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Farm Bill Issues; Renewable Fuel Standard; and, the Ag Economy

Farm Bill Issues

David Rogers reported yesterday at Politico that, “Leaders of the House and Senate Agriculture Committees are slated to meet Tuesday morning amid signs that House Republicans may pull back from a one-year extension of farm programs and focus instead on the immediate needs of drought-stricken livestock producers.

“The extension — due on the House floor Wednesday — remains highly divisive even as there is broad support for new disaster aid to fill gaps in the current farm law for livestock and some specialty crops.

No final decisions have been made. But Minnesota Rep. Collin Peterson, the ranking Democrat on the House Agriculture Committee, appears open to this approach, absent an agreement by Speaker John Boehner (R-Ohio) to allow House-Senate negotiations in August on the larger five-year farm plans favored by the two committees.”

Mr. Rogers pointed out that, “The Senate approved its farm bill in June, but Boehner has so far blocked House action for fear of a messy fight dividing his party. Instead, the speaker prevailed on House Agriculture Committee Chairman Frank Lucas (R-Okla.) to move ahead with a one-year extension, filed late Friday.

But Peterson is balking and appears to enjoy the backing of major commodity groups who share his fear that the extension will be used as an excuse to kill any further farm bill action by this Congress.”

Note that Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Farm groups are coming out against the House plan to vote Wednesday on a one-year extension of the current farm bill…Farm Bureau, Farmers Union, American Farmland Trust, American Soybean Association and National Milk Producers Federation were among the array of groups Monday issuing news releases critical of the House plan unless it leads to conference negotiations for a five-year farm bill. Other groups, including Oxfam and Environmental Working Group also criticized the House extension.”

Also yesterday, 13 conservation related groups sent a letter to Speaker Boehner opposing a Farm Bill extension.

In his Politico article yesterday, Mr. Rogers explained that, “Lucas himself wants to move ahead with a five-year bill and has been put in a difficult spot by his leadership.”

And the article added that, “House Majority Whip Kevin McCarthy (R-Calif.), who has major agricultural interests in his own home district, reached out to Peterson over the weekend. And given the severity of the drought, the GOP leadership badly wants to show some progress before sending their farm state members home for the August recess.

“‘They are beginning to figure out that this is a big albatross and want to get it off their back,’ Peterson told POLITICO. He said McCarthy was not unsympathetic with his desire to get onto the five-year bill but as an interim step, just dealing with the livestock aid is an option.”

A report by Mike Hergert on yesterday’s Agriculture Today radio program from the Red River Farm Network (RRFN), included remarks on the Farm Bill process from Ranking Member Peterson, RRFN audio (MP3- 2:04).

Meanwhile, Daniel Newhauser reported today at Roll Call Online that, “With their Conference deeply divided, House Republicans may have to go to the Democratic well again this week, this time for votes on a short-term farm bill extension that would offer critical relief to drought-stricken ranchers.

“Republicans have had to rely on Democrats to help pass measures this Congress, but Democrats are leery of aiding Republicans in their uphill climb this time, with Chief Deputy Minority Whip Joe Crowley telling reporters on a Monday conference call that they have yet to decide their stance on the bill.

“‘I do think there’s always concern that we’re here trying to carry the water for Republicans when they can’t get a bill passed,’ the New York Democrat said. ‘They don’t want to pass anything in any way, shape or form that will benefit our party right before the election.’”

The Roll Call article noted that, “Majority Whip Kevin McCarthy (R-Calif.) spent the weekend and Monday on the telephone with Members to round up support, including a Saturday call to Agriculture ranking member Collin Peterson (D-Minn.).

“According to staff accounts of the call, Peterson told McCarthy that he is still pushing for the House to take up the five-year bill that he and Agriculture Chairman Frank Lucas (R-Okla.) passed through the panel earlier this month. He said he doesn’t think Republicans have the votes to pass the short-term measure and they did not consult Democrats in writing it.

“‘It’s just mystifying to me why these guys can’t take yes for an answer. We got a bipartisan bill, we’re doing things the way we’re supposed to do it and then they come up with this extension, which they never even talked to us about,’ he told the North Dakota-based Red River Farm Network in a Monday radio interview.”

Mr. Newhauser added that, “The trouble for Republicans is that many of their Members refuse to vote for the measure because they think leadership wants to bring the measure into conference, like they did with the transportation reauthorization bill, and produce a final measure heavily skewed toward the Senate-passed version. Others prefer to vote on the committee-passed bill, though Lucas has given his support to the temporary extension.”

Erik Wasson reported yesterday at The Hill Online that, “House Republican leaders might not have the votes to pass a stopgap farm bill this week.

“The scramble for votes has sparked speculation that leaders in the lower chamber might have to scrap their plan to deal with the politically sensitive issue.

“Speaker John Boehner (R-Ohio) and his lieutenants, wanting to avoid an intraparty battle on a $957 billion five-year bill approved by the House Agriculture Committee, scheduled a vote on a one-year farm program extension that includes drought relief provisions.”

The Hill update indicated that, “But aides and lobbyists closely monitoring the issue said Monday that unless something changes, it looks like GOP leaders will have to pull the bill.

“‘I don’t see how they have the votes,’ one longtime lobbyist said. ‘I have yet to have one person tell me this thing has a chance.’”

Mr. Wasson noted that, “Some conservatives, like Republican Study Committee head Rep. Jim Jordan (Ohio), say they oppose all farm bills and will reject it no matter what.

Other conservatives will only support it if they can be guaranteed that the one-year measure is not a ‘backdoor’ attempt to conference a five-year farm bill with the Senate.

“Fiscal groups such as the National Taxpayers Union and Taxpayers for Common Sense oppose the extension.”

Yesterday’s article added that, “Sources said that the GOP whip count on Friday indicated that the party cannot pass a one-year bill on its own.”

“If the farm bill is pulled, lobbyists hope that the need to act on the drought forces leaders to allow a pre-conference on the five-year farm bills to go forward in August, and that this yields action in September.

“They concede, however, that a better shot at passage might be in the lame-duck session, when leaders will be looking at a way to cut spending in order to turn off the $109 billion in automatic spending cuts coming in January due to the sequester,” The Hill article said.

Mr. Wasson stated that, “Sources said the bill being withdrawn is a more likely scenario than it being defeated on the House floor. Such a move, though, would attract negative headlines for Republicans with nearly three months to go before the election.”

In a news release yesterday, Rep. Lynn Jenkins (R., Kan.) indicated that, “It is disappointing that the agriculture industry is being placed in a position of uncertainty. I am concerned that the one-year extension of farm and nutrition programs that the House is considering this week merely delays the reform that is needed, but I also believe that this extension is better than nothing.”

James Q. Lynch reported yesterday at The Globe Gazette (Mason City, Iowa) Online that, “However, Sen. Tom Harkin warned the Senate may not go along with either a one-year extension of the Farm Bill or passing some sort of targeted drought disaster assistance.

“‘If the House tries to pull this at the last minute, I don’t see any way they are going to get it through the Senate’ before Congress adjourns for its August recess, he said.

“‘I’m all in favor of getting it through as rapidly as possible. But there are some people over here who don’t feel that way,’ Harkin said. ‘I would not have a lot of hope of it getting greased through the Senate.’”

Also yesterday, the Congressional Budget Office (CBO) released an update titled, “One-year extension of the Food, Conservation, and Energy Act of 2008, with certain modifications,” which stated that, “CBO estimates that enacting this proposal would reduce direct spending by $399 million over the 2013-2022 period, relative to spending projected under CBO’s current baseline. Because the proposal would affect direct spending, pay-as-you-go procedures apply. Enacting the proposal would not affect federal revenues.”

In other Farm Bill news, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “The Government Accountability Office (GAO) released a report Monday that says the ability of states to expand eligibility for federal food stamps made about 473,000 more people eligible for food stamps, and added about $460 million in extra costs in 2010. The GAO also said this increased expansion has increased the chances of fraud and abuse of the food stamp program.

The report was requested by Senate Budget Committee ranking member Jeff Sessions (R-Ala.) and leaders of the House Agriculture Committee, in light of dramatically rising costs to administer the $70 billion Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp program.

And Ben Geman reported yesterday at The Hill’s Energy Blog that, “The American Energy Alliance (AEA), a conservative advocacy group, is launching radio ads designed to put political pressure on House Republicans to abandon what the group calls wasteful renewable-energy subsidies in the farm bill.

“The $80,000 worth of ads launching this week urge listeners to weigh in against the legislation by contacting three GOP supporters of the bill: Reps. Kristi Noem (S.D.), Steve King (Iowa) and House Agriculture Committee Chairman Frank Lucas (Okla.).”

In a statement on the Farm Bill yesterday, David Lathem, Chairman of The United Egg Producers, noted that, “We understand the need for quick action on a comprehensive farm bill, especially because of the severe drought, of which we are acutely aware since our farmer members purchase millions of bushels of corn, soybean and other crops to feed the nation’s 300 million egg-laying hens.

But equally critical to the survival of egg farmers is the Amendment to the Egg Products Inspection Act (H.R. 3798 and S. 3239). The legislation is sponsored by 120 members of the House and 16 members of the Senate and supported by the vast majority of egg farmers, scientists, veterinarians, consumer groups and animal protection organizations.

“This legislation carries no cost to the government or taxpayers. Egg farmers do not receive any government assistance, direct payments or share in any livestock disaster programs.  Congress should at least do something to help egg farmers when considering this Farm Bill by including the amendment to the Egg Products Inspection Act that we have asked for.”

 

Renewable Fuel Standard

Gregory Meyer reported yesterday at The Financial Times Online that, “The US livestock and poultry industry urged federal regulators to suspend a government mandate for ethanol use for the first time as a severe drought lifts the price of corn feed.

“A coalition of beef, pork, chicken and dairy producers said the US Renewable Fuel Standard – which requires billions of gallons of corn-based ethanol to be blended with motor fuel – should be waived ‘in whole or in substantial part’ for 12 months.

“The waiver request comes as drought covers nearly all the US corn-growing area and has driven corn prices above $8 a bushel for the first time. Ethanol production and animal feed are the two top uses of the US corn crop, putting refiners and livestock companies in competition for scarce stocks.”

The FT article explained that, “The Renewable Fuel Standard, authored by Congress, requires fuel companies to blend more than 13bn gallons of conventional corn ethanol with petrol in 2012 or offset some blending obligations with government-authorised credits;” and added that, “The EPA, which administers the ethanol mandate, is empowered to rule on a waiver. ‘We are in close contact with USDA as they and we keep an eye on crop yield estimates, and we will review any data or information submitted by stakeholders, industry and states relating to the RFS programme,’ the agency said.

“Ethanol is politically sensitive in Midwest swing states such as Iowa, which has both the nation’s biggest single corn crop and its largest pig herd.”

On the RFS issue, the editorial board at the Chicago Tribune yesterday noted that, “The EPA needs to put the interests of this politically pampered industry aside and do the right thing: Waive the mandate.”

Colin A. Carter, a professor of agricultural and resource economics at the University of California, Davis and Henry I. Miller, a physician, and fellow in scientific philosophy and public policy at the Hoover Institution, opined in today’s New York Times that, “As the summer drags on, the drought is only worsening. Last week the International Grains Council lowered its estimate of this year’s American corn harvest to 11.8 billion bushels from 13.8 billion. Reducing the renewable-fuel standard by a mere 20 percent — equivalent to about a billion bushels of corn — would offset nearly half of the expected crop loss due to the drought.

All it would take is the stroke of a pen — and, of course, the savvy and the will to do the right thing.”

 

Agricultural Economy

Bloomberg writer Tony C. Dreibus reported yesterday that, “The condition of the U.S. corn crop worsened for an eighth straight week amid the worst Midwest drought in a generation. Soybean ratings also fell.

“About 24 percent of the corn was in good or excellent condition as of yesterday, down from 26 percent a week earlier and 77 percent in mid-May, the U.S. Department of Agriculture said today in a report. An estimated 29 percent of the soybeans got the top ratings, down from 31 percent. Both crops are in the worst shape for this time of year since a drought in 1988.” (Note, related corn chart here, related soybean chart here).

A tweet yesterday at The Financial Times Commodities noted that, “Macquarie sees US #corn yields at 120-130bu/ac and #soybeans at 39bu/ac falling to 35bu/ac without rain soon.”

Emiko Terazono reported yesterday at The Financial Times Online that, “Grains and oilseeds rallied on disappointing rains in the US Midwest and on forecasts for further hot and dry weather in the key corn and soyabean-growing regions.”

The FT article noted that, “In Iowa, the top US corn producing state, 46 per cent of the crop was poor or very poor.

“The recent showers have eased conditions in the driest areas in the Midwest soyabean-growing areas, but drier conditions were expected to return to the central and southwestern belt, said consultancy Commodity Weather Group.”

Meanwhile, an update from the World Bank yesterday noted that, “Given the exceptional drought in the US, current crop conditions in other grain producing regions, and the resulting increase in international food prices, the World Bank today expressed concern for the impacts of this volatility on the world’s poor, who are highly vulnerable to increases in food prices.

“‘When food prices rise sharply, families cope by pulling their kids out of school and eating cheaper, less nutritious food, which can have catastrophic life-long effects on the social, physical, and mental well being of millions of young people,’ said World Bank Group President Jim Yong Kim.  ‘The World Bank and our partners are monitoring this situation closely so we can help governments put policies in place to help people better cope.’”

Keith Good