Farm Bill Issues
The “Washington Insider” section of DTN reported on Friday (link requires subscription) that, “House Majority Leader Eric Cantor, R-Va., this week again left the 2012 farm bill off a list of measures the House will consider this summer, leaving lawmakers and lobbyists with the impression that the legislation has little chance of coming up before the August recess.
“In a news release, Cantor said the House will take up tax-related legislation and a moratorium on new regulations in the two weeks before the recess. The House’s last day in session before the break is Aug. 3, with a return date of Sept. 10. And between that return date and the planned post-election lame duck session, the House will be in session just 13 days.
“Supporters of the bill say that failure to pass it before the August recess robs House and Senate negotiators of the chance to craft a compromise during the break and raises the likelihood Congress will have to extend the farm law beyond its Sept. 30 expiration.”
Likewise, Erik Wasson reported on Friday at The Hill’s On the Money Blog that, “The outlook for the 2012 farm bill darkened considerably on Friday after GOP leaders decided not to schedule it for floor action next week.
“That leaves only four legislative days to consider the massive $957 billion bill before the August recess. Current farm programs expire on Sept. 30.
“House Agriculture Committee ranking member Collin Peterson (D-Minn.) blasted the decision on Friday.”
Friday’s update noted that, “‘There is no excuse not to bring the farm bill to the floor. We’ve wasted the last two weeks on political messaging bills that are going nowhere,’ [Rep. Peterson] said. ‘If the House Republican Leadership were serious about creating jobs and growing our economy they would bring up this bill. There is no good reason to put one of our nation’s economic bright spots, the rural economy, at risk.’”
Also, the AP reported yesterday that, “Senate-passed bills to cut farm subsidies and food stamps and overhaul the financially teetering Postal Service have been put on hold by House Republican leaders wary of igniting internal party fights or risking voters’ ire three months before the election.
“The House is scheduled this week to take up a bill to replace the Obama administration’s offshore drilling plan, and the Senate will ignore it, and some measures to reduce government red tape.”
Yesterday’s article added that, “House Agriculture Committee Chairman Frank Lucas, R-Okla., said in an interview with the radio program AgriTalk that he had ‘politely and respectfully’ informed his leadership that his committee had approved a bipartisan farm bill and that ‘as soon as possible, it was my hope and the hope of the committee, that we would have floor time’…[B]ut the House Speaker John Boehner, R-Ohio, and Majority Leader Eric Cantor, R-Va., have brushed aside pressures to bring the bill up. Besides the focus on election-year topics, there’s a reluctance to spend time on a farm bill that could produce hundreds of amendments and might not pass.”
With respect to the potential outcome of a House vote on the measure, Christopher Doering and David Montgomery reported late last week at the Argus Leader (Sioux Falls, SD) Online that, “Kristi Noem, who has spearheaded a bipartisan effort to get a vote on a $500 billion farm bill, said Thursday top leaders in the U.S. House are reluctant to proceed with the measure because they don’t think they have the 218 votes necessary to pass it…‘[F]rom my conversations with the leadership team, that would be the concern,’ Noem, a member of the House Agriculture Committee, told reporters during a conference call. ‘They recognize the importance of agriculture policy and don’t want to do damage to it by bringing it to the floor and not having a successful vote on it. We are working with all the members to see what we can do to get a solid vote on the farm bill and get policy enacted.’”
Patrick B. McGuigan reported late last week at the CapitolBeatOK (Oklahoma City, Okla.) Online that, “In an interview Wednesday (July 18) with CapitolBeatOK, Rep. Lucas discussed prospects for a floor debate and vote before the November election. He commented: ‘The drought conditions across the country could help get the attention of management. They’re a strong reminder of the risks our producers face and why it’s important to pass a bill so that they have the tools necessary to manage risk.’
“Asked if there is a change the bill gets delayed until a ‘lame duck’ time frame (after the general election, and before the next congressional term begins), Lucas replied, ‘It’s ultimately too soon to say. But I will say that I am prepared to do whatever it takes to get a farm bill on the books to provide certainty for farmers and ranchers for the next five years.’”
Over the weekend, AgWired.com provided detailed coverage of a presentation by Chairman Lucas, who spoke on Saturday at the Southern Peanut Growers Conference in Panama City Beach, “House Ag Committee Chair at Peanut Conference.”
During his press briefing on Saturday, Chairman Lucas pointed out that, “But a Farm Bill is got to be a Farm Bill everybody can be part of. You can’t have a Farm Bill, and call it a comprehensive Farm Bill, if its written in such a way that a few commodity groups prosper, and everyone else is left out…[T]he bottom line is still this, if everybody can’t be a part of it, its not a true Farm Bill, if its not going to be a true Farm Bill, then why have a Farm Bill?” (related audio, MP3- 1:02).
Meanwhile, Sen. Roy Blunt (R., Mo.) and Sen. Ben Nelson (D., Neb.) have recently called for the House to pass the Farm Bill; while the editorial board at The Oregonian (Portland, Ore.) indicated last week that, “But time is running short, and both the weather and farm needs are turning up the heat. The House needs to take up the farm bill, and plant the seeds for progress.”
In other Farm Bill developments, Dow Jones writer Jeffrey T. Lewis reported on Friday that, “The subsidies for cotton producers in both the U.S. Senate and House versions of the farm bill currently being negotiated are even more distortionary than the existing subsidy programs, Roberto Azevedo, Brazil’s ambassador to the World Trade Organization said Friday.”
The article noted that, “In 2010, Brazil and the U.S. reached an agreement that resulted in the U.S. paying about $150 million a year for technical assistance to Brazilian farmers. The agreement gave the U.S. until the end of this year, when Congress would have to pass a new agriculture law, to end the prohibited subsidies.
“If Congress is unable to pass the farm bill by the Dec. 31, 2012, deadline, Brazil and the U.S. have agreed to extend that agreement for a ‘short’ period of time, Mr. Azevedo said. He declined to say how long that period might be allowed to last.”
Bloomberg writer Mario Sergio Lima reported on Saturday that, “Brazil may retaliate against the U.S. in October if it determines that the U.S. isn’t honoring an agreement over cotton subsidies to American farmers, O Globo reported, citing Brazil’s ambassador at the World Trade Organization, Roberto Azevedo.
“Brazil will wait until the approval of U.S. farm bill, set for Sept. 30, to see if it will take any action, O Globo said.”
And, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “The egg industry is embroiled in tense infighting ahead of a contentious hearing next week on a bill that would require farmers to use larger cages for egg-laying hens.
“The fight pits the large United Egg Producers (UEP) against the much smaller and newer Egg Farmers of America.”
“The Senate Agriculture Committee is set to hold a hearing on the bill, which eventually could find its way into the 2012 farm bill, on Thursday.”
Mr. Wasson pointed out that, “The hearing has been spurred in part by an amendment Rep. Steve King (R-Iowa) added to the farm bill during a late-night meeting. [Note that a FarmPolicy.com audio replay of the discussion during the House Ag Committee markup of the Farm Bill regarding the King Amendment can be heard here (MP3- 23:00)].
“King’s amendment says states do not have the power to impose restrictions on agricultural products based on the means of production, if the products are made in other states according to the laws in force in those states. King says the provision is designed to apply broadly to state and local laws governing worker rights and environmental standards on products imported into the state.”
With respect to executive branch perspective on the Farm Bill, Sec. Vilsack indicated on Friday at the USDA blog that, “If Congress doesn’t act, USDA will remain limited in our means to help drought-stricken producers. That’s why President Obama and I continue to call on Congress to take steps to ensure that USDA has the tools it needs to help farm families during the drought. Disaster assistance for producers is also one of many reasons why we need swift action by Congress to pass a Food, Farm and Jobs Bill this year.”
For more perspective on the Farm Bill and drought issues from Sec. Vilsack, see this interview on Friday from FoxBusiness (video replay).
Jack Farchy and Gregory Meyer reported on Thursday at The Financial Times Online that, “The world is facing a new food crisis as the worst US drought in more than 50 years pushes agricultural commodity prices to record highs…[T]he drought in the US, which supplies nearly half the world’s exports of corn and much of its soyabeans and wheat, will reverberate well beyond its borders, affecting consumers from Egypt to China.”
Emiko Terazono reported on Friday at The Financial Times Online that, “Fears of a food shortage reverberated through commodities markets this week as corn and soyabean prices soared to fresh record highs amid the worst US drought in half a century, sparking fears of a repeat of the 2007-08 food crisis.
“Although other grain staples such as wheat and rice remain lower, the weather disruptions in key agricultural areas around the globe, such as the severe drought in the US, a weak monsoon in India and a lack of rainfall in Russia threaten to push agricultural commodities prices higher.”
The AP reported on Friday that, “September corn jumped 16.75 cents to settle at $8.245 a bushel, the second straight day of record highs. August soybeans settled up 23.75 cents at $17.575 a bushel. It was the third record-high price in a row.”
And, a recent update at The Financial Times Commodities Twitter page noted that, “Commodity Weather Group downgrades US corn yields by 10.5% from early July to 136.2 bu/ac.”
Meanwhile, Gregory Meyer and Samantha Pearson reported yesterday at The Financial Times Online that, “The US is turning to Brazil for help with corn supplies as low stocks and the worst drought in half a century haunt the world’s leading grain exporter.
“Meat companies including top pork producer Smithfield Foods have arranged to ship Brazilian corn to the US east coast as it has become cheaper than rations from the US corn belt, according to people familiar with the transactions.”
An update posted on Friday at The Motley Fool Online pointed out that, “If you’re looking for who loses from rising corn prices, there are two places to look: livestock producers and corn processors. Morgan Stanley recently downgraded Archer Daniels Midland, one of the country’s largest corn processors, over concerns that margins for high-fructose corn syrup would be pinched.
“And whereas farmers can rely on insurance to provide a safety net in uncertain times, livestock producers have no such protection. Bill Tentinger, president of the Iowa Pork Producers Association, predicts that ‘high corn prices … will force many pork producers out of business.’”
Liam Pleven reported on Friday at The Wall Street Journal Online that, “The brutal drought killing crops in the Midwest this summer threatens to stick Americans with a higher food tab.”
The Journal article noted that, “The amount of food inflation at the retail level will depend on a variety of factors, including how much food processors and retailers believe they can pass along to consumers wrestling with persistently high unemployment, according to commodities analysts.
“As well, higher crop prices could be offset somewhat by slightly lower energy prices, which reduce the cost of transporting many goods. Energy and transportation make up about 8% to 10% of food’s retail value, said Jason Henderson, an agriculture economist at the Federal Reserve Bank of Kansas City and the top executive in its Omaha, Neb., branch.”
“In comments to Fox Business Network on Friday, U.S. Agriculture Secretary Tom Vilsack attempted to tamp down concerns about inflation. ‘While commodities prices may rise significantly, it may not have that much of an impact on food. Maybe a 0.1% increase,’ he said.”
While recent news items have highlighted the impacts of the drought in Missouri and Indiana, the Springfield (Il) Regional Risk Management Agency (USDA) office issued a Fact Sheet titled, “Crop Insurance during a Drought.”
And the AP reported on Friday that, “A widespread drought that’s forcing ranchers to sell off animals has helped shrink the nation’s cattle herd to its smallest number in at least four decades.
“The National Agricultural Statistics Service reported Friday that the number of cattle and calves in the United States totaled 97.8 million head as of July 1. That’s 2 percent less than a year ago. Beef cattle numbers were down 3 percent at 30.5 million head counted, while dairy cow numbers remained unchanged at 9.2 million.
“Overall, it’s the smallest cattle inventory since the agency began a July count in 1973.”
Tom Steever reported on Friday at Brownfield that, “Several weeks ago, Rural Development Deputy Undersecretary Doug O’Brien planned a trip to Missouri and Illinois to see and talk about projects made possible through Rural Development. The scope of O’Brien’s visit changed.
“‘It wasn’t necessarily a drought tour, but I’ve got to tell you now, that I will be traveling in Missouri, and particularly through parts of Illinois, investigating some of the dire effects of the drought,’ said O’Brien, during an interview with Brownfield” (audio replay here).
Lawmakers and state officials have also been making a first hand assessment of the drought impacts including, Rep. Bruce Braley (D., Iowa), Sen. Rob Portman (R., Ohio), and Wisconsin GOP Gov. Scott Walker.