FarmPolicy

November 27, 2014

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

President Obama’s Budget and Agriculture- Payroll Tax- Transportation

Jared A. Favole and Damian Paletta reported in Saturday’s Wall Street Journal that, “President Barack Obama on Monday will propose a multi-trillion-dollar U.S. government budget that seeks to spur job creation and impose higher taxes on the rich to help reduce the deficit, laying down a clear election-year marker of his priorities.”

The Journal article pointed out that, “The budget calls for new spending limits on agriculture subsidies and moving to five-day-a-week postal delivery, among other things.”

Jonathan Weisman reported in Saturday’s New York Times that, “New spending and targeted tax increases seem far more gaudy than the $638 billion in spending cuts the White House is claiming over 10 years from health programs like Medicare and Medicaid, agriculture subsidies, federal worker retirement funds and other programs.”

Bloomberg writers Roger Runningen and Brian Faler reported on Saturday that, “The [President’s] plan, for the fiscal year that begins Oct. 1, would wring $360 billion in savings out of Medicare and Medicare over the next decade…Another $278 billion in savings would come from farm subsidies, federal workers’ retirement plans and the Pension Benefit Guaranty Corporation, which insures company pensions.”

Also with respect to the executive branch proposal, David Rogers reported on Friday at Politico that, “Farm subsidies would be cut deeper than the House and Senate Agriculture Committees have proposed thus far.”

Speaking yesterday morning on CNN’s “State of the Union,” White House Chief of Staff and former OMB Director Jack Lew identified proposed USDA office consolidations and office closures as an example of a “tough” decision the administration has made when it comes to spending reductions.  (Related audio from yesterday’s program can be heard here (MP3- 2:45)).

In related news, a Farm Service Agency news release from Friday stated that, “Acting Under Secretary for Farm and Foreign Agricultural Services Michael Scuse announced today a package of technology enhancements from the Farm Service Agency (FSA) that include Web access for handheld and smartphone users, as well as a more efficient and timely option for receiving news and critical program information. The technology improvements will allow users of FSA information to gain access to easy-to-read data, including key features such as loan deficiency payment (LDP) rates, posted county prices (PCP), FSA news releases and AskFSA, the agency’s online self-help knowledge base.”

Meanwhile, an ABC Blog update from yesterday regarding Mr. Lew’s appearance on “This Week,” stated that, “Lew said that for every dollar of revenue, the budget includes $2.50 in spending cuts, including cuts to Medicare, Medicaid, agriculture subsidies and federal civilian workers’ pensions. Over the next decade, Lew said, the president’s proposal will reduce spending so it will no longer add to the deficit and will create stability in the economy.”

And in further budget details, David Rogers reported yesterday at Politico that, “The Environmental Protection Agency would be trimmed further to $8.34 billion — its third straight series of cuts…And all the real growth in the Food and Drug Administration’s $4.48 billion budget would be dependent on new industry user fees, including a proposed $220 million food establishment charge that could prove controversial.”

Yesterday’s Politico article added that, “With a new farm bill in the offing this year, Obama is much more aggressive in demanding long overdue cuts given the high price of commodities in recent years.”

Jackie Calmes reported in today’s New York Times that, “In his budget Mr. Obama again will commit to $4 trillion in deficit reduction over 10 years, including $1.5 trillion in tax revenue from the wealthy and from closing some corporate tax breaks, and reductions in spending for a range of programs, including the military, Medicare, farm subsidies and federal pensions.”

While Lori Montgomery noted in today’s Washington Post that, “An additional $278 billion would come from a hodgepodge of cost-saving maneuvers, such as charging higher premiums for federal pension insurance, asking federal workers to contribute more to their own retirement and cutting federal farm subsidies.”

As a side issue on the budget, Mr. Lew was also asked on a couple of the Sunday shows why the Democrat controlled Senate had not generated a budget.  A news release yesterday from the House Budget Committee indicated that the Senate only requires a “simple majority” to pass a budget and that the measure “cannot be filibustered.” Mr. Lew had said on CNN that, “You can’t pass a budget in the Senate of the United States without 60 votes.”

And moving forward on the budget, Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “Several House committees will meet next week to interview Obama administration department chiefs on their budget requests, the start of what the House has promised would be a workman-like approach to the FY 2013 budget.”

Meanwhile, on the payroll tax issue, Katy O’Donnell reported yesterday at National Journal Online that, “Lew repeatedly weighed in on the payroll tax fight in his TV appearances Sunday, a tax provision scheduled to expire at the end of the month. A congressional conference committee is currently trying to hash out the details of an agreement on a year-long extension, but has made little progress. Lew emphasized the importance of the extension, an issue the White House deftly handled in December as Republicans stumbled into a position that opposed a tax cut for the middle class.”

And Jake Sherman and Manu Raju reported yesterday at Politico that, “A weekend of talks between the two top tax writers in Congress failed to bridge gaping partisan differences over the payroll tax cut package, increasing the odds of another Washington showdown ahead of an end-of-the-month deadline.”

With respect to the transportation bills, Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “The highway bills are equally contentious, if less pressing. The House bill funds federal transportation programs for five years, and pays for part of the $260 billion in expenditures with revenues from expanded oil and gas drilling.

“The Senate bill, in contrast, is a $109 billion, two-year bill that raises some money by increasing taxes. These differences are likely setting up yet another fight down the road over how to pay for federal transportation programs.”

 

Farm Bill and Policy Issues

DTN Political Correspondent Jerry Hagstrom reported on Friday that, “All the commodity title program proposals need to change before Congress would pass a farm bill, American Farm Bureau Federation lobbyist Mary Kay Thatcher said here [Scottsdale, Ariz.] Thursday.

“‘Everybody’s proposal has to change. I don’t think we have anything we can sell on the House or Senate floor,’ Thatcher said in a speech to the Crop Insurance and Reinsurance Bureau annual meeting.

“Thatcher said she thinks the commodity groups’ proposals for a ‘shallow loss’ program or higher target prices and the Farm Bureau’s own catastrophic loss program will have to be adjusted.”

Chris Clayton reported on Friday at DTN (link requires subscription) that, “A varied group of 82 organizations, representing a cross-section of the political and agricultural spectrums, sent a letter to Congress on Friday stressing that the farm bill should be written and completed this year.”

On Friday’s Agriculture Today radio program (The Red River Farm Network), a Farm Bill focus report included analysis and observations from Senator Al Franken (D., Minn.), to listen to this portion of Friday’s Agriculture Today program, just click here (MP3- 1:35).

Sara Wyant reported on Friday at Agri-Pulse Online that, “With farm bill hearings starting next week in Washington, D.C., Senate Agriculture Committee leaders called for quick action on writing a new farm bill during the 48th annual meeting of the Crop Insurance and Reinsurance Bureau (CIRB).

“Ranking minority member Pat Roberts, R-KS, who spoke via a telephone connection, called for the package to be finished by Memorial Day, even though he admitted that his staff thinks he’s being overly optimistic.”

The Agri-Pulse article added that, “Chairman Debbie Stabenow, D-Mich, who presented a video address to the group, outlined the farm bill hearings that will kick off next week and the tough budgetary challenges ahead—especially for House Agriculture Committee Chairman Frank Lucas, R-Okla., given the over $33 billion in farm bill cuts outlined in the House Budget Committee proposal last year.

Both Stabenow and Roberts offered strong support for keeping crop insurance as the centerpiece of the farm safety net.”

Friday’s article also noted that, “Roberts described renewed efforts by some Farm Service Agency employees to stop the current public/private crop insurance delivery system and once again have FSA offices deliver crop insurance as ‘looney’ and ‘dead on arrival.’”

Meanwhile, Jerry Hagstrom reported on Friday at DTN (link requires subscription) that, “Crop insurance industry groups will oppose all attempts to turn over portions of the crop insurance program to USDA’s Farm Service Agency county offices, crop insurance leaders said here Thursday.”

“American Association of Crop Insurers members have been working for two years to educate new members of Congress and the public about how the crop insurance program has evolved, said David Graves, the executive director of AACI, speaking on the sidelines of the Crop Insurance and Reinsurance Bureau meeting.

“‘Crop insurance companies have invested hundreds of millions of dollars in providing services to farmers,’ Graves said. Farmers’ statements about the importance of crop insurance ‘reflect delivery as much as the program. Farmers complain about program provisions, not service.’”

Mr. Hagstrom added that, “American Farm Bureau Federation lobbyist Mary Kay Thatcher, who spoke at the convention, said in interview that the crop insurance program is too important to risk changing the delivery…‘It is complex, and the agents have been at it for years,’ she said. ‘That is where it ought to stay.’”

For a closer look at crop insurance issues and the Farm Bill, see this Delta Farm Press article from Friday, “Crop insurance likely a key component of new farm bill.”

And a recent article from Choices (“Crop Insurance and the Future Farm Safety Net”) by Keith Collins and Harun Bulut indicated that, “A strong view has emerged this past year from many farm groups that crop insurance should play a pivotal role in the 2012 Farm Bill and beyond. Meanwhile, some have questioned the near-consensus support for crop insurance. This article addresses why crop insurance has taken on a primary position among farm support programs and examines alternative paths that crop insurance could take in the future, including some ways it could assume an even larger role.”

In a column posted yesterday at Bloomberg, Albert Hunt indicated that, “There isn’t much negative to say about agriculture these days. Farm income reached an estimated $100 billion for the first time last year. Real family income, down for most Americans, has risen 5 percent for family farmers under the Obama/Vilsack tenure. The value of farm lands is at a record high and farm debt fell almost 2 percent last year.”

The Bloomberg column pointed out that, “In tough fiscal times, aided by strong interest in agricultural issues on Capitol Hill, he’s [Agriculture Sec. Tom Vilsack] done better in the budget battles than most of his fellow Cabinet members. Half of his $144 billion budget is devoted to food stamps, which have come under attack by Republican presidential candidates, such as former House Speaker Newt Gingrich, who suggest the program largely benefits the indolent.

Vilsack points out that 92 percent of food stamp benefits go to recipients who don’t receive cash welfare, including the aging, the severely disabled, the working poor and children. He boasts that even with the higher demand for the assistance program caused by the recession, his department has markedly reduced fraud. ‘We operate under greater integrity than ever,’ he says.”

In other policy developments, a recent National Public Radio Morning Edition segment (“How Two Bitter Adversaries Hatched A Plan To Change The Egg Business”) featured a closer look at some of the dynamics behind the compromise and proposed legislation that is supported by the Untied Egg Producers and the Human Society of the United States regarding federal egg production standards.

 

Agricultural Economy

Leslie Josephs reported in today’s Wall Street Journal that, “U.S. farmers are expected to plant 13.6 million acres of cotton this spring, down 7.5% from last year amid lower prices for the fiber, while poor weather threatens production, an industry group said.”

The article added that, “Weather is the key. Texas, the largest cotton-producing state in terms of output, has had drought conditions for more than a year, which reduced production in the western part of the state in 2011.”

And Mark Peters and Marshall Eckblad reported in Saturday’s Wall Street Journal that, “A severe drought in the southern Great Plains is fueling a massive cattle drive north that is pushing beef prices higher and threatening to alter the country’s production of red meat.

“Surrounded by parched prairies and dry watering holes, ranchers in Texas and Oklahoma have deeply culled their herds and helped cut the national cattle population to the lowest level in decades. They have found greener pastures in states such as Iowa and Nebraska, but land there is more valuable for corn than cattle, and some owners are hesitant to take on more livestock.”

The article noted that, “The question now is whether the move northward is permanent or will reverse once the drought—by most measures the worst since the 1930s Dust Bowl—finally ends. One fear in the beef industry is that cattle supplies will struggle to rebound across the Great Plains, from Texas to the Dakotas, when the rains return, as many ranchers may have exited from the business for good.

“Others say ranching is too deeply ingrained in Texas culture and will rebound, as it has after previous droughts.”

 

Trade

Even though the overall U.S. trade deficit widened in December, data released Friday by the USDA demonstrated that U.S. farm exports reached a record $136.3 billion in calendar year 2011.

Agriculture Secretary Tom Vilsack indicated on Friday that, “The data released today by USDA represents a record-breaking calendar year for farm exports, demonstrating—once again—that American agriculture remains a bright spot in our nation’s economy. We saw a rise in both the value and volume of U.S. agricultural exports worldwide in 2011, as international sales rose $20.5 billion over the previous record set in calendar year 2010. Total agricultural exports for calendar year 2011 were a robust $136.3 billion.”

The New York Times published an interesting article over the weekend that provided background on this week’s visit to the U.S. from China’s vice president and presumptive next president, Xi Jinping: “In Charged Moment, China’s Political Heir Tries Introducing Himself to U.S.,” while The Wall Street Journal published an article highlighting how the administration is preparing for the visit: “U.S. Gears Up to Reset Tone With Beijing.”   Today’s Wall Street Journal included a more detailed look on the life of Xi Jinping, and today’s Washington Post also provided an overview of this important visit, “A key visit for China, U.S.”

 

MF Global

Both The Wall Street Journal and The New York Times reported on Saturday that MF Global customers were owed $1.6 billion, a number that is higher than previously estimated.

Keith Good

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