February 24, 2020

Farm Bill Issues and the 2012 Drought

Yesterday’s Need-to-Know Daily Email from National Journal stated that, “The time left for a House vote on the farm bill is waning, and it’s becoming increasingly unlikely that there will be action on it until after the August recess. When asked whether leadership was keeping a tally on who supports and opposes the measure, House Majority Whip Kevin McCarthy, R-Calif., told reporters he had ‘not whipped anything on it.’ Instead, he said, leadership is still in the process of ‘educating’ the caucus. Since the bill could cost almost $500 billion over five years, many Republicans will not vote for it, and McCarthy acknowledged that they still ‘have an uphill battle’ in getting it passed. ‘When we have the votes, we’ll move it,’ McCarthy said.”

Following the remarks from Rep. McCarthy, which had been described as a “somewhat confusing account of the exact status of the Farm Bill,” House Deputy Whip Rep. Tom Cole (R., Okla.) appeared yesterday on “The Daily Rundown” (MSNBC television) and discussed Farm Bill issues with host Chuck Todd.  A portion of this discussion, in which Mr. Todd asked Rep. Cole about issues regarding a House floor vote, and comments made by Rep. McCarthy, can be heard here (MP3- 1:54).

Meanwhile, David Rogers reported yesterday at Politico that, “Having blocked the pending five-year farm bill, House Republican leaders now appear to be racing ahead of their own Agriculture Committee to come up with some alternative to protect the party’s farm state candidates during the upcoming August recess.

“Disaster aid for livestock producers hard hit by the current drought was one option under discussion Tuesday, as well as a one-year extension of the current law due to expire Sept. 30.”

Mr. Rogers explained that, “Speaker John Boehner (R-Ohio) touched off a flurry of speculation early in the day in an exchange with a reporter for a rural television network.

“‘Farmers are wondering why the stall on that and what the farm bill will offer. They’re still waiting for that,’ the reporter asked.

“‘We’re working with Chairman (Frank) Lucas and the members of the Ag committee,’ Boehner said. ‘We understand the emergency that exists out in rural America and we’re concerned about addressing it as quickly as possible.’

“But hours later Lucas, the House Agriculture Committee chairman, was still seeking clarification and Minnesota Rep. Collin Peterson, the ranking Democrat on the panel, said he knew nothing of the disaster aid plan discussed by Boehner.”

Yesterday’s article added that, “‘Apparently management is thinking about ways to address the drought and disaster situation,’ Lucas told POLITICO after looking unsuccessfully for Boehner on the floor of the House. ‘I’d like some clarification of what I’m picking up on the grapevine.’

“Asked if he was preparing a new package, the Oklahoma Republican answered with some exasperation: ‘I’m not writing a package at this moment. I’m just trying to figure out what is going on for sure.’”

Molly K. Hooper and Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “House Speaker John Boehner (R-Ohio) on Tuesday said the House GOP is working to address the drought emergency in rural America ‘as soon as possible.’

He appeared to signal openness to either bringing the 2012 farm bill up for a full House vote soon or to bringing forward a smaller emergency drought relief measure.

“Boehner is under pressure from members representing rural districts to bring up the farm bill, which passed out of the Agriculture Committee this month on a 35 to 11 vote. Some members are arguing that the current drought is an added reason to act since the bill extends or replaces expired disaster aid programs.”

The Hill writers added that, “On Monday, the Iowa House delegation, led by Rep. Dave Loebsack (D), introduced an emergency drought relief bill in case the farm bill is not enacted.

“The bill extends a number of programs through 2012: the Supplemental Revenue Assistance Payments Program (SURE); Livestock Indemnity Program (LIP); Livestock Disaster Forage Program (LFP); Tree Assistance Program (TAP); and Emergency Assistance for Livestock, Honey Bees, and Farm-Raised Fish Program (ELAP).

“Sen. Max Baucus (D-Mont.) introduced a companion bill in the Senate last week and has been looking for a way to pay for the extension.”

Dan Friedman reported last night at National Journal Online that, “Republican House Speaker John Boehner might try as early as next week to extend farm programs and fund disaster aid for drought-damaged areas leaving the massive farm bill undone over August recess.

“In fact, key farm-bill players met on Tuesday to discuss ways to move a the bill’s conference report in September, according to congressional aides and industry sources.

“With many conservative House Republicans wary of both the Senate-passed legislation and the House Agriculture Committee’s proposal, Boehner probably cannot get a reauthorization through the House and is instead weighing a bid to extend current policy and provide disaster aid, sources said. That package could hit the House floor as early as next week. But there’s also a possibility it too might have to wait until after August recess.”

Mr. Friedman indicated that, “In the interim, the chairs and ranking members of the House and Senate Agriculture committees–Reps. Frank Lucas, R-Okla., and Collin Peterson, D-Minn., and Sens. Debbie Stabenow, D-Mich., and Pat Roberts, R-Kan.–met on Tuesday night to discuss how to begin combining the House and Senate bills over the August recess, according to congressional aides and an industry source. Those efforts are complicated by the possibility that the House will adjourn next week without taking up the bill.”

And Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “A coalition of mostly fiscally conservative groups wrote to House Speaker John Boehner (R-Ohio) on Tuesday and urged him to resist pressure to bring the 2012 farm bill to the floor.”

As the Farm Bill debate unfolds and the 2012 drought persists, The New York Times editorial board opined today that, “Against this dire backdrop, the House of Representatives, with time running out before the August recess, appears to have abandoned any attempt to move forward with its version of a new five-year farm bill. As Politico reported, the House has never before failed to act in a timely way on a farm bill approved by the Agriculture Committee. At the same time, there is no reason to rush forward with a bad farm bill just because of the drought (even if the present farm program expires, farmers will continue to receive crop insurance). And a bad bill is precisely what the House committee has approved and the Senate has already passed…These [Senate and House] farm bills, in short, are not about the drought but about preserving an inequitable status quo.”

The Washington Post editorial board also included a perspective on the Farm Bill and drought in today’s paper.

With respect to the executive branch, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Noting he is a creature of politics, Agriculture Secretary Tom Vilsack once again reiterated his push for House leaders to set aside partisan fights and bring up the farm bill.

“‘There is clearly a bipartisan understanding of a need for a farm bill and the basic parameters of that farm bill,’ Vilsack said Tuesday.

“The agriculture secretary spoke to participants at the Iowa Farm Bureau’s economic summit in Ames after also attending a drought meeting earlier in the day. Vilsack continued his push for farmers to let House Speaker John Boehner, R-Ohio, know that going to the August recess without passing a farm bill isn’t acceptable. While there may be disputes on issues such as cuts to nutrition programs, the basic framework of the legislation is agreed upon. Now, there are the pressures on producers because of the weather.”

Mr. Clayton added that, “Vilsack said he has been hearing discussions that Congress could pass a special disaster bill. Once again, he said it defies argument that lawmakers would debate a stand-alone disaster bill rather than passing a full farm bill.

“‘There is nothing more important in rural America than passing this farm bill,’ he said.”

Julie Harker reported yesterday at Brownfield that, “U.S. Ag Secretary Tom Vilsack says there’s nothing more important to Rural America than the passage of the Farm Bill. At the Iowa Farm Bureau Economic Summit, Vilsack said House leaders tell him there may not be time in the calendar to get it done.”  Note that the Brownfield link included an audio replay of some of the Secretary’s remarks, including these remarks (MP3- 2:00) on potential disaster aid apart from the Farm Bill.

On the issue of Sec. Vilsack being in Iowa, House Ag Committee Member Steve King (R., Iowa) tweeted yesterday that, “Sec. Vilsack, all Iowa delegation already agrees we need a farm bill now. Your time is far better spent in Ohio [home of Speaker Boehner] or Virginia [home of Majority Leader Cantor] this weekend.”

And a news release yesterday from Senate Ag Committee Ranking Member Pat Roberts (R., Kan.) indicated that, “[Sen. Roberts] led efforts today with Republican members of the committee, in asking the U.S. Department of Agriculture (USDA) for assistance for producers suffering from drought conditions.

“‘While several states are experiencing the effects for a second year, today’s drought impacts reach a larger portion of our nation’s agricultural producers, rural communities, and the agricultural supply chain,’ the letter states. ‘As secretary, you have the authority and ability to provide assistance to those in need. We write to highlight several opportunities to deliver such relief and ask for the administration to take action.’

“The letter, addressed to USDA Secretary Tom Vilsack, highlights several ways Sec. Vilsack and the Obama administration can help producers, including keeping producers apprised of crop insurance rules, providing guidance to producers and elevators, keeping producers informed of crop contaminates, directing crop adjusters to areas most in need, possibly reimbursing transportation of livestock to new grazing locations and getting water to livestock, and releasing all Conservation Reserve Program acres for emergency haying and grazing, among other requests.”

In other policy news, the AP reported yesterday that, “The House on Tuesday barred the labor secretary from imposing new safety rules for children working on farms, putting a legal stamp on a Labor Department decision to put off action on the rules.”

In news highlighting drought related issues, Reuters writer Christine Stebbins reported yesterday that, “Crops are taking a beating in the worst drought since 1988 but most farmers are not sweating like they did 24 years ago when a drought hit as they were just starting to recover from a farm depression that brought down a big slice of the Midwestern economy.

“While financial losses from the 2012 drought in the world’s largest food exporting nation will no doubt top the $40 billion of losses in 1988 — an inflation-adjusted $78 billion today — U.S. farmers face this drought in their strongest financial position in history, buoyed by less debt, record-high grain and land prices, plus greater production and exports, according to agriculture bankers, farm managers and economists.”

Hardest hit will be the dairy, beef, hog, poultry and fish farmers squeezed by soaring feed costs,” the article said.

The AP reported yesterday that, “Cattlemen are selling animals they can’t graze or afford to buy feed for. Beef from the animals now flooding livestock auctions will start showing up in grocery stores in November and December, temporarily driving down meat prices…[B]eef prices are expected to rise sharply by January in the wake of dwindling supplies and smaller livestock herds.”

Zack Colman reported earlier this week at the Hill’s Energy Blog that, “Livestock producers are backing legislation that would let the Environmental Protection Agency (EPA) limit the amount of corn used for biofuels… The bipartisan bill (H.R. 3097), sponsored by Reps. Bob Goodlatte (R-Va.) and Jim Costa (D-Calif.), would let the EPA drop corn ethanol production quotas by as much as 50 percent depending on a ratio of available corn relative to use.”

Bloomberg news noted yesterday that one market analyst sees U.S. corn “yields averaging 129.8 bushels an acre, compared with the USDA estimate of 146 bushels and Goldman’s forecast of 126 bushels.”

The article noted that, “‘I still fear that yields could decline to 125 bushels per acre if increased precipitation is not received,’ [Dan] Cekander said in an e-mail today in response to Bloomberg questions. ‘I want to see this week’s rain event before I change prices,’ he said. He predicted last week that futures may climb to $8.50.”

Iowa State University Climatologist and Ag Meteorologist Elwynn Taylor tweeted yesterday that, “My weather based corn yield estimate is: 136 BPA US average & 153 BPA Iowa average. This is near the apparent market anticipated yield.”

An update posted yesterday at The Financial Times Commodities twitter page noted that, “Reuters polls puts US #corn yield at 130.8bu/ac, production at 11.4bn bushels, #soybeans yield at 38.6bu/ac, production at 2.9bn bu”

Owen Fletcher reported yesterday at The Wall Street Journal Online that, “Prices for corn and soybeans each fell about 3%, as rains sweeping across the U.S. Midwest raised hopes that crop conditions could stabilize amid the country’s worst drought in decades.

“While analysts warned that crops will still need more rain to develop healthily, the showers in northern regions of the Farm Belt on Tuesday rattled market participants who had bet that grain and soy prices would continue to rise. The wet weather led them to sell futures to exit from bullish bets, traders said.”

The Journal article added that, “The corn crop has less room to benefit from increased rains because it has finished its pollination phase, which determines the number of kernels produced by each ear, analysts say.”

Bloomberg writer Rudy Ruitenberg reported yesterday that, “Heat waves in southern Europe are withering the corn crop and reducing yields in a region that accounts for 16 percent of global exports at a time when U.S. drought already drove prices to a record.”

And Whitney McFerron reported yesterday at Bloomberg Online that, “Soybean-meal consumption in the European Union, the world’s biggest importer, may be set to fall after drought in the U.S. sent prices to a record high, Oil World said.”

Keith Good

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