FarmPolicy

February 21, 2019

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

Budget and Farm Bill Issues

Janet Hook reported in today’s Wall Street Journal that, “The threat of a New Year’s tax increase loomed larger Monday, as Congress deadlocked over legislation to extend a payroll tax break and unemployment benefits. (Note: A graphical overview of the House and Senate tax cut bills is available here).

“The split between the parties —and among Republicans—widened as the House was poised to vote Tuesday to block a bipartisan Senate bill extending current payroll tax rates by two months and extending benefits for the long-term unemployed that are due to expire Dec. 31.”

The Journal article pointed out that, “Members of both parties said it was almost unthinkable that Congress would let the tax rate rise on Jan. 1, but neither side could yet see the path to a compromise. In a closed-door meeting Monday night, House Republicans railed against the short-term bill passed Saturday by the Senate and demanded more negotiations on a yearlong deal with senators who had left Washington for the holidays, believing they had cast their last votes of 2011.

“‘We outright reject the attempt of the Senate to kick the can down the road for 60 days,’ said House Majority Leader Eric Cantor (R., Va.) as he announced that the vote to block the Senate bill would be held Tuesday.”  (Note: this related audio clip (MP3- 1:55), includes remarks from Speaker John Boehner and Leader Cantor from last night).

Today’s article added that, “House Democratic leader Nancy Pelosi of California denounced the GOP maneuvering as a move to block the payroll tax-break extension. ‘What we see now is a stalling action on the part of those who were never for a payroll tax cut in the first place,’ she said.”

Rosalind S. Helderman reported in today’s Washington Post that, “GOP leaders announced late Monday that they would hold key votes on the Senate package Tuesday instead of late Monday night, as had been planned.

But Boehner predicted the House would reject the Senate bill and seek to open negotiations over how to pay for a $120 billion, full-year extension of the tax cut.

“‘Our members do not want to just punt and do a two-month, short-term fix where we have to come back and do this again,’ Boehner said Monday night.”

And, Jennifer Steinhauer and Robert Pear reported in today’s New York Times that, “However, rather than have a straight up-or-down vote, the House will implement a procedural maneuver in which they will ‘reject’ the Senate bill while requesting to go to conference with members of that chamber in a single measure, protecting House members from having to actually vote against extending a payroll tax cut. During the conference meeting among Republican members, some members expressed concern about effectively voting for a tax increase on the eve of an election year, said some who attended.

“Speaker John A. Boehner, Republican of Ohio, said he was confident that he had the votes to reject the Senate version of the bill.

The standoff leaves Mr. Boehner ending the year exactly where he began, in the middle of a nasty fiscal fight with Senate Democrats and his conservative freshmen in revolt, making it difficult to find a middle ground between mollifying his conference and coming up with legislation to avert disaster. But Mr. Boehner said repeatedly on Monday that he believed a deal for a one-year extension could still be struck, even with the Senate essentially adjourned for the year and the tax break set to expire on Jan. 1.”

Meanwhile, an update posted yesterday at an ABC News Blog by Jake Tapper indicated that, “Officials from the policy-neutral National Payroll Reporting Consortium, Inc. have expressed concern to members of Congress that the two-month payroll tax holiday passed by the Senate and supported by President Obama cannot be implemented properly.

“Pete Isberg, president of the NPRC today wrote to the key leaders of the relevant committees of the House and Senate, telling them that ‘insufficient lead time’ to implement the complicated change mandated by the legislation means the two-month payroll tax holiday ‘could create substantial problems, confusion and costs affecting a significant percentage of U.S. employers and employees.’”

With respect to executive branch perspective, Steven T. Dennis reported today at Roll Call Online that, “President Barack Obama didn’t get much out of the initial two-month deal to extend his payroll tax holiday. But the revolt by House Republicans against the Senate-passed measure gave the White House a chance Monday to portray the GOP as being taken over by a fringe that is willing to risk a tax increase on every worker.

For the White House, it’s a simple political win-win — Obama takes credit if the tax cut gets extended or pins the blame on the GOP if it doesn’t.”

In more specific Farm Bill news, last week, Don Wick of the Red River Farm Network (RRFN) interviewed House Agriculture Committee Ranking Member Collin Peterson (D-Minn.) in Washington, D.C.- an audio replay of that interview is available here (MP3- 15:12); while an unofficial FarmPolicy.com transcript of their conversation can be viewed here.

With respect to budget issues, the RRFN interview included this exchange: “Mr. Wick: So as far as the dollar part of this, obviously the 23 billion is out there. We saw the super committee process fail, so we see sequestration. Can you kind of walk me through the dollars and cents of this whole process as we go forward?

“Rep. Peterson: Well, we don’t know exactly what the sequestration will be because OMB are the ones that decide how it’s done, and we have not heard from OMB exactly what they’ll do. We’ve had CBO look at this, give us their estimation of what they think will happen. They think it’s about 16 billion in cuts out of agriculture.

“So the scenarios are if there’s not a budget deal next year, there doesn’t look like there’s going to be a budget deal, then I think what we’ll end up having to do is start off with the eye on how much is going to be cut out in the sequestration. So in other words, we’ll put the bill together expecting that they’re going to cut this money out and try to accommodate that when we write the bill.

“Now the other decision that I think will have to be made at some point is do we continue on with the 23 billion or do we go back to the 16 billion that the sequestration is, and do we write a bill that has no cuts, that uses our baseline, with the idea that they’re going to cut 16 billion out of it later. So these are the things that we’re going to have to figure out, and we’ll have to make a judgment about what we can get support for on the floor.”

The wide-ranging RRFN interview also touched on issues of Farm Bill timing, crop insurance, dairy policy, sugar policy and differences between developing the 2008 Farm Bill and this Farm Bill.

In other news, Rod Smith reported earlier this week at Feedstuffs Online that, “Farmers selling their production through farmers markets, roadside stands or other local outlets account for a small but growing segment of U.S. agriculture as consumer demand for locally produced food is also increasing, according to researchers Sarah A. Low and Stephen Vogel at the U.S. Economic Research Service (ERS).

“Farmers also sell their production through ‘intermediated’ channels such as restaurants and retail stores, creating a $4.8 billion market for direct-to-consumer and intermediated local food sales, Low and Vogel said in an article in the November ERS Amber Waves.

“Local marketing channel use varies with farm size, they said. Small and modest-sized farms (sales of less than $250,000) use direct-to-consumer channels more than large farms do, accounting for 73% of direct-to-consumer sales, while large farms account for 92% of intermediated sales.”

From an international perspective, Joe Leahy reported yesterday at The Financial Times Online that, “The lessons from [Mauro Lucio] and other farmers in Paragominas [municipality in Brazil’s Amazonian cattle-raising state of Pará] come as Brazil’s Senate earlier this month passed a controversial update of the country’s forestry code that is expected to be signed into law by President Dilma Rousseff in the new year.

“The code is critical to the future of the Brazilian Amazon, which is one of the most important bulwarks against global warming and one of the ecosystems most vulnerable to it.

“The Senate version of the forest code retains a rule that farmers in the Amazon must keep between 50 and 80 per cent of their land as forest. But it waives billions of dollars in fines for those who illegally cleared land before July 2008 as long as they replant some areas.”

 

Agricultural Economy

Neena Rai and Michael Haddon reported yesterday at The Source Blog (Wall Street Journal) that, “World food commodity inflation will likely ease in 2012, Moody’s Investor Services said Monday, but the rating company warns that food companies could try to recapture stronger profits through price increases, after exhausting margin-saving measures.”

On Friday, the Federal Reserve Bank of Richmond released its survey of agricultural credit conditions, which stated in part that, “Results from the Richmond Fed’s latest survey of Fifth District agricultural banks continued to indicate a stable lending environment in the third quarter of 2011. Despite Hurricane Irene’s negative impact on yields in some areas of the region, bankers generally reported that farm loan demand held steady.”

The report added that, “The market value of good farmland averaged $3,263 per acre in the third quarter— 1.5 percent below the second quarter reading and 4.5 percent lower than a year earlier. Looking ahead, bankers anticipate that farmland prices would slow somewhat during the fourth quarter of 2011; the index for expected land values lost seventeen points to -17.”

Meanwhile, an update posted yesterday at the farmdocdaily blog (University of Illinois) titled, “Crop and Livestock Price Prospects for 2012”( by Professor Darrel Good), included a brief and easy to read overview assessment of several key agricultural variables for the coming year.

Also yesterday, USDA’s Economic Research Service (ERS) released a report titled, “Major Uses of Land in the United States, 2007.”  An ERS summary of the report stated that, “The United States has a total land area of nearly 2.3 billion acres. In 2007, the major land uses were forestland at 671 million acres (30 percent); grassland pasture and rangeland at 614 million (27 percent); cropland at 408 million (18 percent); special uses (primarily parks and wildlife areas) at 313 million acres (14 percent); miscellaneous uses (like tundra or swamps) at 197 million acres (9 percent); and urban land at 61 million acres (3 percent). This report presents findings from the most recent (2007) inventory of U.S. major land uses, drawing on data from the U.S. Census Bureau, public land management and conservation agencies, and other sources. The data are synthesized by State to estimate the use of several broad classes and subclasses of agricultural and nonagricultural land over time. National and regional trends in land use are compared with earlier major land-use estimates.”

 

Regulations

DTN writer Todd Neeley reported yesterday that, “Members of Congress and agriculture interest groups have spent much of 2011 grilling EPA officials, drafting legislation, filing lawsuits and raising their voices against what is perceived as a growing EPA regulatory influence in rural America.

The agency isn’t doing enough to enforce environmental regulations, however, according to a report from the EPA Office of Inspector General.

“Further, the report (PDF) suggests EPA should centralize control of its resources by doing away with a system that divides the states into 10 regulatory regions.

“This idea runs contrary to what members of Congress have been saying throughout 2011 — that states are better equipped to draft and enforce their own regulations.”

Mr. Neeley noted that, “EPA Administrator Lisa Jackson and other agency officials have been taken to task during Congressional hearings for the agency’s work in setting total maximum daily loads, or TMDLs, in the Chesapeake Bay and other watersheds, on whether or not the agency regulates farm dust, and whether it is necessary to require pesticide permits for pesticide applicators when label directions have been sufficient for years.

“The OIG report, however, said although EPA has power to revoke enforcement authority from states, those states do not have resources to fully enforce environmental regulations to begin with.

“‘However, EPA must be able to adjust its resources to take back state authority in programs,’ the OIG said. ‘EPA headquarters, regional enforcement officials, and independent organizations told us that the threat of EPA revoking a state’s authorization was moot because there is a general understanding that no EPA region has the resources to operate a state program. This reality undercuts EPA’s strongest tool for ensuring that authorized states adequately enforce environmental laws: de-authorization.’”

 

Trade

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “U.S. and South Korean trade officials continued meetings this week to work toward implementing the accord between the two nations.

“The delegations are meeting Monday and Tuesday to review laws and regulations as officials aim to get the trade pact ready to go by the start of 2012 and as soon as possible.”

 

Animal Agriculture

The AP reported yesterday that, “The Humane Society of the United States says it’s under attack by a new group that’s trying to starve it of funding by urging donors to send money to local animal shelters instead.

“The society has long been a thorn in the side of some in agriculture with its undercover investigations and campaigns against animal cruelty. It claims the new group is the brainchild of conservative public relations executive Rick Berman, who spearheaded an earlier campaign against it, and that it’s supported by big agricultural interests.”

The article noted that, “The new group announced itself two weeks ago with full-page ads in USA Today, the Los Angeles Times, Chicago Tribune and New York Times. They show a sad-eyed dog and ask, ‘Please help shelter pets by donating locally, not to HSUS,’ and direct people to HumaneForPets.com, where they can find links to local shelters and more information.

Wayne Pacelle, president and CEO of the HSUS, said he’s certain that agribusiness concerns are behind the campaign because he’s heard that Berman made the rounds of major trade groups seeking support for it.”

 

MF Global

A paper last week (“Margin Account Risk, Who Knew?”) by G. A. (Art) Barnaby, Jr., a Professor in the Department of Agricultural Economics at Kansas State University, noted that, “This MF Global debacle is really a big deal, and probably more important to farmers than the Farm Bill.”

The paper went on to provide additional perspective and information regarding the collapse of MF Global.

Keith Good

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