FarmPolicy

Farm Bill; Budget Issues; Ag Economy; Regulations; and, Trade

Farm Bill and Policy Issues

Carolyn Lochhead reported yesterday at the San Francisco Chronicle Online that, “The Senate is poised to take up a new farm bill in the coming weeks that will set the nation’s food policy for the next five years and cost nearly $1 trillion over a decade.

“But California, the nation’s largest farm producer and a strong voice in environmental and health policy, is destined to cede billions of dollars to entrenched commodity interests in the Midwest and South.”

The Chronicle article pointed out that, “The state’s fresh fruit and vegetable growers are pleased that the Senate bill preserves hard-fought gains in the last farm bill in 2008, including research for organics and produce, farmers’ markets and more fruit and vegetable purchases for school lunches and other federal food programs.

“This year, California Democrats are weighing into the debate earlier and more forcefully than in the past. Still, the great bulk of federal support for farms remains focused on such commodities as corn, soybeans, wheat and cotton, just as farm bills have since 1933.”

Monday’s article noted that, “Rep. Sam Farr, D-Carmel, the top Democrat on the House Appropriations panel that doles out farm spending and one of the few Californians with a big voice in farm policy, called the Senate bill ‘a small step forward, but certainly not as much as California would like and that California is already doing for itself.’”

“Most of the bill’s spending goes for the Supplemental Nutrition Assistance Program, or SNAP, formerly known as food stamps, which aid the poor and provide a market for farmers. But a big chunk, $142 billion over 10 years, would go to support corn and other commodities at a time when farmers are riding a historic commodity boom,” the article said.

Meanwhile, John Schlageck indicated in a column on Saturday at The Emporia Gazette (Kan.) Online that, “As Congress writes the upcoming farm bill, Kansas farmers and their contemporaries across our country will tell you that maintaining an efficient, effective and affordable crop insurance system is their number one priority.

“You’ll hear the same story throughout the Midwest and much of the country where agricultural producers believe federal crop insurance provides them with an effective risk management tool – especially when they are facing losses beyond their control.

“Federal crop insurance also reduces taxpayer risk, makes hedging possible to help relieve market volatility and it provides lenders with greater certainty that loans made to producers will be repaid.”

And William Cole noted in a recent column at The Northeast Mississippi Daily Journal (Tupelo, Miss.) Online that, “Crop insurance is privately written and delivered insurance that is purchased by individual farmers and tailored specifically for the risks they face on their farms.

“After Katrina, crop insurance companies dispatched crews from other parts of the U.S. to the Gulf Coast states to meet with the farmers and perform the appraisals. And, believe it or not, indemnities were paid in a matter of weeks.”

Mr. Cole pointed out that, “For farmers, the speed with which they received their indemnities enabled them to pay off their production loans from the crop they had just lost and bounce back to plant again the following spring.”

However, an item posted on Saturday at the Chicago Tribune Online took a different perspective, noting that, “Perhaps because it’s poorly understood, crop insurance is on the verge of being expanded in the 2012 Farm Bill. Lawmakers evidently see it as a way to stuff more money into the pockets of favored constituents whose pockets already are overflowing.”

In other policy developments, the Chicago Tribune editorial board indicated today that, “Eggs are an excellent food — nutritious, tasty, versatile, rich in protein, and largely acquitted of any role in raising blood cholesterol. The average American eats 250 eggs a year in everything from omelets to cakes.

“But there is a downside to eggs: the treatment of hens that lay them. Modern egg production facilities typically confine chickens in cramped wire cages too small to allow them to even spread their wings. The average hen has only about 67 square inches of space, which is smaller than a sheet of paper.”

The Tribune indicated that, “Animal welfare advocates have long pushed for more humane standards, and the idea is catching on in a big way. Last week, Sen. Dianne Feinstein, D-Calif., introduced a bill to require egg producers to make significant improvements in the treatment of hens. The legislation has the endorsement of the United Egg Producers, which represents close to 90 percent of the industry, as well as the Humane Society of the United States.”

“It’s a small but important step, and it deserves to be enacted. Americans are already demanding better conditions for the animals that provide our food, even if it may mean slightly higher prices. Two states have outlawed cramped cages,” the Tribune said.

“‘This is legislation that egg farmers want and need to survive,’ said David Lathem, of the United Egg Producers. It’s a good thing for consumers too — not to mention chickens.”

Meanwhile, a statement from USDA on Friday noted that, “The U.S. Department of Agriculture’s Chief Economist Joseph W. Glauber announced today that USDA is reviewing release times for several major statistical reports due to recent changes in market hours by major commodity exchanges. The National Agricultural Statistics Service (NASS) and the World Agricultural Outlook Board (WAOB)—the USDA entities responsible for the reports—will seek public comment on the release times and procedures of their key statistical reports. In the coming weeks, USDA expects to publish a notice in the Federal Register advising the public of the comment period. USDA is reviewing release times of the following statistical reports: World Agricultural Supply and Demand Estimates, Acreage, Cattle, Cattle on Feed, Crop Production, Grain Stocks, Prospective Plantings, Quarterly Hogs and Pigs, and Small Grain Summary. The current USDA release times of 8:30 a.m. and 3:00 p.m. ET will remain in effect until further notice.”

Budget Issues

Peter Schroeder reported on Friday at The Hill’s On the Money Blog that, “Rating agencies are warning that the federal government risks another downgrade of its creditworthiness if it fails to come up with a credible plan this year to lower the federal deficit.

“The warning comes amid growing expectations that Washington will punt major tax and spending decisions into next year because lawmakers would have little time to address them in a lame-duck session after the November election.”

Alexandra Jaffe reported on Saturday at the National Journal Online that, “The two chairmen of the Simpson-Bowles commission warned of dire consequences if Congress doesn’t tackle a number of expiring tax and budget cuts during the lame duck session this winter.

“‘If we don’t, then I think you will see the markets really take a really adverse look at the country,’ said Erskine Bowles, in an interview with CNN’s Fareed Zakaria GPS set to air Sunday. ‘And I think you’ll see us lose another downgrade in our credit. And I think you’ll see interest rates pop up. And before long, you’ll see the availability of credit lessen. So I think we could have a real problem if we don’t do something and do something relatively quick.’”

Jennifer Steinhauer reported in Friday’s New York Times that, “It is a maxim in Congress these days: If high-profile legislation affecting millions of Americans is about to expire, deal with it at the last possible second, preferably with rancor.

“But a major exception is in the offing with the Bush-era tax cuts, which are set to lapse on Jan 1. Both parties in the House and the Senate are eager, perhaps even giddy, at the prospect of voting for their respective versions of an extension of the cuts this summer, well before the due date.”

The article added that, “Speaker John A. Boehner, Republican of Ohio, has said there will be a House vote to extend the entire package before the November election. ‘We shouldn’t wait until New Year’s Eve,’ he said in a speech at a recent fiscal conference, ‘to give American job creators the confidence that they aren’t going to get hit with a tax hike on New Year’s Day.’ Democrats are trying to up the ante. On Wednesday, Representative Nancy Pelosi of California, the Democratic leader, called on the speaker to schedule a vote right away.

“‘Democrats believe that tax cuts for those earning over a million dollars a year should expire and that we should use the resulting revenues to pay down the deficit,’ she said. Senate Democrats are trying to cobble together a measure that would extend the tax cuts for the middle class but drop them for higher earners. Democrats hope the bill will reach the Senate floor this summer.

“Without any extensions, the expiration would raise taxes next year by $221 billion.”

Agricultural Economy

On Friday, USDA’s Economic Research Service (ERS) updated its Food Price Outlook.  The Consumer Price Index for food (The Consumer Price Index (CPI) measures price changes for all consumer goods and services, including food, whereas the CPI for food measures the changes in the retail prices of only food items) for 2012 is forecast to increase by 2.5%- 3.5%.

And John Revill reported in today’s Wall Street Journal that, “Strapped consumers in economically racked Southern Europe are changing their shopping habits—prompting global food companies to use some of the sales tactics they developed for emerging markets.

“Many companies are repackaging successful standard products into less-costly, smaller versions for low-income shoppers, much as the companies have done in Asia and Latin America.”

Also at ERS Online on Friday, an update at the Charts of Note webpage indicated that, “U.S. cotton exports are forecast to decrease about 25 percent this season. The drought-reduced U.S. crop lowered exportable supplies and competition from more abundant foreign supplies is expected to reduce shipments to their lowest level in a decade. As a result, the share of global trade is projected to fall to 28.4 percent in 2011/12, 9 percentage points below the 5-year average and the lowest share since 2000/01. This chart is found in the March 2012 Cotton and Wool Outlook, CWS-12a.”

Regulations

The New York Times editorial board addressed the issue of federal regulations in an opinion item in Sunday’s paper (“The Phony Regulation Debate”), stating in part that, “American business has always chafed at regulation, but rarely have the cries of outrage been as shrill as during the Obama administration. The United States Chamber of Commerce has moaned of a ‘regulatory tsunami of unprecedented force’ issuing from Washington. Every Republican candidate this year has run on an antiregulatory platform, and one of the loudest has been Mitt Romney, who has promised to immediately tear down President Obama’s ‘vast edifice of regulations.’

“It is absurd, however, for Republicans to attack Mr. Obama for carrying out an unprecedented ‘regulatory jihad’ when, in fact, the administration has a mediocre record when it comes to curbing dangerous practices by industry. As much as any Republican administration, Mr. Obama’s has focused narrowly on the costs of a rule compared to its benefits, and has for political reasons rejected rules opposed by business. The results have often disappointed environmentalists and consumer advocates.”

Trade

Vicki Needham reported late last week at The Hill’s On the Money Blog that, “A top Senate Democrat is urging passage of legislation that would require U.S. trade officials to share information with Congress during trade agreement negotiations.

“Sen. Ron Wyden (Ore.) said he had to introduce legislation clarifying that the U.S. Trade Representative must consult with lawmakers during trade talks because of the Obama administration’s refusal to provide information on the Trans-Pacific Partnership (TPP) with Congress and key staff members.”

The update noted that, “U.S. Trade Representative Ron Kirk recently defended the administration’s actions, saying his office has been as transparent as possible with stakeholders while acknowledging that some details need to remain secret to keep talks moving toward a resolution.

“The nine nations — the United States, Australia, New Zealand, Chile, Peru, Singapore, Vietnam, Malaysia and Brunei — are aiming to complete work on the agreement this year.”

And in a separate update at the On the Money Blog, Ms. Needham reported on Friday that, “A bipartisan group of senators are urging U.S. trade officials to resolve differences with Mexico to expand access for exports of potatoes, especially as negotiations continue over an Asia-Pacific trade deal.

“Sen. Maria Cantwell (D-Wash) and eight other lawmakers want restrictions lifted for U.S. potatoes beyond the 16 miles of the U.S.-Mexico border and settle concerns over the introduction of possible pests that could go the border with the vegetables.

“‘As Mexico’s potential entry into the Trans-Pacific Partnership negotiations continues to be discussed, we urge your agencies to work with Mexico to resolve the outstanding concerns on market access for U.S. fresh potatoes,’ the lawmakers wrote in a letter on Thursday to Agriculture Secretary Tom Vilsack and U.S. Trade Representative Ron Kirk.”

Keith Good

Posted by Keith Good • May, 29, 2012 • 3:59 am