December 15, 2019

Farm Bill; Ag Economy; Regulations (Climate); Food Safety; CFTC; and Trade

Farm Bill Issues

A news release yesterday from American Farmland Trust (AFT) stated that, “A national coalition of 56 policy and advocacy organizations is urging Congress to preserve funding for essential U.S. Department of Agriculture conservation programs and to take additional steps to enhance soil, water quality and wildlife on agricultural land. The coalition outlined a set of key principles [PDF] that lawmakers should observe as they write the Conservation Title of the 2012 farm bill and seek ways to trim the federal deficit.

“The 56 coalition members are asking Congress to:

“- Put a high priority on funding critical conservation programs at the current baseline level of $6.5 billion a year.

– Strengthen and enforce provisions that require farmers to implement basic conservation practices in return for farm subsidies and extend them to insurance subsidies.

Target conservation dollars where the opportunities for conservation and environmental outcomes are greatest.

Streamline existing programs by reducing unnecessary administrative burdens and ramp up their effectiveness by linking payments to performance and focusing more on whole-farm and whole-ranch conservation systems.

– Ensure that all segments of the farming community – women, minorities and beginning farmers – have access to funding and technical assistance. “

The AFT release added that, “The 2011 Survey on Agriculture and Environment [PDF] conducted on behalf of the David and Lucile Packard Foundation, shows clearly that Americans overwhelmingly view conservation as an important priority in national farm policy and don’t want to see conservation programs cut.”

On the issue of linking up producer conservation requirements in return for crop insurance, Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “Count Sen. Chuck Grassley as on the fence when it comes to whether farmers should face land conservation requirements if they buy crop insurance policies that are heavily subsidized by the government.

This is likely to be a big issue in the next farm bill if Congress eliminates the annual direct payments that farmers and landowners now receive in favor of boosting insurance options for producers. To get the direct payments, farmers have to make measures to prevent soil from eroding from their land, but there are no such requirements for crop insurance.”

Mr. Brasher added that, “Environmental groups says it critical to ensure that farmers are still subject to conservation restrictions if the direct payments disappear. The Iowa Farm Bureau Federation recently voted at a recent meeting to make the restrictions a condition for crop insurance but the group reversed its vote the next day.

“‘Such linkage would probably not be determinative of whether or not I would support’ the next farm bill, Grassley told reporters today.”

Also on the crop insurance issue, and the President’s budget proposal from last week, David Graves of the American Association of Crop Insurers pointed out this week in an interview with Brownfield reporter Ken Anderson (complete transcript available here) that, “First off, this proposal does directly impact the farmer in that there is $2 billion proposed to be taken out of the premium that the government pays on behalf of the farmer… Secondly, as the industry continues to consolidate, agents have fewer companies to do business with, the fewer companies and fewer agencies, the farmer will have either less choice or they will actually receive outright less service as companies struggle to contain cost with lower income from the program. What comes to mind is the old adage there is no free lunch.

Farmers testify routinely at field hearings and hearings here in Washington that the crop insurance program has grown over the last couple of decades to become a very good and useful risk management tool that they prefer to see continue as is. And we are concerned that the administration is not understanding what the farmer is saying when the farmer says we want the program to continue as is.”

Dr. Graves pointed out that, “Ranking Member of the House Ag Committee Collin Peterson has routinely and repeatedly said that there should be no more cuts made to the program until there has been sufficient time to analyze the impact on farmers and the industry of the cuts and changes that have already been made.

“So I think it’s reasonable that members of Congress are making these statements because it reflects, we think, the very simple message that farmers have delivered to Congress over the last year, year and a half as Congress has turned its attention toward writing the next farm bill through all these hearings, collecting input from the farmers, wanting to know what farmers think about the current farm bill. And we think, without exception, all of those hearings, when the question came up about the crop insurance program, Congress heard from farmers that the program should be left alone, that it should be maintained because it was working for them.”

Meanwhile, the Washington Insider section of DTN reported yesterday (link requires subscription) that, “Five USDA programs designed to ease pressure on Congress to provide ad hoc agricultural disaster aid lost their authorization at the end of September: 1) supplemental revenue assistance, 2) livestock indemnity, 3) livestock forage disaster, 4) tree assistance and 5) emergency assistance for livestock, honeybees and farm-raised catfish.

“The programs were part of the 2008 farm bill and were included among 37 provisions that expire before the rest of the legislation runs out on Sept. 30, 2012. Authorizers included the early expirations to help trim the cost of the 2008 legislation.”

And with respect to dairy issues, a statement earlier this week from Connie Tipton, the President and CEO of the International Dairy Foods Association (IDFA), on the Dairy Security Act of 2011, indicated in part that, “The Dairy Security Act of 2011 continues a complex, government milk pricing system that forces higher prices on fluid milk and penalizes producers who want insurance by forcing them to accept mandatory supply controls.  Unfortunately, these provisions are unacceptable to our members and we oppose H.R. 3062.

“IDFA opposes milk pricing regulations that increase the already significant regulatory burden on processors, put pressure on declining milk sales, and increase costs for consumers, as well as many government nutrition and feeding programs that are already stretched to serve Americans who are struggling to feed their families.”

The statement added that, “IDFA continues to oppose any form of supply management, especially at a time of great market opportunity for its members and the entire U.S. dairy industry. IDFA supports offering dairy producers risk management tools without any strings attached.”

In other news, Alexander Bolton reported yesterday at The Hill Online that, “Sens. Joe Lieberman (I-Conn.) and Tom Coburn (R-Okla.) are pressing the deficit-reduction supercommittee to consider their proposal to cut more than $500 billion in Medicare spending over 10 years.”

The article stated that, “If the supercommittee fails to agree on a deficit-reduction package worth at least $1.2 trillion by Nov. 23, it would automatically trigger that amount in cuts to defense and non-defense spending programs.

“Under this sequestration process, Medicare would receive as much as a 2 percent cut, which lawmakers say would primarily affect healthcare providers and insurance companies.”


Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “This autumn will bring the last Thanksgiving holiday that Americans buy a Butterball turkey from Colorado.

The high price of animal feed has forced the popular poultry brand to shut down its plant in the state at the end of the year, leaving employees searching for options and giving some lucky birds a breather.

The closure is evidence that high prices are beginning to pinch grain consumption. Turkeys typically eat a mix of corn and soyabean meal. Corn futures reached a record just shy of $8 a bushel in June, while soyabeans last month surpassed $14.50 a bushel, the highest level since the commodity price spike of 2008. ‘The gains in feed prices have had their effect,’ says John Pike of one of Butterball’s parent companies.”

The FT article pointed out that, “Poultry, while quick to raise, are also the first to be culled in the face of high feed prices. In the US, broiler chicken hatcheries are incubating fewer eggs, meaning fewer hungry chicks in the coming months. Turkey meat production will fall next year due to the higher cost of grain and the weak domestic economy, the USDA says.”

However, Marshall Eckblad and Curt Thacker reported yesterday at The Wall Street Journal Online that, “The number of hogs and pigs on U.S. farms as of Sept. 1 was up 1% from a year ago and about 2.9% higher than three months earlier, according to federal data released Wednesday.

“The U.S. Department of Agriculture reported the total size of the U.S. hog and pig herd at 66.599 million head, up 1% from a year ago and 1.4% above the five-year average. The total herd, as reported, is bigger than expectations of analysts who expected it to be 0.5% larger than a year ago.”

Bloomberg writer Whitney McFerron reported yesterday that, “Food prices may remain elevated in coming years as global populations increase and demand rises in emerging markets, said David Dawe, a senior economist at the Food and Agriculture Organization of the United Nations.

“‘There’s going to be a lot of pressure on food prices in coming years,’ Dawe said in New York during a Bloomberg Television interview on Surveillance Midday with Tom Keene.”

In other news, the AP reported yesterday that, “A report released Wednesday by Feeding America, a hunger-relief organization, finds that food banks that were originally created to serve as stop-gap emergency food providers are now taking a long-term, chronic role for Americans turning to them routinely to get enough to eat.”

The article stated that, “The latest analysis showed that 18 percent of those surveyed said they used food pantries six to 11 months of the previous year, while 36 percent they used them every month.

The survey also found that among those 65 years and older, 56 percent went to a food pantry every month. And even those receiving aid in the form of supplemental nutrition money still needed more help, with 58 percent of them being frequent or monthly users.”

And a separate AP article from yesterday reported that, “Enough fencing to cross Texas from east to west nearly seven times, more than 1,500 head of livestock and swaths of pasture nearly twice the area of Delaware have burned in Texas wildfires this year… David Anderson, an economist with the service, estimated Texas agriculture lost $152.1 million through Sept. 19. The bulk of that total comes from the 5,965 miles of fences and other infrastructure that burned. Second are the nearly three million acres of scorched pasture.

“That all comes on top of the estimated $5.2 billion lost to crops and livestock from the drought in Texas. It has been the worst single-year drought on record and more than four-fifths of Texas is in exceptional drought.”


Regulations (Climate Change)

Juliet Eilperin reported in today’s Washington Post that, “The Environmental Protection Agency should have conducted a more detailed scientific review before determining two years ago that greenhouse-gas emissions pose a threat to public health and welfare, according to a report issued Wednesday by the agency’s Office of Inspector General.

“‘This review did not meet all [Office of Management and Budget] requirements for peer review of a highly influential scientific assessment primarily because the review results and EPA’s response were not publicly reported, and because 1 of the 12 reviewers was an EPA employee,’ the study said.

“Although the IG probe — requested by the top Republican on the Senate Environment and Public Works Committee, James M. Inhofe (Okla.) — will do little to affect federal climate regulation, it provides fodder to those who question the government’s role in addressing global warming.”

The Post article noted that, “The investigation did not examine the scientific evidence underpinning the EPA finding of a connection between human activity and global warming over the past half-century.

“However, Inhofe said, the IG’s conclusions raised the question of whether the administration should have concluded that carbon dioxide and other greenhouse gases qualify as pollutants under the Clean Air Act.”

For more background on the EPA’s endangerment finding, see this FarmPolicy update from December 8, 2009.


Food Safety

William Neuman reported in today’s New York Times that, “As the death toll rose this week in a devastating listeria outbreak linked to cantaloupes, a national food retailer said that cantaloupe farmers and shippers must confront a history of food safety problems and take steps to make the fruit safe.

“On Tuesday federal officials said that there had been at least 19 previous outbreaks involving more than 1,000 illnesses and three deaths resulting from cantaloupe consumption since 1984. The current outbreak, caused by cantaloupes grown in Colorado, has sickened more than 70 people and killed at least 13, making it the deadliest food-borne outbreak in the United States in more than a decade.

“‘I don’t think the cantaloupe industry can continue on doing the very same thing and expecting a different result,’ said Craig Wilson, the head of food safety for Costco, the Seattle-based warehouse retailer, which is regarded as a leader in requiring food safety measures from its suppliers.”

For more on the cantaloupe food safety issue, see this report from yesterday’s PBS NewsHour, “CDC Chief: Source of Deadly Listeria in Contaminated Cantaloupes Still Unknown.”


Commodity Future Trading Commission (CFTC) Issues

Reuters writer Christopher Doering reported yesterday that, “The U.S. futures regulator delayed a final vote on controversial measures to crack down on excessive speculation in commodity markets because it lacks the three votes needed for approval, sources familiar with the situation told Reuters on Wednesday.

“The U.S. Commodity Futures Trading Commission announced on Tuesday it was delaying by another two weeks to October 18 its meeting to consider the long-awaited rule on position limits. It was the second time a vote had been postponed.

“The disagreements hinge on some of the smaller, seemingly less-contentious elements of the plan, not on the areas in which the CFTC has yielded to industry complaints.”



Alan Beattie reported yesterday at The Financial Times Online that, “The US Senate is set to vote next week on legislation to punish China for manipulating its currency, as the renewed threat of global recession raises tension over exchange rates.

Harry Reid, Democratic leader of the Senate, said this week he would invoke ‘cloture’ – a procedure to prevent delay – for senators to vote on a bill that would require the US to use estimates of currency undervaluation when calculating anti-subsidy import tariffs. The bill is subject to amendment, meaning that it could end up with so many additions it becomes in effect impossible to move forward, but experts in trade policy said it had a good chance of passing.”

Mr. Beattie explained that, “The issues of US currency legislation and the so-called ‘currency wars’ – international tension over exchange rates had been in abeyance this year. However, that has reversed as safe-haven investment flows have strengthened the dollar, unemployment has remained high and the chances of a dip back into recession have increased sharply. Brazil recently suggested that World Trade Organisation law be changed to permit tariffs to be imposed against imports from countries with undervalued exchange rates, a measure similar to the unilateral actions in the proposed US bill.

“‘There seems to be a global trend developing towards currency-related trade measures, and legislation in the US looks more and more plausible,’ said Ted Alden, senior fellow at the Council on Foreign Relations.”

Keith Good

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