture that was held in conjunction with the Annual Meetings of the IMF and World Bank.”

 

Rural America

Yesterday the U.S. Department of Agriculture’s Economic Research Service (ERS) released its Rural America at a Glance, 2011 Edition report.

ERS noted that, “Rural America At A Glance, 2011 Edition highlights the most recent indicators of social and economic conditions in rural areas for use in developing policies and programs to assist rural areas. This year’s edition focuses on the U.S. rural economy, including employment trends, poverty, education, and population trends.”

 

Animal Agriculture

A news release on Monday from Hagens Berman stated that, “Hagens Berman has filed a class-action antitrust lawsuit against several large players in the dairy industry, including the National Milk Producers Federation, Dairy Farmers of America, Land O’Lakes, Inc., Agri-Mark, Inc. and Cooperatives Working Together (CWT) alleging that the groups conspired to fix the price of milk throughout the United States.”

The release indicated that, “The lawsuit, filed in the United States District Court for the Northern District of California on Sept. 26, 2011, alleges that between 2003 and 2010, more than 500,000 cows were slaughtered prematurely under CWT’s dairy herd retirement program in a concerted effort to reduce the supply of milk and inflate its price nationally. According to the complaint, the increased price allowed CWT members to earn more than $9 billion in additional revenue.

“The case was initially researched and developed by Compassion Over Killing, a national animal protection organization.

“Dairy herd retirement ended in the summer of 2010, but CWT’s tactics may affect the price of milk for years, according to the lawsuit. Hagens Berman is interested in speaking to consumers who purchased milk or milk products from 2004 to the present.”

Additional information regarding this case can be found here.

Keith Good

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