FarmPolicy

Farm Bill (House Draft); Ag Economy; and, Animal Agriculture

Farm Bill- House Releases Draft

Reuters writer Charles Abbott reported yesterday that, “With time running out for a new U.S. farm law, agriculture leaders in the House of Representatives insisted on Thursday on keeping traditional farm subsidies that the Senate wants to kill and called for big cuts in food stamps for the poor.

“The bill could face an uphill battle in the House because of its busy agenda and the pressure to find even bigger cuts. As well, steep cuts in food stamps would face stiff opposition when it comes time to reconcile the bill with the Senate’s version.

“The House Agriculture Committee was scheduled to vote on the package next Wednesday.  After that, the House has 18 days available for floor debate before the 2008 law expires on Sept 30. Analysts see low odds for enactment of a new law on time.”

Yesterday’s article noted that, “Congress could pass a farm bill in its lame-duck session after the November election or early next year, two points when deficit reduction will be a priority and steeper spending cuts would be possible.

“In their bill [related links on the proposal posted at the House Ag Committee are available here], House Agriculture Committee leaders would increase, by up to 40 percent, target prices that trigger payments to grain and oilseeds farmers. They would give growers the choice of two farm programs — traditional supports or a revenue guarantee that is the heart of the Senate-passed farm bill.”

Mr. Abbott added that, “Overall, the bill would cut Agriculture Department spending by $35 billion over 10 years, or $12 billion more than the Senate [related Congressional Budget Office link here].  Almost all the additional cuts come from food stamps.”

The AP reported yesterday that, “Food stamps, formally known as the Supplemental Nutrition Assistance Program, look to be the most contentious issue when the Agriculture Committee begins voting on the bill Wednesday and when the full House begins debating it in the future.”

“‘Underfunding this critically important program when families temporarily rely on it to put food on the table in a tough economy is irresponsible and inhumane,’ said Rep. Rosa DeLauro, D-Conn., a food stamp advocate in the House. The Agriculture Committee said its bill would strengthen the program’s integrity while better targeting assistance to those in need of it.”

In a statement yesterday on the House version of the Farm Bill, Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.) noted in part that, “I commend Chairman Lucas and Ranking Member Peterson for moving forward on a draft farm bill. I will review their draft closely to compare it to the significant reforms we accomplished in the bill that recently passed the Senate on a strong bipartisan basis. I am very concerned about some of the differences between the two bills—for example, rather than focusing on fraud and misuse like the Senate bill, the House bill takes far greater cuts in food assistance by changing eligibility rules so that some people truly in need will not receive the help their family needs…I expect them to have a successful markup and for House Leadership to give them time on the House floor as soon as possible so that we can finish the 2012 Farm Bill in a timely manner.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Keeping true to their word, House Agriculture Committee leaders crafted farm-bill language that would give farmers the option of choosing between a shallow-loss commodity program and a program that effectively raises current target prices.”

“Many of the provisions throughout the House bill are comparable to those in the Senate legislation, which partly stems from work the two agriculture committees did last fall in the failed supercommittee talks.”

Mr. Clayton explained that, “The House bill would up the ante with $12 billion more in projected savings over 10 years than the $23 billion in the Senate bill. The lion’s share of difference comes from a House proposal to cut $16 billion over 10 years from the Supplemental Nutrition Assistance Program, commonly called food stamps. The Senate cut $4.5 billion from the food-aid program.

“That sets up the real battle in the House regarding just how much can be cut in nutrition programs such as SNAP to appease conservatives while not cutting so deep that liberals vote en bloc against the bill.

“For farmers, the House bill mirrors the Senate in getting rid of direct payments, counter-cyclical payments, the Average Crop Revenue Election program and the Supplemental Revenue Assistance program.  Replacing those commodity programs, House Agriculture Committee leaders offer two new commodity programs from which farmers will make a one-time selection regarding which one would best suit their needs.”

Yesterday’s DTN article added that, “Under the House bill, farmers would pick between a ‘Price Loss Coverage’ program, or PLC, and ‘Revenue Loss Coverage,’ or RLC. The way it is structured, a farmer could enroll some crops or whole farms in the PLC and enroll other crops in the RLC. That was considered a flaw of the current ACRE program because it required enrolling an entire farm in ACRE without any distinguishing between crops.

“The Price Loss Coverage is an updated version of the counter-cyclical program. Farmers would collect a payment when the effective price for the commodity is less than the reference price for that crop. The effective price is either the higher of the midseason price for the crop, or the national average loan rate.”

After discussing additional details of the House draft, Mr. Clayton noted that, “The House bill doesn’t make any cuts to crop insurance, but goes along with the Senate in expanding insurance for cotton producers with the Stacked Income Protection Program. Also like the Senate, the bill includes insurance for peanuts and establishes the Supplemental Coverage Option, a program that would work with a farmer’s individual insurance. SCO works much like some insurance policies that trigger payments based on countywide production. Under the program, USDA would pay 70% of the premium for an SCO policy. In the Senate bill, the Congressional Budget Office projected the SCO would cost about $200 million a year.

“The National Cotton Council was quick on Thursday to champion the House bill and encourage its quick passage.  NCC Chairman Chuck Coley, a Georgia farmer, said the new farm bill would put to bed the World Trade Organization case against U.S. cotton subsidies by Brazil.”

Daniel Looker, writing at Agriculture.com, pointed out that, “Like the Senate bill, the House bill would consolidate more than 100 USDA programs and simplifies signing up for conservation programs. And it eliminates direct payments. Its total savings from federal spending over 10 years would be $16 billion from food stamps, more than $14 billion from commodity programs and more than $6 billion from conservation. Total savings would be $35 billion versus more than $23 billion in the Senate bill.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “It is also by no means certain that the bill will come up for a House floor vote. GOP leaders are focused on repealing ‘ObamaCare,’ appropriations bills and anti-tax increase measures and are not seen as enthusiastic about voting on a major spending bill.

“Deficit hawks are already crying foul about the target price-based system and the inclusion of the expanded crop insurance.”

David Rogers reported yesterday at Politico that, “The action begins a long uphill climb for Chairman Frank Lucas (R-Okla.), who must contend with tepid support from the top GOP brass and a fractious class of Republican freshmen who have never been through a farm bill debate before.

“But with Iowa in play and President Barack Obama in Cedar Rapids next week, farm issues can no longer be ignored this presidential year. And the draft bill promises both real savings and certainty for an important segment of the economy, now faced with a Sept. 30 deadline when the current farm program expires.”

A statement yesterday from Rep. K. Michael Conway (R-TX), Chairman of the House Subcommittee on General Farm Commodities and Risk Management, indicated in part that, “While the Senate produced a lopsided bill that would fail to see our nation’s farmers through tough times, the House bill gets it about right.  While I personally would not have included the Senate’s revenue program as an option in the House bill because I believe it is a false choice for any farmer that wants a true safety net, I respect my colleagues who tell me that at least some of their farmers want that choice.”

Rep. Rick Berg (R., N.D.) indicated yesterday that, “‘It is encouraging to see that Chairman Frank Lucas and Ranking Member Collin Peterson have gotten the ball rolling by introducing a Farm Bill in the House,’ stated Berg.   ‘This is great news for the many farmers and ranchers who are looking for the stability and certainty that a long-term Farm Bill reauthorization would bring.  I will continue working with the North Dakota farmers and ranchers, along with Chairman Lucas and Ranking Member Peterson, to do everything we can to pass a strong Farm Bill for North Dakota.’”

Meanwhile, an update yesterday at the National Sustainable Agriculture Coalition Blog noted that, “A diverse group of sportsmen, scientists, and conservation and agricultural organizations delivered two letters to Representatives Frank Lucas (R-OK) and Collin Peterson (D-MN) this week in support of the Protect Our Prairies Act (H.R. 5879).”

While Erik Wasson noted yesterday at the Hill’s On the Money Blog that, “Anti-poverty activists on Thursday denounced a newly released House farm bill that cuts food stamp spending while creating new types of subsidies for farmers.”

Jerry Slominski, senior vice president for legislative and economic affairs at the International Dairy Foods Association (IDFA), noted in part yesterday that, “IDFA is disappointed that the Dairy Market Stabilization Program has been included in the House Agriculture Committee Chairman’s Mark of the Farm Bill.  The stabilization program is designed to limit milk supplies and to periodically raise milk prices.”

With respect to sugar issues, Kim Geiger reported today at the Los Angeles Times Online that, “Makers of sodas, candy bars and other sweetened snacks are taking aim at a long-standing federal program that keeps sugar prices high by restricting imports.

“Doing away with the sugar program would be a ‘huge boost’ to candy makers and help them grow, said Robert Simpson Jr., president of Jelly Belly Candy Co., which has factories in Fairfield, Calif., Chicago and Thailand.

“But the efforts of manufacturers are sparking intense opposition among lawmakers from sugar-growing states and the sugar lobby, as well as from some public health advocates.”

A news item yesterday from the National Council of Farmer Cooperatives (NCFC) noted that, “[NCFC] today expressed its strong opposition any amendment that Representative Bob Goodlatte (R-Va.) intends to introduce during next week’s markup of the farm bill in the House Agriculture Committee that would change current sugar programs in such a way as to effectively eliminate the program.

“‘Any House amendment similar to the Toomey amendment that we saw in the Senate would undermine a program that costs taxpayers nothing and would threaten the jobs thousands of Americans across the country,’ said Chuck Conner, president & CEO of NCFC. ‘The benefits of ending the sugar program would not go to U.S. consumers but rather to our foreign competitors, who are heavily subsidized.’”

Agricultural Economy

The AP reported yesterday that, “A U.N. agency says world food prices have dropped in June for a third straight month to their lowest level in nearly two years but that dry weather in recent weeks could cause a spike.

“The U.N. Food and Agriculture Organization said in its monthly report Thursday that global prices of a basket of food commodities fell by 1.8 percent from May to their lowest level since September 2010.”

Avi Salzman noted yesterday at a Barron’s Blog that, “Hot, dry weather is plaguing midwestern farmers and driving up grain prices. The Food and Agriculture Organization cut its global grain forecast on Thursday as drought conditions have hit the midwest as well as areas in Russia and around the Black Sea, the AFP reported. U.S. corn production could fall to 350 million tons, 25 tons less than had been expected as of June. In the past two weeks, cereals and oil seeds prices have risen about 15%…[T]hat said, there are some signs that food inflation may not rear its ugly head again. Food prices have continued falling in recent months, and global production is still expected to grow despite recent cuts, the AFP noted.”

Bloomberg writer Alan Bjerga reported yesterday that, “When rain doesn’t fall in Iowa, it’s not just Des Moines that starts fretting. Food buyers from Addis Ababa to Beijing all are touched by the fate of the corn crop in the U.S., the world’s breadbasket in an era when crop shortages mean riots.

“This year they have reason to be concerned. Stockpiles of corn in the U.S. tumbled 48 percent between March and June, the biggest drop since 1996, the U.S. Department of Agriculture said last week. And that was before drought hit the Midwest. Chicago last month saw its first 100F June day since 1988, the year parched ground caused $78 billion in crop damage. The percentage of the corn crop with top-quality ratings was 48 percent as of July 1; it was 69 percent a year ago. And with little rain in the forecast, farmers can only hope to preserve what crops they can while watching corn futures rise 33 percent since June 15, to $6.75 a bushel.”

The AP reported yesterday that, “Soybean prices are at the highest level in four years after an extended spell of hot, dry weather caused crops to droop.”

While Gregory Meyer reported yesterday at The Financial Times Online that, “Meat producers are braced for a sharp hit to profits after the price of a key ingredient for fattening chickens and pigs hit an all-time high as a result of the intense heatwave in the US farming belt.

“Soyabean meal, crushed from oilseed and mixed with corn to make animal feed, on Thursday exceeded the record set during the 2007-08 food crisis. Benchmark CBOT July soyameal futures rose to a record $475 per short ton, up 4.6 per cent.”

And Michael Haddon and Neena Rai reported in today’s Wall Street Journal that, “In July, the bulk of the corn crop will pollinate, a critical phase of growth that leaves the plants highly sensitive to heat. If the weather worsens this month, as forecasts suggest, that could mean prices will rise further in the near term, according to Goldman Sachs. The bank said it could cut its yield estimate from the current 153.5 bushels per acre.”

Animal Agriculture

Rod Smith noted this week at Feedstuffs Online that, “The agreement between The Humane Society of the United States (HSUS) and the United Egg Producers (UEP) that the two groups are seeking to codify via federal law did not survive as an amendment to the U.S. Senate’s farm bill.

“It may still get heard as an amendment to the House version or as independent legislation, with bills currently in both the House and Senate.

“Either way, opposition by much of agriculture is fierce and substantial — so much so that it’s led to misperceptions and often statements that are outright wrong.”

Mr. Smith pointed out that, “The House and Senate legislation would make the transition ‘a national standard’ so all producers will participate and to avoid what was becoming a confusing tapestry of state laws.

“This has ruffled the feathers of other agriculture groups, including livestock organizations, that see this as establishing a precedent for Congress to set national production standards for cattle, hog, poultry and even crop producers.

“However, the legislation would amend an egg law that has regulated egg production for more than 40 years — the Egg Products Inspection Act of 1970 — without any impact on livestock and poultry production, and the law cannot be used to set standards for livestock and poultry production.”

Keith Good

Posted by Keith Good • July, 6, 2012 • 4:00 am