FarmPolicy

July 29, 2014

Farm Bill and Budget; Ag Economy; Animal Ag; MF Global; and Climate Issues

Farm Bill and Budget Issues

Forrest Laws reported on Friday at the Delta Farm Press Online that, “A ‘one-size-fits-all’ farm bill approach may no longer be a good fit for agriculture, and it certainly doesn’t fit the rice industry.

“That seemed to be the gist of the comments made at a panel on ‘Farm Policy Outlook and Analysis: Where We Are and What that Means for Rice’ at this morning’s session of the USA Rice Federation’s annual Outlook Conference in Austin, Texas.

“The mini-farm bill proposal submitted by the House and Senate Agriculture Committees to the Select Committee on Deficit Reduction included a provision for target prices that could be used to provide revenue insurance coverage for the row crop commodities.”

The article added that, “Although the Select or ‘Super Committee’ approach failed, panelists at the Outlook Conference said provisions of the Ag Committees proposal could provide a starting point for the 2012 farm bill discussions. Unfortunately, some groups have complained the target price included for rice – $13.98 per hundredweight – was too high.”

Mr. Laws pointed out that, “The Agricultural and Food Policy Center [at Texas A&M University that Dr. Joe Outlaw] helps direct provides detailed analyses of farm bill proposals for members of the House and Senate Agriculture Committees. The Center looked at about 25 of those during the preparations of the joint proposal to the Super Committee.

“‘Our work shows that all but two of the target price recommendations from one of the other commodity group’s proposal would be below the cost of production for those commodities.’ (The average cost of producing an acre of rice in the U.S., according to the Center’s analysis, is $13.10 an acre.)

“‘It’s an unfortunate part of the process when the commodity groups do not at least acknowledge that there are differences regionally in cost of production and practices that need to be accounted for,’ Outlaw said in an interview. ‘As long as you keep the prices within the natural relationship the commodities have to each other, I don’t think you’re going to get any planting distortions like what was in the press recently.’”

An audio report Friday by Agri-Pulse Senior Editor Stewart Doan included additional analysis on this issue, as well as related remarks from Dr. Outlaw, to listen to the Agri-Pulse report, just click here (about two minutes).

The “Washington Insider” section of DTN indicated in part on Friday (link requires subscription) that, “[Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.)] said several issues had been resolved [in the recent super committee Farm Bill draft effort], and that there is no longer support for continuing the nearly $5 billion in annual direct payments, but that the support for crop insurance has intensified. She also suggested that regional differences among groups are severe, and that different regions of the country bring ‘difficult challenges’ in formulating farm policy.”

An update Thursday from the USA Rice Federation indicated that, “Speakers during today’s Farm Policy session at the 2011 USA Rice Outlook Conference agreed that a successful farm bill would include budget cuts and policy proposals that work for all crops and all regions. There was less agreement on when the next farm bill might actually be written, with the congressional ‘Super Committee’ having disbanded without agreement on budget cuts, including farm policy cuts offered by the House and Senate Agriculture Committees.”

The USA Rice Daily item added that, “[Joe Shultz, senior economist for the Senate Agriculture Committee] said Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) is focused on trying to get the farm bill written in 2012 and credited the Senator and House Agriculture Committee Chairman Frank Lucas (R-OK) with doing a ‘tremendous’ job in developing farm safety net programs that would meet the needs of all crops in all regions.

“‘We’re hoping that we can get a farm bill written in 2012 because after that, cuts to agriculture only get worse as we face another round of budget cuts and continue to lose our budget baseline,’ Schultz said.”

Meanwhile, Bloomberg writer Whitney McFerron reported on Friday that, “Government programs including food stamps and school lunches may need to be cut further as lawmakers attempt to rein in spending and trim the federal deficit, U.S. Representative Mike Conaway said.

“A current farm bill proposal includes $4 billion in cuts to nutrition-assistance programs over 10 years, compared with $15 billion in reductions to commodity programs including direct payments to farmers, Conaway said today in a speech at a rice- industry event in Austin, Texas. That doesn’t represent a ‘proportionate sharing’ of cuts, Conaway said.

“‘There are those of us who believe nutrition has money that is currently being spent that does not need to be spent,’ said Conaway, a member of the House Agriculture Committee and a Republican from Texas. ‘There’s a significant amount of money that we can eliminate and still not affect one beneficiary’s calorie intake. We can keep everybody on that’s there, but we pull out a lot of other stuff. It’s in the billions of dollars.’”

Agri-Pulse Senior Editor Stewart Doan, in an audio report from today (about a minute and a half), provided additional analysis on Farm Bill reauthorization; the Agri-Pulse report also included remarks from Rep. Conaway.

Also on the nutrition issue, April Baer reported yesterday at Oregon Public Broadcasting Online that, “Sen. Ron Wyden [D-Oregon] says this week he’ll introduce legislation to make it easier for food stamp and school lunch programs to work with local farms and ranchers. April Baer reports the bill would make it possible to go around the traditional federal purchasing system.

“Whenever local entities like school districts buy food using federal agriculture subsidies, they choose from a list of warehoused goods the government has approved. Wyden’s bill would allow states to request waivers. With the added flexibility, he says they might instead choose to work with local food producers, and so encourage healthier eating.”

In news regarding the sugar program, Ryan Johnson reported on Friday at The Forum Online (ND) that, “The U.S. sugar program seems to be on track to be continued in the 2012 farm bill, Sen. John Hoeven, R-N.D., said Friday.

“‘We need to continue the no-cost sugar program, and it needs to be part of the farm bill, and I believe it will be,’ he said.”

In broader budget developments, Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “Starting Monday, they’ll work until the work gets done.

Congress next week will try to cram what is arguably a year’s worth of work into just one week, as it races to put together a deal on spending for the rest of 2012, plus a package that extends the payroll-tax cut and unemployment insurance benefits.”

On the issue of spending for the rest of 2012, Daniel Newhauser, Meredith Shiner and Steven T. Dennis reported yesterday at Roll Call Online that, “Unlike this year’s spending fights, during which some Democrats likened their disputes with the GOP to negotiating with terrorists, talk of a government shutdown has been absent from the pre-Christmas political theater….Instead, debate over the three already-passed spending bills and nine more expected to see the light of day this week has been relatively smooth.”

With respect to the package on the payroll-tax cut and other measures, Rosalind S. Helderman reported yesterday at The Washington Post Online that, “The payroll-tax fight will continue this week, as the House votes on a GOP-authored proposal that would link the extension of the tax cut sought by Obama with Republican priorities, including a measure to speed the construction of the controversial Keystone XL oil pipeline.

“On Sunday, Senate Minority Leader Mitch McConnell (R-Ky.) predicted that some Democrats who support construction of the 1,700-mile pipeline from Canada to the Gulf Coast would vote for the Republican bill.” (To listen to related audio from Sen. McConnell from yesterday’s Fox News Sunday television program, just click here (MP3- 2:30)).

Yesterday’s Post article added that, “But Senate Majority Leader Harry M. Reid (D-Nev.) has said the GOP measure is a ‘partisan joke’ that cannot win approval in the Democrat-controlled Senate. Speaking Sunday on NBC’s ‘Meet the Press,’ Sen. Lindsey Graham (R-S.C.) acknowledged the pipeline was ‘probably not going to sell.’ He predicted Congress would find a way to broker a different bipartisan compromise to extend the tax cut.

“Before concluding work for the year, Congress must tackle other major issues as well, including figuring out how to avert a scheduled deep cut in reimbursement rates paid to doctors under Medicare and whether to extend benefits for the unemployed.”

A National Journal update from yesterday reported that, “On NBC’s Meet the Press, assistant Senate majority leader Dick Durbin, D-Illinois, insisted that Democrats were sticking with their proposal to pay for the tax holiday with a surcharge on millionaires that is anathema to Republicans.

“‘The payroll tax extension is the highest priority for Democrats, because we’re talking about a payroll tax cut of $1,000 a year for 160 million people,’ he said. ‘[President Obama] is right that this is a make-or-break moment for the middle class, yet Republicans have consistently refused to increase taxes on the wealthiest Americans even if that’s what it takes to make sure working families get a payroll tax cut.’

“Despite the familiar partisan brinksmanship that has defined the current Congress, lawmakers’ confidence that a deal will ultimately be struck suggests a realization that a whopping tax hike for voters just in time for the holidays would likely bring down a pox on both parties.”

(Note that related audio from yesterday’s Meet the Press program, which includes key remarks from Senator’s Durbin and Graham, can be heard here (MP3- 2:49)).

And Robert Pear provided a look at the potential budget cost of reconciling some of these year end items in today’s New York Times, “Price Tag Hindering Congress in Struggle to Pass Year-End Legislation.”

 

Agricultural Economy

Ian Berry and Bill Tomson reported in Saturday’s Wall Street Journal that, “The U.S. Department of Agriculture forecast record global production of wheat and corn as farmers around the world respond to the past year’s high grain prices.

“The increased output is curbing the sales of U.S. crops abroad, with the USDA on Friday lowering its export forecasts for wheat and soybeans as importers have more countries from which to buy supplies.

The increasing supplies are helping to drive down the cost of food globally. Friday’s USDA crop report came a day after the United Nations’ food agency said its index of food prices had fallen for the fifth straight month. The index hit a record in February.”

The AP reported on Friday that, “The U.S. government barely changed its estimate for next year’s corn surplus, which is expected to stay small and keep high food prices high.

“The Department of Agriculture estimated Friday that farmers will have 848 million bushels of corn on hand at the end of next summer. That’s up less than 1 percent from last month’s forecast.”

Meanwhile, a news release Friday from Purdue University indicated that, “After several years of struggling to earn a profit, pork producers could find themselves back in the black in 2012, says a Purdue Extension agricultural economist.

“Profits in 2012 are forecast at about $17 per head, which would be the highest since 2006, Chris Hurt said. In 2006 corn prices were $2.30 per bushel, compared with the $6-$7 per bushel this year, and hogs were bringing a profit of $27 per head.”

And the AP reported today that, “An Illinois farmer made so much money this year he made loan payments on one tractor a year in advance and exchanged some older ones for newer models. An Iowa farmer upgraded his combine and also paid off debt, while an elderly Oregon farmer poured into retirement funds a bundle of his $2 million take from a well-timed sale of much of his turf and equipment.

“While much of America worries about the possibility of a double-dip recession, such stories of prosperity are cropping up as U.S. farmers enjoy their best run in decades, thanks to high prices for many crops, livestock and farmland and strong global demand for corn used in making ethanol.”

Today’s article added that, “That’s not to say that everyone is sharing in the good fortune. Near Gardner, Kan., a short drive south of Kansas City, a lack of rain and nagging winds conspired to leave Bill Voigts with about half of the soybeans he expected. His harvest of corn was worse, coming in at about one-third of his normal production. Even with insurance, he didn’t quite break even on the 2,400 acres he farms — most of them rented.”

 

Animal Agriculture

Art Hovey reported yesterday at the Lincoln Journal Star Online (Neb.) that, “An hourlong discussion on the October alliance between the Nebraska Farmers Union and the Humane Society of the United States ended at the Farmers Union convention Saturday with the alliance intact, but an element of skepticism in the air.

“‘I’m still skeptical,’ said Farmers Union member Dave Wright of Neligh, ‘because there truly is a trust issue.’

“‘I want to believe them,’ fellow convention delegate Richard Corman of Edgar said of those promoting the Farmers Union-Humane Society bond, ‘but it’s going to take time for me to believe them.’”

The article noted that, “Wright and Corman offered their reaction following presentations by Farmers Union President John Hansen and by Joe Maxwell, a Missouri hog farmer and the Humane Society’s director of rural development and outreach.

The Saturday exchange is the latest development in a situation in which the Humane Society has hired an Omaha-based state director, and farm organizations have chosen between outspoken opposition and peaceful dialogue.”

 

MF Global

Azam Ahmed, Ben Protess and Susanne Craig reported on the front page of today’s New York Times that, “Although [Jon] Corzine had been a United States senator, governor of New Jersey, co-head of Goldman Sachs and a confidant of leaders in Washington and Wall Street, he was at heart a trader, willing to gamble for a rich payoff.

“Dozens of interviews reveal that Mr. Corzine played a much larger, hands-on role in the firm’s high-stakes risk-taking than has previously been known.

“An examination of company documents and interviews with regulators, former employees and others close to MF Global portray a chief executive convinced that he could quickly turn the money-losing firm into a miniature Goldman Sachs.”

 

Climate Issues

John M. Broder reported in today’s New York Times that, “After 72 hours of continuous wrangling, the 17th conference of the United Nations Framework Convention on Climate Change wrapped up early Sunday with modest accomplishments: the promise to work toward a new global treaty in coming years and the establishment of a new climate fund.

“The deal on a future treaty renews the Kyoto Protocol, the fraying 1997 emissions agreement that sets different terms for advanced and developing countries, for several more years. But it also begins a process for replacing the Kyoto agreement with something that treats all countries — including the economic powerhouses China, India and Brazil — equally.”

Keith Good

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