FarmPolicy

Budget and Farm Bill Issues; Ag Economy; Climate Meeting; and Trade

Budget and Farm Bill Issues

Josh Gerstein reported yesterday at Politico that, “The supercommittee’s failure may have unleashed a round of doom and gloom over the past week about Washington’s ability to tackle the debt problem. But Sen. Chuck Schumer (D-N.Y.) struck a sunnier note Sunday, saying he believes Republicans and Democrats could agree to a major deficit-reduction package next year.

“‘We have a good chance of actually getting the big package, big deficit reduction in 2012,’ Schumer said on NBC’s ‘Meet The Press’, repeatedly billing his own analysis as ‘a contrarian view.’

“‘The knives … are over our heads. The Bush tax cuts expire in 2013. Sequestration goes into effect in 2013. Now that seems a year and a month away, but as we get closer and closer and closer, the pressure on both parties to come together in the middle — provided we don’t remove one of those knives, like taking defense off the table — is going to be stronger and stronger,’ Schumer said.”

The Politico update added that, “Schumer also said he believes members of both parties returning home to their constituents will get a firm, get-it-done message.

“‘We have a really good chance, basically along the broad outlines of Simpson-Bowles,’ Schumer said, referring to the idea of $4 trillion in deficit reduction over 10 years with about $1 trillion of that from additional revenues, $2 trillion in spending cuts and $1 trillion in savings from reduced borrowing.”

Neela Banerjee reported that, “The super committee’s failure triggered automatic budget cuts — split between military and nonmilitary spending — to go into effect by 2013 unless Congress comes up with a plan before then to reduce deficits.

“Some lawmakers indicated Sunday that they might be open to reviving previous proposals made by the president’s National Commission on Fiscal Responsibility and Reform, which was co-chaired by Democratic former White House Chief of Staff Erskine Bowles and former Republican Sen. Alan Simpson of Wyoming.

“The Simpson-Bowles Commission, as it was known, proposed cuts in spending, including on entitlement programs that Democrats traditionally have protected, but also called for boosting revenues by increasing taxes and closing loopholes. Republicans resisted the revenue recommendations.”

Alicia M. Cohn reported yesterday at The Hill Online that, “Supercommittee member Sen. Pat Toomey (R-Pa.) said Sunday that Republicans will seek to ‘change the configuration’ of the automatic spending cuts triggered by the committee’s failure to present a deficit-reduction deal.

“‘I think it’s important that we change the configuration [of the cuts]. I think there’s a broad consensus that too much of the cuts are weighted on [our national defense],’ Toomey said on ABC’s ‘This Week With Christiane Amanpour.’

“Toomey said he is ‘terribly disappointed’ the committee failed to reach a deal but called the automatic cuts built into the committee’s mandate a ‘silver lining.’”

The Hill update noted that, “The failure of the supercommittee to reach an agreement last week triggered $1.2 trillion in automatic cuts set to hit the Defense department and other programs in 2013.

“President Obama, addressing the supercommittee’s failure last Monday, pledged to veto any attempt to circumvent the automatic cuts. He also exhorted Congress to reach a deal to reduce the national deficit before the cuts are implemented.

“‘I’d be surprised if the president would simply veto any effort to make any changes,’ Toomey said.”

And David Rogers reported yesterday at Politico that, “Will ‘regular order’ in Congress ever again be just that—a regular event?

“That’s the question facing lawmakers over the next three weeks as the House and Senate come to grips with their most basic function: funding for a government that has had to live with the uncertainty of endless stop-gap measures for the past 14 months.

“Prior to Thanksgiving— even as deficit talks were collapsing—Congress made a first down payment with an old-fashioned compromise allocating $182 billion among five Cabinet departments and major science agencies. But the task ahead is many magnitudes larger, impacting the heart of the domestic budget, foreign aid and war funding not to mention scores of legislative riders—most of which have never been subject to public debate.”

Mr. Rogers added that, “For Republicans, especially in the House, it’s truly a test of whether they are a governing party or more of an assault team for tea party forces wanting to dismantle Washington.

“Conservatives are uneasy: better than 40 percent of the House Republicans opposed the $182 billion deal. But House Appropriations Committee Chairman Hal Rogers (R-Ky.) has set a deadline for action by Dec. 16, and much depends on the changed dynamics after the failed deficit talks.

“At one level, there’s a backwash of pessimism, a belief that this Congress can’t get anything done and it’s better to turn around and just go home. At the same time, there’s increased pressure on the House GOP leadership to try to stabilize the situation—to show some staying power, some order amid the turmoil around it.”

In more specific news regarding the Farm Bill, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.) and House Agriculture Chairman Frank Lucas (R-Okla.) said that with the failure of the supercommmittee their effort had ended.

“They did not release the full details of their final framework, even to their colleagues.  Farm lobbyists say this reflects the fact they do not have the backing of the committees for their proposal.”

Mr. Wasson explained that, “Their effort was aided by supercommittee member Sen. Max Baucus (D-Mont.) and Senate Budget Committee Chairman Kent Conrad (D-N.D.), sources said.

“Their proposals were controversial among commodity groups as well as among budget hawks and environmental and Third World anti-poverty activists.

“The framework would eliminate lump sum direct payments to farmers which are controversial since those no longer farming can receive them. Instead, Lucas and Stabenow were looking at a revenue-based supplement to traditional crop insurance, a special loss protection program for cotton, and higher price-based payments for other crops.”

Yesterday’s update indicated that, “Unless a deal to avoid across-the-board cuts triggered by the supercommittee is forged, the five-year farm bill will be crafted in traditional manner, farm lobbyists said this week.

“This would involve field and Washington-based hearings with the goal of wrapping up the 2012 farm bill by Memorial Day.”

In addition, the Hill item pointed out that, “There are also worries that House Speaker John Boehner (R-Ohio), a longtime critic of farm subsidies, would allow the farm bill on the floor under an open rule, something that would allow Tea Party-backed freshmen to pick it apart to find cost savings. Former Speaker Nancy Pelosi (D-Calif.) had allowed the farm bill under a closed rule, but Boehner has said he favors a more open process on spending bills to give the rank and file more of a say. Boehner has largely followed this on budget and appropriations measures.

“On top of this difficulty, sources said there is a strong possibility the framework on which Stabenow and Lucas gets tossed aside and the process starts over from scratch.

“A key blow came when Senate Agriculture Committee Ranking Member Sen. Pat Roberts (R-Kan.) made clear that he was not on board with the secret farm bill, they said.”

Mr. Wasson stated that, “House Agriculture Committee Ranking member Collin Peterson (D-Minn.) has not weighed in on the proposal but is expected to next week when the House returns.

“If Peterson joins Roberts in slamming the Stabenow-Lucas framework, that could further embolden Agriculture committee members to call for a clean slate approach.”

Meanwhile, Gannett writer Philip Brasher reported yesterday that, “Count pheasant hunters among those who probably are disappointed Congress is plowing under the new farm bill. Biofuel producers, however, might be happy to see the bill go.

“Those groups were among winners and losers in the hastily crafted bill that House and Senate agriculture committees had planned to stuff in a deficit-reduction plan that a congressional supercommittee was charged with writing. The collapse of supercommittee talks left the ag committees in Congress to start over on farm legislation.

“Ag committee leaders did all their work on the bill behind closed doors and never released an actual text of the legislation. But Pheasants Forever, an advocacy group, successfully lobbied the lawmakers for provisions that would have steered conservation funding to landowners who preserved grassy areas as habitat for the game bird.”

Mr. Brasher added that, “The ethanol industry was dismayed to learn that the bill, according to a summary that leaked out, would have blocked the Agriculture Department from subsidizing the installation of service station pumps that can dispense higher blends of the biofuel. The measure also contained no money for subsidizing farmers who provide crop residues and other new feedstocks for making biofuels.

“Lloyd Ritter, who led a lobbying effort by the renewable energy industry, is looking forward to another crack at increasing money for biofuels.”

Agricultural Economy

Ian Berry reported on Friday at The Wall Street Journal Online that, “The U.S. government left its food-price inflation forecast unchanged in a monthly report and projected that a sharp climb in prices will abate in 2012.

“The price for all food in 2011 is expected to rise between 3.5% and 4.5%, the U.S. Department of Agriculture said, followed by an increase of 2.5%-3.5% in 2012. Both projections, along with all of the various food categories in the report, were unchanged from a month ago.

“In October, the USDA had increased its 2011 food-inflation forecast by half of a percentage point, reflecting sharply higher commodity costs.”

In other news, Reuters writer PJ Huffstutter reported last week that, “Across the Midwest, the dizzying surge in rural land prices is accelerating a fundamental reshaping of the farm sector in the world’s biggest food exporter. Instead of digging in to benefit from the boom in grain prices, the next generation is opting to cash out of the small, family-owned farms that harbor centuries of rural wisdom and deep tradition.

“The bidding wars that are now common at farm auctions and inside attorney offices, resulting in a 25 percent jump in land values last quarter, are bittersweet for heirs and aging farmers alike, whose children have fled to the city, leaving them unable or unwilling to shoulder the rising financial risk of a farm.”

The article noted that, “On the other side are often investors who view U.S. farmland as the latest hot commodity, with prices soaring at a rate not seen since the 1970s, in some cases to record highs.

“In the Hawkeye State, the nation’s leading corn producer, prices have risen by nearly a third, as many bet that China’s expanding wealth, the increased use of biofuels and a growing global population that has just passed 7 billion will put a premium on fertile soil for decades to come.

“Large-scale farmers and wealthy outside investors – who are weary of Wall Street’s roller coaster – are lining up to plow their money into the perceived stability of farmland. Large parcels of good land can be difficult to find in the U.S., and what is out there doesn’t tend to come up for sale very often.”

Diana Marcum reported last week at the Los Angeles Times Online that, “As Californians savor their Thanksgiving feasts, the states’ farmers are especially thankful. California’s agriculture sector is on track for a record year, a rare bright spot in the state’s economy.

“Prices for cotton, grapes and other crops are near all-time highs. Foreign buyers are gobbling California almonds, grapes, citrus and dairy products. Agricultural exports through September are up 16% over the same period last year. Net farm income is projected to post strong gains in 2011 after nearly doubling over the previous decade.”

The LA Times article indicated that, “Indeed, prices for all manner of farm products are so high that Vernon Crowder, an agricultural economist with Rabobank, a major agricultural lender, has been seeing some unfamiliar faces at industry events.

“‘When you go to ag conferences you now have venture capitalists hanging around,’ he said. ‘But they find it very difficult to beat out another farmer for land, and that shows you how strong the market is. There’s been a fundamental shift as the global market demands more food and more expensive food.’”

And Reuters writer Jessica Toonkel reported on Friday that, “In sleepy White Sulphur Springs, Montana, farms and ranches fetched just hundreds of thousands of dollars five years ago. Now they’re selling for millions.

“It’s a situation playing out across America’s heartland, where the price of farmland has skyrocketed to a three-decade high. But not all farmers are cashing out. Instead, they are turning to their financial advisers for new ideas about how to generate income and avoid huge estate taxes on their increasingly valuable land.”

The article stated that, “The price of U.S. farmland is at its highest level since the 1970s and is up 25 percent in some Midwestern and Western states just in the third quarter.

“Driving the price increases: wealthy investors searching for returns at a time when other markets are volatile. They see farmland as a better bet for returns because of rising food prices, projected crop demand and lucrative land rents.

“Amid this environment, navigating estate tax issues is a priority for farmers with heirs. They have increasingly contacted their financial advisers for help on doing everything possible to keep the land in their families.”

And from an international perspective, Reuters writer Noe Torres reported on Friday that, “Mexico is being battered its worst drought in seven decades, which has devastated farm life and is expected to continue into next year.

“The lack of rainfall has affected almost 70 percent of the country and northern states like Coahuila, San Luis Potosi, Sonora, Tamaulipas and Zacatecas have suffered the most acute water shortage.

“Due to the drought and a cold snap at the start of the year, the government has cut its forecast for corn production two times in 2011. It now expects a harvest of 20 million tonnes compared to a previous estimate of 23 million.”

Climate Meeting

John M. Broder reported in today’s New York Times that, “With intensifying climate disasters and global economic turmoil as the backdrop, delegates from 194 nations will gather in Durban, South Africa, starting Monday to try to advance, if only incrementally, the world’s response to dangerous climate change.

“To those who have followed the negotiations of the United Nations Framework Convention on Climate Change over their nearly 20-year history, the conflicts and controversies to be taken up in Durban are monotonously familiar: the differing obligations of industrialized and developing nations, the question of who will pay to help poor nations adapt, the urgency of protecting tropical forests, the need to rapidly develop and deploy clean energy technology.”

Trade

Pete Kasperowicz reported last week at The Hill’s On the Money Blog that, “House Rules Committee Chairman David Dreier (R-Calif.) on Friday [Nov. 18] introduced a resolution calling for free trade agreement (FTA) negotiations with Egypt.

“Dreier said an FTA would help U.S. companies expand sales to Egypt, but would also help encourage democratic reforms in that country in the wake of the Arab Spring.”

Keith Good

Posted by Keith Good • November, 28, 2011 • 4:54 am