FarmPolicy

October 25, 2014

Farm Bill; Ag Economy; Animal Agriculture; and, Biofuels

House Ag Committee Passes Farm Bill

The AP reported this morning that, “The House Agriculture Committee has approved a five-year farm and nutrition bill that gives farmers new ways to protect themselves from bad weather and poor prices and slices about 2 percent off the $80 billion the government spends every year on food stamps.

The 35-11 committee vote comes three weeks after the Senate passed its version of the half-trillion-dollar bill and shifts the focus to the full House as Congress seeks to come up with a consensus bill before the current farm bill expires at the end of September.

“House Republican leaders have shown little enthusiasm for taking up legislation that faces opposition from conservatives who say it is too expensive. Democrats, meanwhile, don’t like the cuts in food stamps.”

Today’s article explained that, “While the House legislation, like its Senate counterpart, envisions major changes in farm safety nets, the most heated debate during the 15-hour committee meeting was on food stamps. Amendments by both Democrats [more details here] to erase reductions and Republicans [more details here] to increase those cuts failed.

“The panel defeated, on a 31-15 vote, a proposal by Rep. Jim McGovern, D-Mass., that would have eliminated all the proposed cuts to food stamps. The cuts, he said, would deprive some 2 million to 3 million people of food assistance and would ‘literally take food away from hungry people.’”

The AP article pointed out that, “The committee also:

“Defeated, by 36-10, an amendment by Rep. Robert Goodlatte, R-Va., that would have brought changes to federal sugar policy that for eight decades has protected beet and sugarcane growers and sugar refiners by controlling prices and limiting imports [more details here, and here]. Goodlatte argued that government supports drove up prices, forced food companies to move overseas and cost jobs. The amendment was pushed by beverage companies, confectioners and consumer groups. Supporters of the current policy said it did not cost the government anything and protected producers from a surge in Mexican or Brazilian imports.

“Rejected, by 29-17, another amendment by Goodlatte and Rep. David Scott, D-Ga., that would have removed a requirement for dairy farmers participating in a new voluntary risk management program to also agree to be subject to supply management controls where they would have to cut production when surpluses drive down prices.” (Related news release from the National Milk Producers Federation available here).

Erik Wasson reported today at The Hill’s On the Money Blog that, “The House Agriculture Committee just before 1 am Thursday approved the 2012 farm bill by a vote of 35 to 11.

“The strong vote on the $957 billion farm subsidy and nutrition measure was a major victory for Chairman Frank Lucas (R-Okla.) and ranking member Rep. Collin Peterson (D-Minn.) who had risked angering factions in their own parties to forge a compromise bill.

“Earlier in the marathon markup, which began at 10 am on Wednesday, conservatives and liberals had brawled over the $16.5 billion in cuts to food stamps in the bill.”

Mr. Wasson added that, “Lucas said this week that he will immediately press for a full House floor vote and that he had hoped a strong bipartisan vote would convince reluctant GOP leaders to bring the farm bill up. Farm programs expire after Sept. 30 and the Senate passed its bill last month.”

David Rogers reported today at Politico that, “Landmark farm legislation cleared the House Agriculture Committee early Thursday morning, capturing a strong bipartisan majority and putting pressure on the Republican leadership to relent and allow floor debate on the bill this summer — just as the Senate did last month.”

Mr. Rogers indicated that, “Seldom has a major bill moved so far in Congress with so little attention. But defying its doubters, it can no longer be ignored politically — with Iowa in play in the presidential election and the current farm program expiring Sept. 30.

“‘Only 13 legislative days remain before the August recess,’ said Minnesota Rep. Collin Peterson, the committee’s ranking Democrat and a close partner with Chairman Frank Lucas (R-Okla.). ‘If the House leadership fails to bring up this farm bill before the recess, they will jeopardize one of the economic bright spots of our nation’s fragile economy.’”

The Politico article noted that, “Wednesday’s markup wandered far afield: bedbug research, rival catfish inspections, a bid by private weather insurance companies for a share of premium subsidies, and an interstate commerce clause fight between Midwest egg producers and California Proposition 2 rules on living standards for hens were just some of the topics before ending near 1 a.m. Thursday.”

Mr. Rogers added that, “Going forward, Speaker John Boehner (R-Ohio) and Majority Leader Eric Cantor (R-Va.) have been only tepid in their support — despite the promise of $35 billion in savings over 10 years in the House bill. And precious time was lost when Cantor convinced Lucas to delay committee action until after the July 4th recess.

“But with the Senate having passed its farm bill last month, Lucas is gambling that pressure will build if he can get the bill reported from his committee this week.

“Set in the blue and gold décor of the old Agriculture Committee rooms, the proceedings had an air of folksy formality. Lucas, the one-time Oklahoma rancher — his wife now heads the family’s cow-calf operation at home — moved his herd along — always careful to include Democrats and even allowing himself to be overruled on voice votes.”

Daniel Looker reported today at Agriculture.com that, “Lucas wouldn’t say exactly what his options are for getting the House leadership to put the bill up for a vote on the floor. ‘Those kinds of things we’ll discuss tomorrow,’ he said.

Peterson, a Minnesota congressman, was more blunt. ‘They don’t have much to do on the floor until August first anyway. I don’t know what their excuse is to not get us on the floor.’”

Mr. Looker added that, “Peterson said he didn’t want to interfere with how Lucas tries to move the bill forward. But he said he might visit with the Speaker of the House, John Boehner, to encourage prompt action.

“‘Boehner’s a friend of mine and I will talk to him, probably sometime next week,’ he said.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Speaker John Boehner’s (R-Ohio) history with farm bills and with his GOP freshman class indicate that this year’s measure is headed nowhere fast.”

Yesterday’s update noted that, “Supporters of the House bill acknowledge that Boehner’s distaste for farm subsidies and fear of a conservative rebellion are major obstacles.

The Speaker’s office is publicly hands-off on the issue.

“‘The majority leader’s office handles the floor schedule,’ spokesman Michael Steel said.”

The Hill update added that, “Asked if Boehner personally supports the farm bill, Steel said that ‘the Speaker appreciates the work Chairman Lucas has done.’

“Lucas would only say that Boehner has not done anything against his bill — so far.”

Rep. K. Michael Conaway (R-TX), Chairman of the House Ag Subcommittee on General Farm Commodities and Risk Management, noted in a statement on the passage of the farm measure that, “Once again, the House Agriculture Committee took the lead in this effort by passing a farm bill that saves taxpayers more than $35 billion.  This is three times the savings that the Simpson-Bowles deficit reduction commission called for, and over a third more in savings than achieved by the Senate farm bill.  By requiring a nearly $800 billion Food Stamp program to take a mere 2 percent cut compared to the half a percent cut the Senate passed, the House farm bill is spreading the burden of deficit reduction beyond just the broad shoulders of rural America.”

Meanwhile, Damian Paletta reported in today’s Wall Street Journal that, “House and Senate lawmakers are headed for a collision over funding for food stamps, the big nutrition-assistance program for low-income Americans, in the latest skirmish in the larger battle over the size and scope of federal entitlement programs.”

“Republican leaders of the House Agriculture Committee, as part of a broader package of farm and nutrition-policy changes, advanced a measure on Wednesday that would cut $16.5 billion over 10 years from the Supplemental Nutrition Assistance Program, or SNAP. The cuts would come in part by taking away some of the flexibility available to states in the past 10 years to let more families qualify for benefits.”

Today’s article noted that, “The Senate, in a bipartisan vote several weeks ago, rejected a similar proposal to change how SNAP works. Senators agreed instead to smaller reductions for the food-stamp program of $4 billion over 10 years. If the House passes its version of the bill, House and Senate lawmakers would have to resolve their differences over the food-stamp program before sending the bill to be signed into law by President Barack Obama.”

In more specific reporting on the commodity title of the House measure, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Farmers would get the option of choosing a target-price program after the House Agriculture Committee adopted the commodity title Wednesday with virtually no changes from the proposed legislation released last week.”

Mr. Clayton added that, “Direct payments, the Average Crop Revenue Election program and the current counter-cyclical program would go away under the bill. Still, in an effort to satisfy Southern farmers, the committee creates two new commodity programs in which farmers would choose to enroll their crops or whole farm.

“The committee debated an amendment on Wednesday that would have eliminated a proposed dairy supply management program as well as another amendment that would have dramatically overhauled sugar policy as well. Both amendments failed.”

Yesterday’s DTN article stated 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.

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.

“While there was some grumbling before Wednesday about the possible planting distortions that the House commodity programs could cause, there were no amendments voted on during the markup to lower the target prices or make changes to the PLC or RLC.”

“The commodity program in the House sets up a conflict with the Senate’s bill that will eventually have to be worked out in conference negotiations,” Mr. Clayton said.

(For a more detailed comparison between the House and Senate Bills, see “First Draft of New House Farm Bill,” which was posted this week at the farmdoc daily blog).

And, a news release yesterday from Rep. Jeff Flake (R., Ariz.) stated that, “[Rep. Flake] today introduced The Crop Insurance Subsidy Reduction Act (H.R. 6098) which would significantly reduce the amount of taxpayer dollars used to subsidize crop insurance. H.R. 6098 returns federal crop insurance premium subsidies to their pre-Agricultural Risk Protection Act (ARPA) levels. ARPA was passed in 2000.

“While legislation to reauthorize the Farm Bill introduced in the House that is being marked-up today ends some wasteful programs, it unfortunately uses some of the saving to actually create new programs and expands crop insurance subsidies.”

 

Agricultural Economy

Emiko Terazono and Javier Blas reported yesterday at The Financial Times Online that, “The worst drought in the US in 25 years has wrought havoc on the country’s most important crops, putting the global economy at risk of its third food inflation shock in five years.

“The US Department of Agriculture on Wednesday slashed its forecast for the corn crop by the most since the drought of 1988, cutting its 2012-13 production estimate by 12 per cent and its season-end inventory estimate by a hefty 37 per cent.”

(Additional analysis regarding USDA’s report from yesterday is available at the farmdoc daily blog, “USDA Jolts the Markets.”)

The FT article noted that, “The surge in corn and soyabean prices comes as the UN’s Food and Agriculture Organisation and the OECD, the rich countries’ club, warned in their annual food outlook report that prices are set to remain high for at least another 10 years.”

Reuters writer Charles Abbott reported yesterday that, “The worst Midwest drought in a quarter century is doing more damage to U.S. crops than previously expected with the government on Wednesday slashing its estimate for what was supposed to be a record harvest.

“The U.S. Department of Agriculture said the corn crop will average just 146 bushels an acre, down 20 bushels from its June estimate and a much more dramatic drop than analysts had projected.

“The report initially re-ignited a near-record rally in grain prices that could eventually hit consumer grocery bills in North America, although the impact could be more immediate for the world’s poor if the drought persists.”

The AP reported yesterday that, “Some cornstalks in fields around the farm where David Kellerman works stand tall, but appearances can be deceiving. When the husks are pulled back, the cobs are empty. No kernels developed as the plants struggled with heat and drought.

“The soil in Kellerman’s part of southern Illinois is like dust after less than an inch of rain since mid-April. This week, he and the farmer he works with packed it in. They cut and baled the withered plants to use as hay for their cattle.”

And Bloomberg writer Alan Bjerga reported yesterday that, “More than 1,000 counties in 26 states are being named natural-disaster areas, the biggest such declaration ever by the U.S. Department of Agriculture, as drought grips the Midwest.

“The declaration makes farmers and ranchers in 1,016 counties — about a third of those in the entire country — eligible for low-interest loans to help them weather the drought, wildfires and other disasters, Agriculture Secretary Tom Vilsack said today. The USDA is also changing procedures to allow disaster claims to be processed more quickly and reducing the penalty ranchers are assessed for allowing livestock to graze on land set aside for conservation.”

 

Animal Agriculture

Rod Smith reported yesterday at Feedstuffs Online that, “The Humane Society of the United States (HSUS) gave notice this afternoon that it plans to file lawsuits against 51 large-scale pork producers in North Carolina, Iowa and Oklahoma for unreported ammonia releases into the environment…‘It was no surprise,’ HSUS said, that many of the producers who will receive notices are affiliated with the National Pork Producers Council (NPPC), the trade group representing the U.S. pork industry that defends the use of gestation stalls for pregnant sows, a practice that HSUS finds abhorrent and is seeking to end.”

Mr. Smith added that, “NPPC said the notices represent ‘another scare tactic’ to get NPPC ‘to back off’ its opposition to the HSUS-United Egg Producers agreement on hen housing and the congressional legislation that would codify the agreement into law, as well as NPPC’s efforts to correct the record on the HSUS ‘truth-twisting campaign’ against producers who use gestation stalls for pregnant sows.”

 

Biofuels

Zack Colman reported yesterday at The Hill’s Energy Blog that, “The nation’s first 15 percent ethanol blend will begin fueling vehicles next week at a Kansas gas station…The news comes one day after a House Energy and Commerce subcommittee on Energy and Power hearing questioned the viability of E15.”

Also yesterday, Reuters writer Roberta Rampton penned an interesting article titled, “Biodiesel fraud roils U.S. industry, Congress eyes law,” which in part, highlighted an Energy and Commerce subcommittee hearing from yesterday, “RIN Fraud: EPA’s Efforts to Ensure Market Integrity in the Renewable Fuels Program.”

Keith Good

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