FarmPolicy

Farm Bill; Ag Economy; and Trade

Farm Bill: Executive Branch Perspective

The AP reported yesterday that, “Lawmakers working on the next Farm Bill need to find an effective way to provide aid to farmers affected by natural disasters, increase funding for agricultural research and continue important conservation programs, U.S. Agriculture Secretary Tom Vilsack said Monday.

“The former Iowa governor spoke to about 100 workers who make farm equipment at a John Deere plant in Ankeny, telling them programs funded through the massive spending bill also must be streamlined and simpler to understand.” [Note: A complete transcript of the Secretary’s remarks can be found here].”

Yesterday’s article noted that, “Perhaps the most controversial items funded by the bill are direct payments, which are subsidies paid to growers of certain crops regardless of crop prices and yields. Many lawmakers and some farmers support scrapping direct payments in favor of better crop insurance, which would kick in when prices drop or crops are damaged.

“Southern farmers, however, remain strong supporters of direct payments, saying existing crop insurance programs don’t help much with the crops they grow.”

The AP article noted that, “‘We have a responsibility to the American people to use their resources wisely and to provide assistance only when it’s needed,’ [Vilsack] said.

“But, he also said aid needs to be provided more quickly when disasters happen and aid programs should be simple and easier to understand.”

“There has been discussion about Congress scaling back the Conservation Reserve Program, which pays them not to plow up and farm land. Vilsack called on Congress to continue its commitment to improving conservation programs with more flexibility and a simpler, more streamlined application process,” the AP article said.

Dan Piller reported yesterday at The Green Fields Blog (Des Moines Register) that, “The potential loss of direct payments has caused concern among conservationists because the USDA’s conservation compliance rules have been tied to receipt of direct payments, but not the subsidized crop insurance.

“Various conservation and environmental groups have called for the conservation requirement to be re-attached to eligibility for subsidies for crop insurance, which cover about 60 percent of the typical premiums or farmers. Such a requirement was present in federal laws before direct payments were created in 1996.

“‘I won’t be the one to say that compliance should be tied directly to crop insurance,’ said Vilsack, who argued instead that congress should be, in his words, ‘creative’ in coming up with ways to encourage conservation.”

Chris Clayton provided an overview of the Secretary’s remarks yesterday at the DTN Ag Policy blog, where he also pointed out that, “Vilsack has frequently said the Obama administration would not propose a farm bill like the Bush administration chose to do in 2007. But the administration did in fact effectively lay out a farm bill when it proposed $33 billion in cuts to farm programs. The Obama plan proposed in his jobs bill would eliminate direct payments to save $30 billion, as well as include $8.3 billion in cuts to crop insurance.  Another $2 billion would be saved in conservation. That’s $40.3 billion in total cuts to agriculture programs, but the plan would also extend the SURE program through 2016, which would negate some of the savings.”

A Daily Radio News item from USDA yesterday noted that, “The Agriculture Secretary Monday used a visit to a farm machinery plant in Iowa to share what he sees as priorities for the upcoming Farm Bill.”  To listen to this one-minute overview, just click here.

A separate USDA Daily Radio segment from yesterday stated that, “Current economic conditions may serve as a catalyst for Congress and stakeholders to craft and approve a new Farm Bill sooner than later, so says the Agriculture Secretary.”  One-minute audio replay available here.

Agri-Pulse Senior Editor Stewart Doan also provided an audio overview of the Secretary’s visit to Iowa yesterday; to listen to this recap, just click here.

Farm Bill: Additional Proposals

A news release yesterday from Rep. Chellie Pingree (R-Maine) indicated that, “[Rep. Pingree] said today she will introduce a bill later this week that includes provisions that would significantly change the nation’s food policy. The Local Farm, Food, and Jobs Act would expand opportunities for local and regional farmers and make it easier for consumers to have access to healthy foods.

“‘This is about healthy local food and a healthy local economy. When consumers can buy affordable food grown locally, everyone wins,’ Pingree said. ‘It creates jobs on local farms and bolsters economic growth in rural communities.’”

Yesterday’s update added that, “Pingree’s bill is a package of reforms and new programs that will encourage production of local food–not only by helping local farmers and ranchers become more profitable and productive, but also by helping consumers buy locally through improved distribution systems.

“Pingree says farmers markets and other local food outlets are growing rapidly and creating jobs all over the country.”

A news release yesterday posted at the Land Stewardsip Project Online stated that, “Legislation that will help the next generation of farmers and ranchers create jobs and other economic activity in rural communities has been introduced in the U.S. House and is expected to be introduced in the Senate soon. The Beginning Farmer and Rancher Opportunity Act of 2011 is authored by Rep. Tim Walz (D-MN) and Rep. Jeff Fortenberry (R-NE) in the House, and Senator Tom Harkin (D-IA) in the Senate.

“This legislation is a comprehensive policy approach to helping the next generation of farmers and ranchers take advantage of growing opportunities in agriculture. The legislation includes support for beginning farmer and rancher training programs, beginning farmer lending and savings provisions and conservation incentives for new farmers and ranchers.”

The release added that, “A central component of the bill is continued support for the Beginning Farmer and Rancher Development Program (BFRDP), which supports community-based organizations that offer beginning farmer training programs. Since it was launched in 2009, demand for BFRDP has far outstripped resources available. In 2010 alone, 40 projects got a total of $18 million in BFRDP grants, while 117 applications were submitted that year, with a total funding request of approximately $65 million. In total, during the past three years the program has provided $54 million in grants to groups in 48 states.”

The Beginning Farmer and Rancher Opportunity Act of 2011 (H.R. 3236) is available online, while a summary of the legislation is available here.

Meanwhile, a large number of organizations, including the Rural Coalition, National Family Farm Coalition, and National Sustainable Agriculture Coalition sent a letter yesterday to leaders of the House and Senate Agriculture Committees which in part, urged support for, “Beginning Farmers and Ranchers & Socially Disadvantaged Farmers and Ranchers: Renew and expand support for the Beginning Farmer and Rancher Development Program and the Outreach and Assistance for Socially Disadvantaged Farmers and Ranchers Program by increasing mandatory funding from $75 million (this farm bill cycle) to $125 million for each of the two programs over the next 5 year. Also, continue important conservation programs, such as the Conservation Reserve Program Transition Incentives Program, while increasing funding set-asides that target beginning and socially disadvantaged farmers within the Environmental Quality Incentives Program and the Conservation Stewardship Program. Fund the highly popular Value- Added Producer Grants Program at $150 million over 5 years, with the current priority and set- asides for projects that benefitting beginning and socially disadvantaged farmers and ranchers and arevision to the definition of qualifying projects. Continue the commodity payment waiver provision for socially disadvantaged producers who farm less than 10 acres, and extend that waiver to beginning farmers. Reauthorize the current premium waiver for limited resource farmers in the Noninsured Crop Disaster Assistance Program (NAP), extend it to crop insurance, and expand it to include beginning and socially disadvantaged farmers.”

In other news, a brief analysis yesterday from G. A. (Art) Barnaby, Jr. and Troy Dumler of Kansas State University (“Ignoring Underwriting Increases Costs for Commodity Programs”) stated in part that, “If public policy is going to shift from Direct Payments to ‘risk management’ then effectively Congress is creating a derivative of options and insurance. Except for Direct Payments, all of the proposed Farm Bill safety net plans that provide risk management are effectively insurance/options with 100% of the premium paid by government, but the underwriting rules; or lack of still apply. Lack of sound underwriting will allow farmers to adverse select on the program and cost will exceed CBO estimates.

“The closer the yield or revenue is measured to the farm gate, the greater the need for effective underwriting rules. This is why many ag economists expect little moral hazard and adverse selection under ARRM because the yield is measured at the district yield level and prices are effectively national prices. Farm level management has little control over either of those values.”

Also yesterday, a news release from USDA’s Risk Management Agency stated that, “The U.S. Department of Agriculture’s (USDA) Risk Management Agency announced today a new pilot program of insurance for pistachios beginning with the 2012 crop year. The Pistachio Crop Insurance Program will make crop insurance available to growers in 21 counties in California, two counties in Arizona, and one in New Mexico. The program was approved by the Federal Crop Insurance Corporation (FCIC) Board of Directors on September 22, 2011. RMA operates and manages the FCIC.”

Farm Bill: Budget Issues, Supercommittee

In more specific news regarding the supercommittee and the current budget environment, an update posted yesterday at The Committee For a Responsible Federal Budget pointed out that, “Two recent warnings over the United States’ fiscal outlook are worth taking a look at. First, Bank of America Merrill Lynch released a report last week voicing concerns about the Super Committee and the risk of another potential credit-rating downgrade if they don’t succeed. Second, the Government Accountability Office (GAO) released its most recent update on The Federal Government’s Long-Term Fiscal Outlook.”

Meanwhile, Josiah Ryan reported yesterday at The Hill’s Floor Action Blog that, “Sen. Pat Toomey (R-Pa.) hinted he remains optimistic the deficit-cutting supercommittee, on which he serves, will manage to report out a proposal that Congress can accept in time for a fast-approaching November deadline.”

And yesterday’s “Need-to-Know Email Memo” from National Journal reported that, “Democrats will ‘soon’ send the Joint Select Committee on Deficit Reduction a Pentagon report that found various defense firms have bilked $1.1 trillion in wasteful funds out of the defense budget over the last decade, The Hill reports. Hawks on both sides of the aisle have warned that cuts beyond those identified in the Budget Control Act could threaten the country’s security. But, The Hill says, ‘Senate Democrats want the panel to keep in mind that dollars sent to the Pentagon are often lost to fraud and waste, even as some conservatives raise the possibility of retroactively exempting the Pentagon from the $600 billion cut that will be triggered if the super committee fails.’”

Kim Hart reported yesterday at Politico that, “The grudge match between TV broadcasters and the wireless sector is entering its most intense round yet, forcing supercommittee members to choose sides now that the deficit-reduction panel is eyeing auctions of the nation’s airwaves as a surefire way to raise billions.”

And Jonathan Allen reported yesterday at Politico that “Republican governors are leaning on the supercommittee to cut spending by rewriting Medicaid laws.”

In other policy related news, Felicity Barringer reported in yesterday’s New York Times that, “Three generations of Al Kalin’s family have worked their 2,000 acres of carrots and sugar beets, wheat and alfalfa for almost a century in the Imperial Valley, a scorching swath of Southern California desert that was unfit for farming until water from the Colorado River was diverted here in 1901.

“But now Mr. Kalin and his brother enjoy a choice that their parents and grandparents never had. They can continue to farm all their land, or they can stop farming some of it and earn more than $500 an acre — more than the market value of a crop like alfalfa in a given year — simply by not using the water required to nourish those crops. Water saved is sent on to thirsty cities and suburbs to the west: San Diego, Los Angeles and Palm Springs.”

The article added that, “With water increasingly scarce in the West, some other communities are allowing farmers to sell their allotment of it for whatever price they can find, in some cases thousands of dollars for the amount it takes to grow an acre of a crop. But this comes with a hitch. Working farms provide jobs and income to their many suppliers. There are 450 farmers in the Imperial Valley, but half the jobs held by the 174,000 residents are tied to agriculture.

“When land is idled, the communities around the farms can wither. Residents here point to the neighboring Palo Verde Valley, where farmers can sell more than a quarter of their water supply at much higher prices in a process they control. As a result, nearly a third of the agricultural land was not farmed this year; over time, businesses and workers have suffered.”

Agricultural Economy

Cheri Zagurski and Anthony Greder reported yesterday at DTN (link requires subscription) that, “For the week ended Oct. 23, USDA said 65% of the nation’s corn was harvested, compared to 47% last week and a 51% five-year average…Soybeans were reported at 80% harvested, compared to 69% last week and a 71% average.”

Purdue University Agricultural Economist Chris Hurt noted yesterday (“Cattle Can Eat Corn Too”) that, “Cattle feeders are going to use more corn than previously expected according to USDA’s latest Cattle on Feed report that showed five percent more cattle in the nation’s feedlots. The real surprise was the higher number of placements in September that has resulted in over one-half million more cattle being fed than a year ago. Feed grains used by cattle in feedlots from the 2011 crop will now likely be more than five percent higher than was fed from the 2010 crop.”

In other domestic news, National Public Radio’s Morning Edition program yesterday featured a story on farm labor issues titled, “Labor Worries Rise As Planting Season Nears In Ala.”

An update posted earlier this week at Agri-Pulse Online stated that, “A federal judge ruled that a lawsuit claiming corn processors practiced false advertising in a campaign rebranding high fructose corn syrup (HFCS) as ‘corn sugar’ will go forward.

“U.S. District Judge Consuelo B. Marshall made her ruling Friday night in Los Angeles in the case brought by the Western Sugar Cooperative, among other sugar representatives, against the Corn Refiners Association (CRA).”

And from an international perspective, Bloomberg writer Luzi Ann Javier reported yesterday that, “The United Nations is closely monitoring the potential for ‘serious food shortages’ in parts of Southeast Asia after flooding devastated rice paddies and other crops and as aid deliveries are disrupted.”

Trade

Reuters writer Doug Palmer reported yesterday that, “U.S. lawmakers critical of China’s trade policies will use a hearing on Tuesday to press the White House to lay out plans to confront Beijing, even as Republicans resist a bill to punish the world’s second-largest economy for its currency policies.

“With bipartisan concern about the loss of American jobs to China already an issue in the U.S. presidential campaign, the House Ways and Means Committee hearing gives lawmakers a chance to blow off steam at Beijing and to grill top Obama administration officials on what the White House is doing.”

And a news release yesterday from the U.S. Trade Representative’s Office stated that, “On Sunday, October 23, Deputy United States Trade Representative Miriam Sapiro and Egyptian Minister of Industry and Trade Mahmoud Eisa met to further explore various trade mechanisms for expanding our countries’ growing trade and investment relationship, including increased cooperation to facilitate trade at the border and to reduce regulatory barriers, joint support for small- and medium-sized exporters, ways to create a welcoming environment for investment, intellectual property rights protection to encourage innovation, and deepening ties between the American and Egyptian private sectors. A successful democratic transition in Egypt depends on the strengthening of economic policies that enhance trade and investment integration between our two economies and with the region more broadly. Such efforts can help support this goal.”

Keith Good

Posted by Keith Good • October, 25, 2011 • 4:33 am