Farm Bill and Policy Issues
DTN Political Correspondent Jerry Hagstrom reported yesterday that, “Senate Agriculture Committee Chairwoman Debbie Stabenow said Tuesday that she moved up the dates of the last two farm bill hearings so that her committee can move more quickly toward marking up the bill.
“‘We just want a little bit more time to negotiate,’ Stabenow, D-Mich., told reporters after a hearing on conservation, and noting that she would like to finish the markup as soon as possible.
“Senate Agriculture Committee ranking member Pat Roberts, R-Kan., has said he believes the committee will finish its work by Memorial Day.”
The DTN article added that, “House Agriculture Committee ranking member Collin Peterson, D-Minn., told DTN he is pleased the Senate Agriculture Committee has advanced the schedule. He noted that the Congressional Budget Office is scheduled to release a new baseline of costs for current farm bill programs in mid-March and said he believes the Senate Agriculture Committee could act soon after it receives that report, which will determine how much money the agriculture committees have to spend in the new bill.”
With respect to potential Senate – House interaction on the Farm Bill, Meghan Pedersen reported earlier this week at AgWeb.com that, “[Chairwoman] Stabenow also pointed out that House Ag Chairman Frank Lucas (R-Okla.) might not have much leeway for negotiations with her on a farm bill if the House adopts a budget resolution similar to the Fiscal Year 2012 resolution. The 2012 resolution called for significant reductions for agriculture and nutrition programs over 10 years.”
In related developments on the House budget process, Daniel Newhauser reported today at Roll Call Online that, “Republicans have hammered Democrats for not passing a budget while they were in power, but divisions among House Budget Committee Republicans might leave them without a budget this year, too.
“House Republican leaders have been holding listening sessions with their Members on the topic, but they are in a bind. It is unclear that they have the votes to pass a budget resolution with the numbers from the Budget Control Act, as many conservatives believe it would spend too much.
“Lowering the spending cap, on the other hand, would leave appropriators with unrealistic numbers and could doom any spending bills to failure on the House floor.”
The article noted that, “Appropriations Committee Democrats have indicated that they do not intend to help pass appropriations bills if they conform to a lower level of spending than they originally agreed to in the Budget Control Act.
“‘An agreement should be an agreement,’ said Rep. David Price (D-N.C.), an appropriator. ‘We expect all sides to honor that agreement.’”
However, today’s article pointed out that, “Rep. Ken Calvert (R-Calif.) a member of both the Budget and Appropriations committees, was more optimistic, saying the budget will probably conform to the Budget Control Act level. He said that talks are ongoing and that entitlement programs will get even more scrutiny as discretionary spending has been cut to the bone…Calvert mentioned the food stamp program [SNAP program] as a possible target. Republicans argue that funding for the program has increased in the past decade and that it is rife with fraud.”
On the SNAP issue, a video uploaded yesterday of a recent television appearance indicated that, “Rep. Darrell Issa (R-CA), Chairman of the House Committee on Oversight and Government Reform, goes on Fox News’ Fox & Friends to discuss the Committee’s inquiry into failing anti-fraud procedures for disqualifying and reauthorizing merchants to accept USDA food stamp benefits.”
More background on Rep. Issa’s look at the SNAP program can be found here.
In other news, an update posted yesterday at the USDA Blog stated in part that, “Now you can learn more about USDA’s support of local and regional food through the new Know Your Farmer, Know Your Food Compass. The Compass is an online multi-media narrative with stories, pictures and video about USDA’s support for local and regional food systems and an interactive map of USDA-supported local and regional food activities in all 50 states. With the Compass, you can navigate USDA resources for local and regional food; meet farmers, ranchers, businesses and communities in your state that are participating in local food chains; and learn about local and regional food projects across the country.”
A news release yesterday from Senate Agriculture Committee Member Pat Roberts (R., Kans.) stated that, “[Sen. Roberts] raised questions about the ‘Know Your Farmer, Know Your Food’ initiative, saying it isn’t steeped in reality since most food Americans consume isn’t grown locally.
‘This report highlights one of the fastest growing sectors in agriculture, and I commend farmers and ranchers around the country for taking advantage of opportunities to add value to their products by selling locally and regionally,’ said Roberts. ‘While I appreciate the intent of USDA’s initiatives, the fact of the matter is the vast majority of food consumed in this country is not grown locally. Kansans enjoy bananas and coconuts, but they can’t walk into church every Sunday and shake the banana and coconut producer’s hand.’”
And a news release yesterday from Sen. Kent Conrad (D., N.D.) stated that, “Responding to concerns by independent cattle producers in North Dakota, [Sen. Conrad] today signed on to be the lead co-sponsor of legislation making it unlawful for packers to own or feed livestock intended for slaughter.
“‘Family farmers and ranchers are currently at the mercy of the large, corporate meatpackers who dictate the price and manipulate the marketplace,’ Senator Conrad said. ‘This legislation provides a more level playing field and helps family farmers and ranchers get a fair price on the open market. It lets the markets dictate the price as opposed to the large, industrial meat packers.’”
Regulations (CFTC, MF Global)
The House Agriculture Committee held a hearing yesterday in an ongoing series of meetings in which the Members are exercising oversight responsibilities with respect to the Commodity Futures Trading Commission. Wednesday’s hearing focused specifically on the CFTC’s agenda for the coming year. (Statements from Chairman Frank Lucas (R., Okla.) and Ranking Member Collin Peterson (D., Minn.) can be found here and here).
Part of the Commission’s agenda will focus on the Dodd-Frank financial reform bill, which was passed in the summer of 2010. That law required the CFTC to draft a set of companion rules that facilitate the implementation of the new law. The Commission is nearing the half way mark with respect to drafting these regulations and Commission Chairman Gary Gensler, who was making his 39th appearance on Capitol Hill, provided the lawmakers with an update on CFTC activity.
Recall that in an interview with FarmPolicy.com in July of 2010, just after Dodd-Frank was passed, Rep. Collin Peterson indicated that, “And I told him [Mr. Gensler] and warned him that we will be doing extremely aggressive oversight over that process, and we will be meeting on a regular basis to oversee that process and to oversee the decisions that are made to make sure that we make that the risks are being adequately mitigated in whatever they finally come up with.”
Beyond the technical nature of the Dodd-Frank interactions and other CFTC related issues, some Committee members sought Mr. Gensler’s opinion and analysis on a more current constituent concern: Rising gas prices. Much of the impetus for the Dodd-Frank legislation stemmed from the financial collapse in the fall of 2008, over three years ago.
Nebraska GOP Congressman Jeff Fortenberry bluntly asked Mr. Gensler, “What’s causing the rise in the price of gasoline?”
The CFTC Chairman pointed out that, “We are not a price setting agency, its not what Congress asked us to do, we are an agency that oversees the markets to ensure that they are transparent, competitive, and free of fraud and manipulation. So that’s what we can best do to ensure that these energy markets work and that at whatever price, high or low, in the energy markets, in the agricultural markets, reflect buyers and sellers, both hedgers and speculators, meeting in that market.” (Click here to listen to a portion of this exchange (MP3- 2:11).
Earlier in Wednesday morning’s hearing, Rep. Peter Welch (D.,Vt.) inquired more specifically about what he described as $0.56 a gallon “speculative premium” in gas prices. Citing a recent Forbes article, Rep. Welch stated that, “Do you have the resources that you need to address the speculation premium that is now injected into the price of gasoline at the pump?”
Mr. Gensler spoke more broadly to the general issue of budgetary allocations to the CFTC and made the case that the agency needed additional resources- enough to move from a 700-person agency to a 1,000-person group. (An audio clip of a portion of this exchange can be heard here (MP3- 2:20)).
Meanwhile, Rep. Leonard Boswell expressed some level of consternation at the amount of time the House Agriculture Committee has been devoting to CFTC oversight.
The Iowa Democrat stated that, “Seems about like half of our hearings have been about this subject…I understand and I support the need for Congressional oversight, but I believe we must get to other business too,” such as the Farm Bill.
During his response to Rep. Boswell, Chairman Lucas explained that, “I would also note to my good colleague from Iowa that very soon we will announce a series of hearings in the field addressing Farm Bill issues, I suspect after that there will be a few more hearings here in this very Committee chamber addressing Farm Bill issues, and we are going to load our quiver, we are going to sharpen our blades and we are going to get after that Farm Bill, sir.” (related audio– (MP3- 2:07)).
Rep. Tim Huelskamp (R., Kans.) questioned Chairman Gensler more specifically about issues associated with the MF Global debacle at yesterday’s hearing- a video replay of his exchange with the CFTC chief can be viewed here.
And Reuters writer Christopher Doering reported yesterday that, “The top U.S. futures regulator said on Wednesday firms engaged in proprietary trading that make a market in over-the-counter swaps may have to register as swaps dealers, under the financial regulation framework being implemented in the wake of the financial crisis.
“Commodity Futures Trading Commission Chairman Gary Gensler said in an interview that Congress laid out a number of specific instances where an entity would be required to register as a dealer in swaps, such as if they make a market in these OTC derivatives and routinely have a regular business in dealing.
“Among firms that would have to register would be those that use their own capital to trade for profit, also called proprietary trading.”
The article added that, “The rules are part of the new regulatory framework being put in place to boost oversight for the previously opaque $700 trillion over-the-counter derivatives market required under the 2010 Dodd-Frank law. The CFTC is months behind in implementing many of the rules, and has so finalized nearly 30 regulations.”
And a news release yesterday stated that, “The Futures Industry Association released two documents today to address issues related to the bankruptcy of MF Global. One of the documents contains initial recommendations for enhancing the protection of customer funds; the other is designed to provide customers with essential information about the rules and regulations relating to customer fund protections…The release of these documents is an initial step in fulfilling the mission of the Futures Market Financial Integrity Task Force that the FIA established in January 2012.” (See related article that was posted yesterday at The Wall Street Journal Online, “Tighter Rules Sought in Wake of MF Global Collapse.”)
Also on the MF Global issue, Julie Steinberg, Mike Spector and Aaron Lucchetti reported yesterday at The Wall Street Journal Online that, “No one has been charged with wrongdoing, but futures-exchange operator CME Group Inc. has said that someone at MF Global illegally dipped into client funds during the securities firm’s final days. CME, one of MF Global’s regulators, said Tuesday that federal prosecutors in Chicago have convened a grand jury in the matter. Jon S. Corzine, MF Global’s former chairman and chief executive, has denied telling anyone to misuse client funds.
“Meanwhile, regulators and industry groups are working on possible changes to rules aimed at preventing a shortfall in client money. On Wednesday, the Futures Industry Association called for more disclosure by securities firms on handling of customer money.”
In other regulatory developments, a news release yesterday from Senate Agriculture Ranking Member Pat Roberts (R., Kans.) stated that, “With less than 24 hours remaining before the Environmental Protection Agency begins enforcing their controversial and duplicative pesticide permitting rule, Senator Roberts called on Senate Majority Leader Harry Reid to call up and approve compromise legislation to prevent costly fall-out for public health officials and agriculture producers.
“Roberts again urged the Senate to call up and pass the House approved, bipartisan H.R. 872, the Reducing Regulatory Burdens Act of 2011, with his amendment to provide a two year moratorium on the implementation of the rule. Republicans have no objections to the legislation. Democrats have blocked the compromise measure.”
Meanwhile, Reuters writer Emily Stephenson reported earlier this week that, “Heavy industry groups and states argued in a federal court on Tuesday that U.S. environmental regulators had used faulty science in determining that greenhouse gas emissions endangered human health in the latest attempt to dismantle the Obama administration’s rules on the emissions.
“During the first of two days of arguments on a case that seeks to overturn Environmental Protection Agency regulations, Harry MacDougald, a lawyer for the petitioners, said uncertain evidence was used to reach ‘90 percent’ certainty that human emissions are responsible for harmful climate change.”
And Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “The House on Wednesday evening approved legislation aimed at giving residents and farmers in California renewed access to water from the San Joaquin Valley that Republicans say was shut off due to the Obama administration’s environmental regulations.
“Members approved the San Joaquin Valley Water Reliability Act, H.R. 1837, by a 246-175 vote. Democrats spent the day arguing against the bill, and it passed with the help of just 10 Democrats.”
Yesterday the House Ways and Means Committee held a hearing on President Obama’s Trade Policy Agenda where U.S. Trade Representative Ron Kirk testified. (Opening statement from Committee Chairman Dave Camp (R., Mich.) available here).
During the discussion portion of yesterday’s panel with Ambassador Kirk, Rep. Kevin Brady (R., Tex.), the Chairman of the Trade Subcommittee, inquired about Trade Promotion Authority (TPA), and in addition to pointing out how important TPA is to our trade negotiating partners, he also asked about a legislative time frame for renewing TPA. To listen to a portion of this discussion on TPA, just click here (MP3- 3:17).
Also at yesterday’s hearing, Nebraska GOP Rep. Adrian Smith asked Amb. Kirk about restrictions on U.S. beef imports by Japan and highlighted the importance of trade to the agricultural sector. A video replay of a portion of this exchange can be seen here.
Separately, the Washington Insider section of DTN reported yesterday (link requires subscription) that, “Following his recent fact-finding trip to Russia, Senate Finance Committee Chairman Max Baucus, D-Mont., told the press that Congress needs to repeal the Jackson-Vanik amendment as it applies to Russia and to grant Russia permanent normal trade relations (PNTR) status. He indicated that both of these actions need to occur before the November elections.”
Yesterday the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included observations with respect to the U.S. agricultural economy which have been summarized at this FarmPolicy.com webpage- “Federal Reserve Beige Book: Observations on the Ag Economy.”
And the U.S. Department of Agriculture’s National Agricultural Statistics Service released its monthly Agricultural Prices report yesterday, which stated in part that: “The corn price, at $6.16 per bushel, is up 9 cents from last month and 51 cents above February 2011 [related graph]; the soybean price, at $12.30 per bushel, increased 40 cents from January but is down 40 cents from February 2011 [related graph]; and, the February all wheat price, at $7.09 per bushel, is up 5 cents from January but 33 cents below February 2011 [related graph].”