FarmPolicy

September 16, 2014

Farm Bill and Policy Issues; Ag Economy; and Regulations

Farm Bill and Policy Issues

Reuters writer Charles Abbott reported yesterday that, “U.S. farmers collected a record $10 billion in crop insurance indemnities for their 2011 crops, said a trade group on Monday, calling insurance a sound safety net as Congress prepares to overhaul crop subsidies.

“Five percent of claims on 2011 crops are outstanding, so the pay-out is likely to climb above the current $10.08 billion, said National Crop Insurance Services (NCIS). The payment record was $8.67 billion in 2008.

“‘The ability of U.S. agriculture to sustain more than $10 billion in insured losses and seamlessly finance itself for the 2012 crop season should not be taken for granted,’ said NCIS president Tom Zacharias.”

The article added that, “A handful of farm groups want to use crop insurance as a model for a 2012 farm law that protects grower revenue against adverse market prices or yields.

“The Senate Agriculture Committee scheduled a hearing for March 14  to discuss potential change to the crop subsidy system. The $5 billion a year ‘direct payment’ subsidy is unpopular and a target of reformers. It accounts for the bulk of payments to grain, cotton and oilseed growers.”

A news release Friday from North Dakota Governor Jack Dalrymple stated that, “[Governor Dalrymple] met in Washington D.C. with Michael Scuse, USDA’s Acting Under Secretary for Farm and Foreign Agricultural Services, to advance a variety of issues important to North Dakota, including the pathway ahead for a new Farm Bill. Conventional thought in Washington is that the 2012 Farm Bill will require significant changes and because of the current federal budget deficit, savings will have to be identified.

During the meeting late Thursday, Dalrymple emphasized one major point with Under Secretary Scuse:  the importance of preserving a strong crop insurance program.

“‘I made it clear that crop revenue coverage has become an essential tool for North Dakota farmers as they seek to control risks in their operations,’ Dalrymple said. ‘The insurance program has worked well and the delivery of it should remain with local agents. The delivery should not be transferred to the Farm Service Agency.’”

In other Farm Bill related developments, a news release yesterday from the American Sugar Alliance stated in part that, “As sugar farmers from across the country begin visits to Capitol Hill offices today, they will have a unique milestone to tell lawmakers about.

Sugar policy, which has operated without cost to taxpayers since 2002, is celebrating an 11-year anniversary of being no cost and is expected to remain no cost for at least 10 more, according to data recently released by the U.S. Department of Agriculture (USDA).

“‘In today’s budget atmosphere, it’s great to be able to tell Congress that you’ve operated without taxpayer expense for more than a decade and should see another decade of zero dollar figures unless current sugar policy is weakened in favor of subsidized imports,’ said Kelly Erickson, president of the American Sugarbeet Growers Association.”

Meanwhile, Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “More than 600 local, state and national groups — 643 to be exact — sent a letter Monday to the leaders of the Senate and House Agriculture Committees to tout their support for conservation programs leading into Tuesday’s hearing in the Senate.

“The groups cited they understand the need to cut spending and believe the proposal offered by the House and Senate ag leaders last fall could continue to meet the nation’s needs for conservation.”

In part, the letter stated that, “Farm Bill programs fund voluntary agreements between the USDA, non-governmental organizations and farmers, ranchers, and foresters — to keep their land in agriculture and forestry, to preserve natural habitat in rural landscapes, to save the productivity and economic value of soil and water, and to assist in the management of agricultural and forest lands. The result is real conservation with multiple benefits for every region of America. Not the least of these is helping landowners to stay on the land as stewards of America’s legacy of natural resources.

Thus we urge you to reauthorize the Farm Bill in a manner that sustains the integrity and effectiveness of the Conservation Title and maintains conservation funding that meets our national needs.”

An update posted yesterday at the National Sustainable Agriculture Coalition blog yesterday indicated that, “Today over 600 farm and conservation groups wrote to the leaders of the House and Senate Agriculture Committees urging support for a strong conservation title in the 2012 Farm Bill.”

“NSAC Policy Director Ferd Hoefner offered these additional comments: ‘Today’s letter is an important show of unity from the farm conservation community.  Mounting production and climate pressures make the upcoming farm bill the most important ever from a conservation standpoint.  We need a Triple Crown conservation title – one with strong funding, substantive policy improvements, and a reinvigorated and broadened conservation compliance regime.  The combination of conservation programs that will disappear without renewed funding and a shrinking land retirement program means we need to have a new farm bill this year, not an extension of the current bill.  Kicking the can down the road will make the situation far worse from a budgetary standpoint.  Efforts last fall to put together a new conservation title set the stage for further improvements this year that should be added as the bill makes its way through the regular farm bill process.  We are proud to join with so many national, regional and local organizations in bringing the need for a strong farm bill conservation title to Congress’ attention on the eve of the Senate Agriculture Committee’s conservation title hearing.’”

Also yesterday, the Department of the Interior indicated in a news release that, “On Friday, March 2, 2012, the White House will host a conference to spotlight the community-driven conservation efforts that have taken root across the country and to discuss how to build on their success. The conference, Growing America’s Outdoor Heritage and Economy, will explore the link between conservation and strong local economies through tourism, outdoor recreation, and healthy lands, waters and wildlife.”

Secretary of Agriculture Tom Vilsack is scheduled to participate in the event.

In news regarding nutrition, Maggie Fox reported yesterday at National Journal Online that, “Don’t look to the Wii to slim down your kid. Video games designed to get kids moving don’t add to their overall physical activity, researchers reported on Monday.

“The children either have found a way to trick the systems into thinking they are moving around, or they make up for the exercise by vegging out more later, the team at Baylor College of Medicine reported in the journal Pediatrics.”

In other policy developments, an update yesterday at WorldPoultry.net noted that, “In the US, 64 egg producing companies collectively representing over 90% of shell egg production have expressed their support for the Egg Products Inspection Act Amendment (HR 3798), the United Egg Producers has confirmed.

Prominent research specialists have also added their endorsement of the proposed legislation.  Dr. Jeff Armstrong, President of California Polytechnic State University and previously affiliated to Michigan State University, has stated that he supports enriched colony cage housing and also passage of HR 3798, based on his scientific appraisal of the system.  Dr. Temple Grandin of Colorado State University, and a prominent authority on animal welfare stated, ‘enriched colony cage housing is a system that the egg industry should adopt.’”

The update added that, “The American Veterinary Medical Association Executive Board has voted to support HR 3798…[and]… A number of influential newspapers have editorialized in support of the legislation representing both coasts.  Positive support was expressed by the New York Times, The San Diego Union Tribune, The Oregonian, Los Angeles Times and the News Tribune.”

In the latest edition of the Agri-Pulse Open Mic program, Senior Editor Stewart Doan spoke with Gene Gregory, president and CEO of United Egg Producers (UEP).  An Agri-Pulse summary of the discussion stated that, “Gene Gregory talks about the group’s historic decision to partner with the Humane Society of the United States (HSUS) on animal welfare legislation for the egg industry. Gregory insists the UEP-HSUS agreement to move to enriched colony housing is necessary to keep his members in business and equally insistent that it does not set a dangerous precedent for the rest of animal agriculture.”

To listen to the Open Mic interview, just click here.

In budget related developments, a news release yesterday from USDA stated that, “As part of a continuing effort to build a U.S. Department of Agriculture (USDA) that meets the evolving needs of a 21st century agricultural economy, Agriculture Secretary Tom Vilsack today informed Congress that in 90 days he plans to approve consolidation of 131 Farm Service Agency (FSA) offices with other USDA service centers, consistent with provisions of the 2008 Farm Bill. Under the Blueprint for Stronger Service announced on January 9, Vilsack laid out USDA’s plans to modernize and accelerate service delivery while improving the customer experience through use of innovative technologies and business solutions. The Blueprint included USDA’s plan to close 259 domestic offices, facilities and labs, including the proposed closure of 131 FSA offices, and seven foreign offices.”

The release added that, “By proposing to consolidate 131 offices nationwide, FSA is striving to balance budget reductions, staff reductions, and increasing workloads while focusing the efforts of our staff on continuing to provide high quality service from the remaining 2,113 office locations. The agency’s goal is to strengthen service, notwithstanding reduced budgets and fewer workers. And the Blueprint for Stronger Service helps to achieve FSA’s goal.”

Also, Julian Pecquet reported yesterday at The Hill’s Healthwatch Blog that, “Three dozen food-industry groups wrote to congressional appropriators urging them to reject proposed food taxes in President Obama’s budget for FY2013.

“The letter was released in advance of Food and Drug Administration (FDA) Commissioner Margaret Hamburg’s testimony before the House Agriculture Appropriations subcommittee on Wednesday.

“The proposed $4.5 billion budget for the FDA includes a $220 million annual ‘food facility registration fee’ to help the agency carry out its expanded duties under the 2011 food safety law. Industry groups say the fee on food producers, makers and distributors would be passed on to households in the form of higher prices.”

 

Agricultural Economy

Bloomberg writer Alan Bjerga reported yesterday that, “U.S. agricultural businesses are more optimistic about their economic situation than in November, according to a survey-based index produced by industry researcher and publisher DTN/The Progressive Farmer.

Farmers, veterinarians and sellers of seed, chemicals, feed and machinery gave their economic circumstances an index score of 111.1 as of mid-February, up from 100.2 in November, DTN said today in a statement. The result was down from 113.2 a year earlier. Eighty-seven percent of respondents expected their profitability a year from now to be little changed or better, while 13 percent expect it to be worse.”

Purdue University Agricultural Economist Chris Hurt indicated yesterday that, “Per capita pork consumption in the U.S. has declined sharply in the past several years due primarily to strong pork export growth.  Per capita pork consumption in the U.S. averaged 50.1 pounds in 2006 and 2007 when $2 per bushel corn was still the rule. That dropped to a low of 45.8 pounds by 2011, a nine percent decrease.

Surprisingly, as U.S. per capita consumption was dropping sharply, total U.S. pork production grew by eight percent from 2006/2007 to 2012.  How could total pork production grow while domestic per capita consumption was falling sharply?  The answer is that U.S. pork exports expanded and now U.S. consumers have new competition from foreign buyers for limited pork supplies.  There is a saying, ‘China is going to eat your lunch,’ and that statement has some limited truth.  China was the 6th largest buyer of pork from the U.S. in 2006, representing five percent of U.S. exports, but moved to the third largest buyer by 2011 representing 15 percent of U.S. exports.”

The update noted that, “The future direction of pork exports to China remains unclear.  The preference within China has been to raise their own pork and only buy from the world market when their internal production is short.  They are rapidly increasing domestic production, so the race is on to see if they are able to increase domestic production as quickly as internal demand is rising.

“China receives a lot of the media attention regarding U.S. pork exports, but Japan remains the top buyer with a consistent 30 to 35 percent of U.S. exportsMexico, with consistent growth, is in the second spot with 20 percent of U.S. exports in 2011.”

As a side note on trade issues, Evan Ramstad reported yesterday at the Korea Real Time Blog (Wall Street Journal) that, “When South Korea started to negotiate a free trade agreement with the United States in 2006, South Korean farmers protested outside the negotiating sites and staged big rallies in downtown Seoul.

With the country aiming to start talks this summer on a similar pact with China, the farmers are getting an even quicker start on protests.”

The update added that, “How quick? When the Ministry of Foreign Affairs and Trade attempted to hold the first public hearing last Friday to listen to concerns about an FTA with China, farmers shut it down.

They pulled people out of their chairs, threw things at the podium and got into fisticuffs with ministry officials and police.”

 

Regulations (CFTC)

Reuters writers Jeremy Pelofsky and Christopher Doering reported yesterday that, “A U.S. judge said on Monday he planned to rule quickly on whether to temporarily block controversial new regulations that were adopted by the Obama administration as part of an effort to reduce speculation in the commodities markets.

The U.S. Commodity Futures Trading Commission and groups representing the financial industry clashed in federal court over whether the agency overstepped its bounds by imposing restrictions last year to limit the number of contracts traders can hold in 28-commodities, including oil, coffee and gold.

“A lawyer for the Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association told the court the regulations would force their members to drastically alter their businesses, cost them tens of millions of dollars, and send customers fleeing.”

Meanwhile, a Senate Agriculture Committee news release from yesterday stated that, “Senator Debbie Stabenow (D-Mich.), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, and Ranking Member Sen. Pat Roberts (R-Ks.) today urged the Internal Revenue Service to provide former MF Global customers, who may need to file their taxes with incomplete information, with guidance as income tax filing deadlines are approaching. The firm filed for bankruptcy on Oct. 31, 2011 after revealing that hundreds of millions of dollars in customer money had gone missing.

“‘Former MF Global customers are still waiting for 1099 forms detailing gains and losses to their accounts in 2011,’ the letter to IRS Commissioner Douglas H. Shulman states. ‘The court-appointed trustee applied for and received two extensions from your agency, but the former customers of MF Global must still pay their taxes on time. Many of these customers are farmers and ranchers who have significant planting responsibilities in the spring and we urge your agency to respect the difficult time constraints they are under.’”

Keith Good

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