FarmPolicy

September 21, 2019

Farm Bill; Budget Issues; Ag Economy; and Trade

Farm Bill Issues

DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “Senate Agriculture Committee Chairman Debbie Stabenow huddled with several farm state senators on the Senate floor Thursday while committee staff made themselves available in a room off the Senate floor to answer questions as the Veterans Day weekend approached.

“Stabenow, D-Mich., her staff and House Agriculture Committee Chairman Frank Lucas, R-Okla., have been working on a new farm bill proposal to send to the super committee in charge of deficit reduction, which must finalize its bill by Nov. 23. The House has been out of Washington this week, but will be in Washington next week. Stabenow, Lucas, Senate Agriculture Committee ranking member Pat Roberts, R-Kansas, and House Agriculture ranking member Collin Peterson, D-Minn., have told the super committee they would agree to a cut of $23 billion in agriculture programs over 10 years, but they want to rewrite the farm bill in the super committee bill because it would not be subject to amendment or filibuster.”

Mr. Hagstrom explained that, “On a call earlier Thursday with Iowa reporters, Democratic Sen. Tom Harkin, former chairman of the Senate Ag Committee during the past two farm bills, said the current talks are being held up because of concerns about the details on revenue and income protection systems. There is a belief by some lawmakers that major commodities grown in their states lose by giving up the current commodity programs. The revenue plans are believed to be too beneficial for the Corn Belt states that are also the states with lower insurance premiums and crop losses.

“‘Some of the wheat-state people think they are not getting a fair exchange on this, that too much is going to corn, and perhaps oilseeds,’ Harkin said. ‘There is some concern about the amount of support still going to cotton and rice, I think. There are still some little bumps in the road there.’

“Harkin confirmed one of the battles concerns where to put the area range for triggering payments. Wheat growers would like a program that pays for losses at the farm level. Corn growers support using crop reporting districts already mapped out and used by crop insurers. Other plans call for county-level payments. He noted this debate has occurred as long as he’s been on the Ag Committee.”

An article Friday from Inside U.S. Trade indicated that, “The Stabenow-Lucas proposal would create a new federal revenue guarantee program modeled on the Aggregate Risk and Revenue Management (ARRM) proposal put forth by Sen. Sherrod Brown (D-OH) and others. It would be designed to provide farmers with insurance against ‘shallow losses’ in revenue.

“This new guarantee program would complement existing crop insurance programs. The Stabenow-Lucas proposal would also end direct payments to farmers, along with the Average Crop Revenue Election (ACRE) program and Supplemental Revenue Assistance (SURE) payments, for a savings of $15 billion.

“It would also increase target prices for counter-cyclical payments (CCPs), which have not doled out much money in recent years because commodity prices have been high, at a cost of about $2 billion. This would mean a net cut of $13 billion to so-called ‘Commodity Title’ programs, sources said.”

An update posted on Friday at Hoosier Ag Today (HAT) Online by Andy Eubank featured perspective from American Soybean Association (ASA) President Alan Kemper.  The HAT update noted that, “Kemper explains ASA has worked closely with Senate Ag Chair Debbie Stabenow promoting their Risk Management for American Farmers.

“It takes care of any losses kind of above the normal crop insurance loss, and it has good traction on the Senate side. But in the last few days [the House side] has decided that they really want to go back to target prices based on cost of production. That means that the rice guys, peanut guys, cotton guys are in good shape, and the wheat, corn and soybean guys are in not so good shape. It means also for the American Soybean Association and our farmers that farmers would again start growing for the government instead of for the markets.”

With respect to the executive branch, Chris Clayton reported on Friday at the DTN Ag Policy Blog that, “I [Clayton] talked on the phone Thursday with Agriculture Secretary Tom Vilsack as he was wrapping up a trip to Kansas City, Mo., where he met with U.S. Rep. Emanuel Cleaver, D-Mo., and a volunteer group of Cleaver’s agricultural advisors. Vilsack also gave a speech to the National Association of Farm Broadcasters.

“Everyone is anticipating what may come from a farm bill, as is Vilsack. He said USDA is working with lawmakers, but not at the congressional negotiating table trying to push an agenda. USDA staff is answering questions and offering analysis when asked. ‘Our teams have been working with both sides of Congress and both parties to try to respond to the technical questions and try to raise red flags when we think it’s appropriate to say ‘Hey have you thought about this’ or ‘Your design may not address this and you may want to think about it,’’ Vilsack said.

“He also credited the congressional Ag leadership team for working in a bipartisan way, noting that such talks with both parties, across both chambers, on a piece of legislation is a rarity right now.”

Mr. Clayton noted that, “As of now, for 2012 crops, the current safety net would remain. If a farm bill succeeds in the super committee, or shortly after, any changes would potentially begin in the 2013 crop year at the earliest.”

Secretary Vilsack was also a guest on Friday’s AgriTalk radio program with Mike Adams where the two discussed a variety of issues, including the Farm Bill, and dairy issues.  To listen to a portion of this AgriTalk interview, just click here (MP3- 2:48).

Mike Adams also spoke with Michael T. Scuse, the Acting Under Secretary for Farm and Foreign Agricultural Services.  To listen to a segment of this AgriTalk conversation that focused on crop insurance, just click here (MP3- 4:38).

More specifically on the issue of nutrition, the largest category of Farm Bill spending, Christine Fry, a senior policy analyst with Public Health Law & Policy, opined last week at The Hill’s Congress Blog that, “More than 45 million Americans now receive benefits through the food stamp program, now known as the Supplemental Nutrition Assistance Program (SNAP).  That’s one in every seven people in this country. At least nine states have now requested permission from the federal government to set tighter controls on SNAP benefits.

“But as federal policymakers draft a budget plan this month that may include the reauthorization of the Farm Bill — the largest program of which is SNAP, representing half its spending — they have a powerful opportunity to allow states to require SNAP-eligible stores to stock healthier foods.”

The Hill update noted that, “The USDA currently doesn’t require much of retailers applying to participate in the program – which is, after all, a government nutrition program. To be eligible, stores only need to offer at least three varieties of foods in four broad ‘staple food groups’ – meat, poultry or fish; bread or cereal; vegetables or fruits; and dairy products – with perishables in just two of the categories.

Grocery stores are stocked well beyond the requirements because it’s their business. But convenience stores have no financial incentive to step up their offerings and provide healthier options for customers who rely on their inventory to feed their families.”

Fry added that, “Some nutrition advocates fear, understandably, that strengthening standards would exacerbate the problem of ‘food deserts,’ neighborhoods with limited access to healthy, affordable food. But just recently, the USDA upgraded requirements for retailers who participate in the Women, Infants and Children (WIC) program, which has supported low-income mothers and their young children nationwide for decades.

“For the first time in the program’s 35-year history, store owners accepting WIC vouchers are now required to carry fruits and vegetables, whole grains, legumes, and low-fat dairy products.”

And David Rogers reported on Saturday at Politico that, “The white potato loophole in new dietary rules for school lunches just got bigger – about the size of a slice of pizza.

“That’s the latest from the green vegetable front as the Food and Nutrition Service tries to stay on track with its proposal, while also coping with major corporations piling on behind the House and Senate Appropriations committees that govern the Agriculture Department’s budget.

The potato and French-fry industry scored the first breakthrough last month when the Senate adopted an amendment that voided the proposed FNS limits on starchy vegetables. Now negotiations with the House have expanded to help pizza makers preserve their claim that tomato paste packs a much outsized wallop as a vegetable.”

 

Budget Developments

Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “The must-do item of the week is the continuing resolution. The stopgap spending measure Congress approved in October lets the government operate through this Friday, and some extension through mid-December is expected as a minimum.

“The need for another CR reflects the simple fact that Congress has yet to conclude its work on its 12 annual spending bills. However, work on these bills seems to be picking up in recent weeks.

“The CR itself is expected to be attached to a ‘minibus’ spending bill covering the departments of Agriculture, Commerce, Justice, Science, Transportation and Housing and Development.  And the Senate next week will begin considering another minibus, covering Energy and Water, Financial Services, and State/Foreign Operations.”

With respect to supercommittee developments, Robert Pear reported in today’s New York Times that, “With a little over a week left to reach a deal, members of the Congressional deficit reduction panel are looking for an escape hatch that would let them strike an accord on revenue levels but delay until next year tough decisions about exactly how to raise taxes.

“Under this approach, the panel would decide on the amount of new revenue to be raised but would leave it to the tax-writing committees of Congress to fill in details next year, well beyond the Nov. 23 deadline for the panel itself to reach an agreement. That would put off painful political decisions but ensure that the debate over deficit reduction stretched into the election year.

“‘There could be a two-step process that would hopefully give us pro-growth tax reform,’ Representative Jeb Hensarling of Texas, the top Republican on the panel, said Sunday on the CNN program ‘State of the Union.’”

Lori Montgomery reported in today’s Washington Post that, “Mathematically, the gap between the two sides on the supercommittee has narrowed. Republicans have offered a $1.2 trillion deficit-reduction package that would cut spending by about $750 billion over the next decade while raising about $500 billion in revenue, including about $300 billion in new taxes. Democrats have offered to trim borrowing by $2 trillion, with that sum equally divided between spending cuts and tax increases.

“Hensarling acknowledged that the committee is considering punting some of the hardest details of tax reform into next year, a move that would keep the deficit debate alive through the 2012 election season. In recent days, negotiations have focused almost exclusively on the tax issue, with Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Chairman Dave Camp (R-Mich.), both supercommittee members, struggling to reach consensus on how much new revenue could be generated through an overhaul of the tax code and how to force their committees to achieve that goal.”

Meredith Shiner reported today at Roll Call Online that, “At this point, aides to Members inside and outside the room suggest two courses of action: a larger plan that addresses entitlements and revenues significantly, or a modest plan that barely touches either.

“The panel, by law, can produce a plan of any amount, but it has to generate a framework worth at least $1.2 trillion to avoid a politically poisonous sequester that includes about $500 billion in defense cuts, as well as deep cuts to domestic programs.”

 

Agricultural Economy

A Bloomberg news article from last week reported that, “Farmland values in the U.S. Midwest will continue to increase but at a slower pace than this year, Michael Duffy, an Iowa State University agricultural economist, said Wednesday.

“‘The rate of increase is going to slow, and barring major changes, we shouldn’t see a drop, at least not over the next eight to 24 months,’ Duffy said in an interview at an agricultural banking conference in Indianapolis. ‘If you look at the futures market and oil prices, and so forth, they all seem to indicate a level field, if you will.’”

Meanwhile, Robbie Whelan reported in today’s Wall Street Journal that, “Five years into a brutal national housing downturn, raw land destined for residential development has fallen so far in value that thousands of acres across the country are being used again for agriculture.

“During the fast-moving days of the housing boom, real-estate speculators in California, Arizona, Florida and other states paid top dollar to buy land from farmers and convert it from citrus groves and cotton fields to potential subdivisions.

Now, with crop prices soaring and housing in a deep slump, the economics of land investment have turned upside down. Farmers and investors are buying land that had been slated for development and using it for agriculture. And they are paying a small fraction of what housing developers paid for the same land before the recession.”

And William Pack reported on Friday at the Houston Chronicle Online that, “Texas needs rain – and needs it quickly – to keep farmers and ranchers from suffering even bigger losses next year from the drought that already has left them with record-breaking losses this year, producers said Friday while in San Antonio.

“Corn growers in Texas could encounter even bigger losses in 2012 after seeing output fall by 40 percent this year; and rice plantings, which fell by only 2 percent this year, could be cut nearly in half if more water does not become available soon, officials said.”

 

Trade

Hiroko Tabuchi reported in Saturday’s New York Times that, “In a contentious move that could make or break his government, Prime Minister Yoshihiko Noda said Friday that Japan would join talks toward an ambitious pan-Pacific free trade pact. The accord would potentially open up new markets for Japanese exporters but enrage the nation’s powerful farmers, who say their livelihoods would be wiped out.

“Mr. Noda is set to declare Japan’s intent at the Asia-Pacific economic summit meeting in Hawaii this weekend, where President Obama will promote the far-reaching Trans-Pacific Partnership regional trade agreement [fact sheet], which aims to cut import tariffs to zero. Nine governments, including those of Australia and Singapore, are involved in the discussions.”

The Times article added that, “Japan’s rice farmers have long been protected under sky-high tariffs, including a 777.7 percent levy on imported rice. They have already unleashed a vocal and highly emotional campaign against the pact, portraying it as a threat to the very fabric of Japanese society.

“Their position has garnered strong public support, despite assertions from free trade proponents that Japan’s consumers would benefit from cheaper imports — especially of food, for which they pay some of the highest prices in the world.”

Tom Barkley reported in today’s Wall Street Journal that, “President Barack Obama’s biggest economic achievement as host of Asian-Pacific leaders over the weekend was to reach the basic framework for a modestly sized free-trade bloc that nonetheless could serve as a major counterweight to China’s rising power in the region.

“The Trans-Pacific Partnership would hold little initial economic import, cobbling together four countries that already have signed free-trade agreements with the U.S.—Australia, Singapore, Chile and Peru—along with New Zealand, Malaysia, Brunei and Vietnam. Together, they represent just 6% of total U.S. trade.”

Today’s article added that, “In announcing the ‘basic outlines’ of a deal with leaders from the eight countries, Mr. Obama pointed out that, together, they would become the fifth-largest trading partner of the U.S. But the Obama administration and U.S. businesses see its real economic potential as the vehicle for creating a free-trade zone encompassing the 21 economies in the Asia-Pacific Economic Cooperation forum.

“That pathway was opened a little wider when Japan said Friday it would enter discussions on joining negotiations, which was followed Sunday with similar announcements by Canada and Mexico. Even Chinese President Hu Jintao acknowledged the U.S.-led talks as one possible path to a wider regional deal, though China has been pushing instead to achieve that by expanding a trade pact with the Association of Southeast Asian Nations.”

Keith Good

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