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Farm Bill and Policy Issues; Ag Economy; Biofuels; and MF Global

Farm Bill and Policy Issues

Gary Moseman noted earlier this week at the Great Falls Tribune Online (Mont.) that, “When Congress reaches its now-customary partisan deadlocks on Capitol Hill more than 2,000 miles from northcentral Montana, it has the characteristics of a sideshow for most of us — power-suited dandies posturing for the cameras and for the most advantageous positions going into the coming election year.

“Watching the body’s inability to pass key taxing and spending legislation, along with nightly sound bites by Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell with counterpunches from House Speaker John Boehner and Minority Leader Nancy Pelosi, we have no trouble at all understanding congressional approval ratings that have plummeted well into single digits.

But before becoming too cynical about the process, it’s important to remember the extreme weight of the measures currently occupying the time of our national leaders.”

The update stated that, “With Congress not even in session right now, it’s too early to say with any specificity what will happen — and with this Congress, there’s no telling what the outcome will be even as it’s happening.

“But with this week’s series of articles, we wanted to at least get a preliminary look at what’s on the table.”

Among the issues to watch, according to Mr. Moseman: “The Farm Bill, the federal agriculture and food-policy bill that comes up for approval approximately every five years — including in the coming year, Congress willing — provides a major, reliable source of funding for, among other things, agriculture in the state. It usually includes a system of crop subsidies and conservation payments that helps to reduce some of the risk of operating a farm in next-year country.”

In more specific detail on Farm Bill conservation programs, Karl Puckett reported this week in a follow up article at the Great Falls Tribune that, “Congress created a program in 1985 in which the federal government would pay farmers not to plant crops.

It was called the Conservation Reserve Program, and its goal was two-fold: control surplus grain production and curb the loss of topsoil caused by wind and water.

“But there were big secondary benefits: Water quality improved and wildlife, particularly birds, flourished on the idle land.”

Mr. Puckett pointed out that, “CRP supporters, including conservation groups and state and federal wildlife agencies, are worried that lawmakers could significantly cut CRP acreage as they tackle the nation’s $15 trillion debt.”

Almost 30 million acres are enrolled in CRP nationally, including 2.5 million in Montana — the third most of any state in the nation.”

The article noted that, “Earlier this year, the chairmen of the Senate and House agricultural committees recommended lowering the CRP cap from the current 32 million acres to 25 million acres, said Lola Raska, executive vice president of the Montana Grain Growers Association in Great Falls, which represents wheat and barley producers.”

The detailed article added that, “Some agricultural groups say reducing the CRP cap — and thus the rental payments to farmers — is not necessarily a bad idea considering the alternatives, Raska said. Commodity programs and crop insurance are of bigger concern, and budget savings will need to be found somewhere, she said.

“‘That’s one area we see as being easier to find some savings than in crop insurance or the commodity title,’ Raska said of CRP.

“Dave Dittloff of the National Wildlife Federation in Missoula said ensuring conservation programs are not cut disproportionally in the farm bill is a priority for the group and other conservation organizations.”

Also, the article stated that, “Charlie Bumgarner, who farms 10 miles east of Great Falls, has approximately 1,200 acres tied up in CRP, but he has decided to gradually begin planting them again as the contracts expire.

“‘For my needs right now, I think I can farm that ground a lot better than we used to farm it way back in the early ’80s just because of the technology that’s available to us,’ Bumgarner said.”

And the AP reported today that, “Hunters in the northern Plains who’ve grown accustomed to bringing home three pheasants or a deer are finding the years of abundance may be over…A Christmas with little or no snow should help hens and roosters find food and survive so they can reproduce, [Randy Kreil, wildlife chief of the North Dakota Game and Fish Department] said, but population gains will still be hampered by loss of habitat as land enrolled in the federal Conservation Reserve Program shifts back to farming.

“The voluntary CRP program pays landowners not to farm their property. Since its creation in 1985, it has boosted populations of ducks, ring-necked pheasants, prairie chickens, Columbian sharp-tailed grouse and other wildlife by providing areas where they can feed and reproduce, according to the USDA.”

In news regarding nutrition issues, Sarah Gonzalez reported yesterday at Agri-Pulse that, “Among the contentious points in USDA’s proposed ‘Nutritional Standards in the National School Lunch and School Breakfast Programs’ is sodium, which is a major component in salt. The school meal standards adopted the salt restrictions in the 2010 dietary guidelines, which the Salt Institute claims are unreliable and unscientific, and are resulting in a misguided school nutrition proposal.

“‘The flawed sodium provisions in the Dietary Guidelines cause significant harm to the public and the salt producers that we represent, by distributing scientifically unsupportable information disparaging sodium, a mineral essential to human health,’ according to a letter signed by Salt Institute president, Lori Roman.

“The letter, sent to Secretary of Agriculture Tom Vilsack and Secretary of Health and Human Services Kathleen Sebelius, requests the withdrawal of the provisions in the guidelines.”

Meanwhile, The New York Times editorial board opined today that, “The economic downturn is driving more and more families into the ranks of the poor and the ‘near poor’ who barely make it from paycheck to paycheck. This pattern is chillingly clear from the rising numbers of formerly middle-class children now qualifying for free or low-cost meals under the federally financed school lunch program.

“A recent analysis of federal data by The Times showed that the number of children receiving subsidized lunches rose to 21 million in the last school year from 18 million in 2006-7, a 17 percent increase. During that period, nearly a dozen states — including Nevada, Florida, Tennessee and New Jersey — experienced increases of 25 percent or more. In New York City, as of last month, a little more than 62 percent of the city’s children were eligible for free lunch — up from around 57 percent in 2007.”

The Times added that, “The federal government spent nearly $11 billion on this program in fiscal 2010 and is likely to spend more in 2011. While critics of safety-net programs will inevitably complain about the cost, the real problem is that so many millions of American children need this help.”

Recall that earlier this week, Rod Smith reported at Feedstuffs Online that, “Eight groups representing livestock and poultry producers have urged Congress to reject the agreement on hen housing reached by The Humane Society of the United States (HSUS) and the United Egg Producers (UEP).

“In a letter to House Agriculture Committee chair Frank Lucas (R., Okla.) and ranking member Rep. Collin Peterson (D., Minn.), the groups said the agreement would impose ‘costly and unnecessary animal rights mandates’ on the U.S. egg industry. The groups said the agreement’s prescriptive nature would ensure that ‘Congress will be in the egg business for years to come’ by requiring all egg producers to adopt specific hen housing standards.”

Gene W. Gregory, the President of the United Egg Producers, penned a separate letter on this issue to the Members of the House and Senate Agriculture Committees.  In part, the letter noted that, “On December 6, you received a letter from several livestock groups that opposed ‘animal rights mandates proposed by the Humane Society of the United States (HSUS).’  This description is misleading since the proposal is being made jointly by United Egg Producers (UEP) and HSUS and is the result of negotiations in which both groups made substantial concessions to arrive at a national standard that will bring order and sustainability to the egg industry.  Although we respect the right of the livestock groups to make their views known, the letter provides an overheated and distorted view of an initiative that is strongly supported by U.S. egg farmers.  We appreciate this opportunity to provide you with our perspective.”

Also recall that on the July 12 AgriTalk radio program with Mike Adams, “Chad Gregory, Senior Vice President of the United Egg Producers explained why his group agreed to a deal with the Humane Society of the United States to push for legislation banning most hen cages currently in use.”

To listen to this discussion from the July AgriTalk program, just click here.

A second segment from the July show with Chad Gregory is available here (MP3- 3:05).


Agricultural Economy

A recent Email update from the Federal Reserve Bank of Kansas stated that, “United States agriculture is notorious for its ‘golden eras.’ In the 1910s and the 1970s, strong global demand and rising exports boosted agricultural commodity prices and farm incomes. These golden eras, however, were soon tarnished as economic and financial market conditions changed. Today, U.S. agriculture appears to be in the midst of another golden era. Robust export activity, strong bio-fuels demand and low interest rates have spurred another farm income and farmland value boom. Despite the vast similarities to past booms, subtle differences suggest that this time could be different.

“The latest issue of the ‘Main Street Economist’ explores the foundations of the current and past farm booms. Read the complete article here, “Is This Farm Boom Different?

A Radio News Service item from USDA yesterday (“A More Uncertain Year Could be in Store for Farmers”), which included remarks from USDA Chief Economist Joe Glauber, noted that, “The new year could bring a bit more uncertainty into the lives of farmers and ranchers.”

Also yesterday, a Bloomberg video update featured Richard Volpe, food-price economist for the U.S. Department of Agriculture, who spoke about the outlook for milk, cattle and hog prices.

And Bloomberg writer Lucia Kassai reported yesterday that, “Corn production in Argentina, the world’s second-largest exporter after the U.S., has suffered ‘irreversible damage’ from dry weather in the major producing provinces of Santa Fe and Buenos Aires, the Buenos Aires Cereals Exchange said.

“‘Most of the crops in the central area are facing unfavorable weather conditions amid a critical stage of development,’ the exchange said on its website.”

Meanwhile, William Neuman reported in today’s New York Times that, “There is a shortage of organic milk across the country, and it has become so bad in areas like the Southeast that Publix stores from Florida to Tennessee have put up signs in dairy cases anticipating the shopper’s frustrated refrain: ‘Where’s my organic milk?’

“The answer is that there is not enough to go around, and starting next month consumers can expect to see a sharp jump in price as well.

The main reason for the shortage is that the cost of organic grain and hay to feed cows has gone up sharply while the price that farmers receive for their milk has not. That means that farmers feed their cows less, resulting in lower milk production. At the same time, fewer farmers have been converting from conventional dairying to organic.”



The Wall Street Journal editorial board indicated today that, “Congress created ethanol subsidies in 1978, expanded them in a 1980 bill, and then rinsed and repeated in 1982, 1984, 1988, 1990, 1992, 1998, 2004, 2005 and 2007. But now, wonderful to relate, this 30-year adventure in corporate welfare may finally be going into reverse.

Congress adjourned this month without extending the $6 billion annual tax subsidy for blending corn ethanol into gasoline and the steep import tariffs on the industry’s foreign competitors. Both turn into a pumpkin at the stroke of the New Year.”

The Journal noted that, “Ending ethanol protectionism will at least help lower U.S. costs, but the tragedy is that no one would ever buy it at the pump without Congress’s mandate, which, alas, will continue.”

In other news, Ryan Tracy and Jim Carlton reported in today’s Wall Street Journal that, “In a victory for refiners and ethanol producers, a federal judge halted enforcement of California’s low-carbon fuel rules Thursday, saying they discriminated against crude oil and ethanol imported into the state.

“The decision puts on hold a major portion of California’s effort to cut greenhouse-gas emissions, at a time when the most-populous state’s stance has taken on extra importance nationwide because of a stalemate in Washington over greenhouse-gas legislation.”

The Journal writers added that, “The ruling means that refiners and ethanol producers won’t have to buy credits when importing oil and ethanol into California, as the regulations would have required in certain cases.

“Judge Lawrence J. O’Neill, of the U.S. District Court for the Eastern District of California in Fresno, rejected the state’s regulations, finding that California’s effort to control fuel imports infringed on Congress’s constitutional authority over interstate commerce.”


MF Global

Azam Ahmed and Ben Protess reported in yesterday’s New York Times that, “Federal authorities investigating the demise of MF Global think that the firm began improperly moving customer money to a middleman on Oct. 27, according to people briefed on the matter.

“The transfers, which indicate the brokerage firm misused client money earlier than previously believed, represent a new line of inquiry in the hunt for more than $1 billion in missing money.”

The Times article added that, “In MF Global’s last days, the brokerage house was frantically winding down trades to shore up its balance sheet and stave off bankruptcy. Investigators are examining whether the firm — as part of that effort — began moving client money to the Depository Trust & Clearing Corporation, a financial intermediary responsible for closing out some of MF Global’s transactions, these people say.

“The new details bolster claims that MF Global was careless with customer money, regardless of the company’s intentions. Authorities previously found that MF Global had used roughly $200 million of client funds to replenish an overdrawn account at JPMorgan Chase in London on Oct. 28, the last business day before the firm filed for bankruptcy.”

Keith Good