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U.S. Drought Worsens, No Decision on House Floor Action for Farm Bill

John Eligon reported in today’s New York Times that, “The drought that has settled over more than half of the continental United States this summer is the most widespread in more than half a century. And it is likely to grow worse.

“The latest outlook released by the National Weather Service on Thursday forecasts increasingly dry conditions [text, related graphics] over much of the nation’s breadbasket, a development that could lead to higher food prices and shipping costs as well as reduced revenues in areas that count on summer tourism.”

“‘It really is a crisis. I don’t think we’ve ever seen anything like this in my lifetime,’ Gov. Pat Quinn of Illinois said after touring ravaged farms in the southern part of the state.”

Today’s article noted that, “An analysis released on Thursday by the United States Drought Monitor showed that 88 percent of corn and 87 percent of soybean crops in the country were in drought-stricken regions, a 10 percent jump from a week before. Corn and soybean prices reached record highs on Thursday, with corn closing just over $8.07 a bushel and soybeans trading as high as $17.49.”

The article added that, “The withering corn has increased feed prices and depleted available feeding land, putting stress on cattle farmers. A record 54 percent of pasture and rangeland — where cattle feed or where hay is harvested for feeding — was in poor or very poor condition, according to the Department of Agriculture. Many farmers have been forced to sell their animals.”

Mark Svoboda of the National Drought Mitigation Center provided a dire outlook regarding the drought situation on yesterday’s AgriTalk radio program with Mike Adams, a portion of this conversation from yesterday can be heard here (MP3- 2:27).

Meghan Grebner noted yesterday at Brownfield that USDA Undersecretary for Farm and Foreign Agricultural Services Michael Scuse spent time in Ohio, Michigan, and Indiana this week; the article quoted Mr. Scuse as saying, “The losses are just devastating.”

James Politi and Gregory Meyer reported earlier this week at The Financial Times Online that, “Politically, the biggest concern for [President] Obama’s re-election campaign is that the drought could sour the mood in several swing states with significant agricultural communities, from Iowa to Wisconsin and Ohio. The farm economy has been one of the bright spots in the US economic recovery so far, creating boom-like conditions in certain regions that may now be somewhat damped.”

Alexander Burns noted yesterday at Politico that, “A strategist tracking the 2012 air war flags an interesting development: the Obama campaign is booking ad time for rural radio in and around the states of Ohio and Pennsylvania.”

Both Iowa State University Extension and Kansas State University have provided online resources for producers plagued by the drought.

And yesterday, the USDA’s Economic Research Service (ERS) provided a comprehensive look at the farm and food impacts of the current drought.  In part, the ERS update noted that, “For the 2012/13 marketing year, beginning stocks of corn were forecast in the July 11 World Agriculture Supply and Demand Estimates (WASDE) to be historically tight at only 903 million bushels, equal to about 3.5 weeks of supply at current usage rates. Hence, a drought-reduced harvest this fall could make supplies very tight, resulting in higher prices that will ration demand among competing uses.”

And yesterday’s ERS report indicated that, “Soybean supplies are already tight ahead of the 2012 harvest.  Ending stocks from last year’s harvest are currently estimated at 170 million bushels. For the previous 5 years, ending stocks averaged around 600 million bushels. The result is that prices could rise sharply if evidence suggests that the drought could severely reduce soybean production prospects this year.”

Gregory Meyer and Jack Farchy reported yesterday at The Financial Times Online that, “The world is running short of corn. That is the message being delivered by the market, where on Thursday prices pushed above $8 a bushel for the first time.

“With no obvious abundance of international suppliers to make up for the drought-ravaged US corn crop and stocks close to record lows, traders and analysts believe demand must be pegged back.

“A reduction in demand ‘will be necessary to prevent cupboards going bare’, says Hussein Allidina, head of commodities research at Morgan Stanley.”

With respect to the Farm Bill, Kim Geiger reported yesterday at the Los Angeles Times Online that, “As record drought conditions continue to plague farmers and send corn prices higher, some lawmakers are pressing House leaders to bring the now-stalled farm bill to the floor…[B]ut as dry weather continues to hurt farmers, some say the bill can’t wait. Led by Reps. Kristi Noem (R-S.D.) and Peter Welch (D-Vt.), a bipartisan group of 38 Republicans and 24 Democrats sent a letter Thursday requesting that House leaders ‘make this legislation a priority.’”

Yesterday’s article added that, “‘What do we do? We need to pass a farm bill,’ Sen. Debbie Stabenow, a Michigan Democrat who chairs the Senate Agriculture Committee, said Thursday morning in an appearance on MSNBC.

“‘The speaker needs to bring it up on the floor,’ Stabenow said. ‘And frankly, we need to add some additional disaster assistance for 2012 as part of that. But we’ve got to get this done.’”

“‘If the House gives us a bill, we’ll negotiate,’ Stabenow said. ‘We’ll come together in the middle….But the House has to act so we can do that.’”

Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Debbie Stabenow (D-Mich.) called on the House to act quickly on its version of the farm bill in order to help farmers and ranchers being affected by the nation’s drought.

“‘This is a terrible, very serious crisis around the country,’ the Chairwoman of the Senate Agriculture Committee said on the floor Thursday morning of record heat waves around the country. ‘We need to take action to support our ranchers and growers.’

Stabenow pointed out that the livestock disaster assistance program expired last year and that the Senate version of the farm bill makes the program permanent and available to people this year.”

The Hill update added that, “‘This drought underscores the need for risk management tools, better crop insurance, and it underscores the need for a farm bill,’ Stabenow said.  ‘We need to get a farm bill done now more than ever.’”

(To listen to Chairwoman Stabenow’s full remarks yesterday on the Senate floor regarding the drought and the Farm Bill, just click here).

Moreover, Daniel Newhauser reported today at Roll Call Online that, “Members are renewing a push for House consideration of the chamber’s stalled farm bill, tying the legislation to a record drought devastating much of the country.

“The efforts, however, are unlikely to sway Republican leaders, who still see the bill as far too contentious to bring to the floor so close to the November elections.”

Mr. Newhauser pointed out that, “‘No decisions have been made on the farm bill yet,’ Speaker John Boehner (R-Ohio) told reporters Thursday [related audio clip here (MP3- 0:30)] . That comes despite lobbying by two members of his leadership team to bring the measure to a vote and conference it with a Senate-passed bill before current legislation expires Sept. 30.

Rep. Kristi Noem, a freshman member of leadership, and Conference Vice Chairwoman Cathy McMorris Rodgers (Wash.) — both of whom represent agriculture-heavy districts — signed on to a letter Thursday asking Boehner and Majority Leader Eric Cantor (Va.) to bring the bill to the floor before August.”  [Recall that Rep. McMorris Rodgers is Mitt Romney’s liaison to the House of Representatives].

Today’s Roll Call article indicated that, “Notably, Boehner mentioned the farm bill when asked about the drought.

“‘Most farmers in my district … avail themselves of crop insurance,’ he said. ‘That’s why it’s in the farm bill, that’s why our government subsidizes the cost of crop insurance, to encourage farmers to buy that. In most cases, it should be sufficient to deal with this drought.’” [Related audio here (MP3- 0:45)].

Mike Lillis reported yesterday at The Hill Online that, “Boehner’s office deflected questions about the farm bill on Thursday, noting that [House Majority Leader Eric Cantor’s (R-Va.)] office sets the House schedule.

“‘We appreciate the hard work of the chairman and the Ag Committee and will be discussing the committee’s product with our members in the weeks ahead,’ Cantor’s office told The Hill.”

With respect to the sufficiency of crop insurance in this drought, a news release yesterday from Purdue University stated that, “‘The first thought is crop producers will bear the brunt of the financial losses, but losses in animal industries will be enormous over the next year – perhaps considerably greater than for the crop sector,’ [Purdue Extension agricultural economist Chris Hurt] said.

Unlike many crop farmers, livestock producers don’t typically have any form of income protection comparable to crop insurance.”

“‘These higher feed prices have to be absorbed by the animal industry, causing a collapse in financial margins,’ Hurt said. ‘Higher feed costs cannot be passed on to the consumer in the short run, so animal industries have to take these losses or begin to liquidate animals.’”

Meanwhile, Erik Wasson and Molly K. Hooper reported yesterday at The Hill’s On the Money Blog that, “House Minority Leader Nancy Pelosi (D-Calif.) on Thursday called on Boehner to bring the bill forward, even though she does not support the $16.5 billion in cuts to food stamps in the compromise bill.

“‘There are, of course, a diversity of views that exist about specifics in the farm bill. For example, I cannot support the cuts to the food and nutrition programs. But these differences are all the more reason to bring the bill up under an open rule that allows for debate and amendments and move us to a conference with the Senate,’ she said in a letter to farm groups.

“‘Let’s debate the farm bill now before the August recess, make the necessary changes and get a good bill to the president’s desk before Sept. 30 that protects our farmers, provides access to nutritious food and creates jobs,’ she said.”

Yesterday’s update added that, “[House Agriculture Committee ranking member Collin Peterson (D-Minn.)] told The Hill that if the deadline is missed by a few months, true pain might not be felt until the winter crop harvest next spring. He said that some Republicans want to mine the farm bill for more savings to use to replace automatic sequester cuts to defense slated for next year. For this reason, rural-state representatives are keen on action now.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “House Agriculture Committee Chairman Frank Lucas, R-Okla., told DTN on Thursday that committee staff is working on its report and on notice to be prepared to go to the House floor at any time within a 24-hour notice. Lucas said has had conversations with both Boehner and Majority Leader Eric Cantor, R-Va. ‘They have smiled at me and that’s kind of where we are,’ Lucas said.

The drought is changing the dynamics on the bill. ‘It creates a momentum all of its own,’ Lucas said.

While crop farmers can rely heavily on crop insurance, livestock producers don’t have a disaster program any more to help them out. Lucas said the livestock disaster program will not only be funded in the new bill, but ‘will fill in this back fill’ by making it retroactive for 2012.”

Mr. Clayton added that, “The drought has put the farm bill on the front burner.

“‘What the drought has done has caused the national media — outside of the ag media that understand these things — the national media to take note that is an uncertain business, that there are a lot of variables out there, and as we see weatherwise, it can have a devastating effect. That, I think, will drive people back home, and the members of Congress who represent them, to try to provide more certainty. That’s what another five-year farm bill put into place helps provide is more certainty.’

Lucas said lawmakers could gain more enthusiasm for a farm bill after spending the August recess visiting with constituents in drought-affected areas. That was an indication that the bill is unlikely to make it to the floor before the break. ‘I would still hope before we go home on the August break that time will be made available to us,’ Lucas said.”

And a news release yesterday from Sen. Tim Johnson (D., SD) indicated that, “[Sen. Johnson] today called on the leadership of the U.S. House of Representatives to bring a farm bill to the floor for debate.”

In a statement yesterday regarding the 2012 drought, Bob Stallman, the President of the American Farm Bureau Federation noted that, “This drought and the uncertainty it is causing farmers and ranchers and other segments of our industry underscores the importance of completing action on the 2012 farm bill.”

A news release yesterday from Rep. Tim Huelskamp (R., Kan.) stated that, “On Thursday, [Rep. Huelskamp] sent a letter to U.S. Secretary of Agriculture Tom Vilsack requesting that the haying restriction on CP-25 lands (Rare and Declining Habitat) be lifted in order to ease the effects of the drought, which is severe or worse in 91 of Kansas’ 105 counties. Emergency haying and grazing has been approved for 91 counties in Kansas.”

In separate Farm Bill related news, Paige McClanahan reported yesterday at The Guardian Online that, “US lawmakers have been busy this summer shaping the latest version of the farm bill, the far-reaching legislation that governs how the US treats its farmers and feeds its poor people, among many other things.

“Discussions and hearings have been going on for weeks, but there is one topic that few people on Capitol Hill seem to be paying attention to: how Congress’s failure to reform US cotton subsidies may hurt millions of farmers in other countries, along with Hollywood, American pharmaceutical companies and the US music industry.

“What is the link? It all boils down to one word: trade.”

After going into some background on the WTO Brazil Cotton case, yesterday’s article stated that, “For now, though, Brazil’s retaliation is being held off by a ‘framework agreement’ that was negotiated by American and Brazilian officials in the spring of 2010. Among other things, the US agreed to tweak one of its most egregious subsidy programmes and donate nearly $150m every year to support Brazilian cotton farmers. Both sides agreed that the framework deal would hold until this year, when the next farm bill would be negotiated. Only then, the US officials said, would they have the chance to make far-reaching reforms to American cotton subsidies.

“Fast-forward two years, and the 2012 farm bill is quickly taking shape. But will the new law do anything to bring US cotton subsidies in line with WTO rules?

If you ask Brazil, the answer is a resounding no. The new programmes under discussion ‘are not enough to satisfy Brazil’s concerns’, said Roberto Azevêdo, Brazil’s ambassador to the WTO. Some of the proposed policies ‘would leave Brazilian farmers worse off than they are now’, he says.”

In other developments, Chris Clayton reported yesterday at DTN (link requires subscription) that, “With a drought lending credence to their arguments, livestock groups released another study Thursday supporting their case that the Renewable Fuels Standard should be scaled back when corn stocks are low.

“Livestock groups also showed their support for legislation that would lower the Renewable Fuels Standard this year by nearly 2 billion gallons.

“Economist Tom Elam, who works heavily with the livestock and poultry industry, produced a report tying the increased volatility in commodity prices to the inception of the first Renewable Fuels Standard in 2005.”

Mr. Clayton explained that, “Rep. Bob Goodlatte, R-Va., has introduced two bills to counter the RFS. One would repeal the fuels standard outright while the other would require EPA to scale back the ethanol mandate depending on the amount of corn stocks reported by USDA. Goodlatte said there is a disparity in the country between the corn used for food and used for fuel.”

The DTN article noted that, “Obama administration officials have refuted the need to reduce the RFS. Agriculture Secretary Tom Vilsack told reporters Thursday that such a change was not needed.

“Senate Agriculture Chairwoman Debbie Stabenow, D-Mich., also told members of the National Corn Growers Association on Wednesday that the drought was no reason to go after the RFS.”

“As Elam offered his analysis, the congressional hearing room was filled with members of the National Corn Growers Association, who are major defenders of the RFS. National Corn Growers Association President Garry Niemeyer said in a statement such reports as Elam’s in a time of drought do more to divide agriculture than bring it together.”

Keith Good