FarmPolicy

April 24, 2014

Budget Developments; Farm Bill and Policy Issues; Ag Economy; and China

Budget: Payroll Tax –Debt Limit –Energy 

Paul Kane and Ben Pershing reported in today’s Washington Post that, “Amid some dissent, House and Senate leaders prepared for final votes Friday for an economic package worth more than $150 billion that would extend a payroll tax holiday and unemployment benefits for the rest of the year.

“While Senate Republicans protested, the remaining members of a House-Senate committee tasked with forging a compromise pronounced themselves satisfied with the deal, signing the 270-page compromise Thursday afternoon in a bipartisan ceremony that stood in sharp contrast to the otherwise bitterly partisan tone of this Congress.”

The article added that, “The bill would extend a 2-percentage-point reduction in the 6.2 percent Social Security payroll tax through 2012 for about 160 million workers, saving the average worker about $1,000 for the year and effectively removing the issue from political campaigns.”

The Post authors noted that, “In addition to a 10-month extension of the payroll tax holiday and unemployment benefits, House Republicans won a reduction in unemployment eligibility, dropping the maximum tenure for receiving benefits from its current limit of 99 weeks in many states. Now, most states will see jobless workers able to claim 63 weeks of unemployment benefits, but workers in states hardest hit by the recession will have eligibility for 73 weeks.

“The legislation also includes a temporary fix for Medicare’s payment plan, intended to prevent a 27 percent drop in fees paid to doctors who treat elderly patients.”

In other news, Zachary A. Goldfarb reported in today’s Washington Post that, “The federal government will likely hit its borrowing limit before the end of the year, setting up another showdown over the federal debt immediately after the 2012 presidential election, according to Treasury Secretary Timothy F. Geithner.

“In testimony to the Senate Finance Committee on Thursday, Geithner said he expects that the debt ceiling will be hit after Sept. 30, the end of the fiscal year, but before the beginning of 2013.”

A news release yesterday from Sen. Rob Portman (R., Ohio) stated that, “[Sen. Portman], former director of the U.S. Office of Management and Budget and a member of the Senate Budget Committee, announced that his analysis of President Obama’s Fiscal Year 2013 Budget Request found that the statutory debt ceiling will be eclipsed before Election Day 2012:

“Following the contentious debt ceiling last August, President Obama promised that he would take action to address the country’s fiscal crisis. He has failed to do that.  In fact, his new budget increases spending and projects that Washington will be hitting the debt ceiling again in mid-October – burning through a $2.1 trillion debt limit increase in just over 14 months.  This is an unfortunate but clear signal to the American people that Washington is spending too much, borrowing too much, and putting our nation’s fiscal stability at risk.”

And Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Treasury Secretary Timothy Geithner on Thursday explained why President Obama never fully embraced the 2010 report of his fiscal commission, headed by former Sen. Alan Simpson (R-Wyo.) and Erskine Bowles.

“Geithner, under heavy fire from the Senate Budget Committee, said the Obama administration ‘did not feel’ it could embrace it because the cuts to defense were too deep and the reforms to Social Security relied too much on benefit cuts.”

Meanwhile, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “The House on Thursday evening passed a bill that seeks to encourage oil shale development, drilling in the Arctic National Wildlife Refuge (ANWR), and offshore drilling in the Atlantic, Pacific and the Gulf of Mexico, as well as force approval of the Keystone XL oil sands pipeline.

“The House approved the bill on a party line vote of 237-187. Despite Democratic objections to the bill throughout the week, 21 Democrats joined the GOP majority in the final vote, offsetting the 21 Republicans who voted against it.”

The article noted that, “The Protecting Investment in Oil Shale, the Next Generation of Environmental, Energy and Resource Security (PIONEERS) Act, H.R. 3408, is seen by Republicans as a way to expand drilling and create revenues for the government that would help fund the GOP’s highway authorization bill.”

 

Farm Bill and Policy Issues

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “So, what should be the guiding principles of the next farm bill? You might be surprised to learn that there is little agreement about the answer to that question in farm country and that there may be political blood spilled in attempts to work out a deal, if not an answer. Further complicating matters is that farm income has been record high, and there are strong pressures to cut safety nets throughout the economy.”

The DTN update added that, “And, those interests vary widely. The American Farm Bureau Federation says that what is needed is low cost protection against catastrophic losses that individual farmers can’t afford — along with the opportunity for producers to buy up additional coverage.

A competing idea is coverage for ‘shallow losses,’ the idea that the government should help producers cover almost the full range of risks they face. There also are proposals to keep the old-fashioned price supports with the coverage boosted sharply and for highly complex revenue insurance program packages. And, you might be surprised again to find that Land Grant University economists are evaluating these concepts, not on the basis of the principles they involve, but in terms of how much they would have paid producers under past conditions — without any apparent effort to test for links to well-understood but frequently neglected principles expected to drive government policy decisions.”

In a related article, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Farm group representatives indicated they are sticking to their individual positions on farm bill proposals at the annual crop insurance industry conference held here [Scottsdale, Ariz.] this week.

“Executives from the insurance companies and reinsurers and agents are wondering if Congress will cut the budget for crop insurance and how a rewritten farm program would interact with crop insurance. Some proposals would lead farmers to buy less insurance while others might cause a rerating of policies. Tom Zacharias, CEO of National Crop Insurance Services, an industry research group, declined to take positions on any of the proposals, but said that the next farm bill should ‘do no harm’ to crop insurance.”

A report yesterday on the Agriculture Today radio program (Red River Farm Network) by Mike Hergert included remarks from Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) who commented specifically on the executive branch budget framework from earlier this week and the reduced allocations to crop insurance contained in that proposal. To listen to this report from the Agriculture Today program, just click here (MP3- 0:44).

Similarly, Julie Harker reported earlier this week at Brownfield that, “Agriculture is responding to the proposed cut in the Obama Administration’s proposed 2013 budget. For one, it would deeply cut crop insurance premiums. Senate Ag Committee member Charles Grassley of Iowa says there’s agreement in Congress and among farmers that a strong crop insurance program is a necessity. He says, over the years, crop insurance has effectively taken pressure off other federal farm payments.

“‘There’s been billions and billions in savings coming from crop insurance already,’ Grassley tells reporters, ‘And don’t shred that safety net any more is what I think a lot of senators would say.’”

And an update posted by Andrew Glass at Politico yesterday provided a brief background look at the federal crop insurance program: “Congress created the Federal Crop Insurance Corp., February 16, 1938.”

Meanwhile, Ron Smith reported earlier this week at the Southwest Farm Press Online that, “Developing a farm bill that is timely and that preserves a farm safety net in a time of deficit reduction are the foremost challenges for new National Cotton Council Chairman Chuck Coley.”

“‘We also have the Brazil WTO case to deal with, and that will take up a lot of time’ Coley says.”

Mr. Smith indicated that, “[John Maguire, National Cotton Council chief of Washington affairs] in a Farm Press interview at the recent NCC annual meeting, said the farm bill debate will entail discussion of new policy and perhaps policy the cotton industry has never worked with before. He says the cotton industry anticipates ‘more insurance-based and more shallow loss revenue approaches.’”

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “It will soon be time for congressional leaders to take charge of writing the farm bill, said House Agriculture Committee ranking member Collin Peterson, D-Minn. According to Peterson, representatives of general farm and commodity groups signaled at a crop insurance convention here [Scottsdale, Ariz.] that they are still promoting their individual proposals and are not close to compromise on a comprehensive approach.

“‘At some point we’ve got to bring the hammer down. It’s got to be sooner rather than later,’ Peterson said in a telephone interview. ‘Nobody knows how it is going to play out,’ but it is time to move on the bill, he said.

“Peterson said he expects House Agriculture Committee Chairman Frank Lucas, R-Okla., to meet with House Speaker John Boehner, R-Ohio, this week to discuss the bill. ‘My guess is that Boehner wants to do it,’ Peterson said.”

With respect to dairy issues, a news release yesterday from the International Dairy Foods Association (IDFA) stated that, “Connie Tipton, president and CEO of the [IDFA], spoke today on behalf of more than 140 dairy manufacturing members at a roundtable sponsored by the Republican members of the House Committee on Small Business. ‘The Interests of America’s Small Businesses in the Next Farm Bill’ roundtable also included other agriculture-related groups representing wheat, corn, and soybean growers; pork producers; and dairy farmers.

“Tipton told the committee members that they would be surprised to learn that the dairy industry is heavily regulated by rules that were designed to address problems that existed nearly a century ago and that those regulations now stifle innovation and growth of the dairy industry. She urged the members to co-sponsor H.R. 3372, a bill that would phase out federal milk pricing regulations and allow prices to be fairly negotiated between buyers and sellers.

“Tipton warned that a proposal sponsored by Representative Collin Peterson (D-MN) and backed by dairy cooperatives would impose an entirely new regulatory burden on dairy processors to enforce a new program to periodically limit milk production.”

On nutrition issues, an update in yesterday’s Federal Register stated that, “In accordance with the Paperwork Reduction Act of 1995, this notice invites the public and other public agencies to comment on this proposed information collection. This is a revision to a previous data collection to understand better the shopping patterns of SNAP participants at farmers’ markets. The purpose of this collection is for the Food and Nutrition Service to understand how private organizations operate Supplemental Nutrition Assistance Program (SNAP) financial incentive programs for clients purchasing fruits and vegetables at farmers’ markets.”

In policy developments regarding animal agriculture, Bloomberg writer Alan Bjerga reported yesterday that, “Chad Gregory, senior vice-president of United Egg Producers, didn’t tell members of the nation’s biggest egg lobby when he met secretly last year with their longtime nemesis: Wayne Pacelle, chief executive officer of the Humane Society of the United States. ‘I thought I could lose my job over this,’ says Gregory. ‘But I didn’t want to spend the next 20 years fighting.’

“More to the point: Gregory didn’t want to lose another fight to Pacelle. In 2008, California voters approved a ballot measure requiring egg producers to give hens more room in their coops, just one of numerous Humane Society-backed efforts over the past decade to crack down on farmers raising livestock in cramped quarters. Pacelle’s group won over Californians with TV ads that juxtaposed images of hens freely roaming in pastures with footage of birds packed into fly-infested indoor cages, struggling to flap their wings. When the Humane Society vowed to do the same in the 24 states that allow referendums, Gregory decided he needed to do something drastic—or egg producers risked losing control over their industry as each state imposed its own restrictions.”

The Bloomberg article noted that, “So in a five-hour meeting on neutral turf in Arizona last March, Gregory agreed to a truce with Pacelle. The Humane Society would stop pursuing state laws that spell out how large farmers have to make cages for hens, and the egg producers would help push for a single federal standard covering all commercial chicken coops. ‘We can’t win ballot initiatives because of consumer emotion,’ says Gene Gregory, Chad’s father and president of the producers’ lobby. ‘If we have a federal law, we can make changes and have certainty. It’s our best option.’”

Mr. Bjerga added that, “Introduced in Congress in January by Representative Kurt Schrader (D-Ore.), the proposed federal law has other farm groups squawking. Kristina Butts, a lobbyist for the National Cattlemen’s Beef Assn., says her group is fighting it out of concern that the activists will target ranchers next.”

And a news release yesterday from the United Egg Producers stated that, “The United Egg Producers Association applauds the American Veterinary Medical Association (AVMA), the nation’s largest association of animal health professionals representing more than 82,500 veterinarians, for its announcement supporting H.R. 3798, the Egg Products Inspection Act Amendments of 2012. The proposed legislation will lead to improvements in housing for 280 million hens involved in U.S. egg production, while providing a stable future for egg farmers.”

“‘We were extremely pleased to learn about the support of the American Veterinary Medical Association,’ said Gene Gregory, President and CEO of the United Egg Producers. ‘We have relied on the animal scientists and specialists to help define the standards for egg laying hens and value the endorsement of the national association of veterinarians.’”

A news release yesterday from Rep. Louise Slaughter (D., N.Y.) stated that, “[Congresswoman Slaughter], Ranking Member of the House Rules Committee and the only microbiologist in Congress, today sent a letter to over 60 fast food companies, producers, processors, and grocery chains asking them to disclose their policies on antibiotic use in meat and poultry production.

“In addition to asking for company policy, Slaughter asked the restaurants to provide a breakdown of the percentages of beef, pork and poultry which they serve raised ‘without any antibiotics,’ raised with antibiotics only for ‘therapeutic reasons,’ or raised with ‘routine use of antibiotics.’”

On the issue of government regulations, a news release yesterday from the House Agriculture Committee stated that, “This week during The Ag Minute [MP3], guest host Rep. Randy Hultgren [R., Ill.] discusses the Protecting Main Street End-Users from Excessive Regulation Act (H.R. 3527), which he cosponsored along with a bipartisan group of lawmakers. It ensures that end-users, such as farmers and electric utilities, are protected from a proposed rule designed to regulate the largest banks on Wall Street. The House Agriculture Committee approved H.R. 3527 by voice vote last month.”

 

Agricultural Economy

Dow Jones news reported yesterday that, “Farmland values in the heart of the U.S. corn belt jumped 25% in the fourth quarter versus a year ago, and posted the biggest annual increase in 36 years, the Federal Reserve Bank of Chicago said Thursday.

“The Chicago Fed’s report comes a day after the Kansas City Fed also reported a 25% increase from a year ago. Higher prices for crops, livestock and dairy have helped boost farmer incomes, driving the increase.

“For the year, farmland values in the Chicago district, which includes Iowa and the key corn-producing regions of Indiana and Illinois, jumped 22%, the biggest increase since 1976.”

Also yesterday, the USDA’s National Agricultural Statistics Service released its Crop Values 2011 Summary yesterday, which is available here.

 

China

An update posted yesterday at the China Real Time Report Blog (Wall Street Journal) reported that, “While Chinese Vice President Xi Jinping’s visit to Iowa this week pushed U.S. farms to the forefront of the bilateral agenda, a separate Chinese visit farther south could end up delivering a blow to the U.S. farmers who have been praising the jobs that China helped them create.

“In a ceremony in Buenos Aires on Wednesday, the same day that Xi was visiting Iowa (the U.S.’s largest corn producing state), China’s food safety chief signed a deal with Argentina’s agriculture minister that effectively opens the Chinese market to Argentina’s corn exports. China and Argentina have worked for more than a year on the agreement, which involved insuring that Argentine corn meets Chinese food safety standards.

It’s in China’s interests to diversify its suppliers. Unlike most other sectors, it’s running a trade deficit in agricultural trade with the U.S., an issue that rankle some Chinese officials.”

Keith Good

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