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Farm Bill; Ag Economy; Trade; and Senate Procedural Issue (Farm Dust)

Farm Bill Issues

An update posted yesterday at Wallaces Farmer Online reported that, “The National Farmers Union has issued a white paper giving its overview of the 2012 Farm Bill. The organization says the next Farm Bill will likely face intense scrutiny by Congress as the Joint Select Committee on Deficit Reduction examines ways to achieve unprecedented levels of deficit reduction.

“NFU says risk management must be made economical for all farmers, regardless of crop or geographic region, and that the next farm bill should use the funding from and combine parts of the SURE, Average Crop Revenue Election, countercyclical and direct payment programs. Mandatory disaster assistance should be improved so payments are reflective of actual market prices.”

Among other ideas noted in yesterday’s update: “Farm Bill programs should maintain the ability to effectively and efficiently help agriculture provide natural resource conservation and renewable energy benefits and working lands programs must be given priority when considering funding levels.

“NFU supports maintaining an energy title including the Rural Energy for America Program, the Biomass Crop Assistance Program, and the Biorefinery Assistance Program.

“NFU does not support the elimination of the Milk Income Loss Contract Program and Dairy Product Price Support Program. NFU also believes the existing federal milk marketing order system should be maintained with the addition of a price discovery mechanism.”

Also yesterday, an update posted at USAgNet Online indicated that, “Both the Iowa and Illinois soybean associations, together with Informa Economics, have completed a ‘U.S. Farm Policy, Agriculture and U.S. Economy’ study in preparation of 2012 farm bill discussions.

“The report focuses primarily on the costs and benefits of providing the public good of an agricultural infrastructure that produces significantly more food in the U.S. than can be consumed domestically, allowing for exports of more than $98 billion per year. This, in turn, reduces net costs to taxpayers and U.S. consumers for maintaining America’s food security.”

Yesterday’s update added that, “The report also determines the impact of select U.S. government policies regarding agriculture, including that farm safety net programs have little, if any cost to consumers through food prices, and consumers see no incentive to consume unhealthy foods due to farm policies.”

In news developments regarding nutrition issues, Philip Brasher reported on Saturday at The Des Moines Register Online that, “The high prices farmers get for their meat, produce and other crops are doing more than increasing supermarket bills.

The price increases mean the government is providing less food to soup kitchens and food pantries even as more and more people line up for assistance. Walmart is among dozens of companies that have stepped in to help.

“The food banks that supply the feeding programs rely on the Agriculture Department for as much as 60 percent of their food depending on where they are located. But the agency has slashed the amount of food it provides to the food banks, and spending cuts that Congress is considering could squeeze supplies further.”

Mr. Brasher noted that, “The chief culprit is the rise in food prices. The program that the USDA uses to supply the food banks is designed in part to prop up the prices that farmers get for commodities such as fruits, vegetables, meat and nuts that don’t otherwise get federal subsidies. So when prices for those commodities are up, the USDA cuts purchases.

“But that’s not the only problem. The economic stimulus package that Congress passed in 2009 pumped an extra $150 million into the program, but that money ran out in 2010, even as demand at food pantries and soup kitchens remained strong.

“The USDA program could face more cuts in coming months. Congress hasn’t passed a budget for fiscal 2012, but a spending bill for the USDA passed by the House would slash the food assistance program to nearly $300 million, according to Feeding America. A Senate version of the bill would keep the aid at this year’s level.”

In addition, National Public Radio’s Talk of the Nation program aired a segment yesterday titled, “Should Food Stamps Buy Fast Food?”  An audio replay and transcript of this program is available here.

Meanwhile, with respect to the supercommittee, the AP reported yesterday that, “The supercommittee is struggling. After weeks of secret meetings, the 12-member deficit-cutting panel established under last summer’s budget and debt deal appears no closer to a breakthrough than when talks began last month.

“While the panel members aren’t doing much talking, other lawmakers, aides and lobbyists closely tracking the committee are increasingly skeptical, even pessimistic, that the panel will be able to meet its assigned goal of at least $1.2 trillion in deficit savings during the next 10 years.

“The reason? A familiar deadlock over taxes and cuts to major programs like Medicare and the Medicaid.”

Robert Pear reported in today’s New York Times that, “On one crucial point, a powerful Congressional committee seeking ways to reduce the federal budget deficit has managed to produce a rare bipartisan consensus: Republicans and Democrats, liberals and conservatives in and out of Congress say the panel is doing too much of its work in secret.

“Moreover, they say, the secrecy could make it more difficult for the 12-member panel to win acceptance for its recommendations from the public and from other members of Congress.

“Far from apologizing for their secrecy, members of the committee say it shows they are making progress toward a possible agreement, establishing trust among themselves without public posturing or partisan sniping. And there is a view among some in Congress that such politically charged bargains can be struck only behind closed doors, where members can talk freely, insulated from the special interests that could swoop in to try to kill elements of an agreement.”


Agricultural Economy

University of Illinois Agricultural Economists Darrel Good and Scott Irwin provided a brief analysis yesterday regarding recent stock estimates from USDA titled, “Revisiting Recent Corn Stocks Estimates.”

The authors noted that, “For corn, quarterly stocks estimates have not been well anticipated since June 2010.”

After a more detailed discussion, yesterday’s update indicated that, “Corn prices declined after the release of the September 1 stocks estimate, but were already under pressure as a result of concerns about U.S. and world economic conditions and a general decline in commodity prices (excluding livestock).  In addition, the corn market has been influenced by reports of better-than-expected yields.  It is yet to be determined if ‘better-than-expected’ translates into ‘higher-than-forecast’.  The USDA will release new corn production and consumption forecasts on October 12.

The recent decline in corn prices has resulted in profitable margins for almost all users of corn, suggesting that prices are low enough to encourage an increase in consumption.  The USDA’s October reports will provide a new benchmark for evaluating consumption.  After that, weekly estimates of exports, ethanol production, and broiler placements will provide information to gauge the pace of consumption relative to projections and to judge the price level.”

Emiko Terazono reported yesterday at The Financial Times Online that, “Food commodity prices are likely to stay high and volatile during the next few years because of rising demand, more frequent extreme weather and the biofuel industry, according to a report from the UN’s agriculture agencies.

“Rising food prices and increasing volatility have become a big political and economic problem, especially in developing countries.”

Bloomberg writer Joe Richter reported late last week that, “U.S. sugar stockpiles are shrinking to the lowest in 37 years after rain and freezing weather damaged the beet crop, potentially reversing a price slump and forcing the government to ease import limits.

“Farmers in Minnesota, the biggest beet grower, will reap 19 percent less than last year and output will drop in four more of the 10 biggest producing states, the U.S. Department of Agriculture estimates. Domestic prices may rise 10 percent to 41 cents a pound by year end, said Frank Jenkins, the president of Jenkins Sugar Group Inc., the largest U.S. raw-sugar broker.”

And the AP reported yesterday that, “Dozens of foreign insects and plant diseases slipped undetected into the United States in the years after 9/11, when authorities were so focused on preventing another attack that they overlooked a pest explosion that threatened the quality of the nation’s food supply

“At the time, hundreds of agricultural scientists responsible for stopping invasive species at the border were reassigned to anti-terrorism duties in the newly formed Homeland Security Department — a move that scientists say cost billions of dollars in crop damage and eradication efforts from California vineyards to Florida citrus groves.

“The consequences come home to consumers in the form of higher grocery prices, substandard produce and the risk of environmental damage from chemicals needed to combat the pests.”



Erik Wasson reported on Sunday at The Hill’s On the Money Blog that, “The House and Senate are poised to move with lightning speed this week to approve three trade deals with South Korea, Colombia and Panama submitted just last week by President Obama.

Wednesday votes are set in both the House and Senate on the deals and approval is on track just in time for a Thursday joint address to Congress by South Korean President Lee Myung-bak.”

In other trade developments, Dow Jones writer Gerald Jeffris reported yesterday that, “As Brazil gives up on any agreement being reached over the Doha round of global trade talks this year, it is expanding its team at the World Trade Organization to meet what it expects will be a surge in trade disputes.

“‘The Doha round talks are likely to end this year without any concrete results,’ said the ministry’s subsecretary for economic affairs, Waldemar Carneiro Leao. ‘There is more unemployment, which has generated more protectionist and defensive measures, and negotiations have become much more difficult.’”

Mr. Jeffris explained that, “Brazil is already one of the most aggressive users of the WTO conflict-resolution system, having initiated some 28 cases over the last 16 years, and winning some notable actions in suits over goods such as cotton and orange juice trade with the U.S. and sugar with the European Union.

The country has also been studying the possibility of launching new suits against those partners over ethanol and beef trade.”

“Brazil is doubling the size of its legal team at the WTO, and although officials said they had no plans to introduce new trade suits at the WTO this year, they noted it was important to be prepared for a contentious environment,” the article said.

Meanwhile, Reuters writer Michael Martina reported yesterday that, “China warned the United States that it would damage relations, and American jobs, if it forces Beijing to let its currency rise under a law to be voted on in the U.S. Senate on Tuesday.

“Vice Foreign Minister Cui Tiankai on Monday underlined Beijing’s opposition to the bill, saying it could trigger a trade war and hold back global economic recovery.”

Yesterday’s article added that, “‘Should the proposed legislation become law, the only result would be a trade war between China and the U.S. and that would be a lose-lose situation for both sides,’ said Cui, who currently heads the China delegation for G20 negotiations.”

Senator Bob Corker (R-Tenn.), in an Op-Ed published in today’s Wall Street Journal noted that passage of the Currency Exchange Rate Oversight Reform Act, which “seeks to create U.S. jobs by imposing tariffs on imports from China in the amount that China undervalues its currency,” could have the “unintended consequence” of starting a trade war.

Sen. Corker pointed out that, “China is unlikely to respond to a tariff on all imports by doing what we demand they do. More likely, China would retaliate with tariffs of its own…”

Kris Turner reported yesterday at The Flint Journal Online that, “U.S. Sen. Debbie Stabnenow was in Flint on Monday to push legislation to curb unfair trade practices and patent theft.

“Stabenow, D-Michigan, said the plan would impose duties and penalties on countries that manipulate their currency to offer products at lower prices than American companies, create a trade prosecutor to enforce trade agreements and penalize companies that steal U.S. intellectual property.

“‘It will create a level playing field for us,’ she said during an appearance with local leaders at the Genesee Regional Chamber of Commerce on Monday.”

The “Washington Insider” section of DTN noted in part yesterday (link requires subscription) that, “Department of Transportation Secretary Ray LaHood has sent a report to Congress stating that the Federal Motor Carrier Safety Administration has fulfilled the necessary steps to allow Mexican-based carriers to operate beyond US commercial zones under North American Free Trade Agreement provisions.

“The report said that FMCSA had fully addressed outstanding issues identified in a DOT Office of the Inspector General report.”


Senate Procedural Issue (Farm Dust)

Darren Goode reported yesterday at Politico that, “A Republican amendment targeting the Environmental Protection Agency’s nonexistent farm dust regulations laid the groundwork for a surprising, and possibly precedent-setting, parliamentary maneuver from Senate Majority Leader Harry Reid.

“The question now, is how do Reid and Democrats — particularly Midwesterners up for reelection next year — deal with the amendment the next time it comes up? After all, congressional Republicans have made their push to label EPA regulations as job killers a centerpiece in their fight against the jobs strategies from President Barack Obama and Democratic leaders.

“‘This will not go away. We will keep bringing it up every chance we get,’ Sen. Mike Johanns (R-Neb.) told POLITICO on Friday. Reid is ‘going to have to deal with me at some point. He can’t be king forever.’”

Mr. Goode explained that, “Reid moved to stop the GOP’s ability to offer motions allowing for amendments to be offered to a bill even after a filibuster has already been defeated if two-thirds of senators allow. Republicans contend Reid made his move because there was a good chance the 67 votes were there for Johanns’s amendment.”

The article stated that, “The amendment comes as the Obama administration officials have continued their fight to ensure solid standing in rural America — including Obama’s signing in June of an executive order establishing a White House Rural Council aimed at boosting job creation and economic development in rural areas.

“Administration officials have touted efforts to improve roads, drinking water projects and broadband access and EPA Administrator Lisa Jackson has made a series of trips to farm country.

But in the case of the farm dust dispute, Jackson has said the agency has no plans to regulate.”

Yesterday’s article noted that, “Johanns pointed to a letter he received in April from EPA air quality chief Gina McCarthy that he said leaves ambiguous whether EPA particulate matter controls would include dust on farms. National air quality standards, McCarthy wrote, ‘are set to protect public health from outdoor air pollution and are not focused on any specific category of sources or any particular activity [including activities related to agriculture or rural roads].’

“‘I think they are playing this both ways and we want certainty,’ Johanns said. ‘So it’s not that I don’t believe them, it’s very simply they don’t have their act together.’”

Senate majority leader Harry Reid discussed the Senate procedural issue in an Op-Ed published in today’s Washington Post, “A return to order in the Senate.”

Keith Good