FarmPolicy

Farm Bill; Ag Economy (Drought- RFS); CFTC Issues; and, Regulations

Farm Bill Issues

David Rogers reported yesterday at Politico that, “Taking no more chances, the House Republican leadership put a little of its muscle to work Wednesday evening to ensure smooth sailing for a livestock disaster aid package before members go home for the August recess.

“The $383 million bill had been slated to come to the floor Thursday under expedited procedures requiring a two-thirds majority. But rather than risk falling short, the House Rules Committee – an arm of Speaker John Boehner (R-Ohio) – was called back into session to effectively lower the threshold to a simple majority.

“The bill will come up now Thursday with a conventional rule, approved by the Rules Committee quickly, allowing one hour of debate and no amendments.”  (Note that a video replay of yesterday’s Rules Committee hearing is available here).

Mr. Rogers explained that, “Minnesota Rep. Collin Peterson, Lucas’s ranking Democrat, said Wednesday he will now support the disaster package out of loyalty to Lucas. And the two men hope to go into the recess with a show of unity that’s been missing for the past week.

“Peterson, who chaired the panel when the 2008 farm bill was enacted, has typically worked closely with Lucas but wants the mild-mannered Oklahoman to be more aggressive now in demanding action from the Republican leadership. Privately, the Minnesota Democrat has even told his own party leaders that if they were to treat him as Boehner and Majority Leader Eric Cantor (R-Va.) have treated Lucas, he would have quit.

“Lucas believes time and the drought are on his side, but the past week has been awkward for the chairman. He sought to oblige his leaders by first introducing a disaster aid package last Friday coupled with a one-year extension of the current farm law that begins expiring Sept. 30. But this idea ran into immediate strong opposition led by Peterson, forcing the GOP to retreat.”

Note that Rebecca Berg reported in today’s New York Times that, “Mr. Lucas, whose plan would overhaul parts of the nation’s agriculture policy and cut spending on food stamps, has been comparatively patient with his party’s leadership, whom he refers to as ‘the management.’

“‘There will be a farm bill,’ he said Tuesday, smiling and apparently unconcerned. He added, ‘I’m just trying to enlighten everybody as I go along.’” [A Politico article from yesterday included this quote from Chairman Lucas, “‘There will be a farm bill, and I’ve worked very hard to remind everybody in this chamber about that,” Agriculture Committee Chairman Frank Lucas of Oklahoma said when asked if his leadership team is supportive of negotiating on a farm bill this Congress. ‘It’s just when will it happen. And I’m encouraging everyone on both sides of the room that sooner is better than later.’”]

Ms. Berg pointed out in her New York Times article that, “Not all of his colleagues have agreed with that approach.

“‘He’s got a big problem with his leadership,’ said Representative Collin C. Peterson of Minnesota, the senior Democrat on the Agriculture Committee, who has worked closely with Mr. Lucas on the farm bill. ‘I wouldn’t be anywhere near as nice as he’s being if they were doing this to me.’”

The Times article added that, “‘People can be resolute in different ways, and Frank’s not going to go pound the table and be confrontational, but he’ll still meet his objectives and move people in his direction,’ said Allen Wright, who worked previously as Mr. Lucas’s chief of staff in Congress and met Mr. Lucas when they attended the same high school in Cheyenne.”

In his Politico article from yesterday, Mr. Rogers pointed out that, “The package now is a stand-alone disaster bill that will restore livestock indemnity and forage programs that have expired in the current farm program. Some assistance is also provided for specialty crops, and to keep costs down, the aid will only apply to 2012 and not extend past the current farm law…[T]o offset the costs, the bill would impose caps on two conservation programs much as the House Appropriations Committee has already proposed in its 2013 budget bill. Early estimates indicate the net savings would be about $256 million [CBO score here]. But environmental groups are agitated enough about the offsets that getting to a two-thirds majority would have been difficult.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “With the House set to vote on a drought assistance bill on Thursday, environmental and farm lobbyists are weighing in with criticism…[E]nvironmental groups said they oppose the bill because it is paid for by cuts to conservation programs that more than offset the cost of the disaster relief.”

The Hill update noted that, “Sixteen other conservation groups, including the National Wildlife Federation and the American Farmland Trust, also sent congressional leaders a letter opposing the bill.”

Mr. Wasson pointed out that, “Farm lobbyists are still angling for a full five-year farm bill and hope that it can be passed this year.

“Commodity groups said that the disaster bill is unnecessary since the full bill would address the drought and have deeper deficit savings.” (See this statement from yesterday regarding the disaster aid bill, which was signed by the American Farm Bureau Federation, the American Soybean Association, the National Association of Wheat Growers, the National Barley Growers Association, the National Corn Growers Association, the National Farmers Union, the National Milk Producers Federation, the National Sunflower Association, the United Fresh Produce Association, the U.S. Canola Association, the USA Dry Pea & Lentil Council and the Western Growers.)

Looking ahead, Ted Booker reported yesterday at The Watertown Daily Times (N.Y) Online that, “[Rep. William L. Owens (D., N.Y.)] is hopeful that a bipartisan committee will be formed to draft a final farm bill based on its House and Senate versions during the summer break. That could allow just enough time for the final bill to be voted on and approved by the end of September.”

Jason Noble reported yesterday at the Iowa Politics Blog (Des Moines Register) that, “With progress on a federal farm bill halted and congressional leaders now advancing a scaled-back, short-term drought relief package, U.S. Rep. Bruce Braley said Wednesday he would seek to force a vote on a much broader five-year package.”

Yesterday’s update noted that, “His [Rep. Braley] solution is a discharge petition – a procedural move that could force the five-year farm bill out of committee and onto the House floor.

“‘Since House leaders aren’t taking the action to allow a vote on the full farm bill, I’m going to continue pushing for a vote,’ he said. ‘If 218 members sign onto my petition, the House is going to have to vote on the farm bill whether the leadership likes it or not.’”

A news release yesterday from Sen. Sherrod Brown (D., Ohio) noted that, “With more than 98 percent of Ohio experiencing severe or moderate drought conditions – and with the current farm bill set to expire on Sep. 30 – [Sen. Brown] called on the U.S. House of Representatives to schedule a vote on the Senate-passed bipartisan, five-year farm bill that provides critical assistance to farmers affected by drought. During a news conference call, Brown outlined how the Senate-passed farm bill contains critical risk management and disaster response provisions for Ohio’s farmers and agricultural producers.”

The Farm Bill has crept into some campaigns as an issue.  Democrat Christie Vilsack, who is running against GOP Ag Committee Member Steve King in an Iowa Congressional race, issued a Farm Bill related news release yesterday; while, Rep. Rick Berg (R,. N.D.), who is running for the U.S. Senate, tweeted yesterday that, “Our #farmers deserve the certainty a long term #FarmBill would bring. I will continue to stand up to House Leadership and fight for #ND.”  (As a side note, Roll Call yesterday released a House ratings map for each U.S. Congressional District).

Meanwhile, Indiana GOP Congressman Marlin Stutzman and Michael Needham, the chief executive officer of Heritage Action for America, penned an Op-Ed in today’s Wall Street Journal which stated that, “For decades, an unholy Washington alliance—between rural lawmakers and their urban and suburban colleagues—has caused exponential growth in spending by combining farm policy and food stamps in one huge legislative package. It’s a practice our nation can no longer afford as we approach $16 trillion in debt. Yet in July the House Agriculture Committee passed a farm bill with nearly $1 trillion in spending, or 60% more than was contained in the 2008 bill (passed by the Nancy Pelosi-led Congress over the veto of then-President George W. Bush).

“Instead of combining farm policy, food stamps, telecommunications, energy, forestry and conservation into a single legislative vehicle, we must begin advancing one issue at a time. Even Americans with differing views on the role of the federal government in U.S. agriculture should agree that any farm bill passed by Congress be a farm-only bill. Only by breaking this massive bill into manageable, understandable pieces can we begin to make meaningful reforms.”

Agricultural Economy (Drought- Renewable Fuel Standard (RFS))

Bill Tomson reported yesterday at The Wall Street Journal Online that, “The U.S. Department of Agriculture moved to help farmers and ranchers deal with drought conditions by opening up 3.8 million acres of land for haying and grazing and allowing farmers more time to make payments on crop-insurance premiums.

“The steps announced Wednesday ‘will help U.S. livestock producers dealing with climbing feed prices, critical shortages of hay and deteriorating pasturelands,’ USDA Secretary Tom Vilsack said. ‘Responding to my request, crop-insurance companies indicated that producers can forgo interest penalties to help our nation’s farm families struggling with cash-flow challenges.’”

Yesterday’s USDA release added that, “Earlier in the day, Vilsack signed disaster designations for an additional 218 counties in 12 states as primary natural disaster areas due to damage and losses caused by drought and excessive heat.”  A map of USDA 2012 Drought Designations can be viewed here.

Bridget Doyle reported yesterday at the Chicago Tribune Online that, “A new swath of Illinois counties was deemed a natural disaster area by the federal government Wednesday, making loan assistance available to farmers who have spent the summer watching their crops shrink and shrivel in the dry heat.

“But the aid is being overshadowed by a newly released weather outlook that predicts this year’s drought will continue through October.”

Bloomberg writer Alan Bjerga reported earlier this week that, “Drought spreading throughout the Corn Belt becomes a more- certain economic disaster with each passing week, as crops wither in the relentless heat and the growing season wanes. The In June, Decatur [Illinois] got about two-thirds of its normal rainfall, according to the National Weather Service.

“About 24 percent of the nation’s corn was in good or excellent condition as of July 29, the worst assessment for this time of year since 1988. Only 5 percent of the corn in Illinois, the biggest crop-grower after California and Iowa, was in good condition, and none was rated excellent.”

Marshall Eckblad reported yesterday at The Wall Street Journal Online that, “The U.S. market for young beef cattle is feeling the heat of a historic drought.

“Faced with seared grazing pastures, ranchers across the U.S. who can’t afford to provide food and water to steers and heifers are rushing to sell them. But the usual buyers, sprawling feeding operations called feedlots, are scaling back as the price of corn—given to cattle to fatten them up—is soaring as crops wilt across the Farm Belt.

“The combination of a glut of supplies and deteriorating demand last month drove the prices of ‘feeder cattle’ to the lowest level since September 2011.”

Also yesterday, Zack Colman reported at The Hill’s Energy Blog that, “A bipartisan group of 135 lawmakers signed a letter Wednesday asking the Environmental Protection Agency (EPA) to adjust a rule that requires corn ethanol production for transportation fuel.

“The lawmakers want EPA Administrator Lisa Jackson to temporarily reduce the amount of corn ethanol that gets blended into gasoline under the renewable fuel standard (RFS).  They say meeting this year’s target of 13.2 billion gallons of corn ethanol production will tighten corn supplies for livestock producers, given the widespread drought that has devastated farm production.

“Reps. Bob Goodlatte (R-Va.), Steve Womack (R-Ark.) and Mike McIntyre (D-N.C.) are leading the effort. They will send the letter Thursday and hold a morning press conference to discuss the issue.”

Reuters news reported earlier this week that, “The U.S. government is unlikely to bow to pressure for a waiver on quotas requiring a proportion of corn is used to make ethanol before November, at the earliest, traders said, despite the expected slump in global corn production due to severe drought.”

And Iowa GOP Senator Chuck Grassley issued a release yesterday titled, “The Renewable Fuels Standard, Ethanol, and the U.S. Corn Crop,”  in response to a recent Wall Street Journal Op-Ed on the RFS issue.

In a separate update yesterday, Zack Colman reported at The Hill’s Energy Blog that, “Droughts, heat waves and other severe weather are being exacerbated by climate change, several Senate Democrats contended at a hearing Wednesday.

“Democrats on the Senate Committee on Environment and Public Works held the hearing to call attention to what they said are the risks of climate change highlighted by severe weather this summer. They also sought to blame Republicans for holding up action to prevent or slow global warming.”

CFTC Issues- Senate Ag Committee Hearing

Bloomberg writers Silla Brush and Tiffany Kary reported yesterday that, “MF Global Holdings Ltd. (MFGLQ)’s brokerage customers, facing a $1.6 billion gap in funds, will eventually recoup between 90 percent and all of their money, according to the trustees overseeing the liquidation.

“‘I think we’re comfortable saying that additional distributions should certainly be in the 90 percent range,’ James W. Giddens, trustee overseeing the MF Global Inc. unit’s bankruptcy, said today at a U.S. Senate Agriculture Committee hearing in Washington. ‘It’s going to be an uphill fight to get, as I indicated, to 100 percent.’

“Giddens commented after Louis Freeh, bankruptcy trustee for MF Global’s holding company, said it was his belief that customers would eventually recoup all their money. He said he based his conclusion on estimates of the return of customer funds from foreign jurisdictions and settlements obtained by Giddens’s office.”

Jamila Trindle reported yesterday at The Wall Street Journal Online that, “Mr. Giddens told the hearing on Wednesday it is likely that senior management at MF Global, including its former chief, Jon Corzine, were aware that customer funds were being improperly withdrawn.

“‘The preponderance of the evidence indicates that senior management at MF Global’ including Mr. Corzine ‘was aware that customer funds toward the end were being utilized to cover other costs at the firm,’ Mr. Giddens said.

“Mr. Corzine testified before Congress last December that he hadn’t authorized the transfer of customer funds, and a spokesman for the former senator and governor disputed Mr. Giddens’s assertion.”

In a separate Journal article, Jamila Trindle reported that, “CME Group Inc., operator of the world’s largest futures exchange, Wednesday defended the current regulatory system for the futures industry, which has been criticized after alleged fraud at Peregrine Financial Group Inc. left futures customers short of funds for the second time in a year… CME Chairman Terry Duffy said that the current system is ‘resilient’ and ‘adaptive.’”

Meanwhile, a news release yesterday from Nebraska GOP Senator Mike Johanns stated that, “[Sens. Johanns], Mike Crapo (R-Idaho), Herb Kohl (D-Wis.), Jon Tester (D-Mont.), Pat Toomey (R-Pa.) and Kay Hagan (D-N.C.) today introduced a bill to exempt farmers, ranchers, manufacturers and small businesses from the margin requirements in the Dodd-Frank financial legislation. These exempted groups, known as end-users, use derivatives to insure against extreme price fluctuations for commodities integral to their business operations.”

Regulations

A news release yesterday from Sen. Mike Johanns (R., Neb.) stated that, “[Sen. Johanns] today introduced legislation which would ban the Environmental Protection Agency (EPA) from conducting aerial surveillance for one year. The bill comes after EPA failed to fully respond to multiple requests for a clear, complete account of the size and scope of its surveillance program.”

And, a news release yesterday from Rep. Rick Crawford (R., Ark.) stated that, “Today, the House of Representatives passed H.R. 3158, the Farmers Undertake Environmental Last Stewardship Act, sponsored by [Rep. Crawford]. The legislation will modify the Environmental Protection Agency’s (EPA) Oil Spill Prevention, Control and Countermeasure (SPCC) rule that places an unnecessary burden on farmers and ranchers. The bipartisan legislation will now move to the Senate.

“‘The EPA’s spill containment regulation would cost farmers and ranchers literally tens of thousands of dollars to make significant improvements in their infrastructure. On top of that, producers have to procure the costly services of Professional Engineers or PEs just to certify compliance and I’ve heard that some states don’t even have PEs qualified to provide that consultation,’ said Crawford. ‘My proposal – the FUELS Act –would change EPA’s burdensome spill containment regulations to exempt small farmers who can’t afford to comply.  We’ve got some analysis on this from the University Of Arkansas Division Of Agriculture and they conclude that my proposal would save Arkansas producers alone up to $252 million. For the entire Nation, it would save up to $3.36 billion’”

And lastly today, Andrew Pollack reported in today’s New York Times that, “A federal jury awarded $1 billion in damages to the crop biotechnology leader Monsanto on Wednesday, saying that its arch rival DuPont had willfully infringed a patent covering Roundup Ready soybeans.”

Keith Good

Posted by Keith Good • August, 2, 2012 • 4:13 am