FarmPolicy

October 21, 2014

Farm Bill Issues; Ag Economy; Dairy Issue; and Biofuels

Farm Bill: New Proposals

A news release yesterday from the American Soybean Association stated that, “The American Soybean Association today released its proposal for the 2012 Farm Bill, ‘Risk Management for America’s Farmers.’ ‘This proposal will help farmers manage the risks they face from adverse weather, crop disease, and volatile commodity markets,’ stated ASA President Alan Kemper, a soybean producer from Lafayette, Ind. ‘ASA believes the current farm program safety net can be made more effective, efficient, and defensible by reallocating baseline funding to this revenue-based program that improves risk management and complements crop insurance,’ Kemper added. Because the proposal would replace current farm programs, this proposal would also result in savings that help agriculture contribute its fair share to deficit reduction.

“The ‘Risk Management for America’s Farmers’ program, or ‘RMAF,’ would partially protect revenue losses by farmers of soybeans and other program commodities that result from low prices or reduced yields for their crops. The program would establish commodity-specific revenue benchmarks for individual farmers based on historical yields and prices, and compensate them for part of the difference when current-year revenue for a commodity on their farm falls below a percentage of the benchmark. All planted and prevented planted acres would be covered under the plan. The program would complement the existing crop insurance program used by most farmers, which ASA strongly supports and believes should be continued.”

Philip Brasher reported yesterday at the Green fields Blog (Des Moines Register) that, “With the congressional supercommittee pushing ahead with work on a plan to slash the deficit, farm groups are struggling to come up with ways to spend the farm subsidies that don’t get cut. The American Soybean Association is the latest to come forward with a proposal.

“The soybean growers are calling for abolishing the existing direct payments and creating a new revenue-protection program called Risk Management for America’s Farmers. The plan is similar in principal to one proposed by the National Corn Growers Association.  Payments would be triggered by losses in an individual producer’s revenue. The corn growers plan is pegged to area losses.

“The soy growers’ plan also calls for abolishing the existing revenue-based subsidy program, ACRE, and SURE, the permanent disaster assistance system.”

Also yesterday, the American Farm Bureau released a paper titled, “American Farm Bureau Federation Policy Recommendations for the 2012 Farm Bill.”

The paper noted that, “Farm Bureau provides these suggestions to the House and Senate Ag Committees for their consideration as they develop input to the Joint Select Committee on Deficit Reduction (Joint Committee) and as the Ag Committees consider policy changes to write the 2012 Farm Bill.”

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Though some farm groups and lawmakers have proposed scrapping the currentthree-legged stool’ for farm programs, the American Farm Bureau Federation says that’s a bad idea.

“The Farm Bureau released a paper Thursday of farm-bill recommendations approved Wednesday by the group’s board of directors. Farm Bureau proposes keeping direct payments, though offering the program up for significant budget cuts. Still, Farm Bureau rejects the need to completely shift the traditional safety net to a more aggressive risk-management plan.

“The American Soybean Association also released its proposal for budget cuts and a new commodity program as well. Like the National Corn Growers Association, National Cotton Council and legislation drafted by a group of senators, the ASA proposes getting rid of direct and counter-cyclical payment programs to create a new risk-management program that would fill the gap between what crop insurance covers and expected farm revenue.”

Yesterday’s article explained that, “Plans for changing farm programs have been filling up since Congress created the Joint Select Committee on Deficit Reductions, i.e., the super committee, to come up with $1.5 trillion in spending cuts over the next decade. Groups have been laying out their positions on where farm programs should go, along with the possible options for savings that could be achieved. Everyone sees a rapid process for cuts and farm policy in the next month.”

Mr. Clayton added that, “Part of the challenge is that as of now, the super committee has not laid out what it expects in terms of recommended cuts from authorizing committees such as Agriculture. ‘We’re all kind of shooting in the dark,’ said Mary Kay Thatcher, a lobbyist for the American Farm Bureau. Still, it’s hard to keep up with all of the proposals being laid out at the moment.

“‘If you had that number you could be a lot more specific about what kind of program you want to write because you would have a good feel for how much we have to shove in one pot to have a real good safety net,’ Thatcher said.

“The House and Senate Agriculture Committees will be expected to offer proposals within just a few weeks after hearing from the super committee.”

The DTN article stated that, “Farm Bureau cities five priority areas in the farm bill: commodity programs, conservation, crop insurance, research and rural development. Because the budgets for research and rural development are a small slice of the pie, Farm Bureau recommends maintaining the current spending levels in those areas.

“Without knowing how much USDA’s budget could be cut, Farm Bureau proposes distributing the cuts across four areas. Commodity programs, conservation and nutrition programs would each take 30% of any proposed cuts, and crop insurance would take the other 10%. To clarify, this doesn’t mean cutting the commodity budget by 30%. If, for instance, USDA is forced to cut $10 billion over 10 years, it would look like $3 billion taken from each of three areas — commodities, conservation and nutrition — while another $1 billion would come from crop insurance.

“For cuts coming out of direct spending to farmers, American Soybean Association proposes 50-50 spending cuts in commodity programs and conservation. Kemper said a task force and the board of directors came up with that ratio.”

Meanwhile, a news release yesterday from the National Council of Farmer Cooperatives (NCFC) titled, “NCFC Executive Board Approves Farmer Co-op Priorities for the Farm Bill,” stated that, “‘When it comes to writing the next farm bill, many things are still very much up in the air from the impact that the Super Committee will have on the process, to the budgetary resources that will be available to the agriculture committees, to the timing of the bill itself,’ said Chuck Conner, NCFC President & CEO. ‘I believe that NCFC’s member-led process of developing this farm bill framework positions the organization well to be as flexible as needed as the answers to these unknown variables become apparent.’”

For more details on the NCFC Farm Bill Framework, see this four-page document that was released yesterday.

In part, the NCFC Framework stated that, “Provide improved risk management tools and programs for farmers, including crop insurance, and ensure that farmer cooperatives are able to be part of the delivery system; Seek improvements in the scope, availability and delivery of crop insurance for the specialty crop industry; [and], Oppose efforts to link crop insurance with conservation compliance.”

Yesterday’s release added that, “‘Another major piece of our framework reflects one concern that NCFC repeatedly heard from co-op producer-members from across the country—namely, that increased regulations from federal agencies threaten to add significant cost to their farms and cooperatives,’ said Conner. ‘These comments led to NCFC’s recent proposal for a two-year moratorium on all significant, discretionary regulatory actions that would add costs to agricultural production. Moving forward, NCFC will continue to work with others in the agricultural community and leaders on Capitol Hill to push for such a moratorium.’”

For additional specifics on this aspect of the NCFC Framework see, “NCFC Regulatory Moratorium Fact Sheet.”

Also this week, American Farmland Trust (AFT) issued a press release, which stated that, “Senators Brown (D-OH), Thune (R-SD), Durbin (D-IL), and Lugar (R-IN) proposed the Aggregate Risk and Revenue Management (ARRM) legislation, S. 1626, that would seek to reform the commodity support programs that are part of the farm safety net.

“[AFT’s] vision of a modern safety net acknowledges a role for the federal government in helping farmers manage risk, but supports a system based largely on market forces. In addition, any properly constructed program includes accountability measures to receive assistance, and minimizes economic distortion without encouraging production in areas that cannot be farmed in an environmentally sustainable manner.”

The release noted that, “We believe that agricultural risk management should be a partnership between private crop insurance that lets producers manage annual farm level risks, along with a revenue-based program that serves to manage multi-year risks that broadly affect markets, risks for which no producer can plan.

“Upon our initial examination of the bill, it appears to meet our criteria for a modern safety net.”

Note: For a quick overview reference of some of the recent proposals for the 2012 Farm Bill, see this FarmPolicy.com webpage, which is updated regularly, “FarmPolicy.com Summary- 2012 Farm Bill Ideas.”

 

Farm Bill: Supercommittee

Reuters writer Richard Cowan reported earlier this week that, “Congress’ ‘super committee’ is earning a reputation for being the ‘super secret committee’ as radio silence envelopes the panel charged with cleaning up the country’s budget mess.

“Democratic and Republican members of the panel met behind closed doors for a combined 12 hours this week to discuss issues that could decide the country’s long-term fiscal health.”

The article added that, “‘Productive meeting.’ ‘Healthy exchanges.’ ‘We’re making progress’ –

“That’s about as enlightening as it has gotten in interviews with the 12 unusually disciplined lawmakers who face a November 23 deadline for sealing a deal to reduce U.S. government spending by at least $1.2 trillion over 10 years.”

John Stanton reported yesterday at Roll Call Online that, “Business leaders today called on the Joint Committee on Deficit Reduction to significantly expand its efforts to reduce the deficit and include comprehensive tax and entitlement reform.

“In a letter to all 12 members of the super committee, the National Association of Manufacturers, the Business Roundtable and the U.S. Chamber of Commerce urged the super committee ‘to go beyond the legislative mandate of the Balanced Budget Control Act of 2011 to achieve savings of $1.2 [trillion] to $1.5 trillion to ensure that we stabilize our nation’s debt and put the debt’s share of the economy on a downward path.’”

And Carrie Budoff Brown reported earlier this week at Politico that, “Alan Simpson, co-chairman of the White House fiscal commission, isn’t a fan of President Barack Obama’s deficit-reduction plan or his new feisty tone.

“The decision to shield Social Security from changes ‘is an abrogation of leadership, a vacancy of leadership,’ Simpson told POLITICO on Wednesday.

“The harsh appraisal is notable even from the outspoken Simpson, a former Republican senator from Wyoming whom Obama tapped last year to lead his bipartisan fiscal commission. Simpson is often blunt, but he has generally avoided direct criticism of the president, even when Obama declined to embrace the commission report and waited months to push a comprehensive plan.”

 

Agricultural Economy

Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “The U.S. will see declines in production of beef and poultry by as much as 5 percent by mid-2012, which in turn will continue upward pressure on prices, according to a report issued Thursday by Rabobank Group, a Dutch financial institution.

Hog production will keep pace, the report said, but prices will rise by about ten percent due to strong demand.”

Mr. Piller noted that, “The report says per capita meat consumption in the U.S. appears to have peaked. The poultry industry, in particular, should no longer count on rising domestic demand as a means of growing its way out of over-production situations. However, a rising GDP in the developing world is contributing to an increasing global for meat protein.”

The USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report yesterday, which stated in part that, “The corn price, at $6.69 per bushel, is down 19 cents from last month but $2.61 above September 2010 [related graph]; The soybean price, at $13.10 per bushel, decreased 30 cents from August but is $3.12 above September 2010 [related graph]; and, The September all wheat price, at $7.53 per bushel, is down 8 cents from August but $1.74 above September 2010 [related graph.]”

 

Dairy Issue

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The National Milk Producers Federation on Wednesday defended ‘Cooperatives Working Together,’ its program to cull cows when prices were low, against a lawsuit that charged it violates U.S. antitrust laws and attempted to fix milk prices.

“The class-action suit was filed Monday by Hagens Berman LLP, a Seattle-based firm in the U.S. District Court for the Northern District of California 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.

“According to a news release from the firm, the suit 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 DTN article noted that, “Jim Tillison, chief operating office of Cooperatives Working Together, said in a statement that the group was created in 2003 as ‘a self-help initiative to assist family dairy farmers and members of dairy cooperatives who were losing money producing milk.’

“‘The program was designed and has always been operated in a manner fully consistent with the anti-trust laws of the United States,’ Tillison said.”

 

Biofuels

An update posted yesterday at Wallaces Farmer stated that, “Senator Chuck Grassley, R-Iowa, says he hopes the people who are anti-ethanol have satisfied their desire to make their point with what all they have done negatively with ethanol already this year. He says he would also like to see them ‘lay off’ the Renewable Fuel Standard.

“‘There is some talk from livestock groups that want to go after the RFS,’ Grassley said. ‘I think that is going to be a little more difficult for them to do that. Then there is the rider on the appropriations bill from the House that would strike the E15 provision that I think we can stop.’”

Keith Good

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