FarmPolicy

Farm Bill; Drought (Crop Insurance); Ag Economy – Biofuels

Farm Bill

As lawmakers start a summer work period away from the nation’s capital, pressure to pass a five-year Farm Bill persists.

Recall that while the Senate passed a comprehensive Farm Bill on June 21 and the House Agriculture Committee passed a five-year measure on July 12, both with bipartisan support, the House GOP leadership would not acquiesce to a floor vote on the Ag Committee bill.  After a short-lived attempt to bring up a one-year extension of farm programs, while drought conditions worsened across much of the U.S., the House alternatively passed a disaster related bill on Thursday.  The Senate did not take up this legislation for a vote.

Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) explained on the Senate floor Thursday that lawmakers would work over the August recess to bridge differences between the House and Senate agricultural perspectives by September.  And as David Rogers reported on Thursday at Politico,  “But ‘if for some reason or not, we are not able to succeed’ Stabenow opened the door to a stand-alone disaster-aid bill in September, albeit broader than the House package.”

In a video statement from late last week, Senate Ag Committee ranking member Pat Roberts (R., Kan.) stated that, “I am astonished, if not outraged, that the Senate Democrats left Washington without even considering the House passed livestock disaster package.  They are playing politics with a devastating drought.”

On the Senate floor last week, Missouri GOP Senator Roy Blunt, who grew up on a dairy farm, also expressed his disappointment with the failure of Congress to address disaster relief.

Also last week, a video statement from Mary Kay Thatcher, Senior Director of Congressional Relations at the American Farm Bureau Federation (AFBF) indicated that lawmakers need to finish the farm bill when they return to Washington in September.

Rick Jordahl pointed out last week at DairyHerd Online that, “But the [House disaster] legislation favors some livestock segments over others, noted Rep. Collin Peterson (D-Minn) on the floor of the House on Thursday.

“‘Providing assistance to livestock producers — primarily (beef) cattle and sheep — is necessary and important, but this is not a comprehensive disaster package,’ Peterson said. Dairy and specialty crop producers will be left hurting, and there is no assistance for pork and poultry producers.”

Jerry Kozak, the President/CEO of the National Milk Producers Federation indicated recently that, “the House then passed a disaster aid package on Aug. 2nd that does essentially no good for most dairy farmers.”

An update on Thursday at the Denver Post Online stated that, “House Republican leaders couldn’t find enough common ground to pass the Farm Bill before they leave for summer recess, disappointing the Colorado farm lobby which called the lack of progress ‘unsettling’…‘The uncertainty is mind boggling,’ said Brent Boydston, vice president of the Colorado Farm Bureau.”

Tom Lutey reported over the weekend at the Billings Gazette (Mont.) Online that, “The House adjourned for its five-week August break on Friday without passing a controversial farm bill, revealing a widening split between conservative farmers and Republicans opposed to subsidies.

“The two groups, like-minded on other political issues, spent the last two weeks lobbying against each other. Farm groups warned of dire consequences without a comprehensive farm bill that included much-needed drought assistance.”

Meanwhile, Gail Collins opined in Saturday’s New York Times that, “[T]he national farm program was teetering on the cliff…[A]s a gesture of appeasement, the leadership did allow passage of a narrow bill providing disaster relief to cattle and sheep ranchers. The Senate dismissed it as too little, too late.”

And The Seattle Times, LaCross Tribune (Wis.) and Secretary of Agriculture Tom Vilsack have also recently highlighted the importance of passing the Farm Bill.

Meanwhile, Erik Wasson reported on Friday at The Hill’s On the Money Blog that, “A new effort in the House to dislodge the stalled farm bill is already facing some roadblocks.

“Reps. Bruce Braley (D-Iowa), Rick Berg (R-N.D.), Chris Gibson (R-N.Y.) and Peter Welch (D-Vt.) are preparing a discharge petition to force House leaders to bring up a five-year bill.

“Braley told The Hill Friday that he believes House Agriculture Committee Chairman Frank Lucas (R-Okla.) is deliberately stalling the effort, at the behest of leaders.”

The update added that, “The [petition] effort also suffered a blow when Rep. Kristi Noem (R-S.D.), who was originally planning to gather signatures from the GOP side, decided against joining the effort.”

A news release Friday from Rep. Noem (R., S.D.) stated that, “Reps. [Noem] and Peter Welch (D-Vt.) today followed up with the 77 Members of Congress that joined them in calling on Speaker Boehner, Majority Leader Cantor, Democratic Leader Pelosi and Democratic Whip Hoyer on July 19th to bring a Farm Bill to the floor. In a ‘Dear Colleague’ letter, Reps. Noem and Welch urged the bipartisan group to keep fighting for a Farm Bill, writing ‘as you go home to work in your districts during the August Work Period, we urge you to talk with your delegation and Members of Congress in neighboring districts on the importance of not letting the Farm Bill lapse.’”

As the Farm Bill stalemate persists, political campaigns have been drawn to the Farm Bill issue.  Rep. Noem’s Democratic opponent has sought to bring the issue up in the South Dakota Congressional race.

Iowa Democratic Congressional candidate Christi Vilsack on Friday “announced her support for Congressman Bruce Braley’s discharge petition, which would force House leadership to bring the bill up for debate.”

And U.S. Senate candidate Rep. Rick Berg (R., N.D.) on Friday  “announced that he began working with a bipartisan coalition to gather support for a discharge petition that would force the consideration of the Farm Bill on the House floor, regardless of whether or not House Leadership approves.”

Daniel Newhauser reported today at Roll Call Online that, “House Republican leaders are counting on the August heat to help them pass a farm bill when Congress returns from recess in September — and not just the kind causing the record drought parching 80 percent of the country.

“They are hoping that Members headed home for the district work period, particularly in drought-affected states, will hear from angry constituents all month, demanding that Congress do its job.”

The Roll Call article explained that, “Indeed, Majority Whip Kevin McCarthy (R-Calif.) has so far been unable to wrangle the votes necessary to pass the bill, although the chamber narrowly approved a temporary extension of some emergency drought relief for livestock producers Thursday.

“At a Christian Science Monitor breakfast last week, McCarthy conceded that large bills are difficult to move in this Congress. But he said giving the farm bill a chance to sit will allow Members time to become better acquainted with its policies. He said his goal is still to pass it before the current authorization expires on Sept. 30.

“‘I believe we will get the farm bill done,’ he said. ‘The farm bill does not expire until the end of September. When we come back, we’ll find a way to move it into conference.’”

Mr. Newhauser noted that, “Back in Members’ districts, House Agriculture ranking member Collin Peterson said, there is sure to be pressure on Republicans to come to an agreement on the bill and bring it up in September.

“‘A lot of them are going to come back with religion, if you will,’ the Minnesota Democrat said. ‘A lot of these freshmen have not been around here long enough to know what they’re facing when they go home. They have no good answer to give their constituents about why they didn’t do this, and it’s going to make a very uncomfortable situation for them. I think some of leadership has no idea what they’re going to be facing.’”

Today’s article added that, “In fact, Peterson said, the leaders of the Agriculture committees are so confident that something will change over recess that they are working to hash out a compromise bill during August so they are prepared to move swiftly when lawmakers return.

“‘We’re working with the Senate to try to come up with a way to get this bill settled over August,’ Peterson said. ‘What I think is going to happen is they’re going to want to move this as soon as we get back, and we have to be ready. If we’re ready, we can move this in a couple of days.’”

Drought (Crop Insurance)

A news release Thursday from Sen. Dick Durbin (D., Il) stated that, “[Sen Durbin] and a bipartisan group of 14 Senators called for the creation of an Interagency Drought Task Force to meet the wide ranging impacts and diverse needs arising from the ongoing drought.  In a letter sent earlier today, the Senators asked President Obama to direct the task force to report on the severity of the drought, the impacts to all sectors of the economy, the options available to address drought and fiscally-responsible recommendations for Congressional action.”

And Rep. Steve King (R., Iowa), Sen. Rob Portman (R., Ohio), and Sen. Dan Coats (R., Ind.) all recently visited with agricultural producers to get an update on drought conditions.

The Federal Reserve Bank of Kansas City noted in a recent publication (“Initial Impacts of the 2012 Drought”) that, “This article discusses some of the frequently asked questions surrounding the drought and its initial economic impacts on agricultural producers, agribusinesses and U.S. food prices. Although the drought is far from over and its final toll on U.S. agriculture is still uncertain, the 2012 drought will undoubtedly be etched into farmers’ memories for years to come.”

In particular the KC Fed update stated that, “Despite lower feeder cattle prices, cattle feedlot enterprises face significant losses from high feed costs. Break-even prices for cattle feedlot operations surged in July as the price for feeds, such as soybean meal, corn gluten and dried distillers grains, jumped more than 25 percent since May (Chart 2).”

The report added that, “U.S. dairy operations have not been spared from the devastating effects of the drought. Heat stress has lowered U.S. milk production. After rising almost 4 percent above year-ago levels this spring, U.S. milk production per cow retreated to year- ago levels in June. Although smaller supplies have boosted milk prices on futures markets by 17 percent since May, feed prices have surged more quickly. As a result, dairy operations continue to struggle with profitability and the increased liquidation of dairy herds has contributed to the decline in cattle prices.”

See also this update from last week at the Council on Foreign Relations Online, “U.S. Drought and Rising Global Food Prices.”

And, a tweet last week  at The Financial Times Commodities stated that, “Deutsche Bank, post crop tour, sees US #corn yield at 118-125 bu/acre.”

Jennifer Liberto reported on Friday at CNNMoney Online that, “As the drought continues to ravage the nation’s corn, wheat and soybean fields, crop insurance losses are expected to break records.

“With nearly half of the continental United States under severe drought conditions, crop insurance losses are mounting daily, according to a report from the National Drought Mitigation Center at the University of Nebraska-Lincoln released on Thursday.

“‘It will be a major loss situation,’ said Thomas Zacharias, president of the National Crop Insurance Services, a lobbying group representing private crop insurers. ‘The companies are in the field adjusting claims as we speak.’”

Kansas State University Agricultural Economist Art Barnaby noted in a paper from Friday (“Are Crop Insurance Payments Excessive?”)  that, “An Iowa State University economist and critic of the insurance program was quoted by Bloomberg as saying insured farmers with insurance claims ‘are laughing all the way to the bank’. The economist claims that when prices increase, farmers with a crop loss could end up better off than if they had a crop.

“Are farmers with a crop failure better off than farmers with a normal crop? The 2012 crop will likely suffer a record loss due to drought. The same critic has estimated crop insurance losses as high as $40 billion for 2012. Because of these press stories, growers are now questioning if these ‘large’ costs will cause Congress to eliminate the crop insurance safety net.

“My comment is: don’t worry about it. This is mostly Washington rhetoric and many of these critics have other agendas. In any case there is nothing farmers can do individually to change the result, so they need to consider the farm management decisions. The large numbers being tossed around like a political football in Washington are likely to be small enough at the farm level that many farmers will have losses and not ‘excessive’ profits as critics claim.”

Meanwhile, a news release Friday from Rep. Jackie Speier (D., Calif.) stated that, “[Rep. Speier] this week introduced legislation to increase transparency in the $9 billion annual crop insurance subsidy program. The Crop Insurance Subsidy Transparency Act requires the US Department of Agriculture to make public all individuals and corporations that receive the taxpayer-funded subsidy.”

Agricultural Economy- Biofuels

Last week, USDA’s National Agricultural Statistics Service released two annual reports regarding farmland values and production costs, while Cargill Chairman Greg Page indicated in a Washington Post Op-Ed last week that, “We also need to revisit our biofuels policies. The use of agricultural feedstocks — including corn, soy and sugar cane — in the production of biofuels is projected to grow, largely driven by legislative mandates and support policies. By 2020, according to the Food and Agriculture Organization, biofuels will consume 13 percent of global coarse grain production and 15 percent of vegetable oil production. The biofuels industry has moved from an insignificant consumer of grain to a significant one in 10 years.”

Zack Colman reported yesterday at The Hill’s Energy Blog that, “Eight biofuels groups are forming a coalition to coordinate messaging to combat calls to limit a federal mandate for renewable fuels because of the drought…[T]he new organization, called the Biofuels Producers Coordinating Council, aims to defend the renewable fuel standard.”

And, The Washington Post editorial board noted in part today that, “Environmental Protection Agency Administrator Lisa P. Jackson has the power to ameliorate the situation by waiving all or part of the current-year ethanol mandate, as livestock producers and a bipartisan coalition of 135 House members, led by Bob Goodlatte (R-Va.) are requesting. She should use that authority.”

Meanwhile, Zack Colman reported on Friday at The Hill’s Energy Blog that, “The Senate Finance Committee on Thursday voted to extend two biofuels tax credits for ‘next generation’ technology that some Republicans say have not lived up to promises.

“The biofuels credits, which are due to expire Dec. 31, passed in the tax extenders package approved Thursday by the Senate.”

Keith Good

Posted by Keith Good • August, 6, 2012 • 2:40 am