Farm Bill and Policy Issues
The Associated Press reported yesterday that, “The Senate began consideration Tuesday of a farm and food bill that would bring fundamental changes to how the government protects food growers during hard times, including putting an end to paying farmers regardless of whether they plant a crop.
“The Senate is expected to spend several weeks on the five-year bill as lawmakers thrash out differences between Northern and Southern farmers over safety net programs and address the costs of the federal food stamp program, which makes up about 80 percent of the $100 billion in annual spending under the legislation.”
The AP article noted that, “Senate Agriculture Committee chairman Debbie Stabenow, D-Mich., who crafted the bill with the panel’s ranking Republican Pat Roberts of Kansas, said it represented ‘the most significant reform in agriculture policy in decades.’”
Meanwhile, during a press conference yesterday, Senate Majority Leader Harry Reid (D., Nev.) engaged in the following exchange with a reporter:
“QUESTION: Senator Reid, what about the ag — farm bill? When are you going to move to that and how long do you think it will be on the floor?
“REID: As soon as I finish this. We’re going — I have two very fine senators who will be managing that bill. Senator Stabenow, Senator Roberts — they’re both experienced. I think they have a good bill. We — I know we have a number of Republicans who feel very strongly about this bill. I’m confident we’ll get on the bill. We’re going to do what we’ve done on the last two bills. We’re going to do relevant amendments and move forward on this bill. It’s an extremely important piece of legislation for the country…[A]nd by the way, it’s a job-creating bill and it is a bill that cuts subsidies significantly. It saves $24 billion — we reduce the debt by that much money.”
Meanwhile, yesterday morning on the AgriTalk radio program, host Mike Adams visited with Senate Agriculture Committee Ranking Member Pat Roberts (R., Kan.) where a large portion of their conversation focused on the Farm Bill. To listen to part of yesterday mornings AgriTalk program with Mike Adams and Sen. Roberts, just click here (MP3- 4:00).
DTN writer Todd Neeley reported yesterday that, “‘It is almost a sure thing that the farm bill will come up even today,’ [Iowa GOP Senator Chuck Grassley] said. ‘Then it (the bill) could be voted on in the next two to three weeks. I’m not sure how much time we’ll be able to spend on it. Once we start we’re going to get it done.’
“‘I’m pleased with payment limit reforms in the bill. Non-farmers and mega farmers don’t need them (payments).’
“Grassley said he plans to offer an amendment related to a cap on payments and expects the Senate to consider a number of amendments going forward.”
Mr. Neeley added that, “There is the potential for the measure to get held up in the U.S. House of Representatives, depending on where Southern peanut, cotton and rice farm interests stand on the bill, Grassley said, and on whether there will be a series of amendments offered.
“He said he hopes the House ‘doesn’t do a lot of damage’ to the Senate bill once it passes, as time is of the essence in getting a bill passed in 2012.”
The DTN article noted that, “‘I think we have to get a bill passed by Aug. 4 before the summer break,’ Grassley said. ‘We have Southern agriculture that starts making plans for next year about then. If not, we may have to extend the current farm bill.’
“‘If we avoid changing it too much for cotton, rice and peanuts, I assume because the House Agriculture Committee chairman (Rep. Frank Lucas, R-Okla.) is from the South they’ll have a say. Economic interests of Southern agriculture may come up again in the House.’”
In other developments, University of Illinois Agricultural Economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Performance of the Super Committee Target Price Proposal”) that, “A target price program that pays when national market year average price falls below a target price may be included as choice for farmers in the next Farm Bill. Farmers would then be able to choose between the target price program and other revenue alternatives. In this post, an analysis is presented of the target price option contained in the Farm Bill proposal made as part of Super Committee deliberations last year. Frequency of payments will vary across crops because the relationship between the proposed target price and long-run price varies across commodities. A target price program would not necessarily make payments in years of low revenue.”
After more detailed analysis, Dr. Schnitkey noted that, “The efficacy and frequency of payments from a target price program with a fixed target price will depend on the relationship between the target price and expected long-run price. Crops whose target price is set closer to the expected long-run price will be expected to receive more payments.
“As illustrated with corn payments, a target price does not necessarily make payments in years in which financial stress is occurring. A target price program does not include yields in its calculations. Hence, revenues may not be down in years when prices are low and vice versa.
“The above analysis assumed we could accurately predict future long-run prices. While the CBO prices used in the above projections generally are within the consensus, conditions can change that will change estimates of long-run prices. This presents issues when attempting to pick a fixed target price given that structural changes may occur in agriculture.”
With respect to sugar issues and the Farm Bill, a news release yesterday from the American Sugar Alliance stated that, “As the Senate prepares to vote on the 2012 Farm Bill, a new study showing consumer-friendly sugar prices in the United States provides lawmakers with yet another reason to extend the country’s no-cost sugar policy.
“The study, which was conducted by SIS International Research and released today, shows that grocery shoppers in the rest of the world pay, on average, 14 percent more for sugar than American consumers. And shoppers in other developed countries are forking over 24 percent more for sugar at the checkout line, the study found [related chart].
“‘Considering sugar is so inexpensive in the U.S. that restaurants and coffee shops give it away for free, these findings shouldn’t shock anyone,’ noted Kelly Erickson, a Minnesota sugar farmer who currently serves as the president of the American Sugarbeet Growers Association.”
Derek Orsenigo, a 25-year-old sugarcane farmer, penned a column that was posted yesterday at the Tampa Tribune (Fla.) Online where he stated that, “So how do we get more young people into the farming business to help bridge the gap? Recent crop price increases have helped rekindle interest in rural America, although prices aren’t at historic levels for all commodities.
“Sugar prices, for example, were remarkably low until 2009, and following a brief climb they have plummeted 20 percent since the summer of 2010. Such peaks and valleys — which are even more pronounced among fruit and vegetable crops — combined with market-distorting policies in foreign countries are why banks will not depend on price forecasts alone when extending agricultural loans.
“Banks need some certainty provided by the federal government. For Florida’s sugar growers, who don’t receive subsidy checks like many other commodities, this certainty comes from U.S. sugar policy.”
Mr. Orsenigo added that, “Sugar policy is just one small component in the farm bill currently under congressional consideration, but it is the life’s blood of Florida’s sugar industry and much of rural Florida’s economy. This policy operates without taxpayer cost by keeping supply and demand in harmony and avoiding huge surpluses or shortages that could harm growers and consumers.”
In news regarding dairy policy, a release yesterday posted at the International Dairy Foods Association Online stated that, “Grover Norquist’s Americans for Tax Reform, Citizens Against Government Waste and the National Taxpayers Union have sent a joint letter to members of the U.S. House of Representatives asking them to ‘oppose any form of supply management in the 2012 Farm Bill.’ The taxpayer groups had previously teamed up on this issue during the failed supercommittee effort last fall.
“‘On behalf of the millions of taxpayers represented by our organizations, we urge you to oppose any form of dairy supply management in the 2012 Farm Bill,’ the letter states. ‘Instead, the House of Representatives should chart a new course for dairy and other farm policies guided by free markets.’
“The groups are aligned with the position of the International Dairy Foods Association, which opposes production limits of any kind. The Dairy Security Act, part of the Senate version of the Farm Bill, was introduced as H.R. 3067 by Rep. Collin Peterson (D-MI) and includes the Dairy Market Stabilization Program, which will increase milk prices by having the government control milk supply. According to economic analyses, the proposal would limit dairy industry growth, curtail dairy exports and hinder job creation. Because the federal government is the largest consumer of dairy products, the increased costs to the federal government nutrition programs due to higher prices — an estimated $655 million a year based on 2009 prices — would greatly outweigh any possible savings from the program.”
And a news release yesterday from the Midwestern Governors Association (MGA) stated that, “The [MGA] released a set of regional recommendations today on agriculture and conservation policy in preparation for Congress to reauthorize the farm bill. These regional recommendations, coupled with individual states’ priorities, serve as a foundation in the formation of our nation’s next farm bill.
“States play a critical role in supporting federal agriculture and conservation policy. Agriculture is a thriving industry in the Midwest and the farm bill affects every person by ensuring the food on a person’s plate is safe, affordable and sustainable. As Congress faces tough budget decisions, state and regional recommendations, especially the Midwest’s, need to be a priority in legislative decisions.”
And with respect to nutrition and the Farm Bill, Laura Tiehen and Michele Ver Ploeg indicated in the June issue (“SNAP Benefits Alleviate the Intensity and Incidence of Poverty”) of Amber Waves (USDA- Economic Research Service) that:
* The official U.S. poverty measure does not account for noncash government assistance, such as benefits from USDA’s Supplemental Nutrition Assistance Program (SNAP).
* Adding SNAP benefits to family income reduces the poverty rate and leads to even greater reductions in depth and severity of poverty, particularly among children.
* The antipoverty effect of SNAP was especially strong in 2009, when the American Recovery and Reinvestment Act increased SNAP benefits levels.
And, Brooks Barnes reported in yesterday’s New York Times that, “The Walt Disney Company, in an effort to address concerns about entertainment’s role in childhood obesity, announced on Tuesday that all products advertised on its child-focused television channels, radio stations and Web sites must comply with a strict new set of nutritional standards.
“The restrictions on ads extend to Saturday-morning cartoons on ABC stations owned by Disney. Under the new rules, products like Capri Sun drinks and Kraft Lunchables meals — both current Disney advertisers — along with a wide range of candy, sugared cereal and fast food, will no longer be acceptable advertising material.
“The initiative, which Disney revealed at a Washington news conference with the first lady, Michelle Obama, stretches into other areas. For instance, Disney will reduce the amount of sodium by 25 percent in the 12 million children’s meals served annually at its theme parks, and create what it calls fun public service announcements promoting child exercise and healthy eating.”
On this development, the editorial board at The New York Times noted today that, “The Walt Disney Company deserves applause for its plan to impose strict standards on food advertising aimed at young children on Disney-owned television channels, radio stations and Web sites. The standards, based on federal guidelines, should eliminate junk-food ads on children’s programs and could set an example for other companies and advertisers to follow.
“Many health experts believe that one cause of obesity in young children is the relentless barrage of commercials they see promoting foods and beverages that are high in calories and low in nutritional value. Eliminating those commercials is a step toward addressing obesity among children, and it could help focus attention on the need to reduce excessive weight in the general population.”
In other policy news, Jessica Meyers reported last night at Politico that, “They’re the odd man out in a world of arm-slinging corn lobbyists and sleek sugar consultants. And yet the future of their industry hinges on the same agricultural dollars.
“The maritime industry makes much of its money on foreign-aid shipments, courtesy of the Department of Agriculture and the U.S. Agency for International Development. Mariners have watched funding slip in recent years and are poised to lose more amid Congress’s fist-clench on spending, a conservative backlash on foreign aid and a push for alternative ways to assist developing countries.”
The Politico article added that, “The success of the industry lies in the continued authorization of these programs with the farm bill looming before the Senate this week.
“‘There is a real and tangible movement to go away from American commodities,’ said Bryant Gardner, a maritime lawyer who specializes in the subject. ‘Their elimination or scaling down would be disastrous for the U.S. merchant marine and sealift capabilities, as well as the fight against food insecurity.’
“These ships haul more than 2 million tons of food aid a year everywhere from Burkina Faso to East Timor. A longtime law requires most of the cargo move on American-registered ships.”
Dina ElBoghdady reported in today’s Washington Post that, “A federal court has ordered the Food and Drug Administration to revisit its decision not to ban the use of certain antibiotics in animal feed and criticized the agency for relying on industry to voluntarily limit the use of these drugs.”
“This week, the federal district court in Manhattan ruled that the FDA must reconsider two citizen petitions that asked the agency to withdraw approval of some antibiotics used in food-producing animals. The agency’s denial of both petitions years ago was ‘arbitrary and capricious,’ the court said.
“In March, in a decision tied to the same case, the court ordered the FDA to follow through on a proposal it made decades ago that would have banned the use of penicillin and two forms of tetracycline in animal feed.”
The Post article added that, “The back-to-back rulings mark a victory for the Natural Resources Defense Council and the other health and consumer advocacy groups that sued the government. The groups say they expect the FDA to fight back, and the agency already has appealed the March decision. But they also describe this round of the legal battle as a turning point in a decades-long conflict with the agency regarding a major public health threat.”
Meanwhile, a Statement of The National Pork Producers Council On Food Companies’ Decisions On Sow Housing from yesterday indicated in part that, “It is very disconcerting that retailers, in making decisions about sourcing pork products, continue to succumb to the pressure of activist groups such as the Humane Society of the United States without any consideration of the impact on American farm families, who produce the safe and affordable pork that they sell to consumers. These unilateral and impulsive announcements are made without any recognition that nearly all of the pork products produced in the United States today come from facilities built for the validated practice of gestation stalls.
“Nowhere in the announcements is there any discussion on the willingness of these companies to pay for these requests. These are very complex issues that require interaction of the complete supply chain. Simply making an announcement without understanding the supply chain’s ability to meet the requests or the costs associated with them are simply irresponsible. Our customers need to understand that these announcements come with severe and unintended consequences.”
House Agriculture Appropriations
A news release yesterday from the House Appropriations Committee stated that, “The House Appropriations Committee today released the fiscal year 2013 Agriculture Appropriations bill, which will be considered in subcommittee tomorrow. The proposed legislation funds several important and necessary government programs and services, including food safety, animal and plant health, rural development and farm services, and nutrition programs. In total, the legislation includes $19.4 billion in discretionary funding – a cut of $365 million below last year’s level, and a cut of $1.7 billion below the President’s budget request.”
(Note that Appropriations Committee has indicated that today’s markup of the Agriculture Appropriations measure will not be webcast at its homepage.)
John D. McKinnon reported yesterday at The Wall Street Journal Online that, “The Congressional Budget Office released new projections of a worsening U.S. fiscal outlook, adding fuel to the election-year debate over the causes of rising government debt.
“By the end of this year, the CBO said, cumulative federal debt will reach roughly 70% of gross domestic product—the value of all goods and services produced by the economy—the highest level since just after World War II. That’s up from about 40% in 2008. Without changes in current policies, federal debt would reach about 200% of GDP in 25 years, the report said.”
A news release yesterday from Rep. Rick Crawford (R., Ark.) stated that, “[Rep. Crawford] and Congressman Sanford Bishop, (D-GA), co-chairs of the Congressional Chicken Caucus, led their colleagues in expressing concerns over antidumping duties Mexico has preliminarily assigned to U.S. chicken leg quarters. In a letter to U.S. Trade Ambassador Ron Kirk, members of the Chicken Caucus said the pending duties would have a devastating economic impact on the American chicken industry.”