FarmPolicy

August 29, 2014

Budget; Policy and Farm Bill Issues; Regulations; Ag Economy; and Trade

Budget- Payroll Tax

Jennifer Haberkorn reported yesterday at Politico that, “Democrats are licking their chops over the idea of another Republican budget that attempts to dramatically reform the Medicare program.

“House Budget Committee Chairman Paul Ryan (R-Wis.) has indicated that his budget will address Medicare and could include the revised plan he crafted with Democratic Sen. Ron Wyden of Oregon. Under their plan, seniors would get ‘premium support’ to help them buy private insurance coverage or traditional Medicare.”

The article noted that, “Ryan on ‘Fox News Sunday’ said he hasn’t written the budget yet because the Congressional Budget Office baseline isn’t out, but he added, ‘We’re not going backward; we’re going forward. We’re not backing off of any of our ideas, any of our solutions.’”

Meanwhile, Manu Raju reported yesterday at Politico that, “House Speaker John Boehner and Senate Minority Leader Mitch McConnell have expressed confidence that negotiations over extending the payroll tax cut will end in a deal that can pass Congress by the end of February, averting last-minute legislative hijinks that have become all too common in Congress.

“Senate Minority Whip Jon Kyl (R-Ariz.) is not so sure.

“Speaking to reporters outside the Senate chamber, the senior Republican negotiator said on Monday he was worried that foot-dragging by members of the conference committee could complicate a timely deal.”

Yesterday’s article added that, “His warnings come ahead of a conference committee meeting Wednesday to talk about a range of fiscal issues: a yearlong extension of the Social Security payroll tax cut, jobless benefits and overhauling the reimbursement formula for Medicare. If Congress doesn’t act by Feb. 29, about 160 million workers will see a 2-point increase in their payroll taxes. Millions will begin to see their jobless benefits lapse. And there will be a sharp reduction in Medicare payments to doctors.

“While Congress may very well seal a deal before the deadline, the same major sticking point remains over how to offset the costs of measures that would otherwise add billions of dollars to the burgeoning budget deficit. Asked how close Democrats and Republicans were to agreeing to offsets, Kyl said: ‘I don’t know. We haven’t even started working together yet.’”

And with respect to the political tone, and legislating in this election year, John F. Harris and Jonathan Allen reported yesterday at Politico that, “‘This election is built to have a fight,’ Rep. Kevin McCarthy, a California Republican and the House majority whip, told POLITICO. ‘If you watch from the rise of the tea party [on the right] to the rise of the Occupiers [on the left]—in ’08, our country said they wanted a little more government. In 2010, they said, ‘Whoa, that was too much.’ I think 2012 is going to be the argument for the size and scope of what they want America to be, and that is healthy. We should have the debate of what we want this country to look like.’

The correct response to Washington gridlock, by this reckoning, is not private deal-making but a public clash over core beliefs. Most Republicans don’t believe in raising taxes and would rather fight than split the difference. Most Democrats don’t believe benefits like Medicare should be cut or turned over to the states and are more than ready to take the argument to voters.”

 

Policy and Farm Bill Issues

An article posted yesterday at Feedstuffs Online reported that, “American consumers ‘overwhelmingly supportthe agreement between The Humane Society of the United States (HSUS) and the United Egg Producers (UEP) and the legislation that was introduced in Congress last week to effect it, according to a survey that was released today.

“The agreement transitions U.S. egg production from conventional cages to ‘enriched’ colony cages by the end of 2029, and the legislation would make colonies a national requirement, or standard, so that all egg producers will participate.”

The article explained that, “Consumers support the transition to colonies by a margin of 12-to-1, support the federal legislation by a margin of 4-to-1 and support the federal legislation over state legislation by a margin of 2-to-2, according to the survey.

“Consumers also said the two most important organizations to be involved in the transition are HSUS and UEP, and 59% of those consumers surveyed said they would be ‘more supportive’ of the legislation if they were assured that HSUS and UEP were actively involved in and supporting the transition and legislation, the survey found.”

Sara Wyant reported yesterday at Agri-Pulse Online that, “A new survey indicates that American consumers overwhelmingly support national legislation requiring egg producers to switch to enriched cages – a move endorsed by the United Egg Producers (UEP) and the Humane Society of the United States (HSUS).”

The Agri-Pulse article pointed out that, “As a result of state legislative efforts pushed by HSUS, several states already have established, or are in the process of establishing, different laws regarding the housing and sale of eggs in each of their states – creating costly and sometimes confusing requirements for egg producers, many of which sell eggs across state lines.

“The UEP struck a compromise deal last year with HSUS in which the animal rights organization would stop pursuing state by state regulations and the two organizations would jointly seek a federal solution. The HSUS also agreed to drop demands for ‘cage free’ egg production.

“‘This is legislation that egg farmers and consumers overwhelmingly support’ said David Lathem, a Georgia egg farmer and chairman of UEP.”

Yesterday’s article added that, “However, some egg producers and national pork and cattle groups remain adamantly opposed to enactment of federal legislation, fearing that it would require costly new investments and give HSUS an opportunity to push for federal legislation on other species.”

Rod Smith reported yesterday at Feedstuffs Online that, “A bill that would codify the agreement on hen housing between The Humane Society of the United States (HSUS) and the United Egg Producers (UEP) was introduced in Congress last week, and although it was embraced by HSUS and UEP, it was immediately panned by major U.S. agricultural organizations, other animal protection/rights activists and a group organized to keep food prices under control.”

Mr. Smith noted that, “Eggs are marketed nationally, and egg producers need one playing field, not costly and different rules in every state, which is the direction the industry was heading, UEP CEO and president Gene Gregory said.

“‘We need this legislation for our customers and consumers and for the survival of egg farmers,’ he said.”

Dan Wheat reported last week at the Capital Press Online that, “Chris Huckleberry, [U.S. Rep. Kurt Schrader’s, D-Ore.] legislative director, verified the bill would nullify state laws and prohibit new state laws or ballot measures regulating egg production.

“‘The whole idea is federal standards for consistency for animal welfare and to allow farmers to maintain their business models,’ Huckleberry said.”

In more specific Farm Bill news, American Farm Bureau (AFBF) President Bob Stallman noted in a recent AFBF publication that, “Earlier this year, after much thought and deliberation, the American Farm Bureau Federation developed a plan to establish a catastrophic revenue loss program. This plan is unique in that it will help protect America’s farmers from losses that truly endanger the very core of their farms. At the same time, it recognizes today’s budget realities. It is also unique in that it can be applied to a broader range of commodities, like fruits and vegetables.

“There have been several recent proposals for program crops with payments that kick in after only a small decrease in farm revenue for some crops and set up higher target prices for others. But, as Farm Bureau sees it, the government should take on the very serious, large-scale risks that happen infrequently instead of smaller risks. Agricultural programs are intended to help farmers deal with big challenges they cannot handle alone, not minimal losses.

“We have serious concerns about the other proposals floating around, which dictate different rules, different crops and different payments. Not only would such programs be a nightmare for local Farm Service Agency offices to administer, but farmers would have the ability to cherry-pick which program works best for them. Because of distortions in price, we’d have a system of farmers deciding what to produce based on government payments rather than market signals.”

Ron Hays reported on Friday at the Oklahoma Farm Report Online that, “While in Washington for the winter wheat industry meetings, we sat down in the offices of the American Farm Bureau and talked at length with AFBF lobbyist Mary Kay Thatcher- and we covered just a small amount of the waterfront on policy and regulatory issues that confront the general farm organization that she represents in our nation’s capitol.”

With respect to the Farm Bill, Mr. Hays noted that, “Mary Kay Thatcher believes if Farm Bureau proposal became a key part of the 2012 Commodity title- crop farmers would see cheaper crop insurance premiums going forward; [and that], opponents of farm program spending in Washington have grown stronger since the writing of the 2008 farm bill.”

The update noted that, “Thatcher expressed skepticism about the ability to move forward in this election year and complete a farm bill; [however], she does predict we have to do something with the 2008 bill expiring- an extension is very possible because of that.”

To listen to a replay of the discussion with Ron Hays and Mary Kay Thatcher just click here.

On the issue of nutrition, an Op-Ed published in yesterday’s Wall Street Journal (“The Myth of Starving Americans,” by Warren Kozak) stated that, “Perhaps of greater consequence is the belief of many that food should now be free. In a recent report in the magazine Wisconsin Interest, reporter Mike Nichols discovered that in the 2010-11 school year, approximately 373,000 children received free school lunches in Wisconsin. But there are nowhere near 373,000 kids in the state who come from families falling anywhere near the poverty line. The obvious explanation: A lot of middle-class and upper-middle-class kids are eating lunch at taxpayer expense.

“This is not just a Wisconsin phenomenon. Nationally, one out of four school children received a free lunch in 1970, according to the state and federal government data examined by Mr. Nichols. Today, two out of three lunches served in schools are free or nearly free.”

A recent update posted at the School Nutrition Association Online indicated that, “First Lady Michelle Obama expresses gratitude for the tireless efforts school nutrition professionals make to creatively prepare healthful meals for America’s children with tight budgets and limited resources. She applauds the progress that has been made and looks forward to working to continue and build on those efforts.”

In food safety news, Julian Pecquet reported yesterday at The Hill’s Healthwatch Blog that, “A coalition of more than 30 food industry groups wrote to the Obama administration Monday urging officials to request more congressional funding for food safety efforts instead of relying on food taxes.

“The request is laid out in a letter to Health and Human Services Secretary Kathleen Sebelius and White House Budget Director Jeffrey Zients, who are working on the president’s FY2013 budget proposal, due Feb. 13. Last year’s budget proposal requested unspecified user fees to pay for food safety efforts but the idea went nowhere in Congress.

“‘As consumers continue to cope with a period of prolonged economic turbulence and food makers struggle with record high commodity prices, the creation of new food taxes or regulatory fees would mean higher costs for food makers and lead to higher food prices for consumers,’ the letter states. ‘As such, we believe imposing new fees on food makers is the wrong option for funding food safety programs.’”

 

Regulations (CFTC- MF Global)

In other developments, a news release Friday from Rep. Tim Huelskamp (R., Kans.) stated that, “[Rep. Huelskamp] hosted a roundtable with Kansas Agricultural leaders and industry stakeholders on Friday morning at his Dodge City district office. Congressman Huelskamp, a member of the House Committee on Agriculture, hosted the meeting to solicit the input of Kansans on the next farm bill. The Agriculture Committee is expected to begin writing the farm bill this year (2012).

“‘I wish everyone on the Agriculture Committee – make that everyone in Washington – would have the opportunity to hear what I heard today about how overregulation is killing agriculture,’ Congressman Huelskamp said.”

Scott Patterson reported in today’s Wall Street Journal that, “The Commodity Futures Trading Commission is planning to take a closer look at high-frequency trading, with an eye on getting a clearer understanding of how electronic trading affects commodities markets and participants.

“The push is being spearheaded by CFTC member Scott O’Malia, who on Tuesday plans to propose the establishment of a subcommittee on high-frequency trading. The subcommittee, part of the CFTC’s Technology Advisory Committee, would be led by CFTC chief economist Andrei Kirilenko, according to a draft of a proposal for the subcommittee reviewed by The Wall Street Journal.”

And, Bloomberg writers  Zeke Faux and Phil Mattingly reported yesterday that, “A week before MF Global Holdings Ltd. collapsed, its chief financial officer told Standard & Poor’s in an e-mail that the futures broker had ‘never been stronger.’”

 

Agricultural Economy

Reuters writers P.J. Huffstutter and Theopolis Waters reported yesterday that, “For more than a century, through a dozen dry spells when lakes disappeared and the land died, thousands of cows from the Swenson Land & Cattle Co have roamed the fields of Texas.

“Yet the drought currently ravaging the southern Plains has done what the Dust Bowl could not: chased them off this land and driven them more than 600 miles north to Nebraska.

“Now, as the worst drought in a century stretches into its second year, these ranchers and many of their peers are herding their animals in record numbers to the Cornhusker State and other points north, in search of grazing land that is not parched – a shift that is fueling a dramatic economic and cultural reshaping of the U.S. livestock industry.”

The article indicated that, “While some Texas ranchers hang on, selling off their stock at an unprecedented pace that has reduced America’s cattle herd to the smallest in 60 years, many are carving new homesteads out of some of the richest grassland in North America, a bid for survival that falls somewhere between surrender and hope.

“In cattle-car convoys that wind along routes cowboys used in the 1800s, this migration is also a stark illustration of the myriad threats facing the world’s future food supply: intense competition for land; increasing demands on limited water resources; and the growing threat of volatile weather.”

 

Trade

DTN Tokyo Correspondent Richard Smith reported yesterday (link requires subscription) that, “Japan Prime Minister Yoshihiko Noda announced last November his government’s intention to enter negotiations to join the Trans-Pacific Partnership (TPP) agreement. The head of the biggest agricultural association told a Jan. 25 Foreign Correspondents’ Club of Japan luncheon his group will not fight over conditions of entry into the free-trade pact.

“‘Rather, we will sustain our firm position of resisting against participation in TPP negotiations,’ said Akira Banzai, president of the Central Union of Agricultural Co-operatives (JA Zenchu), an organization of nine million members and employees.

“Signed in 2005 by Brunei, Chile, New Zealand and Singapore, the TPP aims to eliminate all tariffs among member countries by 2015. Australia, Japan, Malaysia, Peru, the U.S. and Vietnam are negotiating to join the group.”

The article noted that, “Banzai said his organization was not against free trade per se, but simply wants to protect Japan’s ‘food sovereignty,’ which he deemed the right of any country. ‘In order to protect food sovereignty in Japan, we need to emphasize food security by increasing the food self-sufficiency rate,’ officially standing at barely 40%, Banzai said.”

And Ian Elliott reported yesterday at Feedstuffs Online that, “British Prime Minister David Cameron and German Chancellor Angela Merkel said last week they supported the idea of a free trade agreement between the United States and European Union.”

Keith Good

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