FarmPolicy

Farm Bill; Crop Insurance; Ag Economy; and, Biofuels

Farm Bill Issues

David Rogers reported yesterday at Politico that, “Do Republicans in Congress want to fix the food stamp program — or punish it?

“That’s the question facing the House Agriculture Committee leadership as it rolls out its plan this week to cut farm subsidies together with about $16 billion in 10-year savings from food stamps — also known as the Supplemental Nutrition Assistance Program.

“To get across the House floor, Chairman Frank Lucas (R-Okla.) must go to the right of the Democratic-controlled Senate, which took only $4.5 billion from SNAP in its farm bill. But in trying to show some deft and care, Lucas is meeting stiff resistance in his own committee, where nearly two-thirds of the Republicans are freshmen from the large 2010 class so influenced by the rise of the tea party.”

The Politico article explained that, “Lost on the cutting room floor is a genuine Lucas reform effort that attempted to build on the decades-old farmer-food stamp coalition, which has helped sustain support for rural agriculture in the more urban House. Instead, the path chosen by the GOP is a political dead end in the Senate and could become a nightmare for farm and crop insurance interests trying to fend off tighter income limits on subsidies.

“The central fight is over what to do about a 1996 welfare reform option that gave governors greater flexibility in aligning SNAP eligibility standards to address what was then the great political mantra: helping the ‘working poor.’

“Known as categorical eligibility — ‘cat-el’ for short — it is an administrative shortcut that’s become far more common since the economic downturn in 2008. More than 40 states now invoke this option: the link to the post-welfare regime can be as casual as a mailed brochure from state offices for the Temporary Assistance for Needy Families program. And the result is a patchwork quilt of different income and asset standards from one state to the next.”

After a closer look at SNAP funding issues, Mr. Rogers pointed out that, “Speaker John Boehner (R-Ohio) seems to most want to forget his own stint on the Agriculture Committee. Majority Leader Eric Cantor (R-Va.) gives the impression of hoping the whole endeavor will implode.

“The Cantor camp had been betting the Senate would never act on its farm bill last month. When the Senate did, the next step was to ask Lucas to delay his markup until after the July Fourth recess. The reason given was that the House would be debating the annual Agriculture Department appropriations bill before the holiday but then the leader scheduled a transportation and housing spending measure first.

“Lucas insists he is unfazed, planning to roll out his draft this week in anticipation of a markup July 11. But he is battling a political vacuum that works to the advantage of those who want most to see the farm bill as an opportunity to strike out at the food stamp program.”

More broadly with respect to politics and federal nutrition spending, MJ Lee reported yesterday at Politico that, “Louisiana Gov. Bob Jindal, who has vowed to reject the expansion of Medicaid under President Barack Obama’s health care law, charged Tuesday that the president ‘measures success by how many people are on food stamp rolls and government-run health care.’

“‘The president, his administration, needs to understand what makes this country great in part is that we’re not dependent on government programs,’ the Republican governor said on ‘Fox & Friends.’ ‘It seems to me like the president measures success by how many people are on food stamp rolls and government-run health care. That’s not the American dream.’”

Meanwhile, Russell Berman reported yesterday at The Hill Online that, “Congress is poised to tackle a handful of high-profile bills between now and Election Day, but the measures face an uphill climb.

“Lawmakers face a tight window for action on the remaining agenda items, including a farm bill, postal reform and appropriations legislation. The House is scheduled to be in session for just seven weeks in the four months before Nov. 6, and the mix of expiring tax provisions and looming spending cuts is expected to dominate the post-election lame-duck session.”

Yesterday’s update added that, “For a number of bills that have been in the works since the beginning of the 112th Congress, the next several weeks will be crucial. And those measures will have to compete for floor time with political messaging votes — like House moves to repeal the 2010 healthcare law and extend the full slate of Bush tax rates — that will take up a bulk of the election-season legislative calendar.”

More specifically on the Farm Bill, Mr. Berman noted that, “The pressure is on the House to act on a farm bill after the Senate in June passed a measure with a 10-year price tag of nearly $1 trillion. Whether the House can pass more than a one-year extension off the floor remains unclear. Conservatives have been leery of any legislation authorizing hundreds of billions in spending, and while the Senate bill cuts current spending levels, House Republicans are likely to push for far deeper cuts, particularly to the food stamp program.

“The cuts contained in the Senate version, which passed on a bipartisan 64-35 vote, are less than those called for in President Obama’s budget. The Agriculture Committee, led by Chairman Frank Lucas (R-Okla.), has scheduled a markup for July 11. Ominously, the farm bill was not included in a May memo from House Majority Leader Eric Cantor (R-Va.) outlining the summer floor schedule. The current farm bill expires on Sept. 30.”

In other developments, a news release earlier this week from Sen. John Hoeven (R., N.D.) stated that, “Senator Hoeven said he opposes an amendment adopted in the final hours of negotiation on the bill and will work to change it in the conference committee. The measure ties mandatory conservation programs to crop insurance, a requirement that adds red tape and places an unnecessary burden on farmers who rely on crop insurance to manage risk. Hoeven said farmers already have to comply with conservation requirements when they enroll in commodity programs. Crop insurance should not be tied to the conservation program, Hoeven said.”

Chris Bieri reported earlier this week at The Grand Forks Herald (N.D.) Online that, “Sen. John Hoeven, R-N.D., met Monday with 25 area farmers and representatives from growers’ groups and agricultural interests in Grand Forks to discuss the 2012 Farm Bill, which passed the U.S. Senate less than two weeks ago.

“The roundtable discussion, which included Rep. Rick Berg, R-N.D., focused on the bill’s enhanced crop insurance and let the group give the feedback on the bill, which now lies in the hands of the U.S. House of Representatives.”

The article pointed out that, “Many in the group emphasized crop insurance, and the importance of it not being tied to conservation programs.”

On the issue of direct payments, the Government Accountability Office released a report yesterday (“Direct Payments Should Be Reconsidered”), which stated in part that, “Congress should consider eliminating or reducing direct payments.”

The Senate version of the Farm Bill ends direct payments.

And, a recent update posted at the WTO Online regarding cotton issues and the Farm Bill stated that, “The Cotton-4 reported on their ministers’ visit to Washington just over a week ago, to meet members of the US Congress and administration, and express their concerns about proposed cotton subsidies in the US Farm Bill, which passed the Senate on 21 June 2012 and is now being discussed by House of Representatives.

“Some others shared the concern, particularly as cotton prices are falling, raising the prospect of subsidies rising again. One was Brazil, which referred to its continuing consultations with the US within their ‘Framework Agreement’ for an agreed solution to the legal dispute on cotton subsidies (case DS267), which concluded that the US had violated WTO agreements and its commitments by subsidizing cotton. The consultations are part of a package that includes US development assistance to Brazil, part of which Brazil uses to provide assistance to African producing countries.”

Meanwhile, a news release yesterday from the Coalition for Sugar Reform stated that, “In advance of next Wednesday’s House Agriculture Committee markup of the 2012 Farm Bill, 22 leading organizations sent a letter today to all committee members, urging bipartisan support for the sugar reform amendment to be offered by Rep. Bob Goodlatte (R-­‐VA). The amendment would make modest reforms to the Depression-­‐era U.S. sugar program, which unnecessarily costs consumers $3.5 billion and sacrifices up to 20,000 potential American jobs each year.”

Two opinion items regarding H.R. 3798 and S.B. 3239, bills that amendment the Egg Products Inspection Act, were posted earlier this week at The Hill’s Congress Blog:

- “Egg legislation is good for consumers, animals, and farmers,” by David Lathem, chairman, United Egg Producers.

- “Time is now for Congress to pass the Egg Products Inspection Act,” by Michael Markarian, chief program and policy officer, The Humane Society of the United States.

Crop Insurance

In an update posted yesterday at the farmdoc daily blog (“Crop Insurance in 2012”), University of Illinois Agricultural Economist Gary Schnitkey noted that, “Crop insurance could make large payments in 2012 as low yields become increasingly likely as a result of hot, dry growing conditions. Roughly 60% of the corn acres and 50% of soybean acres in Illinois is insured at high coverage levels with revenue products containing guarantee increase provisions. These acres likely with receive large payments if drought conditions continue. After describing crop insurance use in Illinois, potential insurance payments are illustrated.”

Dr. Schnitkey also noted that, “Farms that do not have crop insurance at high coverage levels are more at risk for low incomes. However, price increases may offset some of potential decreases in yields. This offset assumes that not much of the 2012 crop has been already priced at what could turn out to be lower prices than during the fall of 2012. As a result, farms that did not purchase crop insurance and have hedged a great deal of the 2012 crop are particularly at risk for lower incomes in 2012.”

Agricultural Economy

Gregory Meyer reported earlier this week at The Financial Times Online that, “Few farmers in America’s corn belt have seen anything like it. Only weeks ago, they were looking at a record-breaking harvest. Those hopes are fast turning into a mirage.

“The hot summer in the US, the world’s biggest exporter of corn, soyabeans and wheat, could have far-reaching effects on global agricultural markets, where memories of the 2007-08 food crisis are still fresh, and prices have been volatile on the back of a drought in South America.

“Since mid-June, corn futures – against which the first sales of this year’s crop will be made – have jumped 30 per cent. Soyabeans, used in animal feed, have returned to the highs of the last food crisis. Wheat has tracked the prices of the other crops.”

The FT article noted that, “Brian Fuchs, climatologist at the National Drought Mitigation Centre, said: ‘The conditions that allowed for the good planting and good harvesting are the same reason we’re seeing this drought.’

“At the Wabash Valley Grain storage elevator in Princeton, Indiana, merchandiser Nick Michel says farmers who sold some of this year’s crop in advance are worried they may not be able to honour contracts.

“‘Losing up to half our crop around this area could be a reality,’ he says.”

Biofuels

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Rep. Jeff Flake, R-Ariz., has introduced legislation that would require the Environmental Protection Agency to consider whether cellulosic ethanol exists before requiring fuel companies to blend it with their gasoline supplies. Specifically, the bill would tie the amount of cellulosic ethanol mandated in the nation’s fuel supply under the renewable fuel standard to actual industry production rather than to estimates of projected production, as is required by the Clean Air Act.”

Keith Good

Posted by Keith Good • July, 4, 2012 • 4:09 am