FarmPolicy

Farm Bill; Animal Agriculture, Ag Economy; and, MF Global

Farm Bill Issues

David Rogers reported yesterday at Politico that, “Senate Agriculture Committee Chairwoman Debbie Stabenow said Monday that she has the 60 votes to move ahead on the new farm bill this week and remains ‘very optimistic’ about getting across the Senate floor by the end of this month.

“‘Yes, that’s not in question,’ she told reporters of a possible cloture vote Wednesday or Thursday. ‘We have the 60 votes to proceed.’

“The Michigan Democrat allowed that it could be a two, perhaps three-week slog before Senate passage and remains open to some accommodation with Southern rice and peanuts producers unhappy with how they are treated under her bill. But there was a greater toughness to her tone indicating Stabenow did not want to be held back any longer since final changes can be negotiated in talks with the House later this summer.”

Mr. Rogers added that, “She said it was ‘common knowledge’ that the House Agriculture Committee would take a different approach more favored by the South. ‘We’ll work that out in conference committee,’ she said.

“‘We’re ready to go,’ Stabenow said. ‘We are fully prepared this week and fully anticipate moving forward.’”

Yesterday’s article added that, “There is strong pressure, for example, for Congress to reverse a 1996 law and again require farmers to comply with soil conservation rules or lose the premium subsidies so important to insuring their crop revenues. Stabenow said she has added ‘sod busting’ protections for native prairie grasslands but would oppose any amendment to establish a broader link between crop insurance assistance and the soil conservation rules.  ‘We would not link it going forward,’ she said.”

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Senate Agriculture Committee Chairwoman Debbie Stabenow fired the opening salvo in what could be the start of the battle over a Senate version of the farm bill this week, telling reporters Monday that U.S. farm programs will face significant reform while playing a role in deficit reduction and in stimulating job creation.”

“‘On the top line this represents the most significant reform in agriculture policy in decades, with a reduction in $23 billion to the deficit,’ Stabenow, D-Mich., said. ‘These are real cuts and real reform. The bottom line is the era of direct payments is over. We’re not going to be paying famers for crops they do not grow.’

“‘We’re refocusing on a risk-management program and we’re doing it with $15 billion less. We are cutting and eliminating direct subsidies. And we will help farmers when there is a loss.’”

The DTN article noted that, “Stabenow said two independent analyses found that the ARC program would create a safety net that is ‘fair for all commodities.’

“In the past week, she said, she has been talking with rice growers and other commodity groups that have expressed concern. Economic modeling done on the proposal shows rice producers would see a higher level of support than other commodities in some situations, she said.”

Erik Wasson reported yesterday at The Hill Online that, “Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) said Monday that a wide ‘universe’ of amendments are planned just from Democrats. These could include measures to link crop insurance to environmental protection, limit payments for wealthy farmers and increase food stamp spending.

“Stabenow said she is negotiating with colleagues in her party on the content of the Senate amendments. ‘This is the Senate. We expect that we could have a lot of different kind of amendments,’ she said.”

The Hill article pointed out that, “Stabenow said she is still in talks with Southern senators and farmers and held a conference call with rice farmers last week.

“However, Stabenow also said, new studies call into question complaints from these farmers that they will be treated poorly under the new bill. A report last week from Ohio State University Professor Carl Zulauf showed rice farmers getting better protection under the new farm bill than growers of other crops.

“The USA Rice Federation has questioned whether the Zulauf study truly reflects the committee’s farm bill and continued Monday to push for a system that would guarantee farmers get at least a set target price for their crops.”

Mr. Wasson added that, “House leaders have not signaled any intent to move a bill to the floor before the November election. Even a bill along the lines of what [House Agriculture Committee Chairman Frank Lucas (R., Okla.)] has talked about would likely face opposition from fiscal conservatives seeking to end farm subsidies and slash food stamp spending.”

Meredith Shiner reported today at Roll Call Online that, “Key architects of a long-term farm bill are hoping to keep their ‘delicate’ agreement intact, even as a likely floor assault from Members of both parties and various regions threatens to thwart a final deal.

“Senators in both parties believe there will be enough support to break a filibuster and open debate on the 10-year, $969 billion package as long as Majority Leader Harry Reid (D-Nev.) allows for an open amendment process. But opening the floor to myriad amendments — many of which may be more political than policy-related — could prove troublesome when the measure comes to the floor, possibly this week.”

The Roll Call article noted that, “Stabenow said she expects ‘a lot of different kinds of amendments’ and noted that she and her staff had identified most potential Democratic amendments but were not yet clear on the universe of GOP amendments. She warned that she will be looking for Republicans to offer relevant proposals so the bill won’t be derailed by extraneous issues: ‘We’re going to be open and fair, but in the end analysis, if someone’s just trying to obstruct, then we’ll handle that.’”

Ms. Shiner pointed out that, “Perhaps the most significant boon to the bill’s chances on the floor comes from the relationship developed between Stabenow and ranking member Pat Roberts (R-Kan.) as they moved the bill through the committee.

“In the process of negotiating the final committee product, the two veteran lawmakers spent long nights in Stabenow’s office suite working the phones with Members of their own parties to build enough support for the farm bill, which ultimately passed out of the panel on a 13-5 vote in April.”

“Southern rice and peanut growers have been especially vocal about their concerns regarding massive reforms to the Agriculture Risk Coverage program, which compliments crop insurance against both price and yield losses, and the proposed elimination of direct cash payments to farmers,” today’s article said.

Yesterday’s Need-To-Know Memo (Email update from National Journal) stated that, “Rep. Frank Lucas, R-Okla., chairman of the House Agriculture Committee, tells National Journal he plans to have a markup of a House farm bill in June regardless of what happens in the Senate. Timing is important here as the House and Senate remain far apart on some aspects of the bill, including the best way to insure crops and whether nutritional programs like food stamps should offer more in the way of spending cuts. ‘We’ve clearly identified where we can save up to $33 billion without taking one calorie off the plate of a deserving person,’ Lucas said.”

Meanwhile, a news release yesterday from the American Farm Bureau Federation (AFBF) indicated that, “The [AFBF] today sent a letter to the Senate outlining the organization’s priorities in, along with its concerns about, the Senate Agriculture Committee’s proposed 2012 farm bill, S. 3240.  In a letter, AFBF President Bob Stallman said that with Farm Bureau’s suggested improvements, he believes S. 3240 moves toward the organization’s core principles for rational, acceptable farm policy and his organization would support passage of the bill.”

Yesterday’s release added that, “Some of the areas Farm Bureau believes would benefit from additional policy work includes addressing the net effect of the Agriculture Risk Coverage Eligible Acres provisions to ensure a true ‘planted acres’ approach and avoid recreating ‘base acres’ issues that have raised equity and planting distortion concerns; and re-instituting current payment limitations and the Adjusted Gross Income provisions in current law.

“‘Fundamentally, Farm Bureau continues to support a single program option for the commodity title that extends to all crops,’ wrote Stallman. ‘We believe the safety net should be comprised of a strong crop insurance program, with continuation of the marketing loan program and a catastrophic revenue loss program based on county level losses for each crop.’”

Mary Kay Thatcher, Senior Director for Congressional Relations at the AFBF was a guest on yesterday’s AgriTalk radio program with Mike Adams.  In part, their conversation focused on Farm Bill issues and highlighted topics such as legislative timing, potential amendments in the Senate debate, and crop insurance issues.  To listen to a portion of yesterday’s conversation between Mike Adams and Ms. Thatcher from yesterday’s AgriTalk program, just click here (MP3- 3:42).

Dr. Pat Westhoff, the Director of the Food and Agricultural Policy Research Institute (FAPRI) was also a guest on yesterday’s AgriTalk program.  In part, Dr. Westhoff pointed out that, “I think we’ve all heard the stories that the House is likely to include some sort of a reference price option similar to what was discussed in the discussions last year regarding the Super Committee bill, so that will be another set of factors at play.”

Sara Wyant reported on Sunday at Agri-Pulse Online that, “Sen. John Boozman, R-Ark., told Agri-Pulse on Open Mic that, a lot of independent groups and think tanks have studied the Senate Agriculture Committee’s version of the farm bill and they all agree that, ‘there’s not the fairness.’ Boozman was one of five who voted against the measure in committee.

“‘One group seems to be profiting over another group and perhaps trying to take some of the safety net to reinforce their own. The thing we have to have, and I think will be included in the House bill, is price supports,’ Boozman emphasized.

The Agri-Pulse article noted that, “However, other groups point to a report issued last week by the Food and Agriculture Policy Institute (FAPRI) at the University of Missouri in Columbia as evidence that the Agriculture Risk Coverage (ARC) program in the Committee’s bill treats program crops like corn, wheat, rice, peanuts and soybeans with an even hand.

“‘According to the FAPRI analysis, benefits to soybean farmers under the ARC program will amount to 1.9 percent of total market receipts, slightly below the average of corn, wheat and sorghum and slightly above that of peanuts and rice,’ said ASA President Steve Wellman, a soybean farmer from Syracuse, Neb. ‘This is a good indicator that the Senate version of the Farm Bill treats most commodities equitably.’”

In other developments, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Sen. Kirsten Gillibrand (D-N.Y.) said Monday that she will fight to increase spending on food stamps through an amendment to the 2013 farm bill when it comes to the Senate floor this week.

“Gillibrand voted against the bill in the Agriculture Committee because of its $4.5 billion in cuts to food stamps. Her amendment would restore the funding and pay for it by slashing crop insurance subsidies that she argues unfairly benefit insurance companies.”

The Hill update noted that, “The Senate farm bill, authored by Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) and ranking member Pat Roberts (R-Kan.), reduces food stamp eligibility by limiting the ability of those receiving home heating assistance to automatically become eligible for food stamps as well. Overall, the Senate bill would reduce the budget deficit by $23.6 billion over 10 years by ending direct subsidy payments to farmers and replacing them with an expanded crop insurance system to cover shallow farm losses.

“The Senate bill cuts far less from food stamps than House Republicans have demanded. The House-passed budget would cut $134 billion from the program by turning it into a block grant for the states. The House Agriculture Committee came together to produce a bill making $36 billion in cuts.”

And, a news release yesterday from the American Sugar Alliance stated that, “If no-cost U.S. sugar policy were weakened or eliminated during Senate consideration of the Farm Bill, young sugar producers would exit the business and jeopardize future domestic supplies, a group of sugar farmers and lenders under the age of 35 told Senators in a letter today.

“‘Without the next generation of sugar producers stepping forward, the United States—already the world’s largest importer of sugar—would be at the mercy of foreign suppliers for an essential ingredient to our food supply,’ the letter read.  ‘This would weaken U.S. food security and would hold serious ramifications for food manufacturers and grocery shoppers alike.’

“The 20 members of the American Sugar Alliance Young Farmer Advisory Board sent the letter to Senators representing the 18 states where sugar is produced.”

Animal Agriculture

Rod Smith reported yesterday at Feedstuffs Online that, “The Kroger Co. announced this morning that it has started to inform its pork suppliers that it believes ‘a gestation crate-free environment’ is a more humane means of housing pregnant sows than individual stalls and that pork producers should work toward a transition to stall-free housing for pregnant sows.

“The company said it encourages its suppliers ‘to accelerate’ this transition, which it noted already is underway. The company acknowledged that this transition ‘may take many years.’

“Kroger said it has long pursued science-based standards for animal welfare, and in recent months, the company has sought the advice of animal welfare experts and other professionals regarding the use of gestation stalls ‘and has concluded that there are many ways to humanely house sows’ but that stall-free is more humane.”

Agricultural Economy

Reuters writer Charles Abbott reported yesterday that, “From Ohio to Kansas, corn is selling at startlingly high prices, so high that they are signaling the United States will run short of corn this summer.

“If it does run short, the impact could be felt worldwide. Sales to big export customers like Mexico, Japan, South Korea, and China could take a hit as America grows 40 percent of the corn sold on the world market.

“Domestically, sky-high prices could have U.S. millers suspending operations. If corn for feed costs too much than milk, egg and meat farmers could curtail production leading to higher food prices.”

Owen Fletcher reported yesterday at The Wall Street Journal Online that, “Corn prices rose 3%, boosted by concerns that dry soil in the U.S. corn belt could strain the development of crops if more rains don’t come soon.”

“Futures rose Monday as weather forecasts raised fresh concerns that warm temperatures and relatively little rain in the U.S. heartland could damage developing crops and reduce yields during the harvest.”

Gregory Meyer reported yesterday at The Financial Times Online that, “Mounting evidence of a global slowdown is hitting cotton harder than many other commodities, with futures retreating on Monday to the lowest point since late 2009.

“Cotton markets tumbled after record-high prices last year led farmers to expand production and prompted the clothing industry to use more polyester.

“Now cooling economies in China and India, the world’s biggest and second-biggest textile centres, have prompted a new sell-off as traders eye weaker volumes up and down cotton’s long supply chain.”

MF Global

Aaron Lucchetti, Mike Spector and Julie Steinberg reported in today’s Wall Street Journal that, “A bankruptcy trustee blamed former MF Global Holdings Ltd. Chief Executive Jon S. Corzine for events leading to the financial firm’s collapse, saying he may pursue legal claims against the former financier  for ramping up risks and failing to safeguard money belonging to customers.

“James Giddens, the trustee trying to recover money for the company’s U.S. brokerage unit, said in a 275-page report Monday that he may pursue claims of ‘breach of fiduciary duty and negligence’ against Mr. Corzine and other officials at the firm for revving up the firm’s risk-taking appetite without improving controls needed to keep customer funds safe. He cited Mr. Corzine’s giant trading bets and failure to put systems in place to prevent improper transfers of customer money.

“Monday’s highly anticipated report was the most detailed autopsy yet of MF Global, which filed for bankruptcy protection on Oct. 31. The firm’s customers still are owed an estimated $1.6 billion.”

Azam Ahmed and Ben Protess reported yesterday at The New York Times Online that, “In addition to Mr. Corzine, the trustee said he was considering suing Henri Steenkamp, the chief financial officer, and Edith O’Brien, an assistant treasurer in the firm’s Chicago office who oversaw transfers of customer money. Mr. Giddens is also taking on institutions, including banks like JPMorgan Chase, that received customer money in the chaotic days before the firm went under.

“A spokesman for Mr. Corzine said: ‘The trustee’s report is consistent with Mr. Corzine’s Congressional testimony that he did not direct or intend to direct the misuse of customer funds. We simply do not agree with the trustee’s suggestion that Mr. Corzine was negligent or there is any other basis to sue him.’”

Meanwhile, Shahien Nasiripour reported yesterday at The Financial Times Online that, “The White House has allowed the term of the top US derivatives regulator to expire amid critiques from both political parties over attempts to shape the future of the $648tn swaps industry.

“Gary Gensler, chairman of the Commodity Futures Trading Commission, quietly saw his official term lapse on April 13. On Monday, Bernie Sanders, a liberal Senator from Vermont, called on President Barack Obama not to reappoint Mr Gensler, becoming the latest lawmaker to demand a new CFTC chairman.

“Mr Gensler has come under fire from Wall Street’s biggest banks and Republican lawmakers critical of his stringent proposals. He has also been criticised by many Democrats who argue his agency has been too soft on Wall Street.”

Keith Good

Posted by Keith Good • June, 5, 2012 • 5:02 am