FarmPolicy

October 25, 2014

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

Categories: Audio /Budget /Farm Bill /Trade

Budget and Farm Bill Issues

Janet Hook and Laura Meckler reported in today’s Wall Street Journal that, “President Barack Obama on Wednesday inserted himself directly into the congressional impasse over legislation to avert a Jan. 1 tax increase, but there was no sign of a breakthrough as Republicans found themselves in disarray on one of their signature issues.

“House Speaker John Boehner publicly gave little ground to the president or to growing pressure from fellow Republicans, many of whom see the standoff as damaging to their party. (Note: a portion of remarks made yesterday by Speaker Boehner can be heard here (MP3- 1:00)).

“In a 10-minute phone call with the Ohio Republican, Mr. Obama urged the House to approve a two-month extension of the current, lower tax rate, and promised to negotiate a longer extension in the new year, according to administration and congressional officials.”

The Journal article added that, “Mr. Boehner reiterated House GOP complaints that two months is too short for a tax-cut extension, and asked the president to lean on Senate Democrats to enter into another round of negotiations before year’s end.”

“Senate Minority Leader Mitch McConnell (R., Ky.), an architect of the two-month extension, was blindsided by Mr. Boehner’s strategy and has been silent in recent days. But aides to Senate GOP leaders are fuming. ‘For better or worse this is a problem House Republicans have created and one they have to fix,’ said one aide.”

The Washington Post editorial board opined today that, “The best solution at this point would be for embattled House Speaker John Boehner (R-Ohio) to back away from the cliff to which his rebellious caucus has driven him and to agree to the Senate bill in exchange for a promise from the Senate to return earlier than late January and have conferees work on a year-long extension.”

John D. McKinnon reported in today’s Wall Street Journal that, “If the two-month extension passes, it would mark one of the briefest tax measures yet, accelerating the recent trend in Congress toward last-minute brinkmanship and short-term compromises on taxes. The payroll-tax break was originally passed in December 2010 to provide a one-year boost to the ailing economy. It was part of a package that also extended for two years the Bush-era tax cuts, which were adopted beginning in 2001.

Payroll executives complain that the two-month extension would pose problems for them to manage, even if it’s followed by a full-year extension.”

In other news, the AP reported yesterday that, “While fresh demographic information on U.S. farmers won’t be available until after the next agricultural census is done next year, there are signs more people in their 20s and 30s are going into farming: Enrollment in university agriculture programs has increased, as has interest in farmer-training programs.

“Young people are turning up at farmers markets [related article] and are blogging, tweeting and promoting their agricultural endeavors through other social media.

The young entrepreneurs typically cite two reasons for going into farming: Many find the corporate world stifling and see no point in sticking it out when there’s little job security; and demand for locally grown and organic foods has been strong enough that even in the downturn they feel confident they can sell their products.”

In more specific policy related news, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “All seven House Democrats from North Carolina proposed legislation on Tuesday that would set up a separate federal disaster aid program for farmers.

“Rep. G.K. Butterfield, the lead sponsor, said a separate program is needed because farmers need money much faster to recover from disasters and stay in business. Butterfield said the current disaster-aid program is expected to lead to similar delays without passing his bill, H.R. 3740.

“‘Farmers often operate on shoestring budgets with tight margins and limited cash flow,’ Butterfield said. ‘If farmers are unable to go to market due to crop losses, and it takes several months to receive a Supplemental Revenue Assistance payment or insurance, then they cannot pay employees, purchase new equipment, or prepare for the next growing season.’”

Meanwhile, Rep. Earl Blumenauer (D-Oregon) noted in an opinion item from earlier this week that, “At a time when America’s waistlines and our national debt are both reaching record levels, we are spending billions of dollars every year on subsidies for the massive agribusinesses that grow genetically modified, pesticide-laden commodity products like corn that are ultimately turned into processed foods like Twinkies. Meanwhile, growers of fruits and vegetables are on their own.”

Rep. Blumenauer added that, “It’s time for a farm bill that works for the average farmer. I just released a report, ‘Growing Opportunities: Family Farm Values for Reforming the Farm Bill,’ that offers a series of reforms to bring sanity to our overstuffed, inefficient agricultural policies.”

The Wall Street Journal editorial board today referenced a recent article from the Los Angeles Times which documented that: “For many students, Los Angeles Unified’s introduction of healthful lunches — part of a campaign against obesity, diabetes and other problems — has been a flop. The district says the menu will be revised.”

In referring to the L.A. Times article, The Journal indicated today that, “So the healthy food is so bad that kids are literally starving themselves rather than tucking into vegetarian curries, or else engaging in a black market. Apparently even an art teacher has been among those caught selling illicit candy, chips and instant noodles. Andre Jahchan, a high-school sophomore, tells the Times, ‘No matter how healthy it is, if it’s not appetizing, people won’t eat it.’

“No one is against healthy eating, and obesity is a growing youth problem, but L.A.’s education whizzes forgot the law of unintended health-food consequences. You can’t make a child eat vegetables without a little dessert to wash it down.”

In other policy related developments, Julian Pecquet reported yesterday at The Hill’s Healthcare Blog that, “The Department of Agriculture said Wednesday the agency has not changed its position on the use of antibiotics after public health advocates latched onto comments from Secretary Tom Vilsack as signaling a tougher stance.

“‘Secretary Vilsack’s comments do not reflect a change in policy for the Department,’ said USDA Spokeswoman Courtney Rowe.

“‘Working with the farm community, I think it’s clear we would like to see those antibiotics used in the context of disease control and disease response as opposed to any other reason or purpose for using them,’ Vilsack said Wednesday. ‘And we’re working with state veterinarians and veteranians’ associations and land-grant universities to ensure that there’s a better understanding of the importance of using antibiotics judiciously.’”

Yesterday’s update added that, “Public health advocates quickly jumped on the comments as evidence that the agency that regulates meat and poultry is changing its stance because Vilsack made no mention of disease prevention, which includes fortifying healthy animals raised in unsanitary conditions. Critics of the practice — including some Democrats in Congress — say the abundant use of antibiotics in animal agriculture is putting people at risk by creating disease-resistant superbugs.

“Vilsack’s choice of terms, public health advocates said, refer to situations when antibiotics are used to treat animals that are already sick.”

The Hill item indicated that, “Vilsack made the comments while unveiling a new report detailing the Obama administration’s food safety efforts. These include ‘stricter standards to prevent contamination of food with dangerous bacteria, stronger surveillance to detect contamination problems earlier, and more rapid response to illness outbreaks,’ according to a blog post from Vilsack and Health and Human Services Secretary Kathleen Sebelius.”

 

Regulations

Philip Brasher reported yesterday at The Des Moines Register Online that, “Farmers and the food industry are trying to kill a proposed safety standard for dioxins, chemicals that can cause cancer and are widely found in meat, seafood and dairy products.

Industry groups say a daily exposure limit for dioxin proposed by the Environmental Protection Agency isn’t justified and could unnecessarily scare consumers away from meat and milk products. An individual could ingest more than the proposed daily limit of dioxin in a single meal, the groups say.”

Mr. Brasher added that, “The proposed standard would not by itself trigger any regulations on farmers or food companies, but the government could later recommend measures, including restrictions on the content of livestock feed, to reduce the amount of dioxins that people could consume.

“The dioxin limit is the latest health and environmental issue that has pitted the Obama administration against industries who claim they’re being subjected to unwarranted, job-stifling rules and regulations.”

Meanwhile, Rachel Leven reported yesterday at The Hill Online that, “Thirty senators are calling on Labor Secretary Hilda Solis to withdraw immediately proposed federal rules that would limit the work that young people can perform on farms.

“Led by Sens. Jerry Moran (R-Kansas) and Ben Nelson (D-Neb.), the senators have asked Solis to rethink her department’s ‘misguided’ attempt to revise child labor laws for agriculture.”

Also yesterday, an update posted at Farm Futures Online stated that, “As the U.S. Department of Labor pushes to restrict the ability of youth to do farm work, those close to the land are beginning to fight back. Historically, family farms have been exempted from such rules, but Representative Tom Latham, R-Iowa, has expressed concerns that a new proposal could be interpreted to exclude operations that are partly owned by extended family members such as grandparents, aunts or uncles.

“In response, Latham has authored and introduced bipartisan legislation that expresses the sense of Congress that the Secretary of Labor should recognize the unique circumstances of family farm youth and multi-generational family partnerships in agricultural operations when drafting regulations under the Fair Labor Standards Act. Representative Dan Boren, D-Okla., is co-sponsoring the legislation.”

DTN writer Katie Micik reported yesterday that, “When Secretary of Labor Hilda Solis was sworn in, she said, ‘there’s a new sheriff in town,’ and vowed to increase enforcement of labor laws. Since then, several explosions at elevators and record-setting grain engulfment incidents moved elevators to the top the Occupational Health and Safety Administration’s (OSHA) list.

“‘You’re on the short list, there is an incredible focus on your industry, so you need to be prepared,’ said Eric Conn, an attorney that leads the OSHA practice division of Epstein Becker and Green, at the National Grain and Feed Association’s Country Elevator meeting in Chicago earlier this month.”

And an update posted yesterday at the National Sustainable Agriculture Coalition Blog stated that, “On Monday, December 19, the EPA announced that it is extending the comment period on a proposed rule with requirements for Concentrated Animal Feeding Operations (CAFOs) to report specific information about the their operations to the agency.  Comments are now due January 19, 2012.  EPA has issued a fact sheet with information on submitting comments.”

 

MF Global

Ben Protess and Azam Ahmed reported in yesterday’s New York Times that, “Federal authorities investigating the collapse of MF Global have uncovered e-mails that detail the transfers of money in the firm’s last days, including transfers that contained customer money, according to people close to the investigation.

“One e-mail chain refers to the transfer of roughly $200 million that MF Global owed JPMorgan Chase on Oct. 28 — the firm’s last business day before it filed for bankruptcy. In that chain, a senior official in the firm’s Chicago office was told to make the transfer, said the people close to the investigation who requested anonymity because the inquiry was still open.

“That official, Edith O’Brien, a treasurer at MF Global, is considered a ‘person of interest’ in the investigation, said two of the people, who added that authorities expected to interview her in the coming days. It was not clear who had directed Ms. O’Brien, whose job was to oversee the customer money, to make the Oct. 28 transfer. The roughly $200 million that JPMorgan Chase received is said to be entirely customer money.”

An update posted yesterday at CNN Money Online reported that, “The bankruptcy court trustee in the MF Global case has identified $700 million in U.S. customer funds that were sent to the United Kingdom before the collapse of the commodities and futures trader.

“But while the trustee said he would be trying to get the money back from the British authorities, he warned MF Global customers that getting that money will be a difficult and drawn-out process.”

In a letter earlier this week to the SEC and CFTC, a group of five Congressman indicated that, “We are writing in support of the various efforts before the Court that request the release of 100 percent of assets in all commodity customer accounts at MF Global, which have been frozen by the SIPC liquidation now underway.  Our constituents from all walks of life have been adversely affected by MF Global’s failure, from farmers to investment advisors to MF Global’s competitors.  It is imperative that these funds be released at once in order to prevent irreparable harm to these customers, American’s capital markets and our economic future.”

And a news release yesterday from Sen. Pat Roberts (R-Kansas) stated that, “[Sen. Roberts] today sent a letter to Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), seeking answers on the timing of his decision to recuse himself from matters related to MF Global’s bankruptcy.

“‘Mr. Chairman, I cannot emphasize enough the importance of having a firm hand at the wheel of this nation’s regulator of the futures and swaps industry,’ Roberts said in the letter. ‘That regulator also must know when to hand the wheel over to another if the appearance of a conflict of interest exists. I am astounded at your inability to do either completely, and by your refusal to let us know the scope of, or the reason for what you decided to do and not to do.’

The letter asks Gensler for a complete account of all of his interactions with Jon Corzine, former MF Global CEO, because of their past relationship, and why it would cause a distraction.”

The complete letter from Sen. Roberts is available here.

 

Trade

Alan Beattie reported yesterday at The Financial Times Online that, “Beijing on Wednesday seized on a US court ruling to argue that Washington was practising illegal protectionism by imposing anti-subsidy tariffs on imports from China.

“A statement from the Chinese commerce ministry said the US must stop applying ‘countervailing duties’, used to restrict imports deemed to be state-subsidised, on Chinese imports. A federal circuit court, the highest level below the US Supreme Court, ruled on Monday that it was illegal for the US to impose both countervailing and ‘antidumping’ duties, used against imports deemed to be priced unfairly low, on the same goods.

The FT article added that, “The ruling has handed Beijing a propaganda victory in its trade skirmishes with Washington. China won a case against the US this year at the World Trade Organisation, which ruled that Washington was in effect double-counting by imposing countervailing and antidumping duties on the same imports.

The US Congress could, in theory, easily override the federal court’s ruling by changing domestic trade law. But experts noted the chance that passing such a bill could provide a vehicle for legislation seeking to punish China for undervaluing its currency.”

Keith Good

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