FarmPolicy

November 26, 2014

Farm Bill; Food Safety; Ag Economy; and Regulations

Farm Bill: Revenue Loss Assistance Program- Regional Policy Perspectives

A news release yesterday from Sen. Kent Conrad (D., N.D.) indicated that, “Senators Kent Conrad and John Hoeven [R., N.D.] met with agricultural and agribusiness leaders from across North Dakota today to detail bipartisan legislation they crafted that will maintain a critical safety net for North Dakota farmers and serve as a major component of a new Farm Bill.

“‘We are facing serious budget constraints that make the development of this new Farm Bill more challenging than anything we’ve seen in the past,’ Senator Conrad said.  ‘Senator Hoeven and I carefully crafted our legislation with the help of North Dakota’s producers. They told us that we need to maintain a strong crop insurance program. This legislation does just that while also contributing to deficit reduction.’

“‘Producers throughout our state have been telling us that good crop insurance is the foundation of a strong farm safety net and their number one priority,’ Hoeven said. ‘That is just what we have worked to craft in this bipartisan legislation, which is the most cost-effective approach that will enable us to save money to help reduce the deficit, while providing our farmers and ranchers with strong support.’”

Yesterday’s release added that, “Joined by more than 40 state agriculture leaders, the Senators detailed the Revenue Loss Assistance and Crop Insurance Enhancement Act of 2012, legislation they based on feedback they received from North Dakota producers in a series of meetings over the past year that is less complex, more defensible, and a more effective safety net program for farmers.

“Senators Conrad and Hoeven  — both members of the Senate Agriculture Committee — are working to get their proposals incorporated into the new Farm Bill.  It creates the Revenue Loss Assistance Program (RLAP), an initiative that combines Supplemental Agricultural Disaster Assistance (SURE) and Average Crop Revenue Election (ACRE) into one simpler and more effective program.

RLAP works in conjunction with crop insurance to provide farmers with assistance for losses between 12 and 25 percent of their average historic revenue.  An eligible loss can be due to any combination of decreased yields, declining prices or quality discounts.  RLAP is based on individual farm performance, rather than an area trigger, and assistance is provided on a commodity specific basis.”

Nick Smith reported today at the Bismarck Tribune Online that, “The threshold for the new Revenue Loss Assistance Program would be a 12 percent loss in revenue, Conrad said. It would provide a coverage range of between 75 percent and 88 percent for producers and the payment rate would be 65 percent, with a 45 percent rate for land that farmers are unable to plant.

“‘I think it has a great chance to be the heart of the farm bill,’ Hoeven said. ‘We’re gonna need a big bipartisan vote out of the ag committee to get this on the Senate floor.’

“Conrad said he believes the legislation proposed by himself and Hoeven is far better than if they were to try to craft a bill based on cuts proposed by the House-passed budget resolution. The resolution calls for $180 billion in cuts, which Conrad said makes crafting an effective farm bill virtually impossible.”

The article indicated that, “Rick Clayburgh, president of the North Dakota Bankers Association, asked Conrad what he thought of recent comments by the House Agriculture Committee chairman about passing a one-year extension rather than pass a new farm bill.

“‘Kicking this can down the road would be a huge mistake,’ Conrad said. ‘I think it would be a profound mistake if we have a one-year extension.’

“‘The proposal we have put before our colleagues … can withstand scrutiny,’ he said.”

Sue Roesler reported yesterday at the Farm & Ranch Guide Online that, “Called the “Revenue Loss Assistance and Crop Insurance Enhancement Act of 2012 (RLAP), Conrad said the bill is cost-effective, makes sense because it is at the farm level, strengthens crop insurance, preserves the counter-cyclical program, reduces duplication, is much less complex, and speeds up the time for farmers to receive payments.”

Conrad said with the kind of environment in Washington, D.C., right now, farmers could lose out on more commodity programs if the committee waits to write the farm bill,” the article said.

Ms. Roesler indicated that, “He [Sen. Conrad] added that extending the 2008 Farm Bill for another year while the ag committees worked on a 2012 Farm Bill would be disastrous. ‘Time is not on our side. The more time there is, the more bites of the apple,’ which in this case it would be more cuts to ag.

“He said the Senate Ag Committee will begin writing the farm bill the week of April 16.”

The proposal from Senators Conrad and Hoeven was also highlighted on yesterday’s Agriculture Today radio program (Red River Farm Network).  A portion of yesterday’s Agriculture Today show included remarks from Sen. Hoeven on the Revenue Loss Assistance Program- RRFN audio (MP3- 1:49).

In part, Sen. Hoeven stated that, “We have good support from the different farm groups, we have good support on both sides of the aisle, the key is going to be coming together with some of the Southern producers, and that may be the biggest challenge at this point.”

Recall that last week’s House Agriculture Committee field hearing in Jonesboro, Ark. served to illustrate some of the concerns of Southern producers as the elimination of direct payments appears certain and other policy variables for drafting Title I of the Farm Bill are being considered.

In related news on regional differences and policy, an update from earlier this week posted at the Oklahoma Farm Report Online stated that, “Mark Lange, President and CEO of the National Cotton Council of America, spoke to growers recently about what he sees in store for the new farm bill. He said that getting such a bill passed is an enormous undertaking and that producers are unanimous that they need a good bill and they need it now. He says where the difficulty comes in is whose definition of ‘good bill’ do you use?”

Specifically, the update indicated that, “He [Mr. Lange] said legislators are complaining that they are having a difficult time finding common ground among all the commodity groups.

“‘The commodity groups themselves have made it a little difficult on Congress because the commodity groups aren’t giving the Congress a unified voice.’

“‘And I don’t mind telling you, because I speak for cotton–that’s my job–that some grains and oil seeds are trying to take your money. And not just our money, but they’re trying to take the money that’s in the baseline for rice and peanuts and cotton in order to enrich their revenue programs.’

“‘If they think we’re just going to roll over and say ‘Oh, yeah, that’s just fair,’ I don’t think so. So Congress comes to us and says you really need to give us better direction, but I’m sorry, as long as the grains and oil seeds are going to try to steal several hundreds of millions of dollars annually in support from rice, peanuts and cotton to enrich their programs, we’re not going to speak with a single voice. It’s not going to happen.’”

In other policy developments, the AP reported yesterday that, “U.S. Deputy Secretary of Agriculture Kathleen Merrigan sees an epidemic of sorts sweeping across America’s farmland. It has little to do with the usual challenges, like drought, rising fuel and feed prices or crop-eating pests.

The country’s farmers and ranchers are getting older and there are fewer people standing in line to take their place.”

Meanwhile, Peter Orszag, the vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration, penned a column this week at Bloomberg where he noted that, “It’s the beginning of a new month, and that’s a good thing in America’s schools, because life seems to get worse there as a month goes by. Students get in more trouble toward the end of the month than at the beginning.

“New research suggests that’s especially true for students from families on food stamps, perhaps because life at home gets more stressful as benefits run out. Modifying the food-stamp program so that benefits are paid out twice, rather than once, a month could help eliminate these cycles.”

The column pointed out that, “Families that use food stamps naturally tend to buy more food at the beginning of the month, after receiving their benefit. In fact, more than a quarter of beneficiary households redeem their entire monthly allotment within the first week of receiving it, the Agriculture Department’s Food and Nutrition Service, which oversees the SNAP program, has found. More than half the families take just two weeks to use up their full benefit. And 86 percent of families redeem more than half within the first half of the month.

“Presumably, bulk purchasing toward the beginning of the month need not mean that families run out of food before the month is out — especially since most families are supposed to supplement food-stamp benefits by buying some food with their own income. In reality, however, it often does. Research by economist Jesse Shapiro of the University of Chicago has found that caloric intake among food-stamp beneficiaries is 10 percent to 15 percent lower, on average, at the end of the month than at the beginning.”

 

Food Safety Issues

Bloomberg writer Anna Edney reported yesterday that, “Imported food and drugs in the U.S. have tripled in the past decade, making it tougher on regulators to police the safety of products that Americans consume, the Institute of Medicine said.

“About 85 percent of the seafood Americans buy, 39 percent of fruit and nuts and 18 percent of vegetables come from abroad, according to a report today by the institute, a branch of the National Academy of Sciences that helps the government make health decisions.”

Yesterday’s article noted that, “‘The integrated global economy demands cooperation across borders — to thwart terrorists, reduce environmental hazards, and ensure that our food and medical products are safe and effective,’ Harvey Fineberg, president of the institute, based in Washington, wrote in the almost 300-page report.

The FDA asked the institute to examine gaps in the regulatory systems of developing countries and come up with a strategy for the agency to improve safety. The institute focused on countries that are predicted to be major pharmaceutical and agricultural trading partners with the U.S.: Mexico, Brazil, South Africa, India, Thailand and China.”

Ron Nixon reported in today’s New York Times that, “Federal food safety inspectors said a proposal by the Agriculture Department to expand a pilot program that allows private companies to take over the inspections at poultry plants could pose a health risk by allowing contaminated meat to reach customers.

“Currently, the Agriculture Department’s Food Safety and Inspection Service inspectors are stationed along the assembly lines in poultry plants and examine the birds for blemishes, feces or visible defects before they are processed.

“Under the planned expansion, the agency would hand over these duties to poultry plant employees, while the inspectors would spend more time evaluating the plant’s bacteria-testing and other safety programs. The department has run the pilot program in 20 poultry plants since 1998.”

And New York Times columnist Nicholas D. Kristof authored an item in today’s paper regarding poultry production.

A related article on chicken production today from the AP reported that, “The [Maryland] state Senate is set to cast a final vote on a bill to ban a chicken feed additive containing arsenic.

“The chamber is scheduled to vote Thursday on the measure, which would ban the sale of roxarsone, a chemical used to help the birds grow and fight parasites.”

The AP article stated that, “Opponents of the legislation say the bill threatens Maryland’s eastern shore chicken industry and is not necessary because Pfizer Inc. has voluntarily suspended the sale of the chemical.

Perdue Farms, the country’s third-largest chicken company, stopped using it in 2007.”

 

Agricultural Economy

Reuters writer Christine Stebbins reported yesterday that, “Many U.S. farmers are waiting for crop insurance coverage to kick in before getting too aggressive in planting corn early, resisting the temptation presented by record warm temperatures this spring, a top agronomist said on Wednesday.

“‘Monday’s numbers from USDA certainly showed ‘some’ early planting but the dam has not broken yet. The short-term weather forecast is favorable in terms of no expected heavy rains, but a cool off in temps may dampen some spirits,’ Robert Nielsen, a state extension corn specialist with Purdue University in Indiana, told Thomson Reuters online ags forum.”

 

Regulations

A news release last week from Rep. Tom Rooney (R., Fla.) stated that, “[Rep. Rooney], Chairman of the House Agriculture Subcommittee on Livestock, Dairy and Poultry, this week introduced legislation to protect law-abiding farmers and landowners from reckless, arbitrary and aggressive enforcement actions by the Environmental Protection Agency (EPA) and Army Corps of Engineers.

“‘For many farmers and landowners, recent actions by the EPA and Corps have engineers have put their fundamental right to private property at stake,’ Rooney said. ‘The EPA and Corps have unilaterally expanded their own jurisdiction, giving themselves new authority to regulate private property and spend millions of dollars to prosecute law-abiding citizens.’

“‘By clearly defining federal water policy and setting firm limits on the regulatory authority of the EPA, this legislation strikes the right balance between protecting the environment and preserving the fundamental right to private property.’”

Meanwhile, Jacob Bunge reported in today’s Wall Street Journal that, “CME Group Inc. will tighten scrutiny of futures firms in the wake of the MF Global collapse, focusing on the way in which they safeguard customer funds.

“The breakdown in segregating customer and broker funds at MF Global dealt a severe blow to the futures industry’s credibility and revealed failures in a system that had been the bedrock of industry oversight for decades.

“CME, one of MF Global’s main regulators, said that starting next month all members of its clearinghouse will be required to submit daily reports detailing client funds. These must be approved by senior executives of the firms, and CME said it would also carry out more ‘surprise’ audits of brokers’ books.”

And on the issue of oil prices and speculation, Mike Lillis reported yesterday at The Hill Online that, “House Democratic leaders on Wednesday amplified their attacks on Wall Street oil traders, arguing that excessive speculation — not a lack of supply — is to blame for skyrocketing prices at the pump.

“With gas prices tickling $4 per gallon nationwide, the Democrats are trying to counter Republican accusations that President Obama’s energy policies are behind the rapid cost increase.”

The article added that, “Behind House Minority Leader Nancy Pelosi (D-Calif.), the Democrats hoped to attract attention to the speculation issue by staging a hearing of the Democratic Steering and Policy Committee in an otherwise quiet week when most lawmakers have left Capitol Hill for Spring recess.

“‘Wall Street speculators are artificially driving up the price at the pump and causing pain to … American consumers,’ Pelosi charged.”

The Hill article stated that, “Rep. Rosa DeLauro (D-Conn.), chairman of the policy committee, echoed that message.

“‘The cost of gas is … irrefutable affected by rampant speculation in the oil market,’ DeLauro said. ‘That is something that we can, and should, do something about.’”

***

Lastly today, Cameron Joseph and Emily Goodin reported yesterday at The Hill’s Ballot Box Blog that, “Rep. Tim Johnson (R-Ill.) will retire this year despite winning his GOP primary just a few weeks ago, The Hill has confirmed.”

Rep. Johnson, who was first elected to Congress in 2000, currently chairs the House Agriculture Rural Development, Research, Biotechnology, and Foreign Agriculture Subcommittee.

Keith Good

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