FarmPolicy

August 28, 2014

Budget; Farm Bill; Ag Economy; and Regulations

Budget Issues

Carol E. Lee reported in today’s Wall Street Journal that, “President Barack Obama delivered a blistering critique of the House Republican budget Tuesday, calling it a ‘radical’ proposal, ‘a Trojan horse’ and ‘a prescription for decline’ and tying it directly to Mitt Romney, the GOP candidate the White House believes Mr. Obama will face in November.”

The Journal article noted that, “House Speaker John Boehner (R., Ohio) dismissed Mr. Obama as ‘unserious’ about tackling the country’s economic challenges because he is focused on campaigning over governing.”

Steven T. Dennis reported yesterday at Roll Call Online that, “President Barack Obama dished out partisan red meat today, blaming a GOP shift to the right for the gridlock in Washington, D.C., and warning that Rep. Paul Ryan’s budget plan would decimate important government programs.”

House Budget Committee Chairman Ryan stated yesterday that, “The President refuses to take responsibility for the economy and refuses to offer a credible plan to address the most predictable economic crisis in our history. Instead, he has chosen tired and cynical political attacks as he focuses on his own re-election.”

Also yesterday, Scott Wong reported at Politico that, “The Senate’s chief referee has issued a key ruling against Majority Leader Harry Reid, POLITICO has learned — a move expected to bring unwanted election-year pressure on the Nevada Democrat to act on politically dicey budget bills.

“Newly appointed Parliamentarian Elizabeth MacDonough, whom Reid recommended for the job, has decided that last summer’s deal on the debt ceiling and spending caps does not preclude the Senate from taking up other budget resolutions this year. The ruling could force vulnerable Democrats to cast tough votes that hurt them in November, a situation Reid and other leaders are eager to avoid as they work to protect their fragile majority.”

Yesterday’s article noted that, “The written opinion, shared late last week with a handful of Democratic and GOP senators, gives Republicans significantly more leverage to push for votes on budgets of their choosing. It could mean roll calls on Rep. Paul Ryan’s House-passed GOP budget plan and others offered by Sens. Pat Toomey (R-Pa.) and Rand Paul (R-Ky.). Democrats would gladly vote down the Ryan blueprint, which Obama described Tuesday as a ‘radical’ vision that guts funding for Medicare and education.

“But a version of President Barack Obama’s own $3.6 trillion budget proposal, which the House unanimously rejected last week, also could come to the Senate floor, ensuring an embarrassing replay of last year when not a single senator voted for the president’s budget.”

 

Farm Bill Issues

Jo Dee Black reported earlier this week at the Great Falls Tribune (Mont.) Online that, “In Montana, one in every five jobs is directly tied to agriculture, Sen. Max Baucus told the board members of the Montana Farmers Union and others during a listening session in the Farm Bill on Monday morning.

“So it is imperative for the state’s agriculture industry to lobby for specific provisions they need in the next Farm Bill, rather than advocating for abstract ideas about what farm programs should support, he said.”

The article indicated that, “Baucus, a member of the Senate Agriculture Committee, said there’s an ambitious timeline to produce a farm bill by the end of April. Farm programs include crop subsidies, conservation programs, insurance and loan programs, as well as the food stamp and school nutrition programs.

“‘I know we want a strong commodity title,’ Baucus said. ‘I think direct payments (payments made to farmers based on past production levels) will go and be replaced by farm-level loss protection programs. We want a strong crop insurance and conservation titles.’”

Charlie Keegan reported earlier this week at KFBB-TV (Mont.) Online (video included) that, “Senator Baucus proposed a ‘Made in Montana’ component to be included in the bill. He wants to discontinue direct payments and keep crop insurance strong.

“He says there needs to be a balance in the conservation reserve program lands saying, ‘CRP [Conservation Reserve Program] tends to have an adverse effect on some of the smaller towns, on implement dealers for example. Sometimes farmers just go south and have land in CRP and take the income. We’re actually starting to reduce CRP in a way to help younger people get in to agriculture.’”

Also on the CRP issue, a news release yesterday from the National Grain and Feed Association (NGFA) stated that, “[NGFA] is urging the Senate Agriculture Committee to implement fundamental reforms to the [CRP] as it begins drafting the 2012 farm bill this month.

“While supporting continued use of the CRP to protect truly environmentally sensitive lands, the NGFA said current federal budget pressures make it imperative to allocate farm program spending in ways that provide sufficient funding for federal crop insurance and conservation programs for working farmlands.  The NGFA said there is ‘compelling evidence’ that millions of acres of productive farmland currently idled in the CRP are suitable for row-crop production and are needed to meet growing demand for food, feed, biofuels and exports.”

Meanwhile, Nancy Lofholm reported yesterday at the Denver Post Online that, “Under peach trees loaded with pink blossoms Tuesday morning, Sen. Michael Bennet lauded the latest effort to conserve more pieces of the most productive fruit growing area in the Rocky Mountain region. He also used the occasion to make a pitch for an extension of a national farm bill that supporters say is crucial for farmland conservation.

“‘Over time, the conservation part of the Farm Bill has become one of the most important tools to keep farms in business,’ Bennet told a group of farmers and conservation officials gathered in a newly protected, picture-perfect peach orchard. ‘And Colorado has really led the charge in this.’

“Bennet serves on the Senate Agriculture Committee and is pushing for the continuation of the Farm Bill, which is set to expire at the end of September.”

And Andrea Johnson reported earlier this week at the Farm and Ranch Guide Online that, “Making a big loop around greater Minnesota, Sen. Amy Klobuchar’s staff asked citizens for input on the upcoming farm bill.

“The farm bill listening sessions in March offered the opportunity to meet with staff and share concerns.

A significant topic was crop insurance, said Chuck Ackman, who serves as Klobuchar’s southern Minnesota outreach director.”

The article pointed out that, “‘Crop insurance provides a public good to our nation and consumers all over the world,’ [Erik Younggren, president of the National Association of Wheat Growers] testified. ‘By helping ensure the stability of U.S. farmers, the government is helping to ensure a stable food supply – a necessary government responsibility.’

He said that highest priority for farm safety net programs remained crop insurance premiums subsidized by the federal government.”

Ron Smith reported on Monday at the Southwest Farm Press Online that, “‘We will struggle with the farm bill over the next few months,’[Rep. Mike Conaway (R., Tex.)] said. ‘As most folks know, the current version expires at the end of September.’ At that time, the options include letting the farm law expire, passing a new one or extending the current program for a year. ‘We won’t let it expire,’ he said. ‘If we can’t get a full one done (for five years) we’ll extend it, probably for a year, which has been done in the past.’”

The update noted that, “Conaway also said the House will try to find most of the savings in nutrition programs, which make up 78 percent of farm program spending. ‘We think we can find significant savings without taking calories off the table for beneficiaries,’ he said.

“The recently passed House budget ‘will not become law,’ he said, ‘but will show the path to savings.’”

Rep. Randy Neugebauer (R., Tex.) was interviewed recently on KFYO radio (Lubbock, Tex.) where a portion of the discussion (MP3- 3 min.) focused on agricultural policy and last week’s House Ag Committee field hearing in Jonesboro, Ark.  Rep. Neugebauer talked about crop insurance and farmer concerns about federal regulations.

Recall that Rep. Neugebauer introduced legislation last fall (Crop Risk Options Plan (CROP) Act)) that “would give producers new options for federal crop insurance.”

With respect to opinion items on farm policy, the editorial board at the St. Louis Post-Dispatch and the Environmental Working Group recently published their perspectives on the future direction of agricultural policy.

 

Agricultural Economy

University of Illinois Agricultural Economist Gary Schnitkey noted yesterday at the farmdoc daily blog (“Little Change in Where Corn is Planted in the United States”) that, “On March 31st, the U.S. Department of Agriculture reported that 95.9 million acres of corn are projected to be planted in 2012. If these acres are planted, the 95.9 million acres will be 3.9 million acres more than were planted in 2011 and 16.7 million more acres than the average 2001-2005 plantings. Prospective 2012 planted acres are 21 percent higher than the 2001-05 average. While planted acres have increased, where corn is produced in the United States has not changed much. Over the past decade, there have been modest shift in plantings from the eastern to western corn-belt. North Dakota has increased share of acres. Overall though, there is remarkable stability in shares of planted corn acres across states. This suggests that national expected yield should not change much because of where corn is planted and that continued planting of 95.9 million or more acres of corn depends on success with more corn intense rotations.”

The AP reported today that, “Ham will be the centerpiece of many Easter dinners this weekend, but the cost of that traditional main dish may make it harder for families to live high on the hog.

Ham prices have been higher than usual for the past two years because the cost of pig feed has gone up, and some major pork producers are spending millions to convert barns as they phase out cramped cages used to confine pregnant sows.”

The AP article added that, “Livestock economist Shane Ellis said the price of ham isn’t likely to drop soon because pork producers’ costs aren’t decreasing. Feed, which is mainly corn, is running about $6 a bushel — not far from the record $7.99 per bushel set last June.

Pork producers also are switching from gestation crates to more open pens amid public pressure from consumers and animal welfare advocates who believe the smaller cages are cruel. One major producer, Smithfield Foods, recently said it expects to spend nearly $300 million by 2017 to convert its barns.

“The switch also requires more labor to manage the sows because they tend to fight. Some of those costs are likely to be passed on to consumers.”

Diana Marcum and Rosanna Xia reported yesterday at the Los Angeles Times Online that, “State agricultural inspectors have enacted a quarantine and are going door-to-door in a Hacienda Heights neighborhood in an effort to help save the state’s $2-billion citrus industry and beloved backyard fruit trees from a disease that has wreaked havoc in Florida and Brazil.

“The sale of citrus trees is banned in a five-mile radius around the Los Angeles County neighborhood where Huanglongbing, or yellow dragon disease, was first detected last week, according to the California Department of Food and Agriculture.”

 

Regulations

Todd Neeley reported yesterday at DTN (link requires subscription) that, “Congressional attempts to scale back EPA’s regulatory authority often come with dire predictions of job losses from expanded regulations, met by agency counter-claims that those regulations actually result in job creation and other economic benefits.

“A new report from the Institute for Policy Integrity at the New York University School of Law, however, said both sides fail to fully explain the job effects of environmental regulations.

“U.S. farmers have grown increasingly concerned about EPA’s perceived expanded regulatory reach. Agriculture interest groups say that as the agency increases its presence in rural America, farmers find it more difficult to do business. The new report suggests EPA and lawmakers need to be more honest about how environmental regulations affect the economy, which will ultimately determine how farmers do business.”

Mr. Neeley explained that, “When it comes to agriculture, much of the Congressional fight to strip away EPA authority has centered on what has been perceived as expanded federal authority through the Clean Water Act, the Clean Air Act and other environmental regulations.

“The study, ‘The Regulatory Red Herring, The Role of Job Impact Analyses in Environmental Policy Debates,’ said the recent political fight between Congress and EPA has provided little in the way of actual analysis focused on the costs and benefits of environmental regulations.”

A news release Monday from Rep. Barney Frank stated that, “[Rep. Frank], Ranking Member of the House Financial Services Committee, today released the following statement vowing to fight Republican efforts to substantially weaken provisions of the 2010 Wall Street Reform and Consumer Protection Act.  In his statement, Frank strongly criticizes two bills which would create substantial loopholes in parts of the law dealing with the regulation of derivatives.  Republicans who defeated in the Financial Services Committee Democratic-sponsored amendments to preserve regulations plan to bring the bills to the floor after recess.”

Rep. Frank indicated that, “Unregulated, irresponsible derivative transactions are one of the major causes of the economic crisis.  In the Financial Reform bill, we adopted provisions that allowed derivatives to perform their legitimate function for companies seeking to stabilize prices, while substantially reducing opportunities for abuse.”

And, Peter Schroeder reported yesterday at The Hill’s On the Money Blog that, “Sen. Bill Nelson (D-Fla.) is losing patience with a top financial regulator, saying Tuesday that he should either crack down on speculation driving up oil prices or no longer work at his watchdog agency.

“In a letter sent to President Obama, Nelson said Gary Gensler, the chairman of the Commodity Futures Trading Commission (CFTC), needs to implement new restrictions on speculation or lose his job.”

Keith Good

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