FarmPolicy

Budget- USDA; Farm Bill Issues; Ag Economy; Regulations; and Trade

Budget- USDA

Richard Wolf reported yesterday at USA Today Online that, “The soaring national debt has reached a symbolic tipping point: It’s now as big as the entire U.S. economy.

“The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.

“That’s roughly equal to the value of all goods and services the U.S. economy produces in one year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December — a level the debt is likely to surpass this month.”

And more specifically with respect to agriculture, Reuters writer Charles Abbott reported yesterday that, “The U.S. Agriculture Department plans to close 249 offices this year — half of them the local ‘county office’ that deals with farmers — in a cost-cutting program, Agriculture Secretary Tom Vilsack announced on Monday.

“USDA says the package will save $150 million a year and help reduce the yawning federal deficit. Vilsack announced the closures in a speech to the annual meeting of the 6 million-member American Farm Bureau Federation.

“Some 7,000 USDA employees have accepted early retirement in the past 15 months ‘and that number is sure to grow as this year progresses,’ said Vilsack. USDA had roughly 104,000 employees last year.”

More specific details regarding this development can be found in this USDA news release from yesterday.  Also, a map and complete list of impacted offices related to this budget related news can be found at this USDA webpage.

Mr. Abbott noted that, “Past proposals to close local USDA offices ran into a buzzsaw of opposition. Congress has blocked closures unless USDA provides adequate notice and proof that a local office is not needed. USDA has at least one office in each rural county and thousands of offices in all.

“‘Even with these changes, USDA will still have a strong presence in virtually all counties in the country as well as around the world,’ said Vilsack.”

The AP reported yesterday that, “The U.S. Agriculture Department announced Monday it will close nearly 260 offices nationwide, a move that won praise for cutting costs but raised concerns about the possible effect on food safety.

“Agriculture Secretary Tom Vilsack said the goal was to save $150 million a year in the agency’s $145 billion budget. About $90 million had already been saved by reducing travel and supplies, and the closures were expected to save another $60 million, he said.”

The AP article explained that, “Elisabeth Hagen, undersecretary for food safety, said the closures would affect management and support staff as FSIS offices are consolidated from 15 to 10, but that there wouldn’t be a reduction in inspectors or inspection work.

“‘There will be no reduction in inspection presence at slaughter and processing facilities and no risk for consumers,’ Hagen said.”

Yesterday’s article added that, “Vilsack said he didn’t anticipate widespread layoffs, in part because 7,000 USDA employees took early retirements over the past year. He said the agency is trying to do more with less in light of federal cutbacks, and many of the offices to be closed had few employees or were near other offices.

“‘Our workload is at record highs, we have less money and fewer people and work to do and we tried to address how do you do that without interrupting service,’ Vilsack said in a phone call from Honolulu, where he was speaking to the American Farm Bureau Federation.”

“Vilsack said public hearings will be held in counties where Farm Service Agency offices are to be closed. That department handles disaster assistance, farm loans and crop subsidies, among other programs. The USDA plans to shut 131 FSA offices in 32 states, with largest number of closures in Arkansas, Tennessee and Texas.”

Farm Bill Issues

Reuters writer Charles Abbott reported yesterday that, “Congress could slash U.S. farm subsidies far more than expected, perhaps by twice as much as proposed two months ago, to help trim the federal deficit, Agriculture Secretary Tom Vilsack said on Sunday.

“‘It could be $23 billion. It could be $48 billion. It could be $33 billion,’ Vilsack said on the sidelines of the annual meeting of the 6 million-member American Farm Bureau Federation (AFBF).

“AFBF president Bob Stallman also told reporters there was strong pressure to cut agriculture spending. Vilsack and Stallman said budget pressures will make it hard to write a new farm law this year despite a Sept 30. deadline.”

Mr. Abbott pointed out that, “A cut amounting to $48 billion would be about 5 percent of farm bill funding, and twice the $23 billion suggested by Agriculture Committee leaders last fall.

“The White House has suggested $33 billion in cuts. Republicans in the U.S. House voted for $48 billion last spring.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “A risk-management proposal by the American Farm Bureau Federation board of directors left a lot of questions by farmers attending the group’s forum on the 2012 farm bill.

“Farm Bureau members got a primer on the concept on the opening day of the Farm Bureau’s annual convention. The sun was shining, the waves were rolling, and Hawaii was in its full glory as farmers sat in a convention hall trying to absorb details of the Systemic Risk Reduction Program.

“The Systemic Risk Reduction Program is meant to help farmers deal with heavier losses than other plans put forward by commodity groups last fall. The SRRP would help prevent catastrophic losses and rely on crop insurance but reduce overall farm spending to show farm programs are fiscally responsible.”

Mr. Clayton explained that, “The SRRP is a county-based policy similar to the Group Risk Income Plan crop insurance, or GRIP, except it would trigger based on a five-year Olympic average of county revenue, based on USDA National Agricultural Statistic Service harvest prices. Individual losses would be covered by crop insurance that producers continue to buy.”

The DTN article noted that, “Rob Joslin, an Ohio farmer on the American Soybean Association’s farm-bill task force, said Sunday he still likes the Ag Risk Coverage program proposed by the agriculture committees, which is based on individual farm coverage instead of countywide losses. Joslin said there was little risk of payment overlap between crop insurance and the Ag Risk Coverage program because few producers can afford the 85% coverage level that could kick in payments from both crop insurance and the federal government.

“‘I still think the ARC program makes a lot of sense,’ Joslin said. ‘It’s tailored to the farm.’”

A news release yesterday from Farm Bureau stated in part that, “AFBF economist John Anderson provided an explanation of Farm Bureau’s Systemic Risk Reduction Program farm bill proposal, which is designed to protect farmers from catastrophic revenue losses. Proposed SRRP coverage levels would be in the 70 percent to 80 percent range. It would be administered by the Agriculture Department’s Risk Management Agency and operate as a core program with farmers buying crop insurance as ‘wrap-around’ revenue risk protection.

“One of the most attractive features of the SRRP proposal, according to Anderson, is the impact it would have on lowering farmers’ crop insurance premiums.

“‘As a program that’s integrated with crop insurance, crop insurance premiums could be re-rated to account for the fact that much of the risk is covered elsewhere,’ he explained. ‘That would lower premiums and make buy-up coverage more affordable.’”

Farm Bureau Federation Congressional Relations Director Mary Kay Thatcher was a guest on yesterday’s AgriTalk radio program with Mike Adams where she discussed a variety of policy issues.  In part, Ms. Thatcher discussed concerns about linking conservation compliance requirements for producers to crop insurance eligibility. To listen to a brief portion of remarks on this particular issue from yesterday’ AgriTalk show, just click here (MP3- 1:31).

Meanwhile, a separate update posted yesterday at AgWired reported that, “American Farm Bureau Federation Congressional Relations Director Mary Kay Thatcher gives 50-50 odds on getting a new farm bill done in 2012.

“‘It’s going to be a real uphill battle to get it done,’ Thatcher said during a farm bill session at the AFBF annual meeting on Sunday. ‘It’s a goal that’s certainly worth working towards because there’s going to be less money in 2013 than we have this year so the longer we wait, the more difficult it’s going to be.’”

The AgWired update also included an audio replay of an interview with Ms. Thatcher.

Also yesterday, an update posted at the Environmental Working Group Online, “The Farm Bill is a Climate Bill,” stated that, “Climate Change activists should be concerned about proposed cuts to farm bill conservation programs, which would be the carbon emissions equivalent of adding 2 million cars a year to America’s roads.”

In other news, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Senate Budget Committee ranking member Jeff Sessions (R-Ala.) on Monday asked the Department of Agriculture for more details about its attempt to find fraud in the $89 billion federal food stamp program, and suggested that USDA try to curb eligibility requirements in order to cut spending. USDA announced in December that it was attempting to crack down on food stamp fraud by trying to prevent people from selling or exchanging their food stamps, through new rules and guidance to states on how the program is implemented.

“‘Lax oversight — arising in part from states having little incentive to control the flow of federal dollars — combined with a fast-growing budget and loosened eligibility, has likely led government officials to significantly underestimate the amount of fraud and abuse taking place,’ Sessions wrote in a letter to USDA.”

And, news release yesterday from Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) noted yesterday that, “[Sen. Stabenow] today delivered an address on the ‘State of Michigan Agriculture’ during the Michigan Agri-Business Association’s 79th Annual Winter Conference. Chairwoman Stabenow’s address focused on the future of Michigan agriculture and her efforts to strengthen this vital part of Michigan’s economy.”

In her presentation, Chairwoman Stabenow indicated that, “So as we look at the next Farm Bill, we need effective risk management tools for farmers that are simple and easy to use. In my visits around Michigan, and in our field hearing here and at the one we did in Kansas, we heard over and over again that crop insurance is the foundation of the farm safety net.

“It’s absolutely the most important risk management tool for farmers. So as we worked on the Super Committee recommendations, we made crop insurance the centerpiece of the risk management system. We need to protect crop insurance from cuts, strengthen the program and make it more effective, and expand crop insurance so producers from all regions and all crops can get adequate protection.

“We also made a significant agreement to move away from Direct Payments, which have been under serious political attack from all sides.”

Agricultural Economy

A recent update posted at Feedstuffs Online reported that, “Over time, American farming has consolidated into large-scale operations that have adopted innovation and technology considerably and have become very productive, benefiting farmers, consumers and the country, according to an analysis of farm structure by the U.S. Department of Agriculture’s Economic Research Service (ERS).”

“U.S. agriculture produces food for people across the U.S. and throughout the world, provides feedstocks for bioenergy production and provides ecosystem services such as carbon sequestration for a nation that’s increasingly focused on environmental sustainability, according to the ERS report.”

The Feedstuffs update added that, “Agriculture does this on almost 10% less land than farming used 30 years ago, according to the report, written by James MacDonald, Erik O’Donoghue, Patrick Sullivan and Utpal Vasavada.

“Innovation, technology and productivity are especially evident in the livestock and poultry sectors, where intense, large-scale production and growing and marketing contracts have prompted the development of specialized dairy, hog and poultry operations, with more mechanized animal housing, feeding and manure management systems, ERS said.

“This has allowed producers to respond to higher costs for labor and land by growing more animals on less land using less labor, ERS said. By contrast, producers with less confined operations are not as productive, ERS said.”

Regulations

Robert Barnes reported in today’s Washington Post that, “Conservative members of the Supreme Court seemed outraged Monday by the Environmental Protection Agency’s actions in a four-year battle with an Idaho couple who want to build a house on land the EPA says contains sensitive wetlands.

“Justices across the ideological spectrum appeared troubled by the EPA’s position that Mike and Chantell Sackett do not have the right to go court to challenge the agency’s wetlands decision.

“But some justices got more worked up about the case than others, and Justice Samuel A. Alito Jr. led the parade.”

The Post article noted that, “‘If you related the facts of this case . . . to an ordinary homeowner, don’t you think most ordinary homeowners would say this kind of thing can’t happen in the United States?’ Alito asked Deputy Solicitor General Malcolm L. Stewart, who was representing the EPA.

“The Sacketts wanted to build a home on a 0.63-acre lot near Priest Lake in the Idaho panhandle that they bought for $23,000. But after three days of bringing in fill dirt and preparing for construction in 2007, officials from the EPA and the U.S. Army Corps of Engineers ordered the activity stopped and said they suspected the land contained wetlands.

“Months later, the agency sent the Sacketts a ‘compliance order’ that said the land must be restored as a wetlands before the couple could apply for a building permit. The government acknowledged Monday that fines for failure to comply with the orders could be as much as $75,000 a day.

“The question for the justices is whether the couple had the right at that point to appear before a judge and contest the agency’s contention that their land contained wetlands subject to the Clean Water Act.”

Other recent news items regarding this case can be found here, here, and here.

In other news, Cindy Galli reported yesterday at ABC News Online that, “Montana farmers have filed a class action suit against former New Jersey governor Jon Corzine, charging that the failed financial firm run by Corzine stole millions from their accounts to pay off its spiraling debts, and that Corzine’s ‘single-minded obsession’ with making MF Global a big player on Wall Street led to the firm’s collapse.”

Gregory Meyer reported earlier this week at The Financial Times Online that, “US financial regulators have raised the idea of extending investor safeguards proposed for certain derivatives to the futures markets as they probe missing customer funds at bankrupt broker MF Global.

“Investors in cleared swaps – a form of derivatives contract negotiated between two traders where the risk of one party defaulting is shifted to a clearing house – are set to receive stronger protection than futures traders in a vote by the Commodity Futures Trading Commission on Wednesday.”

Trade

Carol E. Lee and Sudeep Reddy reported in today’s Wall Street Journal that, “President Barack Obama plans to create a U.S. government task force designed to monitor China for possible trade and other commercial violations as part of a larger White House effort to get more assertive with Beijing this election year, people familiar with the matter said.

“The group, called the Enforcement Task Force, will aim to enforce U.S. trade rules. Despite the generic name, officials said the group is specifically meant to target China. It will include officials from various government agencies, including the Treasury Department, the Commerce Department, the Energy Department and U.S. Trade Representative’s office.”

Keith Good

Posted by Keith Good • January, 10, 2012 • 5:22 am