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Two-Track Farm Bill Process Unfolds as Drought Persists

Ron Hays of the Radio Oklahoma Network spoke with House Agriculture Committee Chairman Frank Lucas (R., Okla.) on Saturday about the latest Farm Bill developments in the House.  A summary and audio replay of their discussion is available at The Oklahoma Farm Report Online.  An unofficial FarmPolicy.com transcript of the Ron Hays interview with Chairman Lucas is available here.

Chairman Lucas stated that, “There are many pieces in this process going on simultaneously. I’m still working for floor time for the regular bipartisan farm bill that passed out of the House Agriculture Committee not many days ago.

But at the same time, I’m working to bring a one year extension to the floor, hopefully next week, before we go home for the August work period, that would extend the existing farm bill forward by one year, it would make some very small cuts in the direct payment program, it would take some cuts that the appropriators have done annually through the rest of this farm bill to achieve savings so that the livestock disaster provisions, which in the ’08 Farm Bill weren’t funded in the fifth year, this year would be funded, and also funded for next year.

So I’m trying, on a two-track front here, to provide certainty to producers who are dealing with the drought, yet try to get us a real five-year farm bill completed this year.”

The Oklahoma Republican, who was first elected to Congress in 1994, noted that, “I would just say this: I’m a regular order kind of guy. Just as we used regular order to achieve a consensus in the Ag Committee, and we passed a solid, five-year farm bill with options, so all producers could participate, by a 35 to 11 vote, I still want to go to the floor. I still want to go through regular order. I still want to build a consensus, take that vehicle to conference, and put our final work together.

But whatever route is available to me to put a five-year farm bill on the books, I’m going to attempt to do, because the drought that we suffered through in the Southwest last year, the most horrendous drought in my living memory, which, by the way, has not gone away completely yet in the Southwest, is now plaguing our friends from the Central West all the way through the Midwest. We’ve got some issues here. They need certainty. And especially our livestock folks.

“Because the way the ’08 Farm Bill was put together, the fifth year of the farm bill, the one we’re in right now, there’s no money to deal with livestock drought disaster issues. I want to provide certainty for that. I want people to be able to sleep at night. And right now, if you’re a livestock producer in a drought area, you’re sleeping with one eye open.”

Chairman Lucas added that, “One more year of this farm bill, to provide for an orderly transition to the next farm bill, would be the reasonable way to do this. Now, unfortunately, things at the nation’s capital aren’t always done in the most reasonable way, in spite of my best efforts. But a one-year extension would allow us to have an orderly transition to the next farm bill.”

Politico writer David Rogers reported on Friday that, “Anxious to show progress before the August recess, House Republicans unveiled legislation late Friday that would extend most current farm programs for one year while providing immediate disaster aid to livestock producers impacted by this summer’s severe drought.”

Mr. Rogers explained that, “The Senate approved its new five-year plan in June, but House floor action has been blocked by Republican leaders fearful of divisions in the GOP’s ranks. The one-year extension now is seen by many as a calculated effort to kill any chance of enacting the larger bills in this Congress, and it sets up what could be a highly charged partisan vote on the House floor next week.

“‘Congress should not be playing politics with the rural economy, one of our nation’s economic bright spots,’ said Minnesota Rep. Collin Peterson, the ranking Democrat on the House Ag panel. ‘I am against an extension and will remain opposed until I receive assurances that this is the path to conference a five-year farm bill with the Senate. Farmers need the certainty of a five-year farm bill.’”

Friday’s Politico article indicated that, “House Agriculture Committee Chairman Frank Lucas (R-Okla.) is still pressing for action on his five-year bill, reported with bipartisan support July 12. But given the cards he has been dealt, Lucas will support the extension as an interim step to provide some protection for producers after Sept. 30.

“‘It is critical that we provide certainty to our producers and address the devastating drought conditions that are affecting most of the country, and I look forward to supporting and advancing this legislation,’ the chairman said Friday. But Peterson’s opposition could be fatal given the two men’s long history of working together.

“The Democrat wants some promise from Speaker John Boehner (R-Ohio) that the extension can be used as a vehicle to begin talks in August with the Senate on a longer-term package.”

Chris Clayton reported on Friday at the DTN Ag Policy Blog that, “The House Rules Committee will meet Tuesday to discuss the legislation and how the amendment process for the legislation will function next week. The Rules committee could restrict debate or allow an open rule that would create a longer, broader debate on farm and nutrition programs.”

Dow Jones writers Siobhan Hughes and Bill Tomson reported on Friday that, “The House Republican whip said Friday the chamber will clear a drought-relief measure before Congress adjourns next week for an August recess.

“‘We plan on dealing with the drought problem before we depart,’ Rep. Kevin McCarthy (R., Calif.) told reporters on a conference call. He said Republicans hadn’t decided whether to make a drought package part of a farm bill, but a disaster-relief package ‘could go by itself.’”

The AP reminded readers on Friday that, “The [House] legislation [to revive several expired disaster assistance programs] would still have to be considered by the Senate before Congress leaves at the end of the week for a five-week recess.”

And, Erik Wasson reported on Friday at The Hill’s On the Money Blog that, “If the House passes the one-year bill, [Sen. Ag Committee Chairwoman Debbie Stabenow (D., Mich.)] can call for a conference to meld it with the bill passed by the Senate in June. Significant differences on crop insurance and price-based protection for southern farmers would have to be resolved, as well as differences over food stamp cuts.

“House Speaker John Boehner (R-Ohio) could refuse to appoint conferees, however, if conservatives object to the possibility of a five-year bill coming to the floor.”

Meanwhile, Daniel Newhauser reported today at Roll Call Online that, “But try as it might to control the message, Congress cannot control the weather. A record drought is ensuring that despite its best efforts, Congress will have to do some actual bipartisan, bicameral legislating before it breaks for the August recess.

“‘Our livestock guys are in a world of hurt,’ said Rep. Jo Ann Emerson (R-Mo.), who introduced a roughly $350 million livestock disaster aid bill last week. She said much of her state is in a category 4 drought, the worst there is.

“House leaders grappled with the way forward: Either pass a yearlong extension of the 2008 farm bill with disaster aid attached or pass a stand-alone disaster relief bill. Either route is troublesome politically.”

Mr. Newhauser noted that, “‘Most conservatives don’t like the old farm bill any more than the new one, and we certainly won’t support any effort to use it as a vehicle to sneak the new farm bill past the House floor and go straight to conference committee,’ one conservative aide said.

“In an opposite stance, House Agriculture ranking member Collin Peterson (D-Minn.) said last week that he would only support a short-term extension if it is used as a way to get to conference. That could cost the measure Democratic support.

“Even if House leaders ultimately choose to decouple the aid from a farm bill, passing disaster aid has been a struggle this Congress. When Joplin, Mo., was leveled by tornadoes and Hurricane Irene slammed the East Coast last year, Republicans insisted any aid be offset with spending cuts elsewhere.”

Saturday’s Roll Call article added that, “Senate Agriculture ranking member Pat Roberts (R-Kan.), whose state has been hard-hit by the drought, said Thursday that his top priority is getting the drought relief done regardless of whether that has any connection to the farm bill.”

Reuters writer Charles Abbott reported on Friday that, “On Thursday, Senate Agriculture Committee chairwoman Debbie Stabenow said she was ready to make a legislative sprint and complete a new, full-scale farm bill. ‘If Congress does what Congress always does and kicks the can down the road with a short-term extension, there will be no reform, direct payments will continue, we’ll lose the opportunity for major deficit reduction and we’ll deliver a real blow to our economic recovery,’ said Stabenow.”

Additionally, Mikkel Pates reported on Saturday at The Forum (Fargo, N.D.) Online that, “Stabenow said the Senate has passed a bipartisan farm bill and that the House Agriculture Committee has passed a bill, but it appears House Speaker John Boehner, R-Ohio, wants to send back a one-year extension of current policy and an ad hoc disaster bill that is ‘less than what we really need.’ She predicted the Senate will reject the proposal and will spend August negotiating.

“‘The only thing that will go to the (House) floor is this one-year extension,’ Stabenow says. ‘I’ve never seen anything like it.’ She called it ‘quite shocking’ that the House leadership is unwilling to bring a bill that came out of the committee on a bipartisan vote. She said about half of the Republican caucus doesn’t think there should be a farm bill, so the party may not have votes to pass it.” (Chairwoman Stabenow was in North Dakota this weekend campaigning for Democrat U.S. Senatorial candidate Heidi Heitkamp.)

In his Reuters article from Friday Mr. Abbott also pointed out that, “An advocate for small farmers, the National Sustainable Agriculture Coalition [NSAC], called for the House to ‘vote down this dirty extension bill.’ The bill would cut soil and water conservation programs while keeping the direct payment, it said.”  [For more complete and detailed discussion from the NSAC, see this blog update from Saturday, “Path AWAY from a 2012 Farm Bill: Pending House Extension Dooms Farm Bill Programs”].

Also National Corn Growers Association President Garry Niemeyer noted on Friday that; “America’s farmers need a new farm bill that will allow them the ability to make sound business decisions for the next five years.  An extension of current law fails to provide the needed level of certainty.”

An article on Friday at The Post-Tribune (Merrillville, Ind.) Online quoted Indiana GOP Sen. Dan Coats as saying; “I don’t just want to see the House enact a short-term extension (of the previous law) because we made very necessary reforms in the Senate. … We made a big stride forward in this Senate-passed farm bill that I would hate to see lost simply because we did a short-term extension.”

An article on Friday at the Belleville News-Democrat (Il.) reported that, “U.S. Rep. John Shimkus [R., Il.] told a group of farmers Friday that he expects Congress to approve a compromise, one-year extension of the existing federal farm bill…[S]himkus, R-Collinsville, said he would vote in favor of a one-year extension, adding that it would help farmers hit hard by the drought. He said House leadership has polled members on whether they’d support it.”

The article noted that, “‘The argument for a one-year extension is to make sure that…if the legislative branch still stays fairly dysfunctional, if we at least do a one-year extension, not only are you covered now, but there will be an insurance plan available for next year’s planning,’ Shimkus said.

He said a one-year extension is an acceptable compromise, ‘but the leadership needs to know that we have to have a multi-year bill.’”

“The congressman said an extension to the existing farm bill might help lead to passage of a new bill during the lame-duck session this fall.”

In more specific news on the drought and the agricultural economy, Carolyn Lochhead reported on Saturday at the San Francisco Chronicle Online that, “California ranchers may be hit harder by the drought in the nation’s heartland than farmers in the corn belt.”

Cattle ranchers across the country, however, are seeing the price of corn, hay and other feed skyrocket as a result of diminished yield, forcing many of them to slaughter their animals now rather than later. Corn has gone from about $5.50 to $8 a bushel, and hay and other grains are following.

“‘The drought ‘has a tremendous ripple effect,’ said Jim Warren, owner of 101 Livestock Market, a cattle auction in Aromas (San Benito County). In the last three weeks, the price of young steers waiting to be corn-fattened has plunged from $1.40 to $1.10 a pound, Warren said, mirroring the rising cost of feeding them.”

The Chronicle article noted that, “Corn farmers, while seeing their fields shrivel and die, have access to taxpayer-subsidized insurance that protects their revenue. On average, taxpayers subsidize about two-thirds of the premiums of all crop insurance. Cattle ranchers do not have insurance and never participated in traditional subsidies.”

Dan Piller reported on Friday at The Des Moines Register Online that, “The first significant rainfall in more than a month dropped about a half-inch across most of the state, but the storm itself won’t lift Iowa out of its most serious drought since the 1950s, experts said Thursday.

“‘The rainfall and cooling afterward may cause this month to fall short of July 1936 as the hottest July in history, but it won’t end the drought,’ said Des Moines meteorologist Harvey Freese.”

And Andrew Johnson Jr. reported on Friday at The Wall Street Journal Online that, “U.S. grain and soybean futures rose Friday, trimming some of their losses from earlier this past week, as traders shifted their focus back to the drought in the U.S. heartland.

Disappointing rainfall in the Midwest this past week along with forecasts for hotter weather this coming week boosted both front-month corn and soybean futures by about 2% on Friday.”

Meanwhile, Reuters writer Timothy Gardner reported on Friday that, “At least one of four states hoping to ease requirements on adding grain-based ethanol to gasoline is expected to petition the federal government as soon as Monday as the worst drought in 50 years spikes corn prices and lowers profits for livestock producers.

“Governors from states that may petition the Environmental Protection Agency to waive the mandate known as the Renewable Fuel Standard, or RFS, include Republicans Nikki Haley of South Carolina, Dave Heineman of Nebraska, Rick Perry of Texas and Democrat Mike Beebe of Arkansas, an ethanol industry source said.”

The article added that, “An EPA spokeswoman said on Friday the agency had not received any waiver petitions. If the EPA does get a request, it could take months for it to decide, as a public comment period and assembling a case for or against any petition takes time.”

Zack Colman reported on Friday at The Hill’s Energy Blog that, “The Renewable Fuels Association (RFA), a main corn ethanol lobby, sent a letter Friday to EPA Administrator Lisa Jackson and Agriculture Secretary Tom Vilsack praising the Obama administration for sticking by the rule.

“A collection of livestock interest groups responded by issuing an advisory for a Monday media call to discuss the need for changes to the fuel standards.”

C. Larry Pope, the president and CEO of Smithfield Foods, penned an opinion column in Friday’s Wall Street Journal stating that, “The RFS has diverted so much corn as a questionable substitute for gasoline that in the face of this drought-depleted harvest, major food-producing companies such as Smithfield are being forced to seek alternative markets for grain to meet the demands of their livestock and at more affordable prices. Ironically, if the ethanol mandate did not exist, even this year’s drought-depleted corn crop would have been more than enough to meet the requirements for livestock feed and food production at decent prices…[F]or the first time in memory, corn is cheaper when it’s delivered to the U.S. from abroad than if it’s purchased from domestic suppliers. Smithfield was forced to take the unfortunate but absolutely necessary step of buying corn from Brazil—spending money that under normal circumstances would have gone to U.S. farmers.

“This is what happens when the corn market, which already has to count on the whims of Mother Nature and is governed by the laws of supply and demand, is victimized by the whims of Washington and the unintended consequences of the diversion of food to fuel.”

Keith Good