FarmPolicy

August 17, 2019

Farm Bill Issues; and MF Global

Categories: Farm Bill

Farm Bill: House Ag. Comm. Field Hearing- Saranac Lake, New York

Hearing: Overview- Background

On Friday, seven members (Chairman, Frank Lucas (R., Okla.), David Scott  (D., Ga.), Vice Chairman, Bob Goodlatte (R., Va.), Bill Owens (D., N.Y.), Mike Conaway (R., Tex.), Chellie Pingree (D., Maine), and Rep. Chris Gibson (R., N.Y.)) of the House Agriculture Committee gathered in Saranac Lake, New York, for the first of four field hearings to hear testimony from producers that focused mostly on dairy issues, and concerns from specialty crop growers.

In his opening statement, Chairman Lucas noted that, “These field hearings are a continuation of what my good friend and Ranking Member Collin Peterson started in the spring of 2010.  Today, we’ll build upon the information we gathered in those hearings, as well as the 11 farm policy audits we conducted this past summer.”

Chairman Lucas added that, “New York is a fitting place to kick off these hearings because of the variety of food produced here.  New York farmers produce a wide range of specialty crops that generate $1.34 billion annually and make up one-third of the state’s total agriculture receipts.  New York ranks second in apple production, third for wine and grape juice production, and is among the top vegetable producing states in the country. New York is also among the nation’s top dairy producers.”

During the discussion portion of the first panel (unofficial transcript), Chairman Lucas pointed out that, “Probably a good way to start this give and take questioning is to observe something that really comes clear in Ms. [Michele Ledoux’s] comments, and that is the challenges of the budget process. If we just were to extend the existing farm bill for another five years, we would be about $9 billion short. In the way the previous farm bill was put together, there was not a permanent stream of funding for all programs, as she correctly noted, and a number of those programs are not funded, even if the authorization moves forward, so we have that challenge.”

An article posted on Friday at WYNF 28 (Fox Television, Watertown, NY) Online (video included) reported that, “‘We must develop a farm bill that works for all regions and all commodities,’ [said] Frank Lucas, the Republican who chairs the committee.”

The article added that, “‘Whether you’re talking about conservation, whether you’re talking about the margin insurance and supply management, if you’re talking specialty crops,’ said north country Congressman Bill Owens, ‘I think those pieces of the puzzle go together easier than the funding of the puzzle.’”

 

Hearing: Policy Issues Discussed

Cara Thomas reported on Friday at YNN Television (Syracuse, N.Y.) Online (video included) that, “The last Farm Bill was created in 2008, and since then farmers have faced treacherous storms which destroyed their crops and hurt the livelihood of their farms. Insurance was one of the many topics discussed, as well as foreign labor and issues with regulations.

“‘Major policy strides were made in the 2008 Farm Bill for specialty crops and we hope to build on those strides in the 2012 Farm Bill,’ said [producer Ralph Child].”

Kim Smith Dedam reported on Saturday at the Press-Republican Online (Plattsburgh, N.Y.) that, “Peru apple grower Adam Sullivan told a Congressional delegation Friday that labor is the No. 1 concern of farmers in the region.”

In a closer look at crop insurance issues from the hearing, Chris Morris reported at the Adirondack Daily Enterprise (N.Y.) on Friday that, “Panelists told the committee that crop insurance is a necessity when it comes to managing risk, but the federal government shouldn’t implement it in a way that distorts markets or over-burdens farmers with more regulations.”

Debra J. Groom reported on Friday at The Post-Standard (Syracuse, N.Y.) that, “‘The devastating weather events of 2011 have only served to highlight the need for some major changes in our crop insurance program. I would suggest a few ways for the Farm Bill to be more responsive to specialty crop risk management needs,’ said Larry Eckhardt of Kinderhook Creek Farm. ‘I think Congress should instruct the USDA in the next Farm Bill to research and develop, with input from actual growers of specialty crops, risk management tools that will work more effectively for diverse crop farms.’

“Eckhardt and his fellow panelists also highlighted the need for federal crop insurance programs to offer a buy–up option in the Non-Insured Disaster Assistance Program so farmers can better manage their own risk.”

Mr. Eckhardt also noted on Friday that, “And the other thing is that it’s very difficult, when you try to put together what is referred to as APH, Actual Production History, for your farm. You produce potatoes or sweet corn or whatever, you have to come up with documentation, year after year, to justify that. It’s extremely difficult and time consuming for the producer and those people in the FSA and the crop insurance people to come up with specialty crop insurance that’s going to work.”

With respect to regulatory concerns, dairy and crop farmer Jeremy Verratti stated on Friday during the discussion portion of his panel that, “And I just want to continue to make the point that the dairy farmers, and farmers in general, were are the original recyclers. We invented sustainability, if I dare say so myself. We take a not-so-nice product from the back end of a cow and reuse it and make crops and move forward that way. And it’s an important thing, and I don’t want to see that stifled by high, high amounts of regulation.”

Rep. Pingree also highlighted issues associated with local food production on Friday and had this specific exchange during the panel one discussion:

“Ms. Ledoux: And I guess if I was to follow up, people truly want to know where their food is coming from. They want to talk directly to that farmer, they want to look them in the face, and they want to say I bought this product from you, I want to know that you grew it, you raised it, and you took care of it from the beginning to where it was processed and brought that, you know, whatever that is, if it’s a vegetable or it’s meat, that they know that you are the one that was involved in it, and we can do that.

Rep. Pingree: That’s great. The chair mentioned that one of the big issues we’re dealing with is budgetary constraints and what this new farm bill will look like, and I guess my particular interest is in figuring out, given the fact that this is where a lot of growth in the market is, where farmers are seeing huge opportunities, how do we make sure that some of the programs you’ve already been talking about are there and available to farmers who want to expand into this market as we’re sort of balancing out where our budgetary challenges are.”

And during the discussion portion of the second panel on Friday (unofficial transcript), in response to questions from Rep. Pingree, wine grape grower Scott Osborn noted that, “I’m a big proponent of local. Just to talk a little bit about marketing, marketing to the American consumer that buying local is important not only from knowing where their food is coming from, but what the impact is. For every bottle of wine that you buy local, you return $10.05 to the local community. When you buy a wine from another country, you return $0.67. So the impact of buying local is huge, and I don’t think the American public really understands that. And I think that’s probably the most important thing we need to do.”

Tedd Booker reported on Saturday at the Watertown Daily Times Online (N.Y.) that, “Stabilizing milk prices for dairy farmers in New York was a hot topic at a House of Representatives Agriculture Committee field hearing Friday at North Country Community College, Saranac Lake, that highlighted policy changes slated for the 2012 farm bill.”

More specifically on the dairy issue, a news release Friday from the National Milk Producers Federation (NMPF) stated that, “At a field hearing today in upstate New York, the House Agriculture Committee heard from three dairy farmers that major reform is needed in farm policy, and all three endorsed the Dairy Security Act, H.R. 3062, as the best approach to making needed changes.”

Meanwhile, in other developments regarding dairy, an opinion column by dairy producer Pete Kappelman, posted late last week at the Green Bay Press Online, noted that, “The Peterson-Simpson bill, called the Dairy Security Act, offers the best hope in a generation for improving federal dairy policies. It protects producers, allows for growing markets both domestically and internationally, assures an abundant supply of milk for consumers and saves taxpayer dollars.

The key is to reorient government dairy programs from an emphasis on price, to a focus on maintaining adequate margins: The critical difference between the price farmers receive for their milk, and the cost of producing it. It was a crushing cost-price squeeze caused by record-high feed costs and weakened international demand that forced farmers out of business three years ago. And it’s high feed costs that are causing problems today, even with better milk prices at the farm gate.”

Adam Davidson penned an interesting article in yesterday’s New York Times Magazine (“Even Dairy Farming Has a 1 Percent”) and noted in part that, “Robert [Fulper, who Farms in West Amwell Township, N.J] showed me exactly how much money he and his brother made last year, an unusually profitable one for the dairy industry. He asked me not to reveal the number, but let’s put it this way: Robert and [his brother] Fred start work at 4:30 a.m., finish at 7 p.m. and trade Sundays off. If you divide their 2011 profit by their weekly hours, they earn considerably less than minimum wage. Unlike in their father’s day, they have little money left over to invest in new equipment. One of their computers runs on MS-DOS.”

The article added that, “Today Robert can predict his profit or loss next month with all the certainty that you or I can predict the stock market or gas prices. During my visit, Robert said that his success this year will be determined by, among other things, China’s unpredictable economic growth, the price of gas (influenced, of course, by events in Iran and Syria) and the weather in New Zealand (a major milk exporter), where a drought can send prices skyrocketing.”

 

Farm Bill: Timing, and Other Issues

Linda Vanderwerf reported on Saturday at the West Central Tribune Online (Willmar, Minn.) that, “A new Farm Bill with an overhauled dairy program could be in place by early summer, U.S. Rep. Collin Peterson said Friday.

“However, some issues could disrupt that timeline, including an impending election and disagreements over funding for food stamp programs.

“During a visit to Tribune offices Friday afternoon, Peterson said he was optimistic about getting a new Farm Bill in place later this year.”

The article added that, “This year, the Supplemental Nutrition Assistance Program, more commonly called food stamps, could create some problems.

“Economic stimulus bills increased eligibility for SNAP, he said, and House Republicans want to see major cuts to the program, which costs about $700 billion a year. In the Senate, the majority Democrats want to allow minimal cuts and would prefer none at all.”

Ms. Vanderwerf added that, “The problem is likely to come when the House and Senate bills get to conference committee and there’s no compromise available that would be acceptable to both sides, he said. If the bill isn’t finished by early summer, work will be more difficult as the election approaches.

Peterson said he would like to see some changes that would tighten guidelines to require people to buy ‘real food’ and not use their food support for things like candy and pop. However, soft drink manufacturers have repeatedly lobbied against such a change.”

Christinia Crippes reported on Saturday at The Hawk Eye Online (Burlington, Iowa) that, “Although the so-called super committee flopped, U.S. Sen. Tom Harkin, D-Iowa, believes its efforts to find savings in the federal budget could help with passing the farm bill later this year.

“‘I keep thinking there’s possibly a good chance we could pass a farm bill this year, because of that, because we had the cuts, that it was agreed upon by Democrats and Republicans. So there’s an outside chance we could actually pass the whole bill, not just pass the Senate, but actually get a bill to the president,’ Harkin said this week.”

Meghan Grebner reported on Friday at Brownfield that, “Senator [Richard] Lugar [R., Ind.] says it’s still possible that agriculture will see a farm bill this year.  ‘It’s still a long shot, but the leadership in the committees has to be optimistic by having hearings and drawing the attention of its members.’”

Tom Lutey reported yesterday at the Billings Gazette Online (Mont.) that, “Sen. Max Baucus, D-Mont., a Senate Agriculture Committee member who was on the supercommittee last fall, said he would also like to see a farm bill passed this year, but it must include enough agriculture support to protect farmers from the volatility of unpredictable weather and market prices. Conveying the risks of farming to urban lawmakers won’t be easy, he said.”

Don Dodson reported on Friday at the News Gazette Online (Champaign, Il.) that, “Prospects look dubious for a new farm bill to be written this year, a former deputy agriculture secretary said.

Chuck Conner, who served under U.S. agriculture secretaries Mike Johanns and Ed Schafer from 2005 to 2009, said political gridlock and a presidential election year make the prospect unlikely.”

Meanwhile, a news update late last week from Ohio State University Extension stated that, “The U.S. Department of Agriculture’s offer to pay farmers and landowners more money to stop farming their land to create additional wetlands and grasslands may not be enough incentive to get more growers to forgo planting crops that have fetched record prices in recent months, an Ohio State University expert said.

“In a move to get farmers to enroll up to 1 million new acres of land into the federal Conservation Reserve Program, the USDA last week said it would increase a one-time signing bonus for the program to $150 per acre from $100. The increase will be available only to owners of approved land that features wetlands and benefits duck nesting habitat and certain animal species, including upland birds, the USDA said.”

The update added that, “But with crops fetching higher prices, such as soybeans, which increased 9.5 percent last month to $13.13 a bushel, more farmers are likely to consider returning their farmland to crops rather than participating in CRP, said Brent Sohngen, an agricultural economist with Ohio State’s Ohio Agricultural Research and Development Center.”

In other news, David Taube reported yesterday at the Post Star Online (Glens Falls, N.Y. ) that, “Many markets across the state are reporting the money spent in farmers markets with food stamps has doubled from 2010 to 2011, and local farmers market leaders are seeking to add more portable card readers for EBT in several Washington County farmers markets and two markets in northern Saratoga County.

“From 2010 to 2011, Glens Falls Farmers Market has also doubled its EBT and debit card use, said David Porter, president of the Glens Falls Farmers Market Association, which also runs a market in Queensbury.

Statewide, more than $1.6 million in food stamps was spent at farmers markets in 2010.”

A news release Friday from the American Soybean Association (ASA) stated that, “The [ASA] commends Senate Agriculture Committee Chair Debbie Stabenow (D-Mich.) for the support and leadership demonstrated by the introduction of legislation (S. 2155) that continues and builds upon the Biobased Market Program established under the 2002 Farm Bill.

“The bill recognizes the importance of biobased products and promotes an increase in biobased manufacturing.”

 

MF Global

Jacob Bunge reported last night at The Wall Street Journal Online that, “The closely knit futures industry has confronted scandals before, but the collapse of MF Global Holdings Ltd. still has seasoned brokers and exchange officials on edge.

“Confusion over what went wrong at MF Global and how it could have been prevented have prompted some of the world’s biggest agricultural trading firms to consider dumping brokerage middlemen and bringing their business in-house, to avoid being caught up in another such debacle.”

And, Mike Spector and Aaron Lucchetti reported last night at The Wall Street Journal Online that, “Two lawmakers prodded the bankruptcy trustee in charge of unwinding MF Global Holdings Ltd. to drop his plan to pay bonuses to top executives who were at the securities firm when it collapsed.

“In a letter to former Federal Bureau of Investigation Director Louis Freeh, Sen. Jon Tester (D., Mont.) said it would be ‘outrageous’ to proceed with a proposal to a bankruptcy judge that could result in payouts of several hundred thousand dollars each for MF Global’s chief operating officer, finance chief and general counsel. The size of the bonuses would depend on their job performance in helping Mr. Freeh maximize value for creditors of the company.”

The Journal article noted that, “Sen. Amy Klobuchar (D., Minn.) said in a separate letter to Mr. Freeh that the plan is ‘unacceptable’ until numerous civil and criminal investigations into MF Global’s demise are finished and missing customer money is found. She is a member of the Senate Agriculture Committee, which is conducting a probe of the financial firm’s demise.”

Keith Good

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