September 16, 2019

Farm Bill and Budget; Ag Economy; Trade; Regulations; and MF Global

Farm Bill and Budget Issues

Daniel Looker reported yesterday at Agriculture Online that, “Senator Tom Harkin (D-IA) said Thursday that he hopes congressional ag committees won’t abandon their work on a farm bill that was submitted to the deficit-cutting ‘Super Committee’ last month.

“‘I thought we had pretty wide agreement among a lot of us–I’m talking about the Senate Side,’ said Harkin, a member of the Senate Agriculture Committee and former chairman.

“The agreement crafted by the leaders of both the House and Senate ag committees eliminated direct payments, which Harkin has long opposed. It also backed a revenue protection plan similar to the current law’s ACRE (average crop revenue election) program.”

The article added that, “Harkin said there is talk of starting over from scratch on a farm bill, but he favors keeping the so-called framework developed in November as the starting point for a new farm bill.”

In an interview earlier this week with the Red River Farm Network’s Mike Hergert (Wednesday- full interview available here), House Agriculture Committee Chairman Frank Lucas (R-OK) discussed the timing of the next Farm Bill and noted in part (MP3- 1:00) that: he was “watching the Senate and I’m going to move when I see a window of opportunity;” Chairman Lucas added that, “a lot of the base work has been done.”

In Farm Bill news regarding nutrition, Bloomberg writer Alan Bjerga reported yesterday that, “Driven by high unemployment, food-stamp use nationally has soared by two-thirds since the end of 2007 to more than 46 million recipients, about a seventh of the U.S. population. The government spent a record $71.8 billion on the program in the last fiscal year, or about 12 percent of the national grocery bill, underscoring the benefit’s importance as revenue for grocers led by Kroger Co., Safeway Inc. and Supervalu Inc., the three biggest U.S. chains by sales.

“A coalition of farmers, grocers and anti-poverty activists has helped food stamps survive federal budget-cutting pressures and maintain bipartisan support in Congress, said Dale Moore, a former U.S. Department of Agriculture chief of staff. In times of high unemployment, the aid serves as a cash infusion that has kept communities afloat and people working, he said.”

The article noted that, “Pat Burns, president of the Fresh Grocer, a Pennsylvania- based grocery chain that operates its own stores and also manages five locations for Save-a-Lot, a discount chain owned by Eden Prairie, Minnesota-based Supervalu, said many of the 1,200 people on his payroll would be out of work if not for food stamps, which account for 34 percent of his business.”

The Bloomberg article pointed out that, “About half of SNAP participants are younger than 18, and 8 percent are older than 60, according to the USDA. About 41 percent of all recipients live in households where family members are employed.

Almost one in three people who qualify for food stamps isn’t getting them, the USDA estimates. States, which manage the federal benefit program, lack incentives to expand eligibility because they must pay half the program’s administrative costs.”

And Bloomberg writer Jennifer Oldham reported earlier this week that, “California and Colorado are among cash-strapped states leaving billions of dollars on the table in federal food aid that could fuel growth by stimulating spending throughout the country.

“Almost a third of people who qualify for food stamps aren’t getting them, the U.S. Agriculture Department estimates. In California and Colorado, about half of those who are eligible aren’t being served.”

Ms. Oldham explained that, “Federal food assistance does more to boost consumer spending than any other stimulus program created by the American Recovery and Reinvestment Act, President Barack Obama’s $787 billion economic stimulus program, according to Mark Zandi, chief economist of Moody’s Analytics.”

In more specific news on dairy issues and the Farm Bill, Marc Heller reported yesterday at The Watertown Daily Times Online (NY) that, “The collapse of a congressional debt reduction committee has thrown fresh doubt into the future of U.S. farm programs, including the safety net that protects Northern New York dairy farmers from steep declines in milk prices.

“With the panel now history, lawmakers are promising a more traditional rewrite next year of farm and nutrition policies, which may spell trouble for a key element of dairy policy proposed by farmer-owned cooperatives — a government-sponsored system to tamp down milk production.

“The supply management proposal was part of a plan drafted by the House Agriculture Committee’s ranking Democrat, Rep. Collin C. Peterson, D-Minn., with help from the National Milk Producers Federation. The debt reduction panel was to consider it along with other dairy provisions, as part of an overall farm policy package.”

Yesterday’s article noted that, “Opponents of the supply management provision — primarily operators of dairy manufacturing plants — see the committee’s failure as an opportunity to defeat Mr. Peterson’s proposal, which may be easier now that the debt panel’s quick-track rules for passing legislation are out of the way.”

Meanwhile, an update posted earlier this week at the National Sustainable Agriculture Coalition Blog stated that, “On December 1, the Springfield IL Regional Office of USDA’s Risk Management Agency (RMA) announced that it was easing some restrictions that limit crop insurance coverage on crops that are planted following a cover crop.  The modification affects corn, popcorn, sweet corn, hybrid seed corn, pumpkins, soybeans, grain sorghum, and processing beans grown in the states of Illinois, Indiana, Michigan and Ohio.”

In budget news, Rosalind S. Helderman reported in today’s Washington Post that, “The Senate on Thursday rejected dueling partisan proposals to slash federal payroll taxes for 160 million Americans, while House Republicans trotted out a new, more conservative plan that sought to link the tax issue to other GOP priorities.

“With an end-of-year deadline looming and lawmakers anxious to wrap up legislative business so they can leave Washington for the Christmas holiday, Congress is headed to a showdown over the payroll issue next week, when it must also approve an expansive spending measure to keep the government humming past Dec. 16.

“If Congress does not resolve the issue by the end of the month, the payroll tax rate paid by employees will revert next year to 6.2 percent, instead of the 4.2 percent that has been in place for the past year.”

The Post article added that, “Despite the time crunch, the House and Senate concluded work for this week — neither chamber has votes scheduled Friday — with little sign of compromise on the increasingly contentious payroll tax issue. Instead, both parties spent the week digging in.”


Agricultural Economy

DTN Ag Policy Editor Chris Clayton reported yesterday that (link requires subscription) that, “Farmers were buzzing Thursday at the DTN/The Progressive Farmer Ag Summit about news that 74 acres of farmland in northwest Iowa had sold for a record price of $20,000 an acre.

“The summit ballroom was packed and the audience attentive by the time Kansas State University economists Kevin Dhuyvetter and Terry Kastens gave their slated morning presentation asking the question: Are we in a farmland bubble?

Mr. Clayton noted that, “Most economists would say no. They and others like to point out some major differences between now and the run-up in land values preceding the market crash in the 1980s. Farmers are paying less than half what interest rates were when they peaked at that time, and also are carrying less debt.

“Still, there are risks that agriculture could suffer if China slips into a recession, or if the ethanol industry suffers from lack of federal support. Along with that, interest rates can only go up from where they are now. Lenders and investors could also get carried away with land values, if they are not already. Some economists are cautioning that the spikes in land values are signs of a bubble ready to burst.”

In other news, Bloomberg writer Rudy Ruitenberg reported yesterday that, “World food prices declined for a fifth month in November, the longest slide in more than a year, amid signs commodity prices may be ‘bottoming out,’ the United Nations’ Food and Agriculture Organization said.”

And in domestic news regarding animal production, the AP reported yesterday that, “Smithfield Foods Inc., the world’s largest pork producer, said Thursday it plans to end the practice of keeping pregnant hogs at the company’s farms in small metal crates.

“The Smithfield, Va.-based company, which has been criticized for continuing to breed sows in gestation crates that severely restrict the animals’ movement, said it will phase out the use of gestation crates at its facilities by 2017. By the end of this year, the company said that 30 percent of the sows at its farms will be in group housing rather than the crates.”



Reuters writer Doug Palmer reported yesterday that, “The United States asked the World Trade Organization on Thursday to strike down duties that China imposed on U.S. poultry products in apparent retaliation for U.S. moves to restrict Chinese imports.

“‘The United States will not stand idly by while China appears to have misused its trade remedy laws and put American jobs at risk,’ U.S. Trade Representative Ron Kirk said in a statement just a few days before the tenth anniversary of China’s accession to the WTO.”



Pete Kasperowicz and Elise Viebeck reported yesterday at The Hill’s Floor Action Blog that, “The House on Thursday approved legislation Republicans said was aimed at ensuring the EPA cannot regulate so-called ‘farm dust.’

“The Farm Dust Regulation Prevention Act, H.R. 1633, which would prevent the EPA from issuing any new rule over the next year that regulates coarse particulate matter, or ‘nuisance dust,’ passed in a 268-150 vote.”

The article indicated that, “House passage sends the bill to a Senate that is unlikely to take it up at all. The Obama administration has already said it would veto the bill.”

A news release yesterday from Rep. Kristi Noem (R-SD) indicated that, “‘This is a huge win for farmers and ranchers in South Dakota and across the country,’ said Noem.  ‘The regulation of farm dust is not a partisan issue. It is a rural issue. And it’s a real issue.  My bill received support from Democrats here in the House, and the companion bill in the Senate also has Democratic support. Additionally, over 190 agriculture organizations have written in supporting the bill, including the Cattlemen, Stockgrowers, Wheat Growers, Farm Bureau and many others.’”

On the other hand, during the discussion on the measure yesterday in the House, Rep. Tammy Baldwin (D-Wis.) argued against the farm dust bill, a portion of her remarks can be heard here (MP3- 3:11).

And a news release yesterday from Nebraska GOP Senator Mike Johanns stated that, “[Sen. Johanns] today applauded the U.S. House of Representatives for their bipartisan action prohibiting the Environmental Protection Agency (EPA) from regulating farm dust and called on the Senate to pass similar legislation he introduced in September.”

Meanwhile, a news release yesterday from USDA stated that, “Agriculture Secretary Tom Vilsack today announced USDA has published the Final Rule implementing the 2008 Farm Bill provisions to better protect livestock producers and poultry growers under the Grain Inspection, Packers and Stockyards Administration (GIPSA).

“‘As I travel throughout the countryside, I often hear from farmers and ranchers about their concerns with the marketplace becoming more concentrated,’ Secretary Vilsack said. ‘While concentration certainly comes with some efficiencies, Congress recognized in the 2008 Farm Bill that additional protections for producers are warranted. Today’s rule will implement these targeted protections and help provide more fairness and transparency in the marketplace.’”


MF Global- House Ag Committee Hearing

Scott Patterson and Aaron Lucchetti reported yesterday at The Wall Street Journal Online that, “Jon S. Corzine defended his tenure as chief executive of MF Global Holdings Ltd. before a House committee, but couldn’t explain an estimated $1.2 billion in missing customers’ money.”

“‘I simply do not know where the money is,’ he said in response to questions from the panel, noting that ‘there were an extraordinary number of transactions during MF Global’s last few days’ and that he didn’t know everything that was going on.

“Pressed for an answer as to what could have happened, he said it was possible, though unlikely, that underlings might have misunderstood an order and mistakenly dipped into customer funds. Mr. Corzine said he still expects that the money eventually will be found and recovered.”

The Journal article noted that, “CFTC member Jill Sommers testified on an earlier panel at the Thursday hearing. She took on oversight of the agency’s investigation into MF Global after CFTC Chairman Gary Gensler, who had worked with Mr. Corzine at Goldman Sachs, recused himself to avoid a possible appearance of conflict of interest.”

During yesterday’s House Ag Committee hearing, Ranking Member Collin Peterson (D-Minn.) and Chairman Frank Lucas (R-OK) engaged in an interesting colloquy that served to illustrate the complex nature of the issues regarding the MF Global collapse and the jurisdictional purview of the CFTC, an audio replay of remarks from the Ag Committee leaders is available here (MP3- 3:30).

Dan Strumpf and Jerry A. Dicolo reported in today’s Wall Street Journal that, “As much as $1.2 billion in MF Global customer money is still unaccounted for since the firm’s Oct. 31 bankruptcy, the trustee overseeing the liquidation of the firm’s brokerage has said. If that customer money is discovered, customers would get it, the trustee says.

But if the money isn’t found, the customers will have to get in line with MF Global’s creditors for whatever remains of the failed company are left, according to court filings and the trustee.

Meanwhile, J.P. Morgan has sought ‘super-priority’ creditor status for the $26 million, a position that some customers also contest in court filings.”

And an item posted yesterday at Agri-Pulse Online, reported that, “Representatives Rosa DeLauro (D-Conn.), Peter Welch (D-Vt.) and Leonard Boswell (D-Iowa) are introducing legislation to fully fund the CFTC so it can regulate the risky financial transactions that contributed to the 2008 financial crisis, the recent collapse of MF Global and the speculation-driven rise in energy prices.

The goal of the Wall Street Accountability Act through Sustainable Funding Act is to create a stable, sustainable funding mechanism for the CFTC.

“‘Americans want accountability from Wall Street,’ DeLauro said in a press release today. ‘But this year’s budget cuts to CFTC funding mean that it will not have the ability to regulate the risky financial transactions that caused the 2008 financial crisis and, more recently, the collapse of MF Global. That is why we are introducing the Wall Street Accountability Act through Sustainable Funding Act, which will ensure that the CFTC has the tools it needs to protect American consumers.’”

Keith Good

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