FarmPolicy

Farm Bill; Biofuels; and Trade

Farm Bill Issues

Mikkel Pates reported earlier this week at the Grand Forks Herald Online (North Dakota) that, “How do you write a farm program that ensures an economic safety net when agriculture’s financial results seem to be good and getting better?

“How do you make future payments that can be passed with support from farmers in the South, who prefer direct payments, even during good times?

“Those were some of the issues facing the region’s agricultural organization and political leaders, gathered for the first day of a giant ag policy huddle at the Holiday Inn in Fargo, as part of the conference called ‘2012 Farm Bill: Issues and Challenges.’  The event was organized by U.S. Sen. Kent Conrad, D-N.D., and Won Koo, director of the Center for agricultural Policy and Trade Studies at North Dakota State University.”

The article noted that, “[Sen. John Hoeven, R-N.D.] said crop insurance needs to be ‘not only sustained but enhanced’ in a new farm bill, and must work with the so-called safety net. He noted crop insurance took a $6 billion hit last year.”

“‘Anybody who believes that farm prices are going to be forever strong hasn’t lived through the agricultural history I’ve lived through in the last 25 years,’ Conrad said. ‘Repeatedly, we’ve heard farm prices are going to be permanently high. How many times have we heard that? One thing I’ve learned is nothing is permanent when it comes to agriculture, and we have to make certain there is a safety net if we see a dramatic price decline, or if we see natural disasters, or if we see quality losses from any number of factors.’”

Mr. Pates added that, “Conrad has been working for a policy that covers ‘shallow losses’ for farmers.

“Other speakers at the conference representing corn and soybeans are making proposals that would be based on multi-county areas, while Conrad would base this support on a farm level.”

The Red River Farm Network’s Agriculture Today radio program included an update from the Fargo conference on yesterday’s program.  A portion of the Agriculture Today program, which includes remarks from Michael Scuse, Acting USDA Under Secretary for Farm and Foreign Agricultural Services, Dr. Joe Outlaw (Texas A&M University), and Dr. David Schweikhardt (Michigan State University), can be heard here (MP3- 3:15).

Meanwhile, Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Regional differences continue to flare as lawmakers look for ways to rewrite the commodity title and cut $23 billion from overall ag spending over the next decade.

“In a conference call with Sen. Charles Grassley, R-Iowa, he explained that the division risks the opportunity for the House and Senate Agriculture Committees to put forward a package to the Joint Select Committee on Deficit Reduction, or the so-called super committee.

“‘There is still a lot of debate about how to structure the commodity programs,’ Grassley said. ‘The centerpiece is likely some sort of a revenue program, but many of the specifics haven’t been shared with committee members.’”

Mr. Clayton pointed out that, “This week is critical for the agriculture committees to get language finalized and agreed upon. Senate Democrats and Senate Republicans met separately Monday night. Grassley said Republicans made it clear Monday that the actual bill text needs to be shared with committee members, but there is no bill text yet. Grassley acknowledged there won’t be the usual steps in forming a farm bill, but lawmakers still want to see the bill language before giving House and Senate Ag Committee leaders a green light on submitting a package.

“‘But I’m concerned that if we don’t have a bill to review soon, the agriculture committees won’t even have the option of submitting a full farm bill to the super committee,’ Grassley said. ‘Then the task of how to find savings in the agriculture budget will be left to the super committee.’”

Senator Grassley was also a guest on yesterday’s AgriTalk radio program with Mike Adams, a portion of their discussion is available here (MP3- 2:21).

Daniel Looker reported yesterday at Agriculture.com that, “Senator Chuck Grassley (R-IA) told reporters Tuesday that Republican ag committee members met Monday to learn more about the still unfinished farm bill.”

Mr. Looker added that, “Ag committee Democrats also went over a broad outline of the commodity title ideas at a meeting on Monday, according to a staffer working for a congressional Democrat.

“‘There have been real challenges for the ag committee to come up with something to replace direct payments,’ he told Agriculture.com.”

Yesterday’s article explained that, “There seems to be a consensus to eliminate direct payments, he said, but the ag committees aren’t replacing it with just one commodity program. Instead, he said, they’re likely to offer farmers three separate programs.

“The first would allow producers to stay in the marketing loan and counter-cyclical programs (with no direct payment).  At least some target prices would be increased, making this option more attractive perhaps to rice and maybe wheat growers. But the levels would be too low to be attractive to corn and soybean farmers.

“A second alternative is a revenue program similar to ACRE (Average Crop Revenue Election) but with the guarantee set at the crop reporting district level.  It is similar to legislation already introduced by Senators John Thune (R-SD) and Sherrod Brown (D-OH).

“The third is an enhanced revenue-based crop insurance program designed to appeal to cotton growers, who have not been big participants in the existing crop insurance program.”

A Reuters article from yesterday (posted at DTN, link requires subscription) reported that, “A plan to reform farm subsidies by guaranteeing revenue levels for farmers is a good deal for corn and soybeans growers but unfair to the rest of the country, senators from wheat states said.

“The senators demanded changes in a package drawn up by the chairs of the House and Senate Agriculture committees.”

The article added that, “‘There’s work to be done,’ said North Dakota Senator Kent Conrad, a Democrat, to ‘make this fair for everybody.’ Senators Max Baucus, a Montana Democrat, and Pat Roberts, a Kansas Republican, also objected.

“A Democratic Senate staff worker called the plan a boondoggle for corn growers and ‘sequel to that other give-away to corn agribusiness — ethanol.’”

The Reuters item pointed out that, “Crop insurance, however, is more affordable in the Midwest than other regions, so farmers outside the region would face higher costs.

“‘We are committed to a strong crop insurance as the basic risk management tool,’ said Senate Agriculture chairwoman Debbie Stabenow, Michigan Democrat. ‘The question is when there are additional losses, what’s the fairest way to do that.’”

Mathew Weaver reported yesterday at the Capital Press Online that, “Crop insurance tops the U.S. wheat industry’s priority list when it comes to the 2012 Farm Bill.

“The National Association of Wheat Growers recently sent its list of priorities to agriculture committee leaders in the U.S. Senate and House of Representatives. In an underlined sentence, association president Wayne Hurst opposed any reduction to the baseline available for crop insurance programs.”

Also on the issue of crop insurance, University of Illinois Agricultural Economist Gary Schnitkey penned an update yesterday at the farmdocdaily blog titled, “Crop Insurance Harvest Prices in 2011.”

With respect to the supercommittee, Janet Hook and Naftali Bendavid reported in today’s Wall Street Journal that, “Republicans in Congress are signaling a new willingness to include more tax revenue in a deficit-reduction agreement, in a bid to break the deadlock gripping a congressional committee… The emerging battle, nonetheless, marks a potentially important shift in strategy among Republicans, who for months have seemed to insist any budget deal be built on spending cuts alone. The discussion now appears to be about what kind of revenue might be included in a deficit deal.”

Meredith Shiner reported today at Roll Call Online that, “Super committee Democrats wanted Republicans to come back at them with a revised offer for deficit reduction — and though the GOP did just that Tuesday, it was immediately clear that the second Republican proposal was no more palatable to Democrats than the first.

“But the new plan marked the first sign of movement by the GOP on the question of whether some taxes can be raised to achieve the panel’s $1.2 trillion to $1.5 trillion deficit reduction target.”

Lori Montgomery reported in today’s Washington Post that, “Members of the supercommittee had planned to continue talking Tuesday afternoon, but a bipartisan meeting was abruptly canceled, and neither side appeared optimistic about the prospects for a breakthrough.

“‘I have yet to see a real, credible plan that raises revenue in a significant way to bring us to a fair, balanced proposal,’ Sen. Patty Murray (Wash.), the Democratic co-chairman of the panel, told reporters.”

Robert Pear noted in today’s New York Times that, “Members of a Congressional panel on deficit reduction are no longer trying just to solve the nation’s fiscal problems. Some are desperately trying to avoid blame for the possible collapse of a process concocted by Senate leaders to break an impasse between those who want to raise taxes and those who would prefer to cut spending by focusing on entitlement programs.”

Jake Sherman, Manu Raju and John Bresnahan reported yesterday at Politico that, “After months of posturing by House and Senate leaders in both parties that ‘failure is not an option’ for the deficit supercommittee, that’s exactly what the panel faces unless some major concessions are made soon.”

Reuters writers Alister Bull and Richard Cowan reported yesterday that, “President Barack Obama’s budget chief said on Tuesday he saw some signs that U.S. lawmakers could strike a deficit reduction deal by a November 23 deadline despite no visible indications of progress in talks.

“White House Budget Director Jack Lew told the Reuters Washington Summit that Republicans had begun to show some flexibility on taxes, an issue that has pitted them against Democrats, and seemed serious about avoiding another divisive budget showdown.”

And Alexander Bolton reported yesterday at The Hill Online that, “Senate Republican Leader Mitch McConnell (Ky.) on Tuesday accused President Obama of rooting for the deficit-reduction supercommittee to fail for political reasons.

“McConnell said Obama’s focus on his 2012 reelection bid is why Democratic leaders are sounding increasingly pessimistic about the prospect of the panel reaching a deal by the Nov. 23 deadline.”

In other budget news, William Neuman reported in today’s New York Times that, “Forced to cut its budget, the Agriculture Department has decided to eliminate dozens of reports, including the annual goat census (current population: three million), and the number of catfish on the nation’s fish farms (177 million, not counting the small fry)… The decision, announced last month, to stop measuring various categories of agricultural products reflects a cold-blooded assessment of the economic usefulness of the 500 or so reports that the National Agriculture Statistics Service does every year. Corn, soybeans, cotton and other major commodities vital to the national economy will still be weighed, inventoried and otherwise tallied down to the last acre, bushel or bale. The same is true for cattle, pigs and poultry.”

Biofuels

The U.S. Department of Agriculture’s Economic Research Service released a report yesterday titled, “The Renewable Identification Number System and U.S. Biofuel Mandates,” an ERS summary of the report indicated that, “This report provides an overview of how the Renewable Identification Number (RIN) market works to ensure compliance with the Renewable Fuel Standard provision of the Energy Independence and Security Act, as well as how RIN prices are determined and which factors influence their prices.”

Trade

David Pilling reported yesterday at The Financial Times Online that, “Just what the global trading system needs: another acronym. The TPP, or Trans-Pacific Partnership to give it its full title, is a proposed trade agreement between, to put it politely, a disparate collection of nations.

“The TPP is intended to build on an existing arrangement, the Trans-Pacific Strategic Economic Partnership, of which Singapore, Brunei, Chile and New Zealand are already members. But the new TPP has taken on a life of its own.

“Spearheaded by the US, other countries to show early interest in joining the founding members are Australia, Malaysia, Peru and Vietnam. Japan is also agonising over whether to throw its lot in with the grouping, though, predictably, the proposal has antagonised its farmers.”

The FT article pointed out that, “So what is so special about the TPP? Iwan Azis, head of the Asian Development Bank’s regional integration office, says the agreement is intended to deal with what he calls ‘behind the border’ issues. These include areas of what could be deemed domestic policy, such as government procurement, which go beyond the normal scope of trade agreements.

“Other areas likely to be covered include rules governing the conduct of state-owned enterprises, which sometimes benefit from cheap financing or government protection. China, in particular, is often criticised for seeking to ensure the success of national champions.

“The TPP would also include labour, environmental and intellectual property standards. Finally, it is supposed to help bring benefits to small and medium-sized companies from trade integration.”

A related news release yesterday from the House Committee on Ways and Means indicated that, “House Ways and Means Chairman Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI), along with Senate Finance Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) sent the following letter to United States Trade Representative Ron Kirk today regarding Japan’s possible announcement at this week’s Asia Pacific Economic Cooperation (APEC) Summit in Honolulu to seek participation in the Trans-Pacific Partnership (TPP).”

And Will Englund reported in today’s Washington Post that, “Eighteen years after it first asked to join the World Trade Organization, a still ambivalent Russia is on the verge of membership, with negotiators expected to sign off on the final terms at a meeting in Geneva beginning Thursday.”

Keith Good

Posted by Keith Good • November, 9, 2011 • 5:06 am