FarmPolicy

Farm Bill and Policy Issues; Animal Agriculture; and, MF Global

Farm Bill: Timing

The Need-To-Know Memo (Email update from National Journal) stated on Friday that, “The Senate is set to start considering a farm bill on Tuesday, initiating what will likely be several weeks of floor action on the measure, Senate Democratic leadership aides said. Both parties hope that passage of the sweeping measure reauthorizing federal agriculture programs will continue a run of successful Senate legislating that has belied frequent references to the chamber’s dysfunction. Backers hope Senate passage of the bill before the Independence Day recess will increase odds that the House will act and Congress will pass a compromise farm bill before the election in November.”

Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “The House and Senate will return next week to advance more 2013 spending bills, and possibly a farm bill in the Senate.

“Officially, the Senate is scheduled to hold a procedural vote on the Paycheck Fairness Act, S. 3220, an answer to Senate Democratic charges that Republicans are waging a ‘war on women.’

“But the vote on that bill, which calls for government collection of salary data from companies and offers grants to help women improve their salary negotiation skills, is expected to fail. Once it does, the Senate plans to start work on a 2013 farm bill, S. 3240.”

An update posted on Friday at the National Sustainable Agriculture Coalition Blog reported that, “Like we reported previously, we still expect the House Agriculture Committee to markup its version of the farm bill during the week of June 18.

The House Agriculture Appropriations Subcommittee will be marking up its agriculture appropriations bill next Wednesday, June 6.

Farm Bill: Ron Hays Interview with Chairman Lucas- Policy Issues

Late last week, Ron Hays of the Oklahoma Farm Report, visited with House Agriculture Committee Chairman Frank Lucas (R., Okla.) where their discussion focused on the Farm Bill (audio and summary ; unofficial FarmPolicy.com transcript, here).

Chairman Lucas noted that, “My goal is to have the farm bill out of the committee before we go home for the Fourth of July, so that means the latter part of June. If the Senate can pass their version of the farm bill across the floor sometime in June, we are able then to get our work done in committee towards the end of June, then I think that gives us enough of a window of opportunity to do our version of the bill on the floor, get to conference, and, based on my experiences of working with Senator Stabenow in the hurry-up process last fall, I think we can make a conference work rather quickly. Once each committee has cleared their chamber with a base bill, we can actually sit down together and put that real document on paper.”

With respect to potential difficulties, Chairman Lucas pointed out that, “But the two biggest challenges are how many reforms do you put into the SNAP program, the social nutrition program, how many dollars in savings can you achieve there and still meet the needs of our fellow Americans, and at the same time, when you step away from the direct payment program, how do you craft a revenue program, shallow loss, whatever you want to call it, and/or a target price option so that producers have the ability to pick what’s in their best interest, from their perspective, and do all of this in a way that still meets probably a 33, 34, 35 billion dollar overall savings.”

In addition, with respect to the current version of the Senate Farm Bill, the Oklahoma Republican added that, “I believe that, once again, unlike the Senate bill, that we need to have a policy for the next five years that not only keeps the good times good – and that’s my concern about shallow loss revenue. If you’ve had the best prices for the last five years and you have a small deviation in price, it’s going to pay off. Well, that’s great, but I’m more concerned about – and along with that, perhaps I should say – concerned about what happens if we have another 1970s or 1990s, when supply and/or demand shift in such a way that we have a dramatic change in prices for our wheat and our cotton, and for that matter, our corn and our beans and all those products.

“I want a real safety net. Not just keep the good times the best, but if we have a free-fall, I want something to catch us. And right now, in the way the Senate bill is put together, there’s no real safety net underneath.”

Meanwhile, Friday’s Agriculture Today radio program on the Red River Farm Network (RRFN) included a report by Mike Hergert that featured remarks from Senate Ag Committee Ranking Member Pat Roberts (R., Kan.) who expressed concerns with a policy focused more on target prices- audio clip from RRFN (MP3- 0:32).

Farm Bill: Crop Insurance

In a paper released Thursday, Kansas State University Agricultural Economist Art Barnaby (“Will a $40,000 Premium Subsidy Limit Affect ‘Family Farmers’”?) noted that, “Recently proposed in the Senate is a $40,000 subsidy limit on crop insurance contracts. The justification for these limits is often that ‘big’ farmers do not ‘need’ help. Often these limits never achieve the reduction in cost that is often forecasted, because farmers create new entities, change leases, and find other ways to avoid the limits. Once limits are in place, they are never increased to reflect increased production costs and farm size requirements to meet economies of scale for an efficient agricultural industry. So farmers today that are under the limit will likely grow into operations that are over the limit, if for no other reason than inflation.

“It may be good politics to apply payment limits so that only ‘small’ farms are covered. If that is the objective, then Congress should first consider ‘large’ farmers receiving ‘free’ coverage that can exceed a million dollars, but only farmers with multi-million dollar contracts will be affected by a $40,000 subsidy limit. Many specialty-crop farmers have over a million dollars in CAT coverage and contribute nothing toward their premium that is paid by USDA with a 100% premium subsidy. However the Risk Management Agency (RMA) data suggests a $40,000 limit will likely have little impact on these ‘large’ farming operations that are insured with ‘free’ CAT.”

And in a separate paper last week (“Environmental Working Group Wants Crop Insurance Subsidy Eliminated for ‘Big’ Farmers”), Dr. Barnaby pointed out that, “If the target for risk management protection is only very ‘small’ farms then there is little public justification for any farm program, because the top 20% of farmers produce most of the nation’s food supply. The top 20% are often the ones that need risk protection because they are full-time operators and often carry large lines of credit that must be met even when crops fail.”

Meanwhile, an Associated Press article from yesterday indicated that, “Agriculture Secretary Tom Vilsack has suggested lowering the premium subsidy rate, reducing insurance company returns on investment and cutting payments to farm insurance agents from $1,000 a policy to $900 to save money.

“Farm groups argue that higher premiums would result in farmers insuring fewer acres and exposing taxpayers to more special disaster aid in bad times.”

Stephen Elliott reported on Saturday at the Quad-Cities (Moline, Il.) Online that, “Prophetstown farmer Rock Katschnig said it’s crucial for the 2012 Farm Bill to maintain a crop insurance program.”

The article added that, “U.S. Rep. Bobby Schilling, R-Colona, a member of the House Ag Committee, said Friday that he has visited many farmers, and most agree with elimination of direct payments.

“But they do want crop insurance, he said. ‘The farm bill shouldn’t be about farmers making a profit off of any type of insurance. The key is to have it in the event of a catastrophe or bad storm or drought.’

“‘When a farmer borrows money for new equipment from the bank, the bank has to know there is a safety net there (crop insurance).’”

David Montgomery reported on Friday at the Argus Leader (Sioux Falls, S.D.) Online that, “‘The priority for us in this part of the world, where we’re growing wheat, corn and soybeans … is having a strong crop insurance program,’ said Hal Clemensen, board chairman for the South Dakota Wheat Growers Cooperative. ‘We face so much weather variables in this part of the country that we need some sort of safety net.’

“[Scott VanderWal, president of the South Dakota Farm Bureau] agreed.

“‘We realized some time ago that the mood in Congress was to discontinue direct payments, so our members have endorsed that,’ he said. ‘We feel that it’s very important in the absence of direct payments to make sure we have a strong crop insurance program.’”

Robert B. Semple Jr. stated yesterday in the opinion section of The New York Times that, “The existing crop insurance program, which pays on average 60 percent of the cost of insurance premiums for farmers, has risen from about $2.4 billion in 2001 to about $8.7 billion in 2011, and is expected to cost $9 billion annually in the coming years. The [Senate Agriculture] committee also added a second insurance-related program that could cost an additional $3 billion a year. The main beneficiaries of crop insurance will still be the big farmers, who take out the biggest policies.

“Beyond enshrining that status quo, the bill seriously threatens the environment. Because the committee insisted on generous insurance subsidies, it did not meet the reductions required by the 2011 Budget Control Act even after cutting the direct payments. So it trimmed $6 billion over 10 years from environmental programs, chiefly the Conservation Reserve Program, which rewards farmers for converting erodible farmland to grass and other vegetation. However flawed, the old subsidy programs required farmers to act as responsible stewards of the land — promising, among other things, not to drain wetlands. The crop insurance subsidies impose no such obligations.”

Soda Regulation Proposals

Michael M. Grynbaum reported in Saturday’s New York Times that, “For years, the nation’s powerful soda industry has known it faced a formidable opponent in Mayor Michael R. Bloomberg.

“Bottlers and beverage behemoths like Coca-Cola and Pepsi have kept a wary eye on the city’s health department, which has run an aggressive anti-obesity campaign targeting sugary drinks, regularly filing requests for public records in an attempt to keep up with new policies that could affect them.

“Yet despite those efforts, the industry was blindsided this week when Mr. Bloomberg introduced a totally new tactic in his campaign: an outright ban on sales of large-size sweetened beverages at virtually all of the city’s restaurants, street carts and theaters.”

The Times article added that, “The industry promised to fight, but it remained unclear what line of attack it might pursue. The first step, [Kevin Keane, a spokesman for the American Beverage Association] said, would be to talk to policy makers. ‘We need to educate them,’ he said.

“The State Legislature could supersede Mr. Bloomberg and pass a law specifically curbing the ban, but that would require support from both legislative chambers and from the governor.”

“Barring legislative action, the beverage industry could pursue a lawsuit to block the policy. Officials at several industry groups said they wanted to see the formal language of the proposal before taking legal steps, but Rhona S. Applebaum, Coca-Cola’s chief scientific and regulatory officer, said she had concerns,” the article said.

The Washington Post editorial board noted yesterday that, “Sugary drinks have been the largest single contributor to the increase in Americans’ caloric consumption over the past three decades. Soft drinks deliver roughly half the added sugar in the average American’s diet. But some Americans consume much more than others. Teenage boys, for example, now drink an average of 273 calories in sugary drinks every day. And, unlike with solid bad-for-you foods, public-health experts theorize that people don’t tend to cut back on calories elsewhere after consuming a lot of soda. That is among the reasons it’s unsurprising that consuming sugary drinks is associated with weight gain and diabetes.”

The Post added that, “Still, we are happy to see Mr. Bloomberg experimenting with serious policies to address obesity, which is more than can be said about most of America’s politicians, and we hope he succeeds. Even if Mr. Bloomberg’s plan fails to make much of a difference, it should be taken as an invitation for like-minded policymakers to try different approaches, of which there are many. The country needs innovative leaders with a similar determination to take on America’s expanding waistline.”

Frank Bruni noted in a column in yesterday’s New York Times that, “While Michelle Obama focused on carrots, Mayor Michael R. Bloomberg brandished a stick. It’s what we deserve. Cry all you want about a nanny state, but as a city and a nation we’ve gorged and guzzled past the point where a gentle nudge toward roughage suffices. We need a weight watcher willing to mete out some stricter discipline.”

Meanwhile, Patricia Leigh Brown reported in yesterday’s New York Times that, “The California good life — the one of endless varieties of lettuce and tasting rooms nestled in vineyards — does not extend to Richmond’s Iron Triangle, a neighborhood named for the railroad tracks that delineate its borders and historically one of the neediest communities in the Bay Area.

“Even here at a sweaty Zumba class sponsored by a nonprofit group called Weigh of Life, the city’s proposal for a one-cent-per-ounce tax on sugar-sweetened beverages, which is to appear on the November ballot, meets up against the hard realities of residents’ lives.”

The Times article noted that, “The proposed tax, a license fee on businesses selling sweetened drinks, would require owners of bodegas, theaters, convenience stores and other outlets to tally ounces sold and, presumably, pass the cost on to customers. It is the most visible West Coast municipal challenge yet to Big Soda, as advocates are fond of calling it.”

Animal Agriculture

The AP reported on Saturday that, “The effort to increase cage sizes for the 270 million laying hens in the U.S. is a compromise bill working its way through Congress supported by the Humane Society of the United States and the United Egg Producers, the industry’s largest advocacy group.

“The improbable alliance has formed amid a nationwide push by some consumers, grocers and restaurants to improve living conditions for farm animals that provide food for the table.”

The AP article noted that, “The federal legislation was introduced in the Senate on May 24 by California Democrat Dianne Feinstein and in the House earlier this year by Oregon Democrat Kurt Schrader, California Republican Jeff Denham and others.

“It would amend the Egg Products Inspection Act to require producers to improve conditions for hens now housed in bare wire cages that give each bird the space equivalent to a standard sheet of paper.”

Saturday’s article pointed out that, “‘We’ve had this battle for a long time, and it’s costing a lot of money,’ [United Egg Producers president Gene Gregory] told The Associated Press. ‘But we have to do something for our customers and consumers other than an unsustainable cage-free industry.’

“Gregory said his group reached out to the Humane Society and proposed the national enriched colony plan.

“‘They were receptive to that,’ he said.”

The article noted also noted that, “It turns out there is a benefit for egg farmers to the new system. According to preliminary data collected at JS West in Modesto, so far California’s only egg producer with an enriched colony system, chickens in in the larger European-style cages produce more eggs in a year, have lower mortality rates and have better feather cover — a sign of good health.”

Also on this issue, Steve Boomsma noted in a recent column at The Gazette (Cedar Rapids, Iowa) Online that, “The proposed law (H.R. 3798 and S.B. 3239) is an amendment to the four-decades-old Egg Products Inspection Act. The bill would require the gradual replacement of conventional cages for egg-laying hens with new housing that provides nearly twice the space per hen, as well as other enrichments such as perches, nesting boxes and scratching areas.

“The bill would eliminate the duplicative and conflicting state laws that are confusing to consumers, grocers, restaurateurs and farmers.”

Mr. Boomsma added that, “The bill also has bipartisan support in Congress, with more than 65 Republican and Democratic co-sponsors — a notable achievement in today’s political climate. Notably, the bill is supported by citizens, too, by a 4-to-1 margin, according to independent research.”

In other news, Elise Viebeck reported yesterday at The Hill’s Health Watch Blog that, “The restaurant chain Chipotle Mexican Grill says more needs to be done about antibiotic use in farm animals, a practice that strengthens drug-resistant superbugs.

“The statement from Chipotle came shortly after federal health regulators appealed a court order to begin banning certain drugs from farm feed, eliciting criticism from lawmakers and public health advocates.

“In an interview with Public Radio International (PRI), Chipotle spokesman Chris Arnold praised the Food and Drug Administration (FDA) for announcing new guidance on the issue this spring but noted that the standards are voluntary, not required.”

MF Global

Julie Steinberg, Aaron Lucchetti and Mike Spector reported in today’s Wall Street Journal that, “Federal investigators are scrutinizing a series of conversations among MF Global Holdings Ltd. employees shortly before the securities firm erroneously told regulators that its customer funds were safe, said people with knowledge of the probe.

“Three days before MF Global filed for bankruptcy-court protection, CME Group Inc. was assured by the New York company of a $200 million cushion in accounts that ensured customer funds were being kept separate from the firm’s own money.”

The Journal article explained that, “But the customer accounts actually were in the red, and the deficit ballooned to more than $900 million on the night of Oct. 30. MF Global tumbled into Chapter 11 on Oct. 31. The bankruptcy trustee trying to recover money for the firm’s U.S. customers has estimated that the shortfall now is roughly $1.6 billion. A large chunk of the money is stuck outside the U.S.

“For at least the past month, representatives of the Commodity Futures Trading Commission and Justice Department and Congressional investigators have been asking about the circumstances around the erroneous report and who was responsible for it.”

Keith Good

Posted by Keith Good • June, 4, 2012 • 4:04 am