FarmPolicy

August 22, 2019

Farm Bill; Regulations; Biofuels; and the Ag Economy

Farm Bill Issues

On yesterday’s Agriculture Today radio program (The Red River Farm Network) Mike Hergert conducted an interview with House Agriculture Committee Ranking Member Collin Peterson (D., Minn.).

An audio replay of the Red River Farm Network interview is available here (MP3- 8:07), while an unofficial transcript of their conversation is available here.

With respect to the commodity title of the Farm Bill, Rep. Peterson indicated yesterday that, “Tomorrow I’m meeting with all of the farm groups from my area. In fact, there’s North Dakota people coming in and so forth. I think just about every commodity group is going to be there, and I’m going to try to get those guys in the mode where they’ve got to get this worked out. And of course it’s got to be worked out at the national level, too.

“So at some point, you know, we’ll listen to everybody, but if they can’t come together, we’re going to have to make a decision about where we think is the best kind of middle ground, which is kind of what we did in the super committee, but there have been some evolving thoughts since then, and we’ll just have to try to work this out.”

In response Mike Hergert asked, “When you say coming together, could that mean this so-called three option approach?

“Rep. Peterson: Well, there will be. I think it’s going to be three options. I mean, I don’t see any other way to do this. There’s going to be the target price, kind of a cyclical component, there’s going to be some kind of shallow loss/catastrophic loss component, and there’s going to be a cotton program, the STAX program. And I don’t see any… I mean, rice and peanuts are the ones that are primarily interested in the target price. That brings them on board. And there might be some people out here that might use the target prices. The other commodity groups are more interested in the shallow loss/catastrophic loss.

But we just don’t have the money to do a one-size-fits-all program anymore. And frankly, the crops are different. I mean, the rice market, they don’t have ethanol, so they’re struggling. They don’t have access to Japan and a lot of these big rice consuming countries. They don’t have access. Now peanuts, they’ve got their own problems. Cotton, you know, the WTO case. So to try to fix all of them and have a program that’s going to work for cotton or for corn and soybeans and wheat, I just don’t see it, so I think there will be three options.”

Crop insurance was another issue that came up in yesterday’s Red River Farm Network interview: Mr. Hergert: The president’s budget last week takes another cut at crop insurance. What’s your take?

“Rep. Peterson: I just think it’s premature. I mean, we made big changes in the farm bill and in the SRA [Standard Reinsurance Agreement] last year. We don’t know what they actually did. The agents are complaining we took too much, especially Iowa and Illinois. The companies are complaining we took too much. On the other hand, the administration says we didn’t take enough. I don’t know. I’ve asked to see their books, to use my accounting background to get some sense of what I think, you know, who’s actually telling the truth here.

“But I would prefer that we wait, because we haven’t done crop insurance, necessarily, in the farm bill, that’s always kind of been separate. I would prefer that we get some actual hard data on what impact those changes had before we go off and make another change. I just think I would be more comfortable, because we’ve got to make sure crop insurance works. I mean, that’s too important to screw up.”

The discussion on crop insurance continued with this transaction: “Mr. Hergert: You made the comment here today ‘eventually.’

“Rep. Peterson: Yeah, I think eventually that’s where we’re heading. We’re going to have a crop insurance system, and…

“Mr. Hergert: That’s it.

“Rep. Peterson: You know, maybe some kind of… You know, I don’t know why we couldn’t even handle disaster through crop insurance, and I’ve talked to the crop insurance people about that. It would be a fairly efficient, I think, way to do it. So I think that’s where we’re heading, barring some big collapse in prices. But if we get back to a deal where corn prices go back down again significantly, corn and soybeans, then that could change the whole picture of things, and it could happen.”

Meanwhile, at Friday’s House Appropriations Committee meeting on the administration’s proposed budget outline for agriculture with Secretary of Agriculture Tom Vilsack, a variety of issues associated with nutrition came up.

Rep. Norman Dicks (D., Wash.) focused on the SNAP program (food stamps) and noted that the payments do serve as somewhat of an economic stimulus while helping families meet their budget needs as the economic downturn lingers- related audio here (MP3- 2:08).

On the other hand, Rep. Alan Nunnelee (R., Miss.) offered some counter-points to some of the general arguments articulated by Rep. Dicks when the Freshmen Congressman from Mississippi queried Sec. Vilsack at Friday’s hearing- related audio here (MP3- 3:36).

Meanwhile, Rep. Tim Huelskamp (R., Kans.) was a guest on yesterday’s AgriTalk radio program with Mike Adams where the wide-ranging conversation turned in part to the administration’s proposed spending outline and potential resource allocation for the Farm Bill.  While discussing the considerations of nutrition spending versus farm program spending, Rep. Huelskamp stated that, “We probably waste more money in the food stamp program than we actually do spend on direct payments for farmers.”  (related audio here (MP3- 0:38)).

And in a more general inquiry on nutritional issues, Rep. Marcy Kaptur (D., Ohio) raised several issues (locally grown food distribution, food deserts, school food programs) with Sec. Vilsack at Friday’s House Appropriations hearing, while specifically pointing out that some of the food served in public schools is, in many cases, “disgusting.”  In response, Sec. Vilsack outlined a long and full list of accomplishments that the administration has implemented with respect to nutritional issues. (related audio here (MP3- 3:08)).

Also on the nutrition issue, an AP article from yesterday focused on Sam Kass, the White House chef who is also a “senior policy adviser for healthy food initiatives.”

In other policy developments, Mikkel Pates penned an article yesterday at AgWeek Online (“Livestock Liberty?”) that provided background and information on recently proposed legislation regarding federal egg production standards.

In a separate article yesterday at AgWeek, Mikkel Pates reported that, “[Gene Gregory, president and CEO of United Egg Producers] also acknowledges that this would be the first time Congress would set specific size standards for a livestock enterprise, but that it ‘came from UEP working jointly with HSUS,’ and not with any bureaucrats. He says the bill is clear that this is ‘only about egg farming’ and has ‘nothing to do with pork, or beef or anything else.’ He says it would be ‘difficult’ to do anything similar with other species, without producer support.

He says the federal legislation is necessary because conflicting state laws, passed separately through state legislatures, would make it too difficult for those who market eggs to several states. ‘Eggs are a national commodity,’ he says. ‘You can’t have that kind of thing affecting interstate trade.’

“He says it would be ‘possible’ that California’s Proposition 2, passed in 2008, banning smaller cages but not taking effect until 2015, eventually could be challenged in a courtroom for interfering with interstate trade, but it would be ‘a long and expensive process’ and that ‘voter referendums are almost impossible to overcome.’”

 

Regulations

At Friday’s House Appropriations hearing, Rep. Tom Latham (R., Iowa) brought up a regulatory issue with Agriculture Secretary Vilsack.  Specifically, Rep. Latham discussed issues associated with the recent developments regarding the U.S. Department of Labor’s child labor rule proposal, while noting that the Secretary penned an update on the issue at the USDA blog back in December.

To listen to this exchange from Friday’s Appropriations panel, just click here (MP3- 2:02).

In other news, Bill Tomson reported on Friday at The Wall Street Journal Online that, “The Environmental Protection Agency released a report Friday confirming that it only takes a trace amount of dioxin to put people at risk of ailments of the skin, immune system or other areas, but the agency shied away from warning about any health concerns linked to food contamination.

“‘Today’s findings show that generally, over a person’s lifetime, current exposure to dioxins does not pose a significant health risk,’ the EPA said.

“The EPA standards for the first time set a maximum human-exposure level for dioxins. The food and chemical industries have argued the EPA is using flawed science and will scare Americans about the food they eat, but federal officials said there will likely be no new regulations to restrict dioxin in food.”

 

Biofuels

A news release Friday from Growth Energy stated that, “The U.S. ethanol industry came one step closer today to seeing low-cost, renewable E15 sold into the American fuels marketplace with U.S. Environmental Protection Agency’s evaluation of the health effects of E15 , as part of Growth Energy’s three-year-old petition to approve sale of the mid-level ethanol blend.

“‘For three years Growth Energy has led the effort to clear the way for consumers to have access to affordable, renewable and cleaner-burning fuel. Now it is up to the retailers and individual fuel companies to register for approval to sell E15. With ethanol selling an average of 76 cents a gallon cheaper than gasoline and $4 a gallon gasoline on the horizon, we’d encourage all Americans to ask their local filling station how soon they will see more-affordable E15,’ said Tom Buis, CEO of Growth Energy.

Growth Energy first filed its petition seeking federal approval to increase blends of ethanol in fuel from the current 10 percent (E10) to 15 percent (E15) in March 2009. After rigorous testing of E15’s impact on engine durability and auto emissions systems, EPA approved E15 for voluntary use in all autos and light trucks built since 2001 – which today is more than 70 percent of all vehicles on the road. Growth Energy completed a host of other ensuing regulatory measures, including significant analysis and development of data and literature on the emissions and health effects of E15, which EPA approved today.”

Reuters writer Wendell Roelf reported yesterday that, “South Africa plans to invest 2 billion rand ($258.5 million) to build an ethanol plant and help a nascent biofuels sector that could reduce the country’s reliance on imported fuel, an industry player said on Monday.

“Africa’s biggest economy imports about 60 percent of its crude oil needs and became a net importer of finished petroleum products several years ago.”

The article noted that, “Roak Crew, chief executive at Sugar Beet RSA, which is implementing the project in collaboration with the government, said the plant could start operating in 2014. It would initially produce some 90 million litres of fuel a year as sugar beet and grain sorghum are converted into ethanol.”

 

Agricultural Economy

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its annual Farms, Land in Farms, and Livestock Operations report.

In part, the NASS report stated that, “The number of farms in the United States in 2011 is estimated at 2.2 million, down slightly from 2010. Total land in farms, at 917 million acres, decreased 1.85 million acres from 2010. The average farm size is 420 acres, up 1 acre from the previous year.”

The NASS report added that, “Land in farms increased in the largest sales class while decreasing in all other sales classes. Land operated by farms in the $500,000 & over in sales class increased 2.5 percent, to 305.7 million acres. Land operated by farms in both $1,000- $9,999 and $100,000-$249,999 sales classes decreased by 3.5 percent, to 100.7 million acres and 138.7 million acres respectively.

“The average farm size increased 1 acre in 2011 to 420 acres per farm. However, average farm sizes declined in some of the sales classes partially due to smaller farms moving up to higher sales classes.”

Adam Belz reported yesterday at USA Today Online that, “If manure smells like money — and in February 2012 the commodity markets say it does — then Sioux County is one of the wealthiest places in America.

Truckloads of cows and pigs rumble south every day on Highway 75 on their way to slaughterhouses in Omaha and Dakota City, Neb. Profit flows back into the towns of Rock Valley, Hull, Sioux Center and Orange City.”

The article indicated that, “But something more than a livestock boom is going on. There’s an industrial revolution in one town here, where commuters travel from 66 ZIP codes to churn out hinges, valves, tractors parts and backhoe buckets.”

In a part of the country where small towns are losing their factory jobs, their Main Streets and their people, this area, in the northwest corner of Iowa, is moving in the opposite direction. Dollars earned from cattle and hogs have fertilized a field of innovation and growth, and the recovery is blooming.”

And the AP reported today that, “Five generations of Ronald Gertson’s family have tilled the claylike soil of southeast Texas to grow rice, confident that no matter how fickle Mother Nature was, there would be one constant: water to irrigate their crop.

For the first time since Gertson’s great-grandfather made his way from Denmark through Kansas to the flat, coastal area south of Houston, his family faces the likelihood officials won’t release water from two Austin-area lakes into the rivers and canals they use for irrigation.

“Thousands of farmers in Texas’ rice-producing region are likely to be affected by action taken in response to one of the most severe droughts in state history. With water management agencies implementing emergency plans never used before, the Lower Colorado River Authority is widely expected to announce March 1 that it will not release water to rice farmers in three counties.”

Keith Good

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